A 4632 --- August 1, 1997
P & S 4206

TO: ALL PARTICIPANTS

ATTENTION: MANAGER MUTUAL FUNDS OPERATIONS, MANAGER DATA PROCESSING, MANAGER P&S DEPARTMENT, CASHIER

SUBJECT: FUND/SERV MODIFICATION FOR CASH ADJUSTMENTS ON RETIREMENT ASSET TRANSFERS

National Securities Clearing Corporation's (NSCC) Fund/SERV system is the industry standard for the automated and centralized processing of mutual fund orders, account registration and centralized net settlement. In November 1996, NSCC successfully implemented enhancements to Fund/SERV enabling two mutual fund companies to initiate, acknowledge, confirm and settle the transfer of Individual Retirement Accounts (IRA) between the two funds utilizing a standardized and automated process. This centralized and systematic method of executing fund to fund transfers has reduced the amount of time required and the manual intervention necessary to complete these transactions.

This functionality also enables either fund participant to submit Cash Adjustments at any time after the transfer if there is a requirement for an adjustment. Effective September 8, 1997, this functionality will be modified to require the "Original Control Number" when either the deliverer or receiver submits a cash adjustment related to a Retirement Asset Transfer. This will insure that participants can relate a cash adjustment to the appropriate transfer using the unique control number corresponding to the original transfer.

A value of "1" or "2" in the RAT (Retirement Asset Transfer) Indicator is used to indicate that the adjustment is related to a Retirement Asset Transfer and identifies the originator of the cash adjustment as the deliverer or the receiver. Subsequent to this implementation, the Original Control Number field will be required if the RAT Indicator is a "1" or "2". Refer to the appendix following this notice for fields in the existing record formats affected by this change.

Cash adjustment debits and credits for normal Fund/SERV orders are designated relative to the broker (firm) side of a transaction, while for these transfers, debits and credits are designated relative to the receiving fund. For cash adjustments, the receiving fund for "transfer" transactions is analogous to the firm in other Fund/SERV transactions. Therefore, a cash adjustment with a debit/credit code = "DB" would indicate a debit to the receiver and a credit to the deliverer.

Please note that the notification period for the implementation of this modification is less than the usual 90 day period. Due to pending system modifications of the Fund/SERV system for the Year 2000, NSCC recommended the implementation of this new requirement within a shortened timeframe given that it will only affect fund participants processing cash adjustments for Retirement Asset Transfer related activity. NSCC participants utilizing the Retirement Asset Transfer service agreed to this implementation schedule. Other Fund/SERV participants will not be affected by this change. NSCC will continue to provide the normal notification for other system changes.

Testing and Implementation

The modification to require the Original Control Number in the cash adjustment process for Retirement Asset Transfer related transactions will be available for participant testing as of August 8, 1997. Please contact the Mutual Fund Hotline at (212) 412-8893 for additional information. As indicated in this notice, the change will be implemented and available in production on September 8, 1997. Fund/SERV participants utilizing the cash adjustment process for Retirement Asset Transfer related transactions will be required to provide the Original Control Number at this time.

Questions regarding this Important Notice can be directed to NSCC's Mutual Fund Hotline at (212) 412-8893, your account manager, or the undersigned at (212) 412-8675.

David M. Warsoff
Senior Business/Systems Analyst

APPENDIX

Existing Record Type = 011 (Cash Adjustment)

When RAT related (RAT Indicator = "1" or "2"), Firm means Receiving Fund, and Fund means Delivering Fund, except when otherwise specified.

Fixed Length Record Formats

Opt/ Reject Start End Length Type Field Name Description Req Code

Record 1 of 2

66 66 1 A/N RAT (Retirement Asset 1 = RAT related (submitted R 186 Transfer) Indicator by the receiving fund) 2 = RAT related (submitted by the delivering fund)

Space = Not RAT related

Record 2 of 2

25 39 15 A/N Original Control Required if RAT OC 163 Number Indicator = "1"or "2"

Variable Length Record Formats

Opt/ Reject Start End Length Type Field Name Description Req Code

70 70 1 A/N RAT (Retirement Asset 1 = RAT related (submitted R 186 Transfer) Indicator by the receiving fund) 2 = RAT related (submitted by the delivering fund)

Space = Not RAT related 102 116 15 A/N Original Control Required if RAT OC 163 Number Indicator = "1" or "2"