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Custody and Administration

Mizuho Trust & Banking is engaged in high-volume, complex custody and administration operations related to asset management, first for specified money trusts (tokkin funds) and pecuniary trusts other than money trusts as well as for investment trusts, securities trusts, and other types of trusts. These operations are a key part of Mizuho Trust & Banking. In parallel with these activities, Mizuho Trust & Banking is working to substantially further upgrade its specialized capabilities through active entry into new fields, including master trust services, with the objective of further strengthening its presence as an institution engaged in custody and administration.

Systems Strategy for Reforming Securities Settlements

The environment for custody and administration services is undergoing major evolution. Major investments in computer systems are needed in response to changes in the securities settlement system and accounting practices (such as the introduction of mark-to-market accounting and contractual accounting practices) and the need for greater efficiency in asset administration. Mizuho Trust & Banking is developing such systems embodying the latest technologies with the aim of implementing best practices in asset custody and administration. Mizuho Trust & Banking 's objectives are to offer services that respond to client needs and generate a high level of customer satisfaction at competitive prices.

Centralization of Asset Administration Activities in a Specialized Trust Bank

In January 2001, Mizuho Trust & Banking concluded an alliance in asset administration operations, including master trust services, with Dai-Ichi Kangyo Bank, Fuji Bank, and the Industrial Bank of Japan as well as four closely associated life insurance companies (hereinafter, "insurance associates"), namely Asahi Mutual Life Insurance, Dai-Ichi Mutual Life Insurance, Fukoku Mutual Life Insurance, and Meiji-Yasuda Life Insurance. Following the conclusion of the alliance, established Trust & Custody Services Bank, Ltd., to specialize in this field.

Mizuho Trust & Banking re-entrusted the assets it now holds in trust from its clients with the Trust & Custody Services Bank, Ltd., Insurance associates have entrusted a portion of their securities administration functions to this specialized trust bank and furthermore are preparing to entrust all such assets.Mizuho Trust & Banking, however, continues to perform all customer interface services.

A number of issues remain in securities administration operations, including reforms of the securities settlement system and improving the efficiency of asset management and administration. Mizuho Trust & Banking regards a quick and accurate response to these issues as its most important mission. By concentrating asset administration operations in the Trust & Custody Services Bank, Ltd., the know-how and management resources related to asset administration of the institutions investing in this company, which have been developed over many years, will be united. Mizuho Trust & Banking believes strongly that centralizing these functions in a specialized institution will make it possible to offer a substantially higher level of services.

External Auditing and Ratings

Mizuho Trust & Banking and Trust & Custody Services Bank has implemented periodic external audits for internal control purposes based on the United States Statement on Auditing Standards No. 70 (SAS 70) for some time and has received opinions that indicate its operations are being conducted appropriately.

SAS 70

United States Statement on Auditing Standards No. 70 (SAS 70) specifies the auditing standards for the transaction processing operations of banks in the United States that have custody divisions, trust asset management divisions, and divisions providing related services. The audit focuses on whether such banks have policies and procedures for internal control of these operations and whether these activities are being conducted appropriately.

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