eTrade 2000 Annual Report Download - page 24

Additionally, we expect our co-branded product initiatives to provide a range of online brokerage and banking services to companies
that do not have an online presence. These initiatives target a company’ s employees by providing links at the company’ s Web site that
send the employees to the co-branded products and services.
See “Item 7. Risk factors—We could lose customers and have difficulty attracting new customers if we are unable to quickly introduce
new products and services that satisfy changing customer needs” and “Item 7. Risk factors—Any failure to maintain our relationships
with strategic partners or to make effective investments could harm our business.”
Customers and Markets
The asset gathering business targets many of the same customers and markets as our domestic retail brokerage, banking, and global
and institutional businesses. In addition, through our high net worth initiatives, we are executing upon our strategy to increase our
customer and asset base, specifically targeting more established online investors by providing additional value to those customers who
seek a breadth of product offerings.
In addition to the direct retail customer base, BSG provides products and services directly to both public and private companies with
stock purchase and stock option plans. Clients of BSG range in size and industry focus, from small pre-IPO clients to large public
companies. As we expand the scope of our products and advice offerings, we expect the employees of these companies—the
end-customer for E*TRADE—to benefit from the full array of products and services.
Operations
To the extent that products and services within the asset gathering business are extensions of our domestic retail brokerage, banking,
and global and institutional businesses, revenue streams and operations replicate those business lines. However, there are some aspects
of the business that are unique to the asset gathering group.
The mutual fund business derives revenues through a number of channels, including management fees from our proprietary funds,
fee-sharing arrangements with third-party funds sold through the mutual fund supermarket, 12b-1 fees (administrative fees charged by
funds), sales commissions paid by third-party load funds and transactions fees charged to investors on funds without fee-sharing
agreements.
E*TRADE Asset Management, a subsidiary of E*TRADE, is the investment advisor of all of our proprietary funds. Barclay’ s Global
Fund Advisors is the investment subadvisor of three of these funds. The other funds are set up in a structure wherein the specific
E*TRADE fund invests all of its assets into a portfolio advised by Barclay’ s Global Fund Advisors. This portfolio always has the same
investment objective as the E*TRADE Fund. This is commonly called a “master/feeder” structure.
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BSG, in providing Business-to-Business (“B2B”) products, generates revenue through a number of sources including:
Equity Edge — A world class stock plan administration software that is marketed to corporate clients from
which we derive license and maintenance fees.
OptionsLink —Provides transaction and recordkeeping capabilities to corporate clients while enabling
employees the power to conduct stock transactions and invest online when and how it’ s convenient for them.
Equity Resource —A complete, fully integrated stock plan outsourcing solution. Services include stock plan
administration and consulting, comprehensive and convenient customer support, product training and
educational seminars.
Emerging Companies Program —Takes small, pre-IPO firms into the future with administrative assistance
and stock plan account management up to and through a public offering.
Executive Services —Provides a suite of financial tools and services tailored to fit the needs of corporate
officers and other high-net-worth individuals. E*TRADE’ s Executive Services offers an array of services
tailored to the needs of these individuals.
BSG distributes its product and services to corporations through a nationwide direct sales force and third-party partnerships. As we
deepen our presence in the B2B areas with additional products like our 401(k) and employee banking offerings, we expect to be able
to provide new services and capture additional revenues.
2002. EDGAR Online, Inc.