Welcome to the TD AMERITRADE fourth quarter fiscal 2007earnings results conference call. This call is being recorded. With us today areChief Executive Officer Joe Moglia; Chief Financial Officer Bill Gerber; andManaging Director of Investor Relations, Communications and Public Affairs,Mr. Bill Murray. At this time, I would like to turn the call over to Mr.Murray. Please go ahead, sir.

Thank you, operator. Good morning, everyone and welcome tothe TD AMERITRADE September quarter and full year ’07 earnings call. If youhave not seen our press release yet, you can find it on our website at AMTD.comalong with a copy of today's presentation. Before we begin, I would like to note that this callcontains forward-looking statements that are made pursuant to the Safe Harbor provisions of the Federalsecurities laws. These statements include risks, uncertainties and assumptions thatmay cause actual results to differ materially from those anticipated. You're advised to review the risk factors contained in ourmost recent annual report on Form 10-K and quarterly report 10-Q for adescription of risks, uncertainties and assumptions related to theforward-looking statements. Management will be discussing some non-GAAP financial measuressuch as operating margins, EBITDA and liquid assets. You can find areconciliation of these financial measures to the most comparable GAAPfinancial measures in the slide presentation and on our website at AMTD.com. This call is intended for investors and analysts and may notbe reproduced in the media, in whole or in part, without prior consent of TDAMERITRADE. At this point, I would like to turn the call over to TDAMERITRADE CEO Joe Moglia, who will be followed by CFO Bill Gerber.

Thank you very much, Bill. Good morning, everybody. Welcometo the call. 2007 was our fifth record year in a row. We were able to achieve a35% compounded annual growth rate for our shareholders over that time period. I'm going to ask you to bear with me for a couple ofminutes. I promise I won't be long-winded on this, but I think we need to talka little bit about probably the one thing that I have said the most over thespan of the last two years plus. That is, we've talked again and again andagain about our 2006 to 2008 philosophy. In the summer of 2005, we announced that we were going topurchase TD Waterhouse. There were some excellent economic reasons for that butthere were also some very important strategic reasons for that, which wouldadvance what we were trying to accomplish pretty significantly; probably by anumber of years. We said back then that every decision we were going to make --and this is starting in 2005 -- was geared around laying a foundation, comingout of 2007 and 2008 so we could transition from a firm that has dominantly beentransaction-oriented to one that would be far more of an asset gatherer. In order to do that, we had to roll out our clientsegmentation strategy. If you recall in the long-term investor space, a yearago we didn't even have an offering. Today, we have cash management, we've gotfixed income, a much better mutual fund platform, we've improved our portfolioallocation tool in Amerivest and we started to roll out products like TDAX.That long-term investor offering, just by itself, we believe then will alsohelp us in the RIA segment as well as having already added scale to thatsegment. Then in the active trader space, we regained our #1 positionand we've got a better platform than…

Thanks, Joe. We've shattered all of our old earnings recordsthis quarter, coming in at $0.33 per share, which is a 65% increase over whatwe earned in the same quarter last year and 27% higher than the second-bestquarter in our history. As Joe mentioned earlier, we discuss all earnings,excluding investment gains. We continue to deliver outstanding pre-tax margins,finishing this quarter at 54%. Our return on equity for the quarter was 39%,which is another record. Our EBITDA was a record $359 million or 62% ofrevenues, evidencing our cash generation abilities. Our revenue stream remainsstable as our asset-based revenues accounted for approximately 60% of netrevenues. Let's now turn to the actual September results as theycompare to the same quarter last year, on slide 11. Our net revenue was arecord $575 million, up $86 million or 18% from last year. Transaction revenueof $226 million increased $61 million, almost entirely due to a boost in ourtrading activity of 74,000 trades per day, a whopping 36% increase. Tradingactivity was 278,000 trades per day or a 4.4% activity rate, versus last year'sactivity rate of 3.3%, or 204,000 trades per day. Our average commission pertrade for the quarter came in at $13 even, up $0.11 from 2006, mostly due toincreases in our option mix and payment for order flow. Please note that we have made some reclassifications in therevenue section of our income statement, to better reflect our transaction andasset-based revenues. As a result, our commissions per trade numbers for priorperiods have changed slightly. Asset-based revenue of $342 million increased $25 million,primarily due to an increase in average balances of nearly $17 billion.Investable asset revenue was up $12 million on an increase in balances of over$3 billion, offset by a 31 basis point reduction in the net interest margin.This was primarily due to an increase in our stock…

(Operator Instructions) Your first question comes from PrashantBhatia - Citigroup.

Joe, you talked about the move to the sales organization. Iknow it's still early days, but are you seeing any type of different behaviorfrom the legacy AMERITRADE customer or the legacy TD customer that shows it isworking early on?

Prashant, I think right now based in terms of what we'veseen, I would say that we feel good that we're starting to get some reasonabletraction on this. We have not yet really moved to a sales model in the callcenter, but we've certainly been able to be more aggressive with regard to oursalesforce, whether they're in the branches themselves or our virtual branch inOmaha and in Fort Worth. So we're starting to see some progress. I wouldsuggest though that we haven't really started to see legitimate traction there. I think that's something that we need toexpect of ourselves in 2008. So we're starting to see some progress; I'd say not greattraction yet.

On the investment product side, we're seeing some prettystrong asset growth numbers there. I'm just wondering if you could give us afeel for how much of that is coming from mutual funds versus money marketfunds?

Prashant, we normally don't break that out, but we'reactually relatively pleased to see progress there across the board.

Your next question comes from Howard Chen - Credit Suisse.

Joe, I'm curious what management's outlook is on theconsumer credit environment? I realize you aren't directly impacted by losses,per sae, but organically your business is clearly linked to the health of theconsumer. From an acquisition standpoint, it would appear there are assets outthere where valuations have been impaired by the current deterioration in thecredit market.

Howard, 20% of the world economy is the United States; 60% of the U.S.economy is the consumer. There is no doubt in my mind that the consumer todayhas some anxiety about what is going on, in general, with regard to the realestate market and what's going on with the credit cycle that we happen to bein. That, plus rising energy prices, I think at some point doeshave to have an impact on the consumer. So I'm sensitive to that as far as theeconomy goes and as far as the market goes, but it's our job to run ourbusiness through good times and bad, so we've got to be prepared for that. With regard to assets in the marketplace that are certainlycheaper today than what they had been; eventually, at least as far as we'reconcerned, when we look at all those things, we look at those through the sameeyes that we always have. There's a risk/reward perspective associated withanything that we do and at the end of the day, if we're looking at specificacquisitions, if we believe that makes sense for us long term, we'll beaggressive at it. The fact that there happen to be assets in the marketplacethat are going through a difficult time now doesn't change our philosophy interms of how we approach it.

In the past six months, a few of your major competitors havestepped up efforts on the high yield checking accounts. From your preparedremarks, it seems like you're pretty pleased with the way TD AMERITRADE'smarket share is trending. Any evolution of thinking here, in terms of tappinginto the liability side of the consumer balance sheet?

That's something on a regular basis we re-evaluate, Howard,but we have not made that decision today, no.

In the slides, you mentioned a 25 basis point Fed move wouldhave a non-material impact in earnings. What are you assuming in terms of theshape of the yield curve if that happens? Are you assuming any increase in DARTSif the Fed moves?

Normally, there is anincrease in DARTS historically when the Fed moves, but usually that is over theshort term. We would assume that right now the curve would just move parallel,so everything would move.

So no change in DARTS and parallel shift in the yield curveis what you are talking about?

That's right.

Our next question comes from Matthew Fischer - DeutscheBank.

On qualified accounts, if you could maybe just provide a bitof clarity? What percent of revenue is generated from the qualified accountsand what's the dynamic there? You had 59,000 in new accounts during the quarter, but qualifiedaccounts were roughly flat. Could you give that color?

Ingeneral, profitability of revenues generated from our qualified accounts isaround 50%. Qualified accounts are 50% of our numbers and that accountsfor about 90% of our overall profitability in revenues. Keep in mind that the line of demarcation for qualifiedaccounts is $2,000. So in effect, while you may be opening more accounts, youmay be bringing in more assets, while all those things may be happening, theactual amount of the individual accounts could easily go up and down withregard to what is going on with the market and whether or not people aretransferring money in and out. As I mentioned earlier, I certainly over the span of thelast four quarters would have liked to have the qualified accounts number moveup. I'm pleased with the progress we've seen and I know what we need to focuson going forward. If we are effective in those metrics that we had talked aboutand we outlined, and qualified accounts don't move significantly, we could stillbe very, very, very successful. So we're not sure to what extent that's anaccurate metric or indication in terms of whether or not we're getting the jobdone as far as asset gathering goes.

Moving on to asset gathering, can you give us any color interms of organic growth during the quarter? Net new assets?

No, not as far as net new assets go.

Were they positive?

Yes, they were positive.

Your next question comes from Mike Vinciquerra - BMO CapitalMarkets.

On the Fiserv acquisition, I think when you originallyannounced that, you were going to close within four to six months which I thinkwould have put it at the end of November. Is it just slow in terms of some ofthe approvals you need to get that business closed?

Yes, Mike.

So by the end of the year, that should be in the fold?

We expect it to be.

What was the impact, remind us again, on your 2008 outlookcoming from that business?

We didn't build anything into that.

I want to focus on the options side. Would you mind sharingwith us what the option percentage of trades were during the quarter that wasdriving the higher commission?

It's about 11%.

I presume when you talk about the commission rate beinghigher and payment order flow being higher, both of those related to optiontrading?

Yes.

Finally the Market Gear acquisition from a couple of weeksago, sounds like a pretty interesting tuck-in that should give you much bettertools to offer your clients there. Can you talk a little bit about what thatbrings to the table?

Well, what we did was we bought the intellectual property,in effect, from Market Gear that would enhance our overall options platform. Ithink for the more aggressive and the more sophisticated option investors, itgives them greater sophistication, greater education, et cetera. So I think as long as we are going to focus on the activetrader -- which I don't frankly ever expect us not to do that -- then theoption business has to be a critical component of that and it's something we arealways looking at.

When you wrap all this together then and you look at yourcommission rates going forward, I know in the outlook you've got it essentiallyflat for all of 2008. Is there some reason to be a little optimistic that asthis percentage grows and then you add new tools like Market Gear brings to thetable, that percentage could continue to grow and you could also see youraverage commission rate grow? Or, are there some offsetting factors?

I think that's fair,Mike.

I would agree with that.

Your next question comes from Rich Repetto - SandlerO'Neill.

A question for you, Bill. Interest rates, you said whatwould happen, that no effect with a 25 basis point move. How big of a move doesit take to start impacting the net interest line materially?

Materially, certainly going towards 75 to 100 would probablystart moving the number pretty good, but it really depends upon multiplefactors, as you know, including the shape of the yield curve, including thecompetitive factors and what our competitors are doing, et cetera. We look at all those things and it's not quite as easy asjust saying 100 basis point move is going to have a major effect, but themargin compression would start kicking in, there's no doubt.

In the last Q, at least from the fiscal third quarter, itsaid something like a 100 basis point move would be $39 million. Is thatprobably your best guess? Again, it isn't all that simple, I agree.

Yes. That would be about $0.04 a share.

Joe, the DARTS up 23% in October month-to-date, I think arecord level, 326. From your vantage point, can you talk about retail investorengagement and what your view is given there's certainly been a heightenedlevel of activity here?

First, I think when the market talks about volatility they areoften talking about the market going down. I think when we in the market talk aboutvolatility we talk about market movements up and down. That type of volatilitythat we've seen over the span of the last month or so would certainly keep theindividual investor involved. With regard to the Fed having eased 50 basis points, I thinkthey absolutely like that. That was one of the things that our clients had beentelling us in prior quarters that, when is the Fed going to make a move? Thefact that the Fed did that, I think they felt pretty good about that. When you look at the individual sectors that they seem tohave interest in, they like international, even with all the volatility; aswell as technology; and they're invested in energy. On the negative side of theequation, they're certainly not crazy about what's going on now in the financialsector or in homebuilders in general. I think the volatility in the market coupled with the Fedhas made the individual investor relatively comfortable. Having said all of that, do not underestimate what I wassaying before about the pressure that might exist with regard to the economy aquarter or two down the road. If indeed that starts to happen, you'll see theindividual investor back off. Right now they are certainly involved.

Just trying to get one layer below that, the increasedactivity, is it coming more from the active traders or accounts returning backto the market that really didn't trade before? Do you even have that info?

Rich, we do. It's absolutely across the board. People thatare relatively active, frankly, are a little bit more active; but you areseeing people that are doing a small handful of trades a year do a couple more.So it's across the board.

On the consolidation front, certainly the rumors have pickedup in the marketplace. You've always said you would do the deal that was in thebest interest of shareholders. Has the opportunity set, the people that you'retalking to, widened over the past quarter or six months?

Rich, are you talking about something specific? Because ifyou're talking about something specific, I can't talk about that. If you're talk about though, literally, our approach, honestto God, it is the exact same thing. We'll evaluate things the way we havealways in the past and if something makes sense, we'll be aggressive with it.

I think we will leaveit at that. That's a good answer.

Your next question comes from Matt Snowling -FBR CapitalMarkets.

Joe, you said in your prepared remarks that you're expectingasset growth of 16%. Did that include Fiserv?

No.

How much are you really thinking coming from organic versusmarket participation?

I would say of the 16%, probably 5% would be market, 10% or11% would be organic.

In your outlook statement, it appears if I am reading thiscorrectly that you're expecting some spread compression in the net interestincome line. Is that a pricing decision or is that expectations of lower rates?

Well, if you look at our anticipation with regard tocommissions per trade, we were at $13 for 2007 and I think for 2008 it is$12.89 or so. That would be more a lower mix of business with regard to optionsand more of a conservative estimate on payment for order flow. I think for the most part on our net interestmargins, they're reasonably flat.

I had it at 377 this quarter.

Versus the September quarter?

Yes.

We are looking at it. They're writing signs here for me.What does that say, Jeff? Asset base in total. The asset base in total, Matt,should be flat or close to that.

Your next question comes from Roger Freeman - LehmanBrothers.

What sources would you say you're gathering the most assetsand accounts from? Like other discountbrokers, full service brokers? Where are your sources of accounts these days?

Now you're talking about account transfers. The accounttransfers themselves are actually a very, very small part of the overallbusiness or the overall numbers. So the majority of the assets that we seecoming in, in effect, would be new and we wouldn't necessarily know for a factwhere they come from as far as account transfers go. But in general, we are starting to see a reasonable pickupin the mass affluent sector across full commission firms, in general.

Could you prioritize your uses of free cash flow goingforward in terms of debt or stock buybacks, dividends, acquisitions?

There are a lot of firms, I think, that lock into this iswhat we do with our cash and then they move forward with that. I think we'vealways been, at TD AMERITRADE, very dynamic with looking at that. That'ssomething we look at, I'm not going to say everyday, by certainly that becomesa discussion every month and it certainly comes up at every board meeting. So it's difficult to prioritize. We look at all of thosewith regards to opportunity. Right now we've got a Fiserv close on the table. Thepriority is to have the $225 million that in effect covers that. So in thatcase, that would be an acquisition, i.e. growing our business. In the other case of to what extent we want to buy back ourstock, we are frankly in the market every day. To what extent do we want to paydown our debt? Frankly, we are looking at that on a regular basis. To what extentfrom a secondary perspective do other things make sense -- dividends, et cetera.So it is difficult to prioritize. Right now the priority would be to pay off theFiserv deal.

Your next question comes from Michael Hecht - Banc ofAmerica Securities.

I wanted to come back to the outlook statement again. Itsounds like on the net interest revenue side you're baking in a little bit ofspread compression, but if we look at the MMDAs, it looks like you're baking inabout 9% growth in average balances and maybe 4%, 4.5% increase in spreads. Can I get a little bit more color on what's driving that andcan you remind us, what are the rates paid to clients on those balances and howcompetitive these dealers are relative to other places, to part cash?

We had an MMDA price change in September, so that's going tobasically be the main reason for the change in the spread.

Just flowing through the Fed decrease?

That's right. What was your question on the asset side,Michael? Say that again.

What are the rates that people earn on those now and how doyou feel that compares to rates people can earn on other forms of cash?

We believe it's very competitive rates. It's probably in the150ish range. I'll get you more exact numbers as we're talking. But we think itis a very good rate. It is tiered and so that probably would be the higher endof the range of what people would be getting, but this is something we look atvery much on the basis of the competitive nature of the business.

A similar type of question, this time on investment product feerevenues. You have the realization rate there picking up 5.5%. On top of goodasset growth, it seems like you're baking in higher fees. What's driving that?

It's basically more of the good stuff, so to speak. We'regetting traction in the Advisor Direct and the Amerivest products and we areexpecting that to continue. We have seen that consistently grow since the salesforcegot in, so it's something that we are expecting to grow and we'll adjust therate just a little bit.

On the expense side, it looks like you've got add spendgoing up 5% or 6% again at the midpoint. What kind of account growth do youthink that's going to drive and do you see your average add spend per newaccount rising next year?

We really don't. Itis something we have always targeted about $300 as being the tolerable level,so to speak. I think if you put that into your model, you're going to comepretty close to what we would expect on cost per account.

To double back on the outlook for pricing, it seems like withinthe guidance you're baking in a pretty benign environment. Two questions aroundthat. One, still not seeing any impact from any of the free trade offers, but Iguess it's incumbent upon me to ask. Is it basically saying you don't seepricing really as a tool that you need to stimulate growth here?

Mike, with regard to the impact that free trade has hadagainst us, we still don't see any impact on that. Secondly, with regard to pricing in general, the questionis, pricing is not part of it. Pricing is absolutely a part of it. I know acouple of years ago when people were asking us questions all the time aboutpricing, are you going to adjust, are you going to come down, et cetera, webelieve pricing is very, very important. But it's absolutely only one of thecomponents of what you ultimately offer the client base. Most of the time when a client goes, it's not because it's$1 cheaper someplace else, it's because they become dissatisfied or they feelyou let them down for whatever reason. So I think for us, another big piece ofthe idea, consolidation for the client as far as their respective portfoliosgo. If we didn't have a legitimate long-term investor solution for them, itmade sense that client might decide to go someplace else -- not because of ourpricing, but because we didn't have a comprehensive enough offering. So I do think it is part price, it is part products andoffering service. That whole thing across the entire board, I think you've gotto look at the entire client experience.

Did you say where RIA assets ended the quarter and maybe ifyou can talk a little bit about over the course of the year, how much of yourasset growth came from the RIA market versus the rest of the business, or thecore retail side?

We did not say that and it's not our intent to do that.However, as you know, the Fiserv acquisition should add considerable scale tothe RIA business. We'll give you a little bit more color once we get thatclosed.

Our final question comes from Mike Carrier - UBS.

When we're looking at '08 and trying to get our arms aroundthe returns on the incremental $100 million in investment, if we're not goingto be looking at qualified account growth as much anymore, what should we be lookingat in order to gauge the return on this new investment spending? Is it reallyjust investment product balance growth?

I think on the slide, Mike, that we had given you withregard to how you might want to look at this, remember that investment spendwas focused on the share of wallet, long-term investor, organic growth part ofthe overall business strategy; but it was also spread across the three clientsegments: the active trader, the long-term investor, and the RIA. When you look at this, frankly, how we're doing with regardto the active trader in the transaction segment, how we're doing with regard toour market share, I think that would be one of the things you look at. But thething I think you really would need to concentrate on is what's going on withregard to our assets. The interest that we earn on the margins, securitylending, et cetera, the MMDA balances, or in effect the sweeps, and thefee-based products that we're looking at because we want to try to do more interms of annuitizing our revenue stream. So those would be the things I wouldlook at.

Just on the outlook statement -- and you guys have touchedon this already -- but given something in the range of $1.4 billion in EBITDAand I think you have about $500 million in debt paydown, there still appears tobe a decent amount of cash available. It doesn't look like the outlookstatement includes much on the buyback side. I know you already said your thoughts, but you guys aren'tassuming too much in the outlook statement on buybacks, but it's just anotherlever that you have. Is that correct?

That's exactly right, Mike. We'll look at that dynamically.

That concludes the question-and-answer session today. Atthis time, I would like to turn the conference back over to management for anyadditional or closing remarks.

Thank you, operator. I began the call by simply talkingabout this concept of the 2008 philosophy, but you know what? It goes backfurther than that. Over the span of the last six years, there truly has notbeen a time where there wasn't something that we didn't tell you that weultimately didn't deliver on. We don't exist if it's not for the benefit of ourclients and our shareholders and we recognize that the only way we can deliverto our shareholders and our clients is through our employees or associates. Wereally mean that and that's really our focus internally. So we're proud of what we've accomplished over the span ofthe last year, the last several, but I think at the end of the day, we've beenable to deliver to you what we have promised. We've been saying all along thateverything we've done the last couple of years is geared for 2008 and beyond.Well, now it's 2008. We expect you to hold us accountable for what we do in2008 and going forward. Thanks very, very much for joining us this morning,everybody.