The New York discount brokerage TD Waterhouse Group said Wednesday that it will miss its 2001 growth targets, citing dwindling investment activity.

Steve McDonald, chief executive of the company, which is partly owned by Toronto-Dominion Bank of Canada, said in a conference call that "the outlook for the coming quarter is very different from what we faced a year ago." As a result, he said, it is unlikely that TD Waterhouse will hit its stated goal of opening 1.2 million accounts, representing $40 billion of customer assets, this year.

Mr. McDonald added, however, that the company will not restate its goals.

TD Waterhouse's profits slid 35% in its fourth quarter, which ended Jan. 31. Net income was $37.1 million, and revenues fell 9%, to $347 million, or 10 cents a share. The number of customers trading slipped 21%, to 149,100 a day, fueling a 24% slide in commissions and fees.

"This has been and continues to be a tough market," Mr. McDonald said.

While TD Waterhouse does not plan to engage in stringent belt-tightening measures such as layoffs, Mr. McDonald said he would be watching costs "very carefully."

The company will not cut staff but will allow for natural attrition to reduce the ranks of full-time staff, he said. It will also seek to defer projects with a longer "payback period" instead look for opportunities that could turn a quicker profit.

Asked by an analyst whether TD Waterhouse would acquire one of the Internet-only discount brokers whose stock prices have been battered as customers move offline, Mr. McDonald said his company has the capital and earnings power to benefit from any consolidation in the industry.

"Things are probably getting more interesting now than they were a year ago - and I will leave it at that," he added.

Frank Petrilli, president and chief operating officer, said TD Waterhouse is getting inquiries from some of the larger investment advisers, who had worked with Charles Schwab & Co. and felt usurped when the San Francisco broker bought a private bank last year.

Analysts said TD Waterhouse's hybrid model should help it through the market's volatility.

"It's a tough time to be a growth company," said Henry McVey, an equity analyst at Morgan Stanley Dean Witter & Co. "But they do have scale and a strong capital base -they will weather the storm."

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