As you can see from our cover, we have changed the name of our newsletter from Mutual Fund News to Wealth Management Services Quarterly. The new name reflects a growing emphasis by our customers on expanding their businesses beyond mutual funds into other related areas, such as managed accounts and alternative investments products. This diversification has given DTCC an opportunity to develop new processing solutions; one is our Managed Accounts Service, the other is a service in development that will standardize and automate the processing and settlement of alternative investment products.

These two businesses are poised for dramatic growth, and we have been asked by asset managers

and distributors active in these markets to lend our expertise to reduce processing risk and error rates, assure business continuity, support regulatory compliance and increase operating margins.

Managed accounts, which include separately managed accounts, unified managed accounts and other similar programs, are ringing a loud bell with U.S. investors, particularly those with increasing net worth who are looking for nontraditional avenues to expand their wealth. The same is happening with higher-tier investors who have the resources and risk tolerance to invest in hedge funds, funds of hedge funds, real estate investment trusts,

managed futures and commodity pools. Hedge funds alone reached $1.89 trillion in assets in 2006, and institutional demand for them could triple by the end of the decade.

Along with impressive growth projections comes increased risk exposure on the operational side of the business. The challenge is to manage that exposure without unduly squeezing margins. DTCC’s understanding of these and other issues affecting the capital markets is broad. By leveraging our experience and creating partnerships with global providers,

we can develop technology solutions that fully address our customers’ complex processing requirements and help firms involved in emerging investment markets succeed.

Going forward, Wealth Management Services Quarterly will continue to provide information on mutual funds, managed accounts, hedge funds and other alternative investments, and we will also look to offer you timely articles of related interest, such as developments in OTC derivatives and insurance products.

As always, we welcome your comments on our publication.

Ann Bergin
Managing Director & General Manager
Wealth Management Services
The Depository Trust & Clearing Corporation