STRATEGIC ASSET AND WEALTH MANAGEMENT
While the majority of the funds within our US asset management business had positive returns for 2007, a few of our funds were negatively impacted by the second-half downturn, resulting in an overall decline in annual revenues from US-based Jefferies Asset Management. However, our global convertible bond asset management business, based in London and Zurich, achieved solid performance in 2007, with both global and European funds comfortably ahead of their respective benchmarks, and assets under management up 16 percent over the course of the year. This team now manages approximately $2.9 billion in assets. We remain committed to our successful funds and supporting our asset management business going forward.

Jefferies Private Client Services (PCS) expanded its geographical coverage in 2007, adding wealth management teams in Atlanta, Dallas, Los Angeles and San Francisco, increasing the number of account executives by 40 percent. Revenues from this business increased more than 30 percent year-over-year, while assets under management increased 42 percent. Assets in our third-party managed account programs more than tripled in 2007, and the number of asset managers in our network grew to more than 300, covering a broad range of investment styles and asset classes. PCS continued to broaden its platform of products and services in order to better serve its high net worth clientele, enhancing its alternative investment platform and private equity capabilities to enable our experienced advisors to offer greater portfolio diversification and customized investment solutions for clients.