NDR problem

Running Exchange 5.5. I have created a distribution list and populated with SMTP addresses that continually generate NDRs. This has reduced the amount of NDR’s from 1500/day to less than 100. My boss is still not happy though. He wants a detailed explanation on where this mail actually goes.

Does it become part of a transaction log and then purged when there is no mailbox for delivery.? Any help would be greatly appreciated.

Thanks

Michael