NOTE 1 - CASH EQUIVALENTS.

Cash equivalent investments in our sponsored money market mutual funds aggregate $555.6 million at December 31, 2008, and $676.5 million at December 31, 2009.  Dividends earned on these investments totaled $38.0 million in 2007, $17.5 million in 2008, and $1.6 million in 2009.

NOTE 2 - INFORMATION ABOUT RECEIVABLES, REVENUES, AND SERVICES.

Accounts receivable from our sponsored mutual funds for advisory fees and advisory-related administrative services aggregate $95.0 million at December 31, 2008, and $130.1 million at December 31, 2009.

Revenues (in millions) from investment advisory services provided under agreements with our sponsored mutual funds and other investment clients include:

The following table summarizes the various investment portfolios and assets under management (in billions) on which we earn advisory fees.

Investors that we serve are primarily domiciled in the United States of America; investment advisory clients outside the United States account for nearly 12% of our assets under management at December 31, 2009.

Fees for advisory-related administrative services provided to our sponsored mutual funds were $273.9 million in 2007, $282.6 million in 2008, and $249.9 million in 2009.

NOTE 3 – INVESTMENTS IN SPONSORED MUTUAL FUNDS.

These investments (in millions) at December 31 include:

Unrealized holding losses that were attributable to fund holdings with an aggregate fair value of $195.2 million at December 31, 2008, were considered temporary.

Dividends, excluding capital gain distributions, earned on sponsored mutual fund investments totaled $8.3 million in 2007, $10.4 million in 2008, and $9.8 million in 2009.

NOTE 4 – DEBT SECURITIES HELD BY AND CUSTOMER DEPOSITS AT SAVINGS BANK SUBSIDIARY.

Our savings bank subsidiary holds investments in marketable debt securities, including mortgage- and other asset-backed securities, which are accounted for as available-for-sale.  The following table (in millions) details the components of these investments at year end.

The unrealized losses in these investments were generally caused by changes in interest rates and market liquidity, and not by changes in credit quality.  We intend to hold these securities to their maturities, which generally correlate to the maturities of our customer deposits, and believe it is more likely than not that we will not be required to sell any of these securities before recovery of their amortized cost.  Accordingly, impairment of these investments is considered temporary.  The adoption in 2009 of new financial reporting guidance for other-than-temporary impairments of debt securities did not have a m aterial impact on our consolidated financial statements.

The estimated fair value of our customer deposit liability, based on discounting expected cash outflows at maturity dates that range up to five years, using current interest rates offered for deposits with the same dates of maturity, was $162.3 million at December 31, 2008, and $164.9 million at December 31, 2009.

NOTE 5 – OTHER INVESTMENTS.

These investments (in millions) at December 31 include:

On January 20, 2010, we purchased a 26% equity interest in UTI Asset Management Company and an affiliate from existing stockholders for 6.5 billion Indian rupees (INR) or $142.4 million, plus transaction costs of about $3.5 million.  UTI Asset Management Company is an unlisted company in India with approximately $17.8 billion in average assets under management in December 2009.  We will account for this investment using the equity method.

In conjunction with our signing of the definitive UTI purchase agreements in November 2009, we entered into a series of rolling non-deliverable forward contracts to economically hedge the foreign currency exchange rate exposure relating to the UTI acquisition price.  We recognized non-operating investment income of $.3 million in 2009 and $2.2 million in January 2010 in the valuation and settlement of these contracts.

We had outstanding commitments to fund other investments totaling $35.4 million at December 31, 2009.