Mutual funds include registered open-end funds and registered closed-end funds.

At June 30, 2004, the Company had $16.5 billion of assets under management in open-end funds, representing approximately 51% of the Company’s total assets under management. Open-end funds are continually offered and are not listed on an exchange. Open-end funds issue new shares for purchase and redeem shares from those shareholders who sell. The share price for purchases and redemptions of open-end funds is determined by each fund’s net asset value, which is calculated at the end of each business day.

At June 30, 2004, the Company had $5.8 billion of assets under management in closed-end funds, representing approximately 18% of the Company’s total assets under management. Closed-end funds typically sell a finite number of shares to investors through underwritten public offerings, unlike open-end funds, which continually offer new shares to investors. After the public offerings, investors buy closed-end fund shares from, and sell those shares to, other investors through an exchange or broker-dealer market.

In 2003, the Company introduced the Convertible and High Income Fund, to create a product that combines the Company’s convertible and high yield strategies. In 2004, the Company introduced the Strategic Total Return Fund to create a product that seeks total return through a combination of the Company’s equity, convertible and high yield strategies.

Separate accounts include institutional accounts, managed accounts, private client accounts and alternative investments.

At June 30, 2004, the Company had $3.0 billion of assets under management in institutional accounts, representing approximately 9% of the Company’s total assets under management. Institutional accounts are separately managed accounts for institutional investors such as public and private pension funds, public funds and endowment funds.

At June 30, 2004, the Company had $6.6 billion of assets under management in managed accounts, representing approximately 20% of the Company’s total assets under management. Managed accounts are separately managed accounts for individual and institutional investors, offered primarily through national and regional broker-dealers. Managed accounts may be structured as investment management agreements between the Company and the investor directly or the Company and the broker-dealer.

Mutual fund net purchases increased by $3.9 billion, or 130%, to $6.9 billion for the six months ended June 30, 2004 from $3.0 billion for the prior year period.

Total revenues increased by $77.2 million, or 120%, to $141.5 million for the six months ended June 30, 2004 from $64.3 million for the six months ended June 30, 2003.

Investment management fees increased by $49.0 million, or 112%, to $92.7 million for the six months ended June 30, 2004 from $43.7 million for the prior year period.

Operating expenses increased by $42.1 million, or 105%, to $82.1 million for the six months ended June 30, 2004 from $40.0 million for the six months ended June 30, 2003.