In the United States, assets managed by registered investment companies have grown at a compound annual rate of approximately 12% to over $11 trillion during the ten years ended December 31, 2006, according to the Investment Company Institute. During the same time period, worldwide hedge fund assets under management, or AUM, have grown at an 18% annual rate, and are now approaching $1.6 trillion, according to research by Hedge Fund Research.

Additionally, the variety, complexity and geographic diversity of financial assets held by investors have expanded significantly, resulting in multi-asset class, multi-national portfolios often including derivatives. At the end of 2006, the notional amount of exchange traded and over-the-counter derivatives outstanding worldwide was approximately $485 trillion, a 37% increase over 2005. These derivatives typically include interest rate contracts, credit default swaps, foreign exchange contracts, equity-linked derivatives and commodities and futures contracts.

As a result of increasing complexity of investment strategies, governments and regulatory authorities are increasing the requirements on financial services firms and investment firms to track and report risk as part of their daily operations.

Recent research from CarbonBased Consulting forecasts that, over the next several years, financial institutions\' spending on outsourced portfolio and risk management products and services will increase at a compound annual growth rate of 21%. Similarly, Gartner, Inc. forecasts that total financial services outsourced IT spending will reach $565 billion in the same time period.

RiskMetrics is a leading global provider of multi-asset, position-based risk and wealth management solutions. The Company provides its clients with comprehensive, interactive solutions that allow them to measure and quantify portfolio risk across security types, geographies and markets.

The Company’s flagship RiskManager market risk system integrates consistently-modeled market data with its widely adopted analytical models and robust processing capabilities into a comprehensive risk reporting solution. The Company’s clients access RiskManager through its secure web-based application or engage the Company to provide fully-outsourced risk reporting services.

ISS is a leading provider of corporate governance and specialized financial research and analysis services to institutional investors and corporations around the world. Through ISS the Company facilitates the voting of proxies by institutional investors and provide in-depth research and analysis to help inform their voting decisions and assess issuer-specific risk.

The Company offers both global security coverage and fully-integrated, end-to-end solutions, from policy creation to comprehensive research, vote recommendations, reliable vote execution, post-vote disclosure and reporting and analytical tools. The Company’s financial research and analysis services provide its clients with insights into many investment criteria that have become increasingly important to investors, including companies\' environmental, social and governance attributes and accounting and compensation polices.

The Company sells its products and services primarily on an annual subscription basis and generally receives upfront subscription payments from its clients. The Company’s products and services are generally priced based on the number of users who have access to them, as well as based on the volume of data, research, voting or reports purchased.

Total operating expenses increased from $39.2 million for the six months ended June 30, 2006 to $92.1 million for the six months ended June 30, 2007, or 134.8%.

Cost of revenues increased from $12.4 million for the six months ended June 30, 2006 to $34.7 million for the six months ended June 30, 2007, or 180.1%.

Research and development expenses increased from $10.9 million for the six months ended June 30, 2006 to $15.0 million for the six months ended June 30, 2007, or 38.0%.

Net interest, dividend and investment income was $1.0 million of income for the six months ended June 30, 2006 and $16.8 million of expense for the six months ended June 30, 2007.

Net income decreased from $8.4 million for the six months ended June 30, 2006 to $0.7 million for the six months ended June 30, 2007, or 91.1%.