Our investment management subsidiary, Deerfield Capital Management LLC ("DCM"), has approximately $9.8 billion in assets under management, consisting of approximately $9.2 billion in client assets and approximately $0.6 billion in assets of DFR. (The AUM for our structured products is generally based on the aggregate principal balance of the collateral held by the product.  The AUM for separately managed accounts includes levered amounts on which our management fees are charged.)

The client assets consist of 27 structured products, six separately managed accounts and a private investment fund. The structured products invest mainly in bank loans and other corporate debt, residential mortgage-backed securities and asset-backed securities. The separately managed accounts invest in U.S. government securities using duration management strategies.  The private fund invests in bank loans and related instruments.  The DFR portfolio is comprised of fixed income investments, including bank loans and other corporate debt and residential mortgage backed securities.

During DCM's 17-year history, DCM has also managed hedge funds and other products.

We believe that internal controls and technology are vital to successful investment management, and we have made major commitments to those areas, particularly in:

• Risk management and risk assessment. 
• Internal audit.
• Transaction processing--trade confirmation, settlement and recording.
• Valuation of portfolio securities.
• Accounting.
• Legal and compliance.