Ethan Berman - Chief Executive Officer David Obstler - Chief Financial Officer Sarah Cohn - Investor Relations

James Kissane - Bank of America/Merrill Lynch Kelly Flynn - Credit Suisse John Neff - William Blair Andrea Glucoff - Brean Murray Peter Appert - Piper Jaffray David Scharf - JMP Securities

Good day, ladies and gentlemen. Welcome to the second quarter RiskMetrics Group Inc. earnings conference call. My name is [Chantelae] and I will be your facilitator for today’s call. (Operator Instructions) I would now like to turn the call over to Ms. Sarah Cohn of the Investor Relations Group.

Good morning and thank you for joining us to discuss RiskMetrics Group’s second quarter 2009 financial results. With us today are Ethan Berman, CEO of RiskMetrics Group; and David Obstler, CFO of RiskMetrics Group. This conference call is being recorded on behalf of RiskMetrics Group and consists of copyrighted material that may not be recorded, reproduced, retransmitted, rebroadcast or downloaded, or otherwise used without RiskMetrics’ express written permission. Your participation in the question-and-answer session constitutes your consent to having any comments or statements you make in any transcript or broadcast of this call. Information provided during this call will include certain forward-looking statements. These statements relate to future events or to future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by the forward-looking statements made in this call. You should not place undue reliance on forward-looking statements. Reconciliations of non-GAAP financial measures to the nearest GAAP equivalents are included in Tables C, D and H through K of RiskMetrics’ earnings release, which was issued earlier today and is accessible on our website at www.riskmetrics.com. It is now my pleasure to introduce our CEO, Ethan Berman.

Thank you Sarah, and thank you everyone for joining us this morning for our quarterly call. In the second quarter of 2009, our revenues grew by 1.9%, $75.5 million and adjusted EBITDA grew by 14.3% to $27.1 million despite difficult market conditions. For the first half of the year, our revenues increased 5.2% to $152.9 million and adjusted EBITDA by 20.3% to $56.5 million. The deceleration of revenue growth was the result of lower renewal rates versus our historical averages, more prolonged contract negotiations to close new sales, appreciation of the dollar versus the euro a year ago, and to a limited extend price pressures as our end market is focused on cutting costs. Our subscription based business model will always lag current market conditions both on the up and the down side. As a result the current slowdown in our revenue growth has lagged the slowdown in our end market, and we are just now realizing the full effects of the global financial crisis. At the same time, the recovery of our end markets will lead the recovery of the growth in our top line going forward. Given what we are seeing in the market today, we expect our renew rate to bottom in the third quarter of this year at rate similar to what we’ve been experiencing year-to-date. In addition given our new sales pipeline and level of customer dialogue, we expect to rise in new sales starting this quarter. Despite the slower top line growth, we continue to deliver on EBITDA and margin expansion in the first half of 2009. This was the result of both careful cost control and a continued realization of economy just scaling our business model. EBITDA expenses had actually declined 2% during the first six months in of the year and 4% in Q2 alone, due mainly to sharpening low non-compensation expenses. As a result, our EBITDA margin was 35.9% in Q2 up 390 basis points over the previous period. Even with this cost discipline we have continued to invest in our products as evidenced by the 7% growth in R&D expenses in Q2. While we were obviously disappointed by our sales and renewal rate to date, we remain increasingly optimistic about the demand for risking governance products in the medium and longer term given the state of the financial markets. We are therefore continuing to build out new functionality and services for our clients as their demands grow for better risk management tools. With continued invest in our core business we expect margin expansion to slow in the second half of 2009 as revenue growth continues to decelerate. However we remain committed to our stated goal of 150 to 200 basis points expansion in 2009 as a whole. We also had strong free cash flow in the first half of the year, $23.8 million versus $14.5 million last year. Lastly our GAAP EPS was $0.11 in Q2 up 38% over Q2’08. Now, I would like to spend a few minutes to discuss the renewal rate experience in more detail, and provide color on why we are optimistic, that we are nearing the ending of this renewal rate deterioration. Our total renewal rate for the first half of 2009 was 80.8%, down 900 basis points from 89.9% in the first half of 2008. The declines at risk in ISS were approximately the same 90.3% to 80.5% of risk and 89.4% to 81.2% to ISS. Our long term renewal rate trend, and what we think we can achieve in 2010 is 88% to 90%. In the first half of 2009 we lost $22 million to non- renewals. In the normal year at our historical renewal rates we would have expected to have lost only $13 million, the additional $9 million is due to four factors we do not expect to see again in 2010. First and most importantly we lost our $4 million of risk ACV from large hedge fund liquidations mainly from hedge funds which started up less than two years ago, taking the total risk ACV loss in the alternate sector to $8 million. In 2007 and the beginning of 2008 we made a significant number of sales and a multibillion dollar hedge fund start-ups, many of them that ultimately never got fully funded and therefore closed over the last year. While our hedge fund sector is more volatile than other end markets, this $4 million was well above the normal trend. Excluding the hedge fund sector our overall renewal rate and risk renewal rate would have been 86.7% and 90% respectively for the first half of 2009. We expect our hedge fund renewal rate to increase in the disappearance of these newer funds, and of course the percentage of hedge fund at the entire company is now significantly lower down to 16% of total firm-wide ACV. Second, while we have retained most of our large asset management customers in the proxy business, we have had cost pressures in that client base related to budget constraints; lower AUM of our clients in [valid bundling]. The result of this has been about $2 million of down sales in the first half of 2009, far more down sales than we normally experience. This down selling is completely related to difficult market conditions and we expect to return to normal proxy business renewal rates next year. Third, we have been experience significantly lower than normal renewal rates in the CFRA business due to exposure of the hedge fund industry and the more discretionary nature of the CFRA research business. This had accounted for over $1 million more of renewal and non-renewals than the historical trend line. Without this lower CFRA renewal rate and the proxy down selling discussed earlier, the ISS renewal rate would have been 87.7% in the first half of 2009. With the exit of the smaller customers from the CFRA customer base, the CFRA renewal rate has already begun to improve significantly and we expect that trend to continue into Q4 and into next year. Finally, the extraordinary consolidation we’ve seen in the global banking markets over the last year have accounted for close of 2 million of cancellations in the first half of the year, while we expect consolidation to continue in our end market and in fact than experiencing them for years, we believe the size of the consolidations experienced over the last 12 months will not become more important going forward. Before passing to David, to go into more details in our financials and future guidance, I would like to update you on the steps we are taking to invest in our business and some regulatory opportunities for us going forward. First we remain on track for the launch of our new proxy voting platform, proxy exchange with clients already interacting with the system today. As we reiterated during our last earnings call, proxy exchange will help us achieve significant head count and operational efficiencies that will allow us to further grow our margins at ISS. At the same time, we believe that it will provide significant additional functionality and services to or proxy guiding clients. The launch of our proxy exchange platform is the combination of investment cycle to begin with our [inaudible] acquisition at the end of 2007 and as a significant evolution for ISS business. In conjunction with this launch we are also relocating our proxy voting operations to Oklahoma, which again is an investment improving the efficiency of our voting operations and the related client experience. We’ve also been hard at work in the integration of the Innovest acquisition. This acquisition has allowed us to combine market leading ratings and research with screening tools and data to provide an integrated S&G sweep. We are seeing strong demand in the market for S&G products and services and are aggressively building out integrated capabilities in the fast growing market. On the international regulatory front, we recently submitted a series of responses to the committee of European Securities Regulators regarding uses for directive. We are significant outsourcer of risk management functions for users across all of the appropriate jurisdictions to firms that manage such funds. The usage for directive which will come to effect in late 2010 looks at tighten firms independent risk management functions and is a constructive step to increase market transparency around complex financial instrument. We believe that the implementation of usage for will create a new investment cycle for us amongst European asset managers. To conclude, while we continue to face the challenging revenue environment we are starting to seen our renewal rates stabilize and new sales pickup. While this pickup will have a lagging impact on our financials we believe the demand in our end market is strong and the result in resumption of high revenue growth in the future. With that, I’ll now turn the call over to David to provide more financial detail and guidance.

I will discuss our second quarter financial performances as well provide an update on what we expect for the remainder of 2009. Turning first on revenues; second quarter 2009 consolidated revenues of $75.5 or up $1.9 over the second quarter of 2008. Second quarter revenues include $1.5 million of revenues from Innovest which was acquired in March 2009. Excluding Innovest, organic growth was flat compared to the prior year. Second quarter revenue decreased $1.9 million or 2.4% compares to first quarter 2009 revenue. The sequential decline in revenue is primarily due to a $1.1 million decline in recurring revenue as the result of the lower renewal rate that Ethan discussed, and a $0.8 million decline in non recurring revenue primarily due to the seasonality of the ISS corporate advisory services which are historically strong in the first and fourth quarters. Changes in currency exchange rates, principle strengthening of the U.S. dollar in the second quarter of 2009 compared to the second quarter of 2008 had a negative impact on consolidated revenues of $1.1 million. Without the currency effect revenue would have been up 4%. In Q3 we expect revenues to declines slightly from Q2 mainly due to lower non recurring revenues from the seasonal corporate advisory product which occurs every third quarter, and then the slightly increased negative currency effects which are expected to flatten thereafter. We expect Q4 revenue to increase from Q3 partially due to reverse of the above effects. The flattening of our revenue has been caused by our lower renewal rates and new sales, and unfavourable currency effects which have combined to flatten our ACV and therefore our recurring revenues. As Ethan discussed our first half 2009 renewal rate declined to $80.8 versus $89.9 in the first half of 2008 and $84.4 in the second half of 2008 due to lower risk hedge fund renewal rates, costs cutting in the proxy business, lower CFRA and corporate renewal rates and overall market consolidation that Ethan discussed. In the third quarter, we expect our renewal rate to remain at the same levels as we’ve been experiencing year-to-date before rebounding in the fourth quarter. While we had difficulties in our hedge fund markets and certain product lines such as CFRA, our core risk and governance businesses in the traditional asset management and banking markets have had renewal rates which have remained in the upper 80s and the low 90s throughout this cycle providing a strong underpinning for recovery. As we said in our last earnings call we had a strong pipeline for new sales, particularly on the risk side and the Q2 results would be determined by how quickly we were able to convert that pipeline. We made some progress on that in Q2 with new sales up to 8.9 from 8.2 in the first quarter. First half new sales were just under $18 million significantly down from just under $42 million in our peak first half of 2008 and we still had challenges with pipeline conversion although they are lessening. As evidence of the improving market, we signed several large deals in the last quarter, including 500,000 plus deals with a large U.S. asset manager, a U.S. hedge fund and the European asset manager. Our pipeline continues to grow in Q3 and we remain in discussions on many sizable deals, particularly in the risk segment as the global financial crisis and investor regulatory pressures are creating new needs for our products. Based on what we see today, we expect our Q3 new recurring sales so rise into the low double digits with some very large deals in the mix. As a result of the lower new sales, higher non-renewals a negative currency effect, Q2 end period ACB decreased 0.9% to 279.2 from 281.8 in the same period last year. Risk ACV was $154.5 million and ISS ACV was $124.8, with similar rates of decline. Consolidated ACV was negatively impacted by $6.4 million in negative currency effects offset by $5.2 million of acquired Innovest ACV. While this currency effect has been substantial in the last year the losses will begin to slowdown in Q3 as the currency comparisons are more favourable in the second half of the year. Currency accounted for $3.1 million of the $8.8 million of net ACV loss in Q2. Despite the market difficulties, one time sales for the six months ended June 30, 2009 remains strong at an $11 million, up 4% over the last year. This is mainly due to strong interest in our corporate compensation and advisory solutions, and particularly as exactly of compensation plans continue to draw more scrutiny in today’s markets. We expect this trend to continue for the rest of the year and beyond. Turning from revenues to our profitability, second quarter consolidated adjusted EBITDA was $27.1 million, an increase of 14% over the previous year caused by a 2% increase of revenues and 4% decrease in EBITDA expenses. Adjusted EBITDA for the six months was $56.5 million up 20% over the comparable period with revenue growth of five and adjusted EBITDA expenses down 2%. The adjusted EBITDA margin increased that 36.9 in a six months compared to 32.3 in the comparable period and the 34.1 for the full year 2008. Our EBITDA expenses in Q2 were down from last year and nearly flat versus Q1, despite a onetime 750,000 data cost benefiting Q1, much of this has been due to the decline in non comp expenses caused by, first of decline in marketing and TNE expenses due to the declined overall spending; secondly it declined a professional fees primarily due to lower kind of consulting costs some what related to Sarbanes-Oxley forecasts; thirdly the weakening of foreign currency particularly the Euro and Pound which has positively impacted EBITDA expenses by $3.2 million in the second quarter and 4.1 in the six months. Compensation expenses increased slightly from the prior year due to increased salaries. However this has been offset by control over head count and reduced expected commission payments. For the remainder of the year we expect EBITDA expenses to remain relatively flat. The result will be decline in margin, slight declined in the second half of the year, but still a 150 to 200 basis points expansion for the year. Second quarter GAAP-EPS in ‘09 was $0.11 versus $0.08 in the prior year. Second quarter adjusted EPS, which adds-back amortization of intangibles in one time cost and stock based comp was $0.18 versus a $0.15 comparison. Year-to-date adjusted EPS was $0.39 compared to $0.28 in the first half of last year. On cash flow we continue to have healthy cash flow generation in the second quarter of 2009. Free cash flow or operating cash flow less CapEx for the six months increased to $23.8 million compared to $14.5 million last year. Free cash flow for the second quarter was $23.8 million and our cash balance at the end of the second quarter was a very healthy 184.8 million. With that I would like to provide an update to our previously provided 2009 annual guidance. After considering the year-to-date financial results, our current projections for renewal rates and new sales for the remainder of the year and current foreign currency rates, we expect 2009 annual revenue to be in the range of $300 million to $305 million, consistent with our comments on quarterly revenue development earlier. We also expect adjusted EBITDA in 2009 to be in the $107 to $112 million range, implying margin expansion versus 2008 in the 150 to 200 basis point range. At this time, Ethan and I will now open up the call to your questions.

(Operator Instructions) Your first question comes from James Kissane - Bank - America/Merrill Lynch. James Kissane - Bank of America/Merrill Lynch: Firstly, can you give us that 8.9 million in new sales for the quarter? Can you break that down by the two segments? And maybe also give us the actual quarterly renewal rate by segment?

The new sales of $8.9 million were $3.3 million at ISS, and $5.6 million at Risk. We don’t give out quarterly renewal rates but essentially when we trued up the year-to-date and looked at the development and sort of finalized all the renewals from the first quarter, the 80.8 was composed of a number that was just under 82% in the first quarter and about 80% in the second quarter. James Kissane - Bank of America/Merrill Lynch: You mentioned the retention to renewals rates will be under pressure in 3Q, should we expect sort of normalization then in the fourth quarter meeting us. We think of risk, should we be thinking in the mid 80%, high 80% renewal rate for 4Q?

Yes, in the third quarter we say continuation of the trend. Obviously the third quarter is easier to forecast because we have more information and for the remainder of the year, in the fourth quarter, we do not expect to get back to normal long-term trends which would be in the upper 80s to low 90s, but somewhere in between where we are today, in the very low 80s and normal long-term trends.

In some ways catching up to what happened, if you look at the first half of ’08, and we had renewal rates around 90%, and the second half of ’08 it started to go down into mid 80s and then obviously in the low 80s, the beginning of this year, and so our expectation is by the fourth quarter you’ll be back to the mid 80s, you wouldn’t have gotten all the way to 90 and then the beginning of next year you’ll be back to where we have been historically.

I think Jim that we have renewals that are up over the course of the year. So with the renewal rate starting to have been effected in the third quarter of last year, into the fourth quarter, will by the third and the fourth have had a year of that and that’s what we are going through right now. James Kissane - Bank of America/Merrill Lynch: You touched on the sales cycle, maybe on the risk side, how was the change say, go back to early ’08 and kind of where is it tracking and where would you see it in terms of length of time in 2010. Any sense there?

Well, if you go all the way back to the first half of ’08, the sales cycle had never been shorter. I think that the first half of ’09 had never been longer, so you couldn’t have more of a contrast than I think what we’re starting to see now, is the sales cycle somewhere in between those two. I certainly wouldn’t say its back to early ’08 days. Reflective of I think the general markets overall, frankly the demand that has been pent up, with very limited buying in this area for the first half of the year. We are seeing contracts moving again. Our early expectations, that will be true through the rest of this year and I think these will be 2010 and a lot will depend on whether the recovery we are seeing in our end market will stabilize; in which case I would expect it to continue in 2010. If obviously we see that continued weakness in that end market we’d be concerned about those sales cycles next year. James Kissane - Bank of America/Merrill Lynch: Okay, not to put to you on the spot, but how strategic is CFRA for you? How does it fit with the rest of the business?

Well obviously at times like it sticks out in particular around the discretionary nature of the product. I think that as a research tool we like it a lot, we think it goes together with the other research we are doing at the organization, but it clearly is not linked to an activity that is nondiscretionary, whether it be the actual voting of proxies or the measurement of risk and so, you are seeing obviously higher renewal rates within that being a discretionary product. We certainly like the analysis that it provides and the richness that we are already seeing in some of our research products that we’ve recently done; something with Innovest around Wal-Mart where we are putting CFRA research and Innovest research together on the company analysis and I think that we like that and we think our client’s have appreciated to bring together the disciplines.

Your next question comes from Kelly Flynn - Credit Suisse. Kelly Flynn - Credit Suisse: I have a bunch of follow-up questions. First one the free cash flow, I’m not sure if you said this, but what do you expect for the year on that?

We gave guidance previously, it haven’t changed that $70 million to $80 million. Kelly Flynn - Credit Suisse: Okay, so you think that’s still realistic?

We’ve maintained that guidance. Kelly Flynn - Credit Suisse: Okay, and then secondly, just kind of following-up on the last question, I know you said you gave kind of Q3, Q4 targets for renewal rates, but can you just give that detail for new sales. I know you implied what you think for Q3, but what do you think new sales are going to do year-over-year in Q3 and Q4?

Yes, I think what we said was that we have been in the eight to nine in the first half of the year and we expect that number to go in Q3 into the low double-digit range. Then we see a similar picture for Q4. We’re a little further away relative to where contracts are out, but we see a similar type of picture in that regard. Kelly Flynn - Credit Suisse: So its bottoms you think?

Well we think we see that based on the pipeline and also our contracts that are out. We see that the new sales are increasing relative to where they were in the first half of the year and we’re most able to project the third quarter, because the contract is where we see it heading into the double-digits and then we see a similar type of environment from our pipeline for the remainder of the year. As we set our alarm, the issue here is really just the timing of getting these contracts signed from the pipeline, where there is more variability than in previous periods.

Kelly we have a tended to see vis-à-vis budgets as you think about this year. I think people were quite concerned, if you remember what the world looked like in the first quarter, about what was spending. I think as again the end markets stabilizes, I think people have unused budgets that they will spend between now and the end of the year. Kelly Flynn - Credit Suisse: Okay and how tenuous you think this recovery you seem to be seeing is. I mean it’s a broad question, but can you just kind of give your thoughts on that. Do you feel like if the stock market were to move down here, you wouldn’t be able to just see the positive trends here you are expecting; can you just comment on that Ethan, just your level?

Well, I guess there’s two questions in that Kelly; one, the bigger question is, is this recovery for real and I certainly don’t want to be hundredth prognosticator on that one. I do feel that certainly the dialog we are having with customers as I think we made reference in our first quarter, it was very difficult to close a sales with someone who wasn’t even sure they were going to have a job and have no budget whatsoever. I think, that clearly has stabilized among our end market and so I think that, if we stay where we are, even get a little softer than what we are and I’m not talking the overall market, but just business in general, I feel pretty confident that we’ve seen the bottom in our business and that we’re going to see stabilization and growth again. I think that obviously a significant deterioration will impact us just like it will impact everyone else. I think the most important thing in all this is, how long the lag is, to work its way through our actual financials and we said two years ago when we were sort of on the road going public, that people asked us what the crisis would do for us? And we said for the first six months it would be great, if it goes for two years, eventually it’s going to hurt us and that’s in essence what happened. We had a great first six months around that as everyone was focused on risk, and then when it got so severe that people said “If I don’t know whether we’re going to around, you just had a significant drop off of new business and obviously lost a bunch of in particular large hedge funds.” I don’t expect the new large hedge fund launches to be new business, it’s going to come back, but I do think, as evidenced by sort of our recurring revenue, our renewal rates of our traditional business as nutritional clients remain in the high 80s and low 90s, that that business will remain stable and as their businesses recover, we’ll be providing hopefully more products and services from us as we bowl them out. Kelly Flynn - Credit Suisse: Okay. Then just a couple more; given the visibility inherent in your model, I think you’d have a pretty good read on 2010. Can you help us understand how you’re thinking about 2010 sales and margin expansion, given the ACV you’re expecting by year end?

Well, the new sales picture is what’s thrilling us here Kelly, before we want to sort of go too far into 2010. We are cautiously optimistic that I would keep the word ‘cautious’ in there. I do think we are increasingly optimistic on where our renewal rates would be, and so where we end the year, I think we are going to be back in the high 80s, at least maybe even up to 90% on renewal rates for 2010. I think that in general we are committed, and feel we still have enough leverage to maintain that margin expansion of 150 to 200 basis points since 2010, finished this year that way and next year. I think getting a better REIT on sales, which at this point don’t feel comfortable forecasting for 2010, which will have a number of elements to it, importantly on the regulatory side, especially in the U.S., where there has obviously been a lot of talk about regulation and very little action. Whether that changes to actual actions around H1 transparency, more risk reporting at our traditional asset managers, that will obviously be a significant boost to our new sales and could have a real impact in 2010. If you don’t get any of that, the market is going to be soft; I think we’re in this new environment of low double-digit new sales every quarter, that would be reasonably different results for the year.

Last year we had a little over $70 million of new recurring sales in the year, before we were just under 60. So, that was the peak. We are obviously running down in the just under double-digit versus say around 40. So we think that the extent there is recovery as Ethan said, you know head back in the directions of the previous years, but it’s too early to calibrate that more precisely. Kelly Flynn - Credit Suisse: Okay, just one quick one, just rounding up, what is implied for year end ACV by your guidance?

The guidance is consistent with flattish ACV, in terms of when you look at the renewal rates that we put forward and then low-double-digit type of sales, that will result in flattish ACV between now and the year end, plus or minus $50 million. Kelly Flynn - Credit Suisse: So you mean sequentially flat or year-over-year growth flat?

From where we are today, which would be a slight decline now from where we were at the end of last year, that would be a slight decline from the end of last year. If you look, the renewal rates that are employed and then the comments on new sales, they are low double digits, both and entrance and exits.

You throw in the currency Kelly and sort of round all this up to about flat.

Your next question comes from John Neff - William Blair. John Neff - William Blair: Two questions for you; the percentage of the risk in the ISS, ACV that was up for renewal in the quarter and then David, if you have a percentage outlook for the rest of the year, third and fourth quarter, that would be great?

The amount in the quarter that was up just under $60 million, which is I think consistent to what we said, which is just over 20%. Then for the remainder of the year, we have about $60 million and then around $100 million. Were you asking ISS or were you asking whole company? John Neff - William Blair: For both segments ideally.

Yes one moment.

So, that was the full segments John.

So in the second quarter, for ISS about 26 was up for renewal and risk 32.5, that’s about 58; that’s the second quarter. In the third quarter, 26 point something and 41, and the fourth quarter ISS is 52 and risk is about 51. You guys have some interesting statistics, but could you just quickly run through the sort of dollar amount again, of the sort of sources of cancellation in the quarter from hedge fund and from consolidation and then what the adjusted renewal rates were?

Sure. I’ll just repeat for the year, we’re talking about year-to-date. We said that essentially in the risk business, we said we had lost about 8 million of ACV and about four of it was these new launches, and pro forma in the risk business taking out the hedge fund, 09.3% renewable rate; and across all businesses, 9.7 million of lost ACV year-to-date, and pro forma taking that up 86.7% renewal rate.

John, basically there was $9 million if you figure out the 900,000 basis point of extra cancellations than we would normally have seen and just under half of that was new launch hedge funds that had signed up in the last two years and never been fully funded. $2 million was basically down sales to our proxy voting clients, the large asset managers in the U.S. primarily who are either had produced their voting given asset management were down, bundled ballots and then interest cutting costs was about $2 million, and while we do see some of that in normal years, it was extraordinary with what happened in the last year given the events. $1 million was CFRA, and while CFRA renewal rates are traditionally lower than other businesses given its discretionary nature, they were again about $1 million more than a normal market and that one in particular, we’ve actually seen firm up immediately if it is a smaller market for us. Then lastly sort of what we would call extraordinary consolidation that occurred over the last year, which led to about $2 million of lost ACV, which while we always lose business to consolidation, and we continue to expect consolidation in our industry; I think the last year was far greater than we expect to see going forward.

The $9 million bridge as to a renewal rate if you add it back to 89, which is consistent with what we said, which is the other businesses have been running at those type of renewal rates, the difference between the renewal rate of 80, 85 that we experienced then, on normal trend was this $9 million dollar impact. John Neff – William Blair: Then Ethan, you mentioned uses for in Europe, I was just wondering if you could just give us a sense of some of those specific provisions there that are being discussed that could be drivers. Then you mentioned in your earlier question, a lot of talk relatively a little action in the United States in terms of some regulatory changes, but any development there that look promising. Thanks very much for that.

No, I mean it’s hard to sort of forecast regulatory changes. In Europe, the use of initiative has been put forward on one, two, three and are working on four. Again in general, all these initiatives, again given at least a year from now, it will take some time to develop exactly how it ends up. In general the use of initiatives are round transparency and its basically funds reporting more and more information about their investments, in particular in usage four it’s focused on derivatives probably defined and funds that have derivatives in their portfolio. Again derivatives conclude futures contract. These are not sort of necessarily the complex derivatives that get written about, that that would require funds that want a trade those instruments to report more. In the U.S., we all read the newspaper and that’s not an environment that has proven to be as successful in putting forward or putting through regulation, but it is hard for us to imagine a world that doesn’t provide more transparency into risks taken by market participants, whether those be banks, whether those be traditional asset managers or hedge funds, whether they be exchanges around some of the derivatives that clearly are being pushed to move from over the counter to exchanges or clearing houses, we are optimistic that the next 12 to 18 months will lead to some specific initiatives around reporting, that will play well into our product suite. Sorry to not be very specific at this point John, but the truth is there aren’t specifics that are sort of up for some body at the moment.

Your next question comes from Andrea Glucoff - Brean Murray. Andrea Glucoff - Brean Murray: Real quick; as far as the hedge funds, can you guys give us an update, what is right now hedge funds as a percentage of risk ACV and then since obviously you have had some large consolations, if you look at some of your larger hedge funds customers, I guess what percentage of that customer base do you think is still at risk or going through either significant down sales or closing down.

First, on ACV its 16% and of revenues 15%, because through adding back in the one-time, which is not hedged fund, so on a revenue perspective just been under $15 million. I think when we look out, the non-renewals has been very concentrated as Ethan mentioned, in hedge funds that were started up in the last two to three years and installing market class risk systems. We look out into Q3 and then into Q4 and see the renewal rate in this sector ticking up from where it was in Q2 and that’s largely related to less of these types of funds in the renewal book and then at risk. So we think that we bottomed in the alternative, we’ve gone through renewals in some of the large, more established hedge funds and had renewals and when we look account-by-account, in Q3 and Q4, we think the renewal rate is increasing. Again we have much more information in Q3 than Q4, but when we look out further, we think that we’ve hit the bottom in terms of renewal cycle in these newer hedge funds.

Again if you think through that the vast majority of our contracts are one year; think of when the crisis hit and when they would have approved renewal, so our thinking is that fourth quarter of last year was a pretty bad quarter and so you would have lost some then, which we did. The first and second quarters in this year were obviously very bad and so we lost some, but now we are going back to the fourth quarter of this year and we feel that that base is a lot more stable. In retrospect, and obviously it’s easier to say, after the fact that the bubble element of our business was really this over this several years, multi billion dollar hedge fund launches that occurred, that aren’t occurring any more and obviously proved to be a bubble and that was a source of new sales and revenue for us for that period of time, but we are washing that, wash out and the number of million dollar contracts we have with hedge funds that have been existing plus in two years is almost non-existent at this point, and that wouldn’t have been true 18 months ago.

If you look through our signings, if you look at hedge fund signings all from 2006, and you look at the ’06 and the first half of ’07 business, you wouldn’t seen many of these are coming in the customer base. Then in the second half of ’07 and the first half of ’08, you saw an acceleration of this as Ethan mentioned. Basically we’ve lost these customers and that dealt to be talked about earlier. A lot of this business that was signed in those four quarters has now been lost, as we have gone into one year anniversary or in some cases year two, and that is the above normal trend of hedge funds signing that we experienced in those four quarters and what we’re essentially loosing. Andrea Glucoff - Brean Murray: If you think about your CFRA business, is the trend here roughly comparable. You’re basically seeing following several quarters of fairly significant pressure in that business, we’re starting to hit the natural flow.

Yes, I think in that one too, we are looking at renewal rates in Q3 and Q4, and essentially that’s been hit by two things; hedge fund which has also lost a lot of business there, and then some cost cutting in the asset management. When we look at just the Q1 to Q2 alone, and then the Q3, we see a significant improvement of the renewal rate of CFRA, but caveating that the CFRA business has over many years had a lower renewal rate, a renewal rate in the low 80s, up 70’s to low 80s, relative to other businesses which tends to be in the upper 80s to 90s. Andrea Glucoff - Brean Murray: I guess lastly, last quarter we talked about the ISS business units starting to do, the one-off project that you subsequently hope to productize and rollout to a large customer base. What’s the uptake on that? I guess what are the pricing trends you are seeing there and kind of how do you expect that to play out over the next couple of quarters?

Well, I guess there’s two big investments on the ISS side: one is proxy change, the new voting platform and as I mentioned earlier, clients are starting to use that product today. It is officially ruled out in late fall, so that it would be the one voting platform we are on next year. This year we were running parallel to voting platforms. So we are quite excited about that and that is not simply a efficiency for us, but it is a new functionality and services around clients. The second, and again I may reference to, is around the ES&G space, responsible in investing sustainability and investing, and that clearly has been a real growth area for us and we continue to see very strong demand globally, more so in Europe and the U.S. but even here in the U.S. and we know that we have a quite strong position in that market going forward. Those are probably the two big growth drivers that we see in the ISS business going into next year.

(Operator Instructions) Your next question comes from Peter Appert -Piper Jaffray. Peter Appert – Piper Jaffray: Ethan, you mentioned in your prepared comments, some recent evidence of increased pricing pressure. Could you just explain on that in terms of where you’re seeing it or are you having to do anything broad based from a pricing perspective?

No, I don’t think that’s recent Peter. That’s sort of what we’ve seen over the first half of the year. It is in particular around the proxy voting business; where as big referenced traditional asset managers have less assets under management, who are all aware of their business model. When that goes down, costs become the focus and so whether it be directly linked to fewer assets, which means fewer holdings, which means fewer votes and so they’re going to pay us less, or ways of bundling ballots for less, that is how our business model works. It is much unlike the CFRA business which is discretionary, and therefore you can cancel. They have to vote, they have to execute their proxies and so it’s not a case of cancelling the deal, it’s just a way of finding costs. As referenced over the first six months we’ve seen about $2 million of down sales which is significantly greater than we have seen in previous years.

Peter, the major difference, the proxy business does have higher renewal rates over time. It’s remained in the mid 80s, and the difference between that and the long-term low 90s has been this; as we’ve talked about the down selling, where we retain a large asset manager, but there has been price pressures and contract renegotiations, with the asset back in, you get back to the renewal rates, 92% to 93% that has been long-term. So that’s really the delta in the proxy business in the first half of the year. Peter Appert - Piper Jaffray: Some of that down selling though, I assume it must be a function of just competitive pressures as well right, so like we assume therefore that some of this pricing pressure is permanent?

Hard to say; again, it’s not that significant within our overall business. Again I don’t ever want to eliminate or not worry about competition. I think that’s fair Peter, but again, certainly from our point of view, the focus on cost that the asset management industry has been through over the last 12 months is I believe greater than it’s going to be going forward number one. Number two, with the role out of proxy exchange, the functionality that we’re going to be offering people for the first time will go up significantly, but to your point, in times like this, price becomes a significant tool for competition and so the last year is certainly led with we can save money for you, which is the environment we have been living with.

The competitors haven’t changed that much this year; it’s that the large asset management complexes have been trying to cut costs and sure they will use competitors against each other in doing that; that’s been going on for sometime. It’s more or less that these budget programs are out there and are putting more pressure on renewals. Peter Appert - Piper Jaffray: Sure. David you’ve done an impressive job here on the cost side of the equation in the context of the slower revenue growth, so how can we think about the sustainability of some of these cost reductions that you’ve been able to implement. I’m trying to think about how much of this is deferred expenditures versus permanent reductions and cost basis.

Yes, I mean there’s a number of things going on. First of all, in the environment there’s some deflation in our cost structure. We are doing the same thing to our providers that some of our customers are doing to us. So we are getting better price points, and there’s some natural evolution in the cost structure, in the recession. Next, different things, like we did Sarbox last year and are not doing that this year and are in-sourcing more of that functionality and therefore have been able to reduce cost. There’s cost discipline in areas like marketing in TNA. There is also some areas in the ISF business where we’ve been investing in technology to reduce head count and that we’re in the middle of that and that will reduce the compensation headcount. On the other hand, we’re continuing to invest in some of the growth areas. So we’re continuing to higher selectively, and all that balances out towards a lower expense this year than we had last year and we are going to continue along those lines of being very careful, being very disciplined and having some reductions of cost and some additions for growth.

Being the first of your question, I think that given in particular the investment we’ve made on the voting side, where this year we’ve run to voting platforms, I think there is a built-in significant cost cushion in the governance business for 2010. I think that as David made comments from a technology point of view, the cost of computing power continues to drop and we are significant beneficiaries of that. So we feel pretty comfortable that we have a good cushion into 2010, that this wasn’t a one-time where we can cut to the bone, save costs and hope that revenues pickup going forward. Peter Appert - Piper Jaffray: Then one last thing for David; if I’m reading this right, I think the FX impact on revenues was about $1.1 million negative, but on plus $3.2 million. So the FX was a benefit from an operating income or EBITDA perspective, about $2 million, and should I read that to be there for that you’re billing more in dollars or there is just a mismatch I guess.

It’s very much a timing issue. The cost savings are recognized immediately as payroll or rent and the revenue side, the negative impact is delayed, it’s more reflected in the ACV impact that I mentioned and that starts the flow through fully when you look at the whole year. So by the end of the year it all evens out, but its more or less you get the benefit from the currency on the cost side, before you get the revenue side and that’s one of the factors I mentioned in the third quarter on revenues; is that we begin to get the full impact of the currency by Q3, which is more related to the currency effect of 6.4 you experienced in ACV, divided by four. Peter Appert - Piper Jaffray: But Peter again, to make sure we’re all clear, it is why margin expansion is so high in the first half of the year, it will not be at high for the full year and that’s not reflective of gosh, we had a great first half and a lousy second half. It begins to even out.

Your next question comes from David Scharf - JMP Securities. David Scharf - JMP Securities: I wanted to follow-up on a couple of. First Ethan, I’m just trying to get a little more granularity on some of the discussions with potential risk clients as you gauge the pipeline, and specifically while regulation and the prospects for more recording requirements is one of the primary catalysts we’re looking forward to. I’m just curious, are you getting any specification feedback from domestic discussions that hint at earns potentially just holding off until they get more direction from Washington and what’s going to happen. Obviously Europe and where you sit, on the fourth leg of that has been more aggressive in putting recording requirements in place. Do you get any sense of some of the headwinds right now in the pipeline or it’s just caused by lack of focus from DC and some firms wanting to see what form those regulations take before they commit to a vendor.

We haven’t had that David. I wouldn’t say that we’ve got to do something if we want to find out what we have to do first then make a decision, we haven’t had that dialog. I do think certainly among traditional asset managers and to some degree hedge funds, this is not how they traditionally run their businesses and so it is a change of behavior rather than we have a vendor doing risk and one upgrade or change it. We don’t do anything and while I normally say we don’t do anything, they don’t anything in a structured transparent way that would sort of stand the test of a true process. So for that group, I think it is a case of how do we culturally get the organization of change and that’s a longer sales cycle and obviously do not at this point through regulations have a requirement to do it. We are seeing more investors push forward and so in some ways at this point, more of the need comes from “Well, this is what investor is asking for” rather than the way we see what the regulators decide.

David our pipeline which has significant amount of U.S. risk business and is not dependent upon Washington, it’s related to the business uses of the risk reporting service that we’ve been selling into so far.

Our going assumption again to be clear, is that there will be no changes in regulation. Again, I’m optimistic that that won’t be the case, but I think the way we’re running our business is, you can’t count on it and when it comes out, who knows where it will go. I think we feel pretty confident that regulation in general would be a good think for us and that something will happen, but we’re not in anyway predicating our products or services or forecasts on the fact that a certain regulation is going to happen and that we’ll benefit from that. David Scharf - JMP Securities: Along those lines of investors pushing for more, are you seeing a shift in the uses of risk manager or in the pipeline discussions. I mean there’s always been some portion that’s been used for analytics, some portion for investor reporting, and some portion for marketing, asset gathering. At the end of the day, are you seeing generally a shift in end demand, in terms of like people are subscribing to it or potentially maybe subscribing over the next four quarters.

I would generally say it’s increasingly becoming a communication tool. That communication tool can be with different constituents, so you now have investor asking for it, you have management asking for it, you have regulators asking for it, but in terms of the focus of communication versus decision making, it is more communication at the moment than it has been in the past. David Scharf - JMP Securities: Does that change any of your thoughts about product development going forward? If you see that your end market are relying or using it more for reporting and perhaps less for analytics.

Well the two obviously go together right; I mean you need the analytics to do the reporting accurately. I would say that the reporting functionality has become increasingly important, so if we have previous, and these are broad generalizations, because I don’t think it’s as extreme as this, but if we’ve previously been selling to someone who was highly quantitative, they were much more interested in the numbers and the output that they could then manipulate and do different things with. Today we have more people interested in the report, and they are not going to manipulate the numbers. So giving people the ability to generate reports that do what it wants to do, rather than interim results that they can manipulate and do something else with, has become increasingly important. David Scharf - JMP Securities: And just lastly, I wanted to confirm the number out there. I know somebody had asked about hedge funds alternative asset managers as a percentage of ACV and 16% was given, was that a risk ACV or total.

That’s a total ACV. David Scharf - JMP Securities: Okay, and do you have that figure for risk.

Its 22% risk. David Scharf - JMP Securities: Okay and lastly just as to confirm, I’m looking at the notes here, with respect to the pressures on renewals, did I here you say that among bank asset managers, they’re still running roughly in high 80s, low 90s. I mean is it a fair conclusion that alternative asset managers will be overwhelming if not almost the entire cause of the drop in renewals year-to-date.

I think before we gave the four reasons, yes, the asset management and banking sectors year-to-date are running in the upper 80’s to low 90’s depending upon when you are talking about risk or governance. The overwhelming, the large reason I think we talked about, $4 million of the $9 million of the delta in the renewal rate was hedge fund above the average. So yes, there was also some effect from the CFRA which is also a hedge fund issue. The short answer is, yes. If we had no hedge funds in our renewal book whatsoever, you would have seen a small dip of maybe 100 basis points on our renewal rate from historical trends; and that said, it really has been the alternative space.

I repeat, we are just below 87% with no hedge funds and we’ve been running in the upper 80’s to lower 90’s over many years, so that was the major factor.

At this time, I would like to turn the call back over to Ms. Sarah Cohn for closing remarks; please proceed ma’am.

This concludes our second quarter earnings for 2009. Thank you very much for participating and have a good day.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a wonderful day.