Note 3 — Investment Securities

JCG’s investment securities as of September 30, 2013, and December 31, 2012, are summarized as follows (in millions):

	September 30,		December 31,
	2013		2012
Trading securities:
Seeded investment products	$	338.9	$	219.5
Investments in advised mutual funds	58.4		89.0
Deferred compensation plans	13.8		11.9
Total trading securities	411.1		320.4
Available-for-sale securities:
Seeded investment products	23.3		30.1
Total investment securities	$	434.4	$	350.5

Trading Securities

Investment securities classified as trading include seeded investment products, investments in advised mutual funds and investments related to the economic hedging of deferred compensation plans. Investments in advised mutual funds represent those assets that had been previously utilized as economic hedges against JCG’s mutual fund share awards. Effective January 2013, JCG is no longer making dollar-for-dollar investments in advised mutual funds for purposes of economically hedging mutual fund share awards.

At September 30, 2013, seeded investment products represented $257.4 million in 13 mutual funds advised by JCG and $81.5 million in 27 separately managed accounts. At December 31, 2012, seeded investment products represented $155.3 million in 18 mutual funds advised by JCG and $64.2 million in 25 separately managed accounts.

JCG recognized $14.5 million and $13.5 million of gains related to trading securities that were still held as of the reporting date for the nine months ended September 30, 2013 and 2012, respectively.

Available-for-Sale Securities

At September 30, 2013, and December 31, 2012, seeded investment products advised by JCG classified as available-for-sale securities represented $23.3 million held in 37 mutual funds and $30.1 million held in 31 mutual funds, respectively.

The following is a summary of the cost, gross unrealized gains and losses, and estimated fair value of seeded investment products classified as available-for-sale securities at September 30, 2013, and December 31, 2012 (in millions):

	September 30,			December 31,
	2013			2012
Cost basis	$	21.1		$	32.2
Gross unrealized gains	2.3			1.0
Gross unrealized losses	(0.1		)	(3.1		)
Estimated fair value	$	23.3		$	30.1

The gross unrealized gains and losses in seeded investment products were recognized as components of other comprehensive income (loss), net of tax on the Condensed Consolidated Statements of Comprehensive Income. JCG reviewed the gross unrealized losses and determined that the losses were not other-than-temporary. No other-than-temporary impairment charges were recognized in the three and nine months ended September 30, 2013 and 2012.

Realized gains and losses related to the disposition of seeded investment products classified as available-for-sale securities were recognized in investment gains, net on the Condensed Consolidated Statements of Comprehensive Income. The following is a summary of realized gains and losses upon disposition of seeded investment products classified as available-for-sale securities for the three and nine months ended September 30, 2013 and 2012 (in millions):

	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
Realized gains	$	1.8		$	—		$	2.6		$	0.6
Realized losses	(0.5		)	(0.6		)	(1.1		)	(0.6		)
Net realized gains (losses)	$	1.3		$	(0.6	)	$	1.5		$	—

Derivative Instruments

The Company maintains an economic hedge program that uses derivative instruments to hedge against market volatility of its seed investments. Fluctuations in equity markets, credit markets and foreign currency markets are hedged by using index swaps, futures contracts and forward contracts, respectively. As of September 30, 2013, JCG had six index swap positions with a notional value of $182.5 million, six futures contract positions with a notional value of $84.1 million and four foreign currency forward contract positions with a notional value of $81.6 million.

These instruments are not designated as hedges for accounting purposes. The index swaps and futures contracts are settled daily, and settlement amounts are recognized in investment gains, net on the Condensed Consolidated Statements of Comprehensive Income. The fair value of the foreign currency forward contracts as of September 30, 2013, and December 31, 2012, was $(2.6) million and $(0.2) million, respectively, and is netted against associated cash collateral within other current assets on the Condensed Consolidated Balance Sheets. Fair value adjustments for the foreign currency forward contracts are recognized in other income, net on the Condensed Consolidated Statements of Comprehensive Income.

JCG recognized the following net gains on hedged seed investments and net losses on associated index swaps and futures contracts for the three and nine months ended September 30, 2013 and 2012 (in millions):

	Three months ended						Nine months ended
	September 30,						September 30,
	2013			2012			2013			2012

Hedged seed investments classified as trading securities	$	15.4		$	4.8		$	18.6		$	9.4
Hedged seed investments classified as available-for-sale securities	0.6			—			0.6			—
Total hedged seed investments	16.0			4.8			19.2			9.4
Futures contracts	(13.7		)	(5.0		)	(20.5		)	(10.1		)
Index swaps	(0.7		)	—			(2.1		)	—
Total	$	1.6		$	(0.2	)	$	(3.4	)	$	(0.7	)

JCG recognized the following net gains on hedged trading securities denominated in a foreign currency and net losses on associated foreign currency forward contracts for the three and nine months ended September 30, 2013 and 2012 (in millions):

	Three months ended						Nine months ended
	September 30,						September 30,
	2013			2012			2013			2012
Net losses in net income related to:
Translation gains	$	3.4		$	0.1		$	2.7		$	—
Foreign currency forward contracts	(3.7		)	(0.2		)	(2.9		)	—
Total	$	(0.3	)	$	(0.1	)	$	(0.2	)	$	—

Investment Gains, Net

Investment gains, net on the Condensed Consolidated Statements of Comprehensive Income includes the following for the three and nine months ended September 30, 2013 and 2012 (in millions):

	Three months ended						Nine months ended
	September 30,						September 30,
	2013			2012			2013			2012
Seeded investment products	$	17.4		$	8.7		$	18.0		$	15.3
Noncontrolling interests in seeded investment products	2.0			0.6			2.1			1.7
Investments in advised mutual funds	2.2			3.3			7.0			6.1
Futures contracts and index swaps	(14.4		)	(5.0		)	(22.6		)	(10.1		)
Economic hedges for deferred compensation plans	0.7			—			1.9			—
Other	—			—			—			(6.1		)
Investment gains, net	$	7.9		$	7.6		$	6.4		$	6.9

Purchases, Sales and Maturities

Cash flows related to investment securities for the three and nine months ended September 30, 2013 and 2012, are summarized as follows (in millions):

	Three months ended September 30,										Nine months ended September 30,
	2013					2012					2013					2012
	Purchases			Sales/ Maturities		Purchases			Sales/ Maturities		Purchases			Sales/ Maturities		Purchases			Sales/ Maturities
Trading securities	$	(2.1	)	$	2.2	$	(16.4	)	$	6.9	$	(113.5	)	$	62.5	$	(77.9	)	$	51.4
Available-for-sale securities	(0.1		)	8.1		(0.1		)	2.9		(0.4		)	18.2		(0.8		)	8.0
Seed capital derivative instruments	(19.2		)	8.0		(7.4		)	1.8		(53.9		)	31.5		(17.7		)	10.1
Total cash flows	$	(21.4	)	$	18.3	$	(23.9	)	$	11.6	$	(167.8	)	$	112.2	$	(96.4	)	$	69.5