6. Investments

Investments consist of the following:


	As of December 31,
	2012		2011
	(Dollars in millions)
Equity method investments, excluding accrued performance fees	$	855.1	$	419.9
Trading securities and other investments		26.1		35.0

Total investments	$	881.2	$	454.9

Equity-Method Investments

The Partnership’s equity method investments include its fund investments in Corporate Private Equity, Global Market Strategies and Real Assets, typically as general partner interests, and its investment in NGP Management (included within Real Assets), which are not consolidated but in which the Partnership exerts significant influence. Investments are related to the following segments:


	As of December 31,
	2012		2011
	(Dollars in millions)
Corporate Private Equity	$	251.6	$	238.5
Global Market Strategies		18.0		11.9
Real Assets		585.5		169.5

Total	$	855.1	$	419.9

The summarized financial information of the Partnership’s equity method investees from the date of initial investment is as follows (Dollars in millions):


	Corporate Private Equity							Global Market Strategies						Real Assets							Aggregate Totals
	For the Year Ended December 31,							For the Year Ended December 31,						For the Year Ended December 31,							For the Year Ended December 31,
	2012		2011			2010		2012		2011		2010		2012		2011		2010			2012		2011		2010
Statement of income information
Investment income	$	733.3	$	496.7		$	733.2	$	150.9	$	127.5	$	266.3	$	517.1	$	436.2	$	354.7		$	1,401.3	$	1,060.4	$	1,354.2
Expenses		526.0		497.7			582.8		65.3		37.5		42.3		381.5		402.9		435.2			972.8		938.1		1,060.3

Net investment income (loss)		207.3		(1.0	)		150.4		85.6		90.0		224.0		135.6		33.3		(80.5	)		428.5		122.3		293.9
Net realized and unrealized gain		5,401.9		4,320.7			9,911.3		297.1		79.3		529.1		1,358.0		2,231.7		2,364.2			7,057.0		6,631.7		12,804.6

Net income	$	5,609.2	$	4,319.7		$	10,061.7	$	382.7	$	169.3	$	753.1	$	1,493.6	$	2,265.0	$	2,283.7		$	7,485.5	$	6,754.0	$	13,098.5


	Corporate Private Equity				Global Market Strategies				Real Assets				Aggregate Totals
	As of December 31,				As of December 31,				As of December 31,				As of December 31,
	2012		2011		2012		2011		2012		2011		2012		2011
Balance sheet information
Investments	$	34,959.5	$	36,517.6	$	1,739.7	$	1,936.2	$	27,915.9	$	20,952.4	$	64,615.1	$	59,406.2
Total assets	$	35,937.1	$	37,729.7	$	2,074.7	$	2,224.3	$	28,709.6	$	21,860.3	$	66,721.4	$	61,814.3
Debt	$	11.8	$	79.9	$	59.4	$	64.0	$	1,438.3	$	1,978.1	$	1,509.5	$	2,122.0
Other liabilities	$	261.9	$	278.7	$	15.8	$	116.0	$	251.2	$	260.9	$	528.9	$	655.6
Total liabilities	$	273.7	$	358.6	$	75.2	$	180.0	$	1,689.5	$	2,239.0	$	2,038.4	$	2,777.6
Partners’ capital	$	35,663.4	$	37,371.1	$	1,999.5	$	2,044.3	$	27,020.1	$	19,621.3	$	64,683.0	$	59,036.7

Investment Income

The components of investment income are as follows:


	Year Ended December 31,
	2012			2011			2010
	(Dollars in millions)
Income from equity investments	$	32.7		$	70.5		$	66.3
Income from trading securities		5.7			8.4			2.6
Other investment income (loss)		(2.0	)		(0.5	)		3.7

Total	$	36.4		$	78.4		$	72.6

For the year ended December 31, 2012, income from equity investments was reduced by $1.1 million of amortization and expenses associated with the Partnership’s investment in NGP Management.

Carlyle’s income from its equity-method investments is included in investment income in the consolidated statements of operations and consists of:


	Year Ended December 31,
	2012			2011		2010
	(Dollars in millions)
Corporate Private Equity	$	35.7		$	57.3	$	49.0
Global Market Strategies		1.2			0.9		9.3
Real Assets		(4.2	)		12.3		8.0

Total	$	32.7		$	70.5	$	66.3

Trading Securities and Other Investments

Trading securities and other investments as of December 31, 2012 and 2011 primarily consisted of $26.1 million and $35.0 million, respectively, of investments in corporate mezzanine securities and bonds, as well as other cost method investments.

Investments of Consolidated Funds

On March 30, 2012, June 28, 2012, September 28, 2012, and December 12, 2012, the Partnership formed four new CLOs. The Partnership has concluded that these CLOs are VIEs and the Partnership is the primary beneficiary. As a result, the Partnership consolidated the financial positions and results of operations of the CLOs into its consolidated financial statements beginning on their respective formation dates. As of December 31, 2012, the total assets of these CLOs included in the Partnership’s consolidated financial statements were approximately $3.0 billion.

Also, commencing with the issuance of credit support to CEREP I in July 2012, CEREP I became a VIE and the Partnership became its primary beneficiary (see Note 11). Accordingly, as of that date, the Partnership began to consolidate the fund into its consolidated financial statements. As of December 31, 2012, this fund reported total assets of $59.7 million, total liabilities of $66.9 million and a deficit in partners’ capital of $7.2 million.

The following table presents a summary of the investments held by the Consolidated Funds. Investments held by the Consolidated Funds do not represent the investments of all Carlyle sponsored funds. The table below presents investments as a percentage of investments of Consolidated Funds:


	Fair Value				Percentage of Investments of Consolidated Funds
Geographic Region/Instrument Type/ Industry Description or Investment Strategy	December 31,				December 31,
	2012		2011		2012			2011
	(Dollars in millions)
United States
Equity securities:
Accommodation and Food Services	$	20.2	$	106.1		0.08	%		0.54	%
Administrative Support, Waste Management, Remediation Services		255.9		3.7		1.03	%		0.02	%
Aerospace and defense		—		53.2		—			0.27	%
Finance and Insurance		75.9		44.3		0.31	%		0.23	%
Health Care and Social Assistance		42.1		31.8		0.17	%		0.16	%
Information		76.5		48.0		0.31	%		0.25	%
Manufacturing		340.4		412.7		1.37	%		2.12	%
Professional, Scientific, Technical Services		610.9		500.0		2.46	%		2.56	%
Retail Trade		127.7		147.1		0.51	%		0.75	%
Wholesale Trade		116.6		17.9		0.47	%		0.09	%
Other		59.8		117.5		0.24	%		0.60	%

Total equity securities (cost of $1,901.6 and $2,160.6 at December 31, 2012 and 2011, respectively)		1,726.0		1,482.3		6.95	%		7.59	%
Partnership and LLC interests:
Fund investments (cost of $2,572.5 and $2,593.5 at December 31, 2012 and 2011, respectively)		2,925.4		2,701.0		11.79	%		13.85	%
Loans:
Administrative Support, Waste Management, Remediation Services		31.0		60.6		0.12	%		0.31	%
Finance and Insurance		44.2		—		0.18	%		—
Manufacturing		21.2		65.0		0.09	%		0.33	%
Professional, Scientific, Technical Services		107.7		81.1		0.43	%		0.42	%
Wholesale Trade		72.0		48.2		0.29	%		0.25	%
Other		59.3		81.7		0.24	%		0.42	%

Total loans (cost of $390.0 and $361.4 at December 31, 2012 and 2011, respectively)		335.4		336.6		1.35	%		1.73	%
Total investment in Hedge Funds		2,888.7		1,929.1		11.65	%		9.89	%
Assets of the CLOs
Bonds		290.8		247.7		1.17	%		1.27	%
Equity		35.0		25.3		0.14	%		0.13	%
Loans		8,408.7		6,911.6		33.88	%		35.43	%
Other		—		0.1		—			0.00	%

Total assets of the CLOs (cost of $8,720.7 and $7,446.8 at December 31, 2012 and 2011, respectively)		8,734.5		7,184.7		35.19	%		36.83	%

Total United States	$	16,610.0	$	13,633.7		66.93	%		69.89	%


	Fair Value				Percentage of Investments of Consolidated Funds
Geographic Region/Instrument Type/ Industry Description or Investment Strategy	December 31,				December 31,
	2012		2011		2012			2011
	(Dollars in millions)
Canada
Equity securities:
Manufacturing	$	2.1	$	2.9		0.01	%		0.01	%
Transportation and Warehousing		—		2.9		—			0.02	%

Total equity securities (cost of $6.1 at December 31, 2011)		2.1		5.8		0.01	%		0.03	%
Partnership and LLC interests:
Fund Investments (cost of $103.0 and $112.0 at December 31, 2012 and 2011, respectively)		34.4		45.0		0.14	%		0.23	%
Loans:
Transportation and Warehousing (cost of $0.6 and $9.5 at December 31, 2012 and 2011, respectively)		—		8.0		—			0.04	%
Assets of the CLOs
Bonds		3.5		15.8		0.01	%		0.08	%
Loans		204.9		228.5		0.83	%		1.17	%

Total assets of the CLOs (cost of $206.3 and $247.1 at Decmeber 31, 2012 and 2011, respectively)		208.4		244.3		0.84	%		1.25	%

Total Canada	$	244.9	$	303.1		0.99	%		1.55	%

Europe
Equity securities:
Administrative Support, Waste Management, Remediation Services	$	104.2	$	104.4		0.42	%		0.53	%
Health Care and Social Assistance		85.7		13.2		0.35	%		0.07	%
Information		98.6		88.1		0.40	%		0.45	%
Manufacturing		474.9		389.2		1.91	%		2.00	%
Retail Trade		233.9		95.4		0.94	%		0.49	%
Wholesale Trade		109.3		62.8		0.44	%		0.32	%
Other		305.2		93.7		1.23	%		0.48	%

Total equity securities (cost of $1,617.8 and $1,249.3 at December 31, 2012 and 2011, respectively)		1,411.8		846.8		5.69	%		4.34	%
Partnership and LLC interests:
Fund investments (cost of $952.0 and $1,052.6 at December 31, 2012 and 2011, respectively)		898.2		976.9		3.62	%		5.01	%


	Fair Value				Percentage of Investments of Consolidated Funds
Geographic Region/Instrument Type/ Industry	December 31,				December 31,
Description or Investment Strategy	2012		2011		2012			2011
	(Dollars in millions)
Europe
Loans:
Manufacturing		1.8		158.2		0.01	%		0.81	%
Other		—		135.1		—			0.69	%

Total loans (cost of $413.3 at December 31, 2011)		1.8		293.3		0.01	%		1.50	%
Assets of the CLOs
Bonds		628.7		288.6		2.53	%		1.48	%
Equity		0.3		12.5		0.00	%		0.06	%
Loans		4,227.5		2,577.2		17.04	%		13.21	%
Other		7.3		20.7		0.03	%		0.11	%

Total assets of the CLOs (cost of $5,397.4 and $3,345.2 at December 31, 2012 and 2011, respectively)		4,863.8		2,899.0		19.60	%		14.86	%

Total Europe	$	7,175.6	$	5,016.0		28.92	%		25.71	%

Australia
Assets of the CLOs
Bonds	$	11.2	$	4.9		0.05	%		0.03	%
Loans		65.1		—		0.26	%		—

Total assets of the CLOs (cost of $75.7 and $5.0 at December 31, 2012 and 2011, respectively)		76.3		4.9		0.31	%		0.03	%

Total Australia	$	76.3	$	4.9		0.31	%		0.03	%

Global
Equity securities:
Manufacturing (cost of $89.0 and $85.3 at December 31, 2012 and 2011, respectively)		204.7		73.9		0.82	%		0.38	%
Assets of the CLOs
Loans (cost of $46.6 at December 31, 2012)		46.7		—		0.19	%		—
Partnership and LLC interests:
Fund investments (cost of $412.8 and $427.2 at December 31, 2012 and 2011, respectively)		457.5		475.7		1.84	%		2.44	%

Total Global	$	708.9	$	549.6		2.85	%		2.82	%

Total investments of Consolidated Funds (cost of $22,486.0 and $19,514.9 at December 31, 2012 and 2011, respectively)	$	24,815.7	$	19,507.3		100.00	%		100.00	%

There were no individual investments with a fair value greater than five percent of the Partnership’s total assets for any period presented.

Interest and Other Income of Consolidated Funds

The components of interest and other income of Consolidated Funds are as follows:


	Year Ended December 31,
	2012		2011		2010
	(Dollars in millions)
Interest income from investments	$	772.8	$	605.7	$	435.5
Other income		130.7		108.3		17.1

Total	$	903.5	$	714.0	$	452.6

Net Investment Gains (Losses) of Consolidated Funds

Net investment gains (losses) of Consolidated Funds include net realized gains (losses) from sales of investments and unrealized gains (losses) resulting from changes in fair value of the Consolidated Funds’ investments. The components of net investment gains (losses) of Consolidated Funds are as follows:


	Year Ended December 31,
	2012			2011			2010
	(Dollars in millions)
Gains (losses) from investments of Consolidated Funds	$	2,680.6		$	(260.8	)	$	502.0
Losses from liabilities of CLOs		(927.8	)		(64.2	)		(752.4	)
Gains on other assets of CLOs		5.2			1.7			5.0

Total	$	1,758.0		$	(323.3	)	$	(245.4	)

The following table presents realized and unrealized gains (losses) earned from investments of the Consolidated Funds:


	Year Ended December 31,
	2012		2011			2010
	(Dollars in millions)
Realized gains	$	829.5	$	658.8		$	74.1
Net change in unrealized gains (losses)		1,851.1		(919.6	)		427.9

Total	$	2,680.6	$	(260.8	)	$	502.0