Dear Fellow Shareholder:

Stuart Clark Former President and Chief Executive OfficerHaving served as Interactive Data’s president and chief executive officer since the February 2000 merger with publicly traded Data Broadcasting Corporation until just prior to the production and delivery of this annual report, I felt it would be important to share my thoughts about Interactive Data’s performance in 2008 and express my confidence about the Company’s future. 

“I am very proud of all that we’ve achieved, especially during the past 13 years as Interactive Data established itself as a tier-one player in our industry. And as proud as I am about what we’ve accomplished, I am equally as enthusiastic about our future.”

Interactive Data posted record results in 2008 as our business grew strongly during a year marked by unprecedented turbulence across the broader financial markets, which in turn  is reshaping the financial services industry that we primarily target. We made considerable progress in further fortifying and expanding our institutional customer relationships, extending our geographic reach outside of North America and putting in place the leadership succession plans and organizational framework that we believe will position Interactive Data for progress and prosperity well into the future. 

Our growth during 2008 was primarily driven by four powerful trends that we believe will be enduring, even in difficult market conditions. These trends encompass the heightened scrutiny around the valuation of securities; increased regulation and its associated impact on risk management and compliance; increasing adoption of low latency data and related solutions to power automated trading systems; and the continued need to differentiate wealth management offerings in order to attract high net worth customers. Our success in the past year was influenced by our efforts in 2008 and in prior years to position the capabilities across our organization to help our clients address these trends. Through both investment in internal development and acquisition, we have added new capabilities, brought innovative new offerings and product enhancements to the marketplace, and expanded the data content within our services.  We are well positioned to continue helping our customers in this way.

Today’s Interactive Data moves forward with the requisite scale in terms of the content, technology, distribution channels, support resources, financial strength and everything else that has enabled us to earn the trust of our institutional customers around the world. That trust serves as the foundation upon which we can work collaboratively with our customers and it underpins our ability to win new business within their organizations.

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Financial Review

Interactive Data’s financial performance in 2008 was excellent, particularly when viewed against market conditions that became increasingly more challenging during the second half of the year. Revenue grew 8.8% to $750.5 million in 2008 primarily as a result of sustained global demand for our evaluations, reference data and real-time datafeeds, as well as strong revenue growth in the U.S. for our managed solutions offerings. We remained diligent about controlling costs while directing investment into areas of our business that we believe will continue to deliver attractive returns. Net income grew 13.2% to $142.6 million, or $1.48 per diluted share, due primarily to ongoing improvements to our operating profitability, which more than offset lower interest income and a higher effective tax rate in 2008 compared with 2007.

Interactive Data has historically managed its business with an emphasis on generating high levels of net cash provided by operating activities. This was certainly the case in 2008 as we generated $196.2 million in cash from operations. We completed two acquisitions totaling a net of $43.7 million that served to substantially increase our presence in two key international markets while also making capital investments totaling $45.5 million to enhance our technical infrastructure and advance product development. We also returned $103.6 million to shareholders through our regular quarterly dividend and a special dividend, and spent $52.5 million on our stock repurchase program.


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