UNITED
STATES


SECURITIES AND
EXCHANGE COMMISSION


Washington, D.C.
20549


_______________________





FORM
10-Q





(Mark One)[
      X ]
              QUARTERLY REPORT
      PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES
      EXCHANGE ACT OF 1934For the quarterly period
      ended September 25, 2009OR[     ]
              TRANSITION REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT
      OF 1934


For the transition
period from _______ to _________





Commission file
number 0-16633





THE JONES FINANCIAL
COMPANIES, L.L.L.P.





(Exact name of
registrant as specified in its Partnership Agreement)





MISSOURI
            
            43-1450818(State or
      other jurisdiction of
            
            (IRS Employer
      Identification No.)incorporation
      or organization)


12555 Manchester
Road


Des Peres, Missouri
63131





(Address of
principal executive offices)


(Zip
Code)





(314)
515-2000





(Registrant's
telephone number, including area code)





Indicate by check
mark whether the registrant: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. YES [ X ] NO [   ]





Indicate by check
mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). YES [   ] NO
[   ]





Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company.  See the
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.  (Check
one):





Large
      accelerated filer [    ]
            Accelerated
      filer [    ]Non-accelerated
      filer [ X ]
            Smaller
      reporting company [    ](do not check
      if a smaller reporting company)





Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).  Yes [    ] No [ X ]











THE
JONES FINANCIAL COMPANIES, L.L.L.P.
 
 INDEX
 
 PagePart
      I.
              FINANCIAL
      INFORMATIONItem
      1.
              Financial
      StatementsConsolidated Statements of Financial
      Condition
              3Consolidated Statements of
      Income
              5Consolidated Statements of Changes in Partnership
      Capital Subject to Mandatory Redemption
              6Consolidated Statements of Cash
    Flows
              7Notes to Consolidated Financial
    Statements
              8Item
      2.
              Management’s Discussion and Analysis of Financial Condition and
      Results of Operations
              21Item
      3.
              Quantitative and Qualitative Disclosures About Market
      Risk
              40Item
      4.
              Controls and Procedures
              41Part
      II.
              OTHER
      INFORMATIONItem
      1.
              Legal Proceedings
              42Item
      1A.
              Risk Factors
              43Item
      6.
              Exhibits
              44Signatures
              45





2


PART
I.FINANCIAL
INFORMATION
  Item
1.  FINANCIAL STATEMENTS





THE
JONES FINANCIAL COMPANIES, L.L.L.P.


CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION


ASSETS




(Unaudited)September
      25,
              December
      31,(Dollars
      in thousands)
              
              2009
              
              
              2008Cash and cash
      equivalents
              
              $
              265,779
              
              
              $
              216,645Cash and
      investments segregated under federal and other
      regulations
              
              
              2,528,551
              
              
              
              2,221,032Securities
      purchased under agreements to resell
              
              
              618,650
              
              
              
              1,354,000Receivable
      from:Customers
              
              
              2,013,711
              
              
              
              1,966,972Brokers,
      dealers and clearing organizations
              
              
              182,357
              
              
              
              332,349Mutual funds,
      insurance companies, and other
              
              
              149,374
              
              
              
              147,808Securities
      owned, at fair valueInventory
      securities
              
              
              183,119
              
              
              
              50,844Investment
      securities
              
              
              88,631
              
              
              
              92,194Equipment,
      property and improvements, at cost, net of
      accumulated depreciation
              
              
              623,457
              
              
              
              531,374Other
      assets
              
              
              73,377
              
              
              
              78,676TOTAL
      ASSETS
              
              $
              6,727,006
              
              
              $
              6,991,894




The
accompanying notes are an integral part of these Consolidated Financial
Statements.


3




PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
  THE
JONES FINANCIAL COMPANIES, L.L.L.P.
 CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION
 LIABILITIES
  (Unaudited)September
      25,
                December
      31,(Dollars
      in thousands)
                
                2009
                
                
                2008Payable
      to:Customers
                
                $
                4,232,942
                
                
                $
                4,651,640Brokers,
      dealers and clearing organizations
                
                
                158,669
                
                
                
                40,612Securities
      sold, not yet purchased, at fair value
                
                
                7,998
                
                
                
                12,135Accrued
      compensation and employee benefits
                
                
                323,832
                
                
                
                324,328Accounts
      payable and accrued expenses
                
                
                185,493
                
                
                
                174,672Bank
      loans
                
                
                74,000
                
                
                
                43,000Long-term
      debt
                
                
                8,496
                
                
                
                9,0924,991,430
                
                
                
                5,255,479Liabilities
      subordinated to claims of general creditors
                
                
                257,400
                
                
                
                261,100Commitments
      and contingencies (See Notes)Partnership
      capital subject to mandatory redemption,net of
      reserve for anticipated withdrawals
                
                
                1,441,898
                
                
                
                1,412,695Reserve for
      anticipated withdrawals
                
                
                36,278
                
                
                
                62,620Total
      partnership capital subject to mandatory redemption
                
                
                1,478,176
                
                
                
                1,475,315TOTAL
      LIABILITIES
                
                $
                6,727,006
                
                
                $
                6,991,894


The
accompanying notes are an integral part of these Consolidated Financial
Statements.
 4


PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
 THE
JONES FINANCIAL COMPANIES, L.L.L.P.
 CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)
  Three
      Months Ended
                      
                      
                      Nine
      Months Ended(Dollars
      in thousands,
                      
                      September
      25,
                      
                      September
      26,
                      
                      September
      25,
                      
                      September
      26,except
      per unit information)
                      
                      2009
                      
                      2008
                      
                      2009
                      
                      2008Revenue:Trade
      RevenueCommissions
                      
                      $
                      349,576
                      
                      
                      $
                      373,088
                      
                      
                      $
                      1,008,913
                      
                      
                      $
                      1,246,889Principal
      transactions
                      
                      
                      115,363
                      
                      
                      
                      129,936
                      
                      
                      
                      360,599
                      
                      
                      
                      381,166Investment
      banking
                      
                      
                      23,293
                      
                      
                      
                      11,210
                      
                      
                      
                      63,972
                      
                      
                      
                      36,095Fee
      RevenueAsset
      fees
                      
                      
                      251,651
                      
                      
                      
                      275,917
                      
                      
                      
                      681,426
                      
                      
                      
                      845,189Account and
      activity fees
                      
                      
                      125,313
                      
                      
                      
                      119,544
                      
                      
                      
                      366,701
                      
                      
                      
                      354,057Interest and
      dividends
                      
                      
                      28,745
                      
                      
                      
                      47,423
                      
                      
                      
                      81,763
                      
                      
                      
                      154,228Other
      revenue
                      
                      
                      7,086
                      
                      
                      
                      (9,138
                      )
                      
                      
                      29,539
                      
                      
                      
                      (10,286
                      )Total
      revenue
                      
                      
                      901,027
                      
                      
                      
                      947,980
                      
                      
                      
                      2,592,913
                      
                      
                      
                      3,007,338Interest
      expense
                      
                      
                      14,147
                      
                      
                      
                      17,607
                      
                      
                      
                      43,389
                      
                      
                      
                      55,616Net
      revenue
                      
                      
                      886,880
                      
                      
                      
                      930,373
                      
                      
                      
                      2,549,524
                      
                      
                      
                      2,951,722Operating
      expenses:Compensation
      and benefits
                      
                      
                      573,398
                      
                      
                      
                      575,661
                      
                      
                      
                      1,610,248
                      
                      
                      
                      1,822,399Occupancy and
      equipment
                      
                      
                      84,927
                      
                      
                      
                      80,081
                      
                      
                      
                      246,955
                      
                      
                      
                      233,566Communications
      and data processing
                      
                      
                      72,355
                      
                      
                      
                      81,694
                      
                      
                      
                      220,305
                      
                      
                      
                      239,556Payroll and
      other taxes
                      
                      
                      34,876
                      
                      
                      
                      34,302
                      
                      
                      
                      108,185
                      
                      
                      
                      115,756Postage and
      shipping
                      
                      
                      17,593
                      
                      
                      
                      15,698
                      
                      
                      
                      41,871
                      
                      
                      
                      43,510Advertising
                      
                      
                      11,485
                      
                      
                      
                      14,624
                      
                      
                      
                      38,008
                      
                      
                      
                      52,369Clearance
      fees
                      
                      
                      2,656
                      
                      
                      
                      5,028
                      
                      
                      
                      10,673
                      
                      
                      
                      13,715Other
      operating expenses
                      
                      
                      38,943
                      
                      
                      
                      50,461
                      
                      
                      
                      121,226
                      
                      
                      
                      156,163Total
      operating expenses
                      
                      
                      836,233
                      
                      
                      
                      857,549
                      
                      
                      
                      2,397,471
                      
                      
                      
                      2,677,034Income before
      allocations to partners
                      
                      
                      50,647
                      
                      
                      
                      72,824
                      
                      
                      
                      152,053
                      
                      
                      
                      274,688Allocations
      to partners:Limited
      partners
                      
                      
                      5,990
                      
                      
                      
                      9,819
                      
                      
                      
                      18,136
                      
                      
                      
                      37,267Subordinated
      limited partners
                      
                      
                      5,048
                      
                      
                      
                      6,770
                      
                      
                      
                      15,288
                      
                      
                      
                      26,254General
      partners
                      
                      
                      39,609
                      
                      
                      
                      56,235
                      
                      
                      
                      118,629
                      
                      
                      
                      211,167Net
      Income
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -Income before
      allocations to partnersper weighted
      average $1,000equivalent
      limited partnership unit outstanding
                      
                      $
                      12.78
                      
                      
                      $
                      20.14
                      
                      
                      $
                      38.35
                      
                      
                      $
                      75.95Weighted
      average $1,000 equivalentlimited
      partnership units outstanding
                      
                      
                      468,701
                      
                      
                      
                      487,537
                      
                      
                      
                      472,907
                      
                      
                      
                      490,678
 The
accompanying notes are an integral part of these Consolidated Financial
Statements.
 5


PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
 THE
JONES FINANCIAL COMPANIES, L.L.L.P.
 CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERSHIP
CAPITAL
 SUBJECT
TO MANDATORY REDEMPTION
 NINE
MONTHS ENDED SEPTEMBER 25, 2009 AND SEPTEMBER 26, 2008
 (Unaudited)
 (Dollars
      in thousands)
                
                Limited
      Partnership Capital
                
                
                Subordinated
      Limited Partnership Capital
                
                
                General
      Partnership Capital
                
                
                TotalTOTAL
      PARTNERSHIP CAPITALSUBJECT
      TO MANDATORYREDEMPTION,
      DECEMBER 31, 2007
                
                $
                545,199
                
                
                $
                158,133
                
                
                $
                747,448
                
                
                $
                1,450,780Reserve for
      anticipated withdrawals
                
                
                (50,713
                )
                
                
                (11,456
                )
                
                
                (60,269
                )
                
                
                (122,438
                )Partnership
      capital subject to mandatoryredemption,
      net of reserve for anticipatedwithdrawals,
      December 31, 2007
                
                
                494,486
                
                
                
                146,677
                
                
                
                687,179
                
                
                
                1,328,342Issuance of
      partnership interests
                
                
                -
                
                
                
                31,438
                
                
                
                -
                
                
                
                31,438Redemption of
      partnership interests
                
                
                (7,664
                )
                
                
                (1,132
                )
                
                
                -
                
                
                
                (8,796
                )Income
      allocated to partners
                
                
                37,267
                
                
                
                26,254
                
                
                
                211,167
                
                
                
                274,688Withdrawals
      and distributions
                
                
                (3,477
                )
                
                
                (24,175
                )
                
                
                (132,636
                )
                
                
                (160,288
                )TOTAL
      PARTNERSHIP CAPITALSUBJECT
      TO MANDATORYREDEMPTION,
      SEPTEMBER 26, 2008
                
                $
                520,612
                
                
                $
                179,062
                
                
                $
                765,710
                
                
                $
                1,465,384Reserve for
      anticipated withdrawals
                
                
                (33,790
                )
                
                
                (2,079
                )
                
                
                (20,249
                )
                
                
                (56,118
                )Partnership
      capital subject to mandatoryredemption,
      net of reserve for anticipatedwithdrawals,
      September 26, 2008
                
                
                486,822
                
                
                
                176,983
                
                
                
                745,461
                
                
                
                1,409,266TOTAL
      PARTNERSHIP CAPITALSUBJECT
      TO MANDATORYREDEMPTION,
      DECEMBER 31, 2008
                
                $
                504,048
                
                
                $
                182,313
                
                
                $
                788,954
                
                
                $
                1,475,315Reserve for
      anticipated withdrawals
                
                
                (21,682
                )
                
                
                (5,380
                )
                
                
                (35,558
                )
                
                
                (62,620
                )Partnership
      capital subject to mandatoryredemption,
      net of reserve for anticipatedwithdrawals,
      December 31, 2008
                
                
                482,366
                
                
                
                176,933
                
                
                
                753,396
                
                
                
                1,412,695Issuance of
      partnership interests
                
                
                -
                
                
                
                25,312
                
                
                
                -
                
                
                
                25,312Redemption of
      partnership interests
                
                
                (14,476
                )
                
                
                (5,904
                )
                
                
                (8,467
                )
                
                
                (28,847
                )Income
      allocated to partners
                
                
                18,136
                
                
                
                15,288
                
                
                
                118,629
                
                
                
                152,053Withdrawals
      and distributions
                
                
                (2,124
                )
                
                
                (13,493
                )
                
                
                (67,420
                )
                
                
                (83,037
                )TOTAL
      PARTNERSHIP CAPITALSUBJECT
      TO MANDATORYREDEMPTION,
      SEPTEMBER 25, 2009
                
                $
                483,902
                
                
                $
                198,136
                
                
                $
                796,138
                
                
                $
                1,478,176Reserve for
      anticipated withdrawals
                
                
                (16,012
                )
                
                
                (1,795
                )
                
                
                (18,471
                )
                
                
                (36,278
                )Partnership
      capital subject to mandatoryredemption,
      net of reserve for anticipatedwithdrawals,
      September 25, 2009
                
                
                467,890
                
                
                
                196,341
                
                
                
                777,667
                
                
                
                1,441,898


The
accompanying notes are an integral part of these Consolidated Financial
Statements.
 6


PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
 THE
JONES FINANCIAL COMPANIES, L.L.L.P.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
  Nine
      Months EndedSeptember
      25,
                  September
      26,(Dollars
      in thousands)
                  
                  2009
                  
                  
                  2008CASH FLOWS
      FROM OPERATING ACTIVITIES:Net
      income
                  
                  $
                  -
                  
                  
                  $
                  -Adjustments
      to reconcile net income to netcash provided by operating
      activities:Income before
      allocations to partners
                  
                  
                  152,053
                  
                  
                  
                  274,688Depreciation
                  
                  
                  68,533
                  
                  
                  
                  65,555Changes in
      assets and liabilities:Cash and
      investments segregated underfederal and other
      regulations
                  
                  
                  (307,519
                  )
                  
                  
                  (23,871
                  )Securities
      purchased under agreements to resell
                  
                  
                  735,350
                  
                  
                  
                  (134,000
                  )Net payable
      to customers
                  
                  
                  (465,437
                  )
                  
                  
                  466,973Net
      receivable from brokers, dealers andclearing
      organizations
                  
                  
                  268,049
                  
                  
                  
                  11,503Receivable
      from mutual funds, insurance companiesand
other
                  
                  
                  (1,566
                  )
                  
                  
                  (3,400
                  )Securities
      owned, net
                  
                  
                  (132,849
                  )
                  
                  
                  (48,079
                  )Other
      assets
                  
                  
                  5,299
                  
                  
                  
                  5,359Accrued
      compensation and employee benefits
                  
                  
                  (496
                  )
                  
                  
                  (134,587
                  )Accounts
      payable and accrued expenses
                  
                  
                  17,554
                  
                  
                  
                  (26,029
                  )Net cash
      provided by operating activities
                  
                  
                  338,971
                  
                  
                  
                  454,112CASH FLOWS
      FROM INVESTING ACTIVITIES:Purchase of
      equipment, property and improvements, net
                  
                  
                  (167,349
                  )
                  
                  
                  (172,274
                  )Net cash used
      in investing activities
                  
                  
                  (167,349
                  )
                  
                  
                  (172,274
                  )CASH FLOWS
      FROM FINANCING ACTIVITIES:Issuance of
      bank loans
                  
                  
                  31,000
                  
                  
                  
                  -Repayment of
      long-term debt
                  
                  
                  (596
                  )
                  
                  
                  (1,550
                  )Repayment of
      subordinated debt
                  
                  
                  (3,700
                  )
                  
                  
                  (14,200
                  )Issuance of
      partnership interests
                  
                  
                  25,312
                  
                  
                  
                  31,438Redemption of
      partnership interests
                  
                  
                  (28,847
                  )
                  
                  
                  (8,796
                  )Withdrawals
      and distributions from partnership capital
                  
                  
                  (145,657
                  )
                  
                  
                  (282,726
                  )Net cash used
      in financing activities
                  
                  
                  (122,488
                  )
                  
                  
                  (275,834
                  )Net increase
      in cash and cash equivalents
                  
                  
                  49,134
                  
                  
                  
                  6,004CASH AND CASH
      EQUIVALENTS:Beginning of
      period
                  
                  
                  216,645
                  
                  
                  
                  378,141End of
      period
                  
                  $
                  265,779
                  
                  
                  $
                  384,145Cash paid for
      interest
                  
                  $
                  39,113
                  
                  
                  $
                  51,811Cash paid for
      taxes
                  
                  $
                  2,770
                  
                  
                  $
                  3,216NON-CASH
      ACTIVITIES:Additions of
      equipment, property and improvementsin accounts
      payable and accrued expenses
                  
                  $
                  19,787
                  
                  
                  $
                  23,931


The
accompanying notes are an integral part of these Consolidated Financial
Statements.
 7


PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
  THE
JONES FINANCIAL COMPANIES, L.L.L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
  (Dollars
in thousands, except per unit information)
 
 BASIS
OF PRESENTATION
 
 The Partnership's
Business and Basis of Accounting.The accompanying Consolidated Financial Statements
include the accounts of The Jones Financial Companies, L.L.L.P. and all
wholly-owned subsidiaries (collectively, the "Partnership").  All
material intercompany balances and transactions have been eliminated in
consolidation.  Non-controlling minority interests are accounted for
under the equity method.  The results of the Partnership's subsidiary
in Canada are included in the Partnership's Consolidated Financial Statements
for the nine months ended August 31, 2009 and 2008 because of the timing of the
Partnership's financial reporting process.
 
 The
Partnership operates as a single business segment.  The Partnership's
principal operating subsidiary, Edward D. Jones & Co., L.P. ("Edward
Jones"), is comprised of three registered broker-dealers serving individual
investors as of September 25, 2009.  Edward Jones primarily derives
its revenues from the retail brokerage business by selling listed and unlisted
securities and insurance products, providing investment banking services,
engaging in principal transactions, serving as a distributor of mutual fund
shares, providing services related to assets held on behalf of its customers,
and providing other account services.  As of September 25, 2009,
Edward Jones conducts business throughout the United States of America, Canada
and the United Kingdom ("U.K.") with its customers, various brokers and dealers,
clearing organizations, depositories and banks.  See Subsequent Events
note for further details on the U.K. subsidiary.  Edward Jones offers
trust services to its customers through Edward Jones Trust Company ("EJTC"), a
wholly-owned subsidiary of the Partnership.
  The
Consolidated Financial Statements have been prepared under the accrual basis of
accounting in conformity with accounting principles generally accepted in the
United States of America ("GAAP") which require the use of certain estimates by
management in determining the Partnership's assets, liabilities, revenues and
expenses.  Actual results could differ from these
estimates.
  Under
the terms of the Partnership Agreement, the Partnership will redeem a partner’s
capital in the event of the partner’s death, resignation or
termination.  In the event of the partner’s death, the Partnership
must redeem the partner’s capital within six months of death.  The
capital of limited partners withdrawing from the Partnership due to termination
or resignation must be redeemed by the Partnership in three equal annual
installments beginning the month after their resignation or
termination.  The capital of general partners resigning or terminated
from the Partnership is converted to subordinated limited partnership
capital.  Subordinated limited partners are repaid their capital in
four equal annual installments (beginning the month after their request for
withdrawal of contributed capital).  The Partnership’s managing
partner has the discretion to waive these withdrawal restrictions and to
accelerate the return of capital to the partners.  All current and
future partnership capital is subordinate to all current and future liabilities
of the Partnership.
  8
 PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
 The
interim financial information included herein is unaudited.  However,
in the opinion of management, such information includes all adjustments,
consisting primarily of normal recurring accruals, which are necessary for a
fair presentation of the results of interim operations.
 
 The
results of operations for the nine months ended September 25, 2009 and September
26, 2008 are not necessarily indicative of the results to be expected for the
full year.  The Partnership has evaluated subsequent events for
recognition or disclosure through November 6, 2009, which was the date this
Quarterly Report on Form 10-Q was filed with the Securities and Exchange
Commission ("SEC").  These Consolidated Financial Statements should be
read in conjunction with the Partnership's Annual Report on Form 10-K for the
year ended December 31, 2008.
 
 Revenue
Recognition.The Partnership
records customertransactions on a
settlement date basis, and the related commissions, principal transactions and
investment banking revenues are recorded on a trade date basis.  All
other forms of revenue are recorded on an accrual basis.
  Commissions
consist of charges to customers for the purchase or sale of securities,
insurance products and mutual fund shares.
  Asset
fees revenue consists primarily of service fees and other revenues received
under agreements with mutual fund and insurance companies based on the
underlying value of the Partnership’s customers’ assets invested in those
companies’ products.  The Partnership also receives asset fee revenue
from its Advisory Solutions and Managed Account Programs, which provide
investment advisory services to its customers for a fee based upon their asset
values in the program.  Asset-based revenues related to the
Partnership’s interest in the advisor (Passport Research Limited) to the Edward
Jones Money Market Fund are also included in asset fees revenue.
  Principal
transactions revenue is the result of the Partnership’s participation in
market-making activities in over-the-counter corporate securities, municipal
obligations, U.S. Government obligations (including general obligations and
revenue bonds), unit investment trusts, mortgage-backed securities and
certificates of deposit.
  Account
and activity fees revenue includes fees received from mutual fund companies for
sub-transfer agent accounting services performed by the Partnership and
self-directed IRA custodian account fees.  It also includes other
activity based revenues from customers, mutual fund companies and insurance
companies.
  Interest
and dividend income is earned on margin account balances, cash and cash
equivalents, cash and investments segregated under federal and other
regulations, securities purchased under agreements to resell, inventory
securities and investment securities.
  Investment
banking revenues are derived from the Partnership’s underwriting and
distribution of securities on behalf of issuers.
  The
Partnership derived 34% of its total revenue for the nine months ended September
25, 2009 and 35% of its total revenue for the nine months ended September 26,
2008 from one mutual fund vendor.  Significant reductions in the
revenues from this mutual fund source could have a material impact on the
Partnership's results of operations.
 
 9
 PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
  Recently Issued
Accounting Standards. In
July 2009, the Financial Accounting Standards Board ("FASB") launched the
Accounting Standards Codification ("ASC"), a structural overhaul to U.S. GAAP
that changes from a standards-based model to a topically based model. The topics
are organized by ASC number and are updated with Accounting Standards Updates
("ASUs"). ASUs will replace accounting changes that historically were issued as
FASB Statements (SFASs), FASB Interpretations (FINs), FASB Staff Positions
(FSPs), or other types of FASB standards.  FASB ASC 105, Generally
Accepted Accounting Principles ("ASC 105") identifies the FASB Accounting
Standards Codification as the authoritative source of GAAP in the United States
of America.  It also identifies rules and interpretive releases of the
SEC under federal securities laws also as sources of authoritative GAAP for SEC
registrants.  ASC 105 was effective for financial statements issued
for interim and annual periods ending after September 15, 2009.  The
ASC does not change GAAP and will not have an effect on our financial position,
results of operations or liquidity.
  In
April 2009, the FASB issued two pronouncements intended to provide additional
application guidance and enhance disclosures about fair value measurements. The
first pronouncement, Determining
Fair Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not
Orderly, clarifies the objective and method of fair value measurement
even when there has been a significant decrease in market activity for the asset
being measured.  The second position, Interim
Disclosures about Fair Value of Financial Instruments, expands the fair
value disclosures required for all financial instruments, within the scope of
FASB ASC 825, Financial
Instruments, to interim periods.  These pronouncements were
effective beginning April 1, 2009.  Adoption of these pronouncements
did not have a material impact on the Partnership's Consolidated Financial
Statements.
  In
April 2009, the FASB issued FASB ASC 855, Subsequent
Events ("ASC 855").  ASC 855 establishes general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or available to be
issued.  Although this standard is based on the same principles as
those that existed in previous accounting standards, it includes a new required
disclosure of the date through which an entity has evaluated subsequent
events.  Adoption of ASC 855 did not have a material impact on the
Partnership's Consolidated Financial Statements.  See the "Basis of
Presentation" section for this new disclosure.
 
 FAIR
VALUE OF FINANCIAL INSTRUMENTS
 
 Substantially
all of the Partnership's short-term financial assets and liabilities are carried
at fair value or contracted amounts which approximate fair value.
  Fair
value of a financial instrument is defined as the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date (the exit
price).  Financial assets are marked to bid prices and financial
liabilities are marked to offer prices.
  The
Partnership's assets and liabilities recorded at fair value in the Consolidated
Statement of Financial Condition are categorized based upon the level of
judgment associated with the inputs used to measure their fair
value.  Hierarchical levels, defined by FASB ASC 820, Fair Value
Measurements and Disclosures, and directly related to the amount of
subjectivity associated with the inputs to fair valuation of these assets and
liabilities, are as follows:
 
 10
 PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
 Level I
– Inputs are unadjusted, quoted prices in active markets for identical assets or
liabilities at the measurement date.
  The
types of assets and liabilities categorized as Level I generally are government
and agency securities, equities listed in active markets, unit investment trusts
and investments in publicly traded mutual funds with quoted market
prices.
  Level II
– Inputs (other than quoted prices included in Level I) are either directly or
indirectly observable for the asset or liability through correlation with
related market data at the measurement date and for the duration of the
instrument’s anticipated life.
  The
types of assets and liabilities categorized as Level II generally are
certificates of deposit, municipal bonds, mortgage and asset backed securities
and corporate debt.
  Level
III – Inputs are both unobservable and significant to the overall fair
value measurement.  These inputs reflect management’s best estimate of
what market participants would use in pricing the asset or liability at the
measurement date.  Consideration is given to the risk inherent in the
valuation technique and the risk inherent in the inputs to the
model.
  The
Partnership did not have any assets or liabilities categorized as Level III
during the quarter and nine months ended September 25, 2009.
  
 11
 PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
 The
following tables set forth the Partnership's financial instruments measured at
fair value as of September 25, 2009 and December 31, 2008:
 
 Financial
      Assets at Fair Value as ofSeptember
      25, 2009(Dollars
      in thousands)
                  
                  Level
      I
                  
                  
                  Level
      II
                  
                  
                  Level
      III
                  
                  
                  TotalInvestments
      segregated under federal regulations:Certificates
      of deposit
                  
                  $
                  -
                  
                  
                  $
                  450,000
                  
                  
                  $
                  -
                  
                  
                  $
                  450,000Securities
      purchased under agreements to resell
                  
                  $
                  618,650
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  618,650Securities
      owned:Inventory
      securities:Certificates
      of deposit
                  
                  $
                  -
                  
                  
                  $
                  2,188
                  
                  
                  $
                  -
                  
                  
                  $
                  2,188U.S. and
      Canadian government and U.S.agency
      obligations
                  
                  
                  1,620
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,620State and
      municipal obligations
                  
                  
                  -
                  
                  
                  
                  154,812
                  
                  
                  
                  -
                  
                  
                  
                  154,812Corporate
      bonds and notes
                  
                  
                  -
                  
                  
                  
                  13,929
                  
                  
                  
                  -
                  
                  
                  
                  13,929Collateralized
      mortgage obligations
                  
                  
                  -
                  
                  
                  
                  1,374
                  
                  
                  
                  -
                  
                  
                  
                  1,374Equities
                  
                  
                  8,657
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  8,657Unit
      investment trusts
                  
                  
                  539
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  539Total
      inventory securities
                  
                  $
                  10,816
                  
                  
                  $
                  172,303
                  
                  
                  $
                  -
                  
                  
                  $
                  183,119Investment
      securitiesU.S.
      government and agency obligations heldby U.S.
      broker-dealer
                  
                  $
                  11,761
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  11,761U.S. and
      Canadian government and U.S.agency
      obligations held by foreignbroker-dealers
                  
                  
                  4,687
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  4,687Municipal
      bonds
                  
                  
                  -
                  
                  
                  
                  6,941
                  
                  
                  
                  -
                  
                  
                  
                  6,941Mutual
      funds
                  
                  
                  64,451
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  64,451Equities
                  
                  
                  791
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  791Total
      investment securities
                  
                  $
                  81,690
                  
                  
                  $
                  6,941
                  
                  
                  $
                  -
                  
                  
                  $
                  88,631Financial
      Liabilities at Fair Value as ofSeptember
      25, 2009(Dollars
      in thousands)
                  
                  Level
      I
                  
                  
                  Level
      II
                  
                  
                  Level
      III
                  
                  
                  TotalCertificates
      of deposit
                  
                  $
                  -
                  
                  
                  $
                  602
                  
                  
                  $
                  -
                  
                  
                  $
                  602U.S. and
      Canadian government and U.S.agency
      obligations
                  
                  
                  263
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  263State and
      municipal obligations
                  
                  
                  -
                  
                  
                  
                  708
                  
                  
                  
                  -
                  
                  
                  
                  708Corporate
      bonds and notes
                  
                  
                  -
                  
                  
                  
                  4,029
                  
                  
                  
                  -
                  
                  
                  
                  4,029Collateralized
      mortgage obligations
                  
                  
                  -
                  
                  
                  
                  31
                  
                  
                  
                  -
                  
                  
                  
                  31Equities
                  
                  
                  2,302
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,302Unit
      investment trusts
                  
                  
                  63
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  63Total
      inventory securities
                  
                  $
                  2,628
                  
                  
                  $
                  5,370
                  
                  
                  $
                  -
                  
                  
                  $
                  7,998
   12
 PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
 
 Financial
      Assets at Fair Value as ofDecember
      31, 2008(Dollars
      in thousands)
                    
                    Level
      I
                    
                    
                    Level
      II
                    
                    
                    Level
      III
                    
                    
                    TotalSecurities
      purchased under agreements to resell
                    
                    $
                    1,354,000
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    1,354,000Securities
      owned:Inventory
      securities:Certificates
      of deposit
                    
                    $
                    -
                    
                    
                    $
                    5,255
                    
                    
                    $
                    -
                    
                    
                    $
                    5,255U.S. and
      Canadian governmentand U.S.
      agency obligations
                    
                    
                    1,200
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,200State and
      municipal obligations
                    
                    
                    -
                    
                    
                    
                    14,933
                    
                    
                    
                    -
                    
                    
                    
                    14,933Corporate
      bonds and notes
                    
                    
                    -
                    
                    
                    
                    9,269
                    
                    
                    
                    -
                    
                    
                    
                    9,269Collateralized
      mortgage obligations
                    
                    
                    -
                    
                    
                    
                    1,113
                    
                    
                    
                    -
                    
                    
                    
                    1,113Equities
                    
                    
                    18,851
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    18,851Unit
      investment trusts
                    
                    
                    223
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    223Total
      inventory securities
                    
                    $
                    20,274
                    
                    
                    $
                    30,570
                    
                    
                    $
                    -
                    
                    
                    $
                    50,844Investment
      securities:U.S.
      government and agencyobligations
      held by U.S.broker-dealer
                    
                    $
                    22,120
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    22,120U.S. and
      Canadian governmentand U.S.
      agency obligationsheld by
      foreign broker-dealers
                    
                    
                    14,206
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    14,206Mutual
      funds
                    
                    
                    55,095
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    55,095Equities
                    
                    
                    773
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    773Total
      investment securities
                    
                    $
                    92,194
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    92,194Financial
      Liabilities at Fair Value as ofDecember
      31, 2008(Dollars
      in thousands)
                    
                    Level
      I
                    
                    
                    Level
      II
                    
                    
                    Level
      III
                    
                    
                    TotalSecurities
      sold, not yet purchased:Certificates
      of deposit
                    
                    $
                    -
                    
                    
                    $
                    528
                    
                    
                    $
                    -
                    
                    
                    $
                    528U.S. and
      Canadian governmentand U.S.
      agency obligations
                    
                    
                    95
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    95State and
      municipal obligations
                    
                    
                    -
                    
                    
                    
                    542
                    
                    
                    
                    -
                    
                    
                    
                    542Corporate
      bonds and notes
                    
                    
                    -
                    
                    
                    
                    5,847
                    
                    
                    
                    -
                    
                    
                    
                    5,847Collateralized
      mortgage obligations
                    
                    
                    -
                    
                    
                    
                    75
                    
                    
                    
                    -
                    
                    
                    
                    75Equities
                    
                    
                    4,937
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    4,937Unit
      investment trusts
                    
                    
                    111
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    111Total
      inventory securities
                    
                    $
                    5,143
                    
                    
                    $
                    6,992
                    
                    
                    $
                    -
                    
                    
                    $
                    12,135
 
 
 13
 PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
 The
Partnership attempts to reduce its exposure to market price fluctuations of its
inventory securities through the sale of U.S. government securities and, to a
limited extent, the sale of fixed income futures contracts.  The
amount of the securities purchased or sold will fluctuate on a daily basis due
to changes in inventory securities owned, interest rates and market
conditions.  Futures contracts are settled daily, and the related gain
or loss is recognized in principal transactions revenue.  The notional
amount of futures contracts sold as of September 25, 2009 and December 31, 2008
were $13,000 and $3,000, respectively.  The underlying assets of these
contracts are not reflected in the Partnership's Consolidated Financial
Statements.
  Due
to the short-term nature of the Partnership's bank loans, the fair value of bank
loans is estimated at carrying value.  The estimated fair value of
bank loans was approximately $74,000 and $43,000 as of September 25, 2009 and
December 31, 2008.  The Partnership estimates the fair value of
long-term debt and liabilities subordinated to claims of general creditors based
on the present value of future principal and interest payments associated with
the debt.  The estimated fair value of long-term debt was
approximately $8,000 and $7,900 as of September 25, 2009 and December 31, 2008,
respectively.  The estimated fair value of liabilities subordinated to
claims of general creditors was approximately $277,400 and $238,000 as of
September 25, 2009 and December 31, 2008, respectively.  The estimated
fair values of long-term debt and liabilities subordinated to claims of general
creditors at September 25, 2009 are higher compared to December 31, 2008 due to
the impact of lower interest rates.
 
 BANK
LOANS AND LINES OF CREDIT
 
 The
following table shows the composition of the Partnership's aggregate bank lines
of credit in place as of September 25, 2009, June 26, 2009 and December 31,
2008.
  (Dollars in
      thousands)
                  September
      25,
                  
                  June
      26,
                  
                  
                  December
      31,2009
                  
                  
                  2009
                  
                  
                  2008Uncommitted
      secured
                  
                  $
                  510,000
                  
                  
                  $
                  595,000
                  
                  
                  $
                  745,000Uncommitted
      unsecured
                  
                  
                  50,000
                  
                  
                  
                  50,000
                  
                  
                  
                  100,000Committed
      secured
                  
                  
                  -
                  
                  
                  
                  100,000
                  
                  
                  
                  100,000Total
                  
                  $
                  560,000
                  
                  
                  $
                  745,000
                  
                  
                  $
                  945,000
 
 In
addition to the lines of credit included in the table above the Partnership is
currently in the process of renewing lines of credit consisting of a $100,000
uncommitted secured line of credit and a $50,000 committed secured line of
credit.  These renewal lines of credit will replace lines of credit
which expired on August 12, 2009 and consisted of a $100,000 committed secured
line of credit and a $75,000 uncommitted secured line of credit.  The
Partnership's uncommitted lines of credit are subject to change at the
discretion of the banks and, therefore, due to credit market conditions and the
uncommitted nature of these credit facilities, it is possible that these lines
of credit could decrease or not be available in the future.
  Actual
borrowing availability on the secured lines is based on customer margin
securities and Partnership securities, which serve as collateral on
loans.  There were no amounts outstanding on these lines of credit as
of September 25, 2009 and December 31, 2008.  In addition, the
Partnership did not borrow against these lines of credit during the first nine
months of 2009 and 2008.  However, on October 15, 2009, the
Partnership had one overnight draw in the amount of $35,000 against an
uncommitted unsecured line of credit.
 
 14
 PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
 In
2008, the Partnership entered into a $120,000 revolving unsecured line of credit
which the Partnership has used for funding the construction of the new buildings
and parking garages at its home office facilities in St. Louis, Missouri and
Tempe, Arizona.  The revolving unsecured line of credit has a final
maturity date of August 22, 2010.  To the extent the Partnership
obtains permanent financing on its St. Louis, Missouri South Campus facility
("South Campus") prior to August 22, 2010, the Partnership must apply the
proceeds from the financing towards the amounts outstanding on the revolving
unsecured line of credit.  However, any financing obtained for the
South Campus facility will not reduce the total $120,000 availability under the
revolving unsecured line of credit.  As of September 25, 2009, the
Partnership had drawn $74,000 on the revolving unsecured line of credit (of
which $31,000 was drawn in the first nine months of 2009) to fund construction
projects.  Subsequent to September 25, 2009, an additional $5,000 was
drawn on the revolving unsecured line of credit resulting in $79,000 total
outstanding on the revolving unsecured line of credit as of November 6,
2009.  Each draw is for a period of up to six months, at which time
interest is due, and the Partnership has the option to renew the
draw.  The Partnership plans to renew the existing and future draws at
their maturities and anticipates that at final maturity the revolving unsecured
line of credit will have an aggregate balance outstanding of
$120,000.  The weighted average interest rate for outstanding amounts
under the line of credit was 1.0% as of September 25, 2009, and fluctuates with
the London Interbank Offered Rate ("LIBOR").
 
 PARTNERSHIP
CAPITAL SUBJECT TO MANDATORY REDEMPTION
 
 FASB
ASC 480, Distinguishing
Liabilities from Equity ("ASC 480"), establishes standards for
classifying and measuring certain financial instruments with characteristics of
both liabilities and equity.  Under the provisions of ASC 480, the
obligation to redeem a partner's capital in the event of a partner's death is
one of the Statement's criteria requiring capital to be classified as a
liability.
  Since
the Partnership Agreement obligates the Partnership to redeem a partner’s
capital after a partner’s death, the Statement requires all of the Partnership’s
equity capital be classified as a liability.  Income allocable to
limited, subordinated limited and general partners prior to the issuance of ASC
480 was classified in the Partnership's Consolidated Statement of Income as net
income.  In accordance with ASC 480, these allocations are now
classified as a reduction of income before allocations to partners, which
results in a presentation of $0 net income for the three and nine month periods
ended September 25, 2009 and September 26, 2008.  The financial
statement presentations required to comply with ASC 480 do not alter the
Partnership’s treatment of income, income allocations or capital for any other
purposes.  In addition, ASC 480 does not have any effect on, nor is it
applicable to, the Partnership’s subsidiaries’ financial
statements.
  Net
income, as defined in the Partnership Agreement, is equivalent to income before
allocations to partners on the Consolidated Statements of
Income.  Such income, if any, for each calendar year is allocated to
the Partnership’s three classes of capital in accordance with the formulas
prescribed in the Partnership Agreement.  First, limited partners are
allocated net income (as defined in the Partnership Agreement) in accordance
with the prescribed formula for their share of net income.  Limited
partners do not share in the annual net loss in any year, unless the Partnership
is dissolved or liquidated.  Thereafter, subordinated limited partners
and general partners are allocated any remaining net income or annual net loss
based on formulas in the Partnership Agreement.
   15
 PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
 The
partnership capital subject to mandatory redemption, net of the reserve for
anticipated withdrawals, of $1,441,898 consists of $467,890 of limited
partnership capital issued in $1,000 units, $196,341 of subordinated limited
partnership capital and $777,667 of general partnership capital as of September
25, 2009.  As of December 31, 2008, the partnership capital subject to
mandatory redemption, net of the reserve for anticipated withdrawals, of
$1,412,695 consisted of $482,366 of limited partnership capital issued in $1,000
units, $176,933 of subordinated limited partnership capital and $753,396 of
general partnership capital.
  The
limited partnership capital subject to mandatory redemption is held by current
and former employees and general partners of the Partnership.  Limited
partners are guaranteed a minimum 7.5% return on their capital, which is
included as a component of interest expense.  This return was $8,794
and $9,142 for the three months ended September 25, 2009 and September 26, 2008,
respectively, and $26,640 and $27,583 for the nine months ended September 25,
2009 and September 26, 2008, respectively.  The 7.5% return is paid to
limited partners regardless of the Partnership’s earnings.
  The
subordinated limited partnership capital subject to mandatory redemption is held
by current and former general partners of the Partnership.  Each
subordinated limited partner receives a varying percentage of the net income of
the Partnership.  The subordinated limited partner capital subject to
mandatory redemption is subordinated to the limited partnership
capital.
  The
general partnership capital subject to mandatory redemption is held by current
general partners of the Partnership.  Each general partner receives a
varying percentage of the net income of the Partnership.  The general
partner capital subject to mandatory redemption is subordinated to the limited
partnership capital.
 
 NET
CAPITAL REQUIREMENTS
 
 As
a result of its activities as a broker-dealer, Edward Jones is subject to the
net capital provisions of Rule 15c3-1 of the Securities Exchange Act of
1934.  Under the alternative method permitted by the rule, Edward
Jones must maintain minimum net capital equal to the greater of $250 or 2% of
aggregate debit items arising from customer transactions.  The net
capital rule also provides that partnership capital may not be withdrawn if the
resulting net capital would be less than 5% of aggregate debit
items.  Additionally, certain withdrawals require the consent of the
SEC to the extent they exceed defined levels, even though such withdrawals would
not cause net capital to be less than 5% of aggregate debit items.
  At
September 25, 2009, Edward Jones' net capital of $704,165 was 36.6% of
aggregate debit items and its net capital in excess of the minimum required was
$665,708.  Net capital after anticipated withdrawals, as a percentage
of aggregate debit items, was 36.6%.  Net capital and the related
capital percentages may fluctuate on a daily basis.
  At
September 25, 2009, the Partnership’s foreign broker-dealer subsidiaries and
EJTC were in compliance with regulatory capital requirements in the
jurisdictions in which they operate.
  During
the second quarter of 2009, the Financial Services Authority ("FSA") completed a
new supervisory review requirement of the Internal Capital Adequacy Assessment
Process ("ICAAP") for the U.K. subsidiary of Edward Jones.  This
review established an amount of required capital for the Partnership's U.K.
subsidiary.  The existing capital of the U.K. subsidiary was already
in excess of the increased minimum capital required by the
 
 
 16
 PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
 
 FSA
and therefore no additional capital was required to be contributed to the U.K.
subsidiary as a result of the ICAAP review.  See Subsequent Events
note for further details on the U.K. subsidiary.
 
 CONTINGENCIES
 
 In
the normal course of business, the Partnership has been named, as a defendant in
various legal actions, including arbitrations, class actions and other
litigation.  Certain of these legal actions include claims for
substantial compensatory and/or punitive damages or claims for indeterminate
amounts of damages.  The Partnership is also involved from time to
time in investigations and proceedings by governmental and self-regulatory
agencies, certain of which may result in adverse judgments, fines or
penalties.
  In
view of the inherent difficulty of predicting the outcome of such matters,
particularly in cases in which claimants seek substantial or indeterminate
damages or actions which are in very preliminary stages, the Partnership cannot
predict with certainty the eventual loss or range of loss related to such
matters.  The Partnership has determined it is likely that an ultimate
resolution in favor of the plaintiffs will result in losses to the Partnership
on some of these matters, and as a result, has established appropriate accruals
for potential litigation losses.  Based on current knowledge and after
consultation with counsel, the Partnership believes the outcome of these actions
will not have a material adverse effect on the consolidated financial condition
of the Partnership, although the outcome could be material to the Partnership’s
future operating results for a particular period or periods.
  Also,
in the normal course of business, the Partnership enters into contracts which
contain indemnification provisions, such as purchase contracts, service
agreements, escrow agreements, sales of assets, outsourcing agreements and
leasing arrangements.  Under the provisions of these contracts, the
Partnership may indemnify counterparties to the contracts for certain aspects of
the Partnership's past conduct if such counterparties fail to perform, or if
certain events occur.  These indemnification provisions will vary
based upon the contract.  The Partnership may in turn obtain
indemnifications from other parties in certain contracts.  These
indemnification provisions are not expected to have a material impact on the
Partnership's results of operations or financial condition.
 
 COMMITMENTS
 
 The
Partnership is in the process of expanding its home office facilities in order
to support its current and future growth plans.  Construction
activities for 2009 include an office building at its St. Louis, Missouri, North
Campus location, a building addition and garage at its South Campus location,
and a parking garage at its Tempe, Arizona campus.  The office
building at the St. Louis, Missouri, North Campus location was completed
and placed into service in September 2009.  The total capitalized
costs related to this building as of September 25, 2009 was $111,018 and is
included in the buildings and improvements and equipment, furniture and fixtures
categories of equipment, property and improvements.  The remaining
estimated costs related to this building consist of estimated costs accrued for
but not yet paid, as well as costs not yet incurred primarily related to office
equipment.  The parking garage at the Tempe, Arizona campus was
completed and placed into service in July 2009.  The total capitalized
costs related to this parking garage as of September 25, 2009 was $19,611 and is
included in the buildings and improvements category of equipment, property and
improvements.  The costs related to construction activities not yet
placed into service are reflected in the construction in
 
 17
 
 PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
 progress, which
is reflected in the equipment, property and improvements line item on the
Consolidated Statement of Financial Condition. The Partnership had $110,050
and $118,104 in construction in progress as of September 25, 2009 and December
31, 2008, respectively.
  The
following table shows the estimated construction, furniture, fixtures and
equipment and infrastructure costs for each construction project, the amounts
associated with executed agreements, amounts paid as of September 25, 2009 and
remaining estimated costs.
 
 EstimatedCostsBuilding/
                  
                  
                  
                  
                  
                  
                  
                  
                  Amounts
                  
                  
                  RemainingAddition
                  
                  
                  
                  
                  
                  
                  
                  
                  Paid
      as of
                  
                  
                  as
      ofCompletion
                  
                  Square
                  
                  
                  Estimated
                  
                  Executed
                  
                  
                  Sept.
      25,
                  
                  
                  Sept.
      25,Construction
      Project
                  Date
                  
                  Footage
                  
                  
                  Costs
                  
                  Agreements
                  
                  
                  2009
                  
                  
                  2009130 Edward
      Jones Blvd.(North
      Campus)
                  September
      2009
                  
                  
                  370,000
                  
                  
                  $
                  129,147
                  
                  
                  $
                  115,110
                  
                  
                  $
                  107,115
                  
                  
                  $
                  22,03212555
      Manchester addition and
                  Estimatedrelated
      garage (South Campus)
                  December
      2009
                  
                  
                  225,000
                  
                  
                  
                  137,651
                  
                  
                  
                  119,482
                  
                  
                  
                  97,074
                  
                  
                  
                  40,577Tempe Campus
      garage
                  July
      2009
                  
                  
                  
                  
                  
                  
                  19,960
                  
                  
                  
                  19,098
                  
                  
                  
                  18,258
                  
                  
                  
                  1,702Total
                  
                  
                  
                  
                  
                  
                  $
                  286,758
                  
                  
                  $
                  253,690
                  
                  
                  $
                  222,447
                  
                  
                  $
                  64,311
 
 The
total estimated amount needed to complete the above construction projects of
$64,311 will be financed by the remaining available balance of $41,000, as of
November 6, 2009, from the $120,000 revolving unsecured line of credit (which
matures August 2010) and the Partnership's existing working
capital.  The Partnership plans to obtain additional financing in the
future, including the refinancing of the $120,000 revolving unsecured line of
credit.  There can be no assurance that such financing will be
available at attractive terms, or at all, in the future.  The
Partnership anticipates the estimated amounts remaining to be paid of $64,311
will be incurred and paid throughout 2009 and the first quarter of
2010.  Of this amount, the Partnership has recorded $19,787 as accrued
costs included in equipment, property and improvements in the Consolidated
Financial Statements as of September 25, 2009.  In addition to the
cost of expanding the home office facilities, the Partnership expects operating
expenses including depreciation to increase as the new facilities are placed
into service.
  In
addition to the construction activities previously mentioned, the Partnership
committed, in October 2009, to construct an additional parking garage at its St.
Louis, Missouri, North Campus location.  The costs associated with
constructing this parking garage are estimated to be $24,000 and will be paid
for throughout 2010 and into the early portion of 2011 from the Partnership's
existing working capital.
 
 FOREIGN
OPERATION MATTERS
 
 During
the second quarter of 2009, the Partnership's Canadian subsidiary became
self-clearing.  In this new self-clearing environment, the Canadian
subsidiary no longer relies on National Bank Correspondent Network and National
Bank Financial for processing customer transactions and maintaining the related
customer books and records.  The Canadian subsidiary has become the
custodian for customer securities and manages all related securities and cash
processing, such as trades, dividends, corporate actions, customer cash receipts
and disbursements, customer tax reporting, and statements.  Trades are
executed by the Canadian subsidiary directly with the Toronto Stock Exchange or
other venues, and the firm
 
 18
 PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
 has
become a member of the Canadian Depository of Securities and FundServ for
clearing and settlement of transactions.  In order to support this new
self-clearing environment, the Canadian subsidiary executed agreements with
Broadridge Financial Solutions, Inc. to provide the securities processing
systems along with other agreements with other providers to perform selected
services.
  As
of July 29, 2009, the FSA approved the EDJ Limited's request to become a limited
license firm, at which point the U.K. subsidiary's fixed income trading is done
on an agency basis only.  See Subsequent Events note for further
details on the U.K. subsidiary.
 
 FINANCIAL
SERVICES REGULATORY MATTERS
 
 During
the second quarter of 2009, significant financial services industry regulatory
reform was proposed by the current presidential administration.  This
proposed regulatory reform includes creating a new Consumer Financial Protection
Agency, adding new fiduciary standards for broker-dealers, and other provisions
that could potentially impact the Partnership's operations.  While
this regulatory reform is only proposed, the industry and the Partnership are
still assessing the specific impact.  Currently, financial services
regulatory reform is being discussed and considered by various governmental
agencies, financial services firms and other industry participants.
 
 SUBSEQUENT
EVENTS
 
 On
October 22, 2009, Edward Jones entered into a Share Purchase Agreement
("Agreement") to sell all of the issued and outstanding shares of the
Partnership's subsidiary EDJ Limited.  Pursuant to the Agreement,
Edward Jones has agreed to sell its operations in the U.K. through the sale of
all of the issued and outstanding shares of EDJ Limited.  In
connection with the sale, Edward Jones will receive an amount equal to EDJ
Limited's net assets in excess of approximately £36,000
(approximately $60,000), determined as of the closing date.  EDJ
Limited had net assets of approximately £44,000
(approximately $73,000) as of the date of the agreement and therefore the net
assets in excess £36,000
(approximately $60,000) of at that time were approximately £8,000
(approximately $13,000).  The actual amount to be received upon
closing will vary depending on the actual date of the closing.  Any
losses incurred by EDJ Limited before closing will reduce net assets and
therefore the excess distributed to the Partnership.  The Partnership is obligated to maintain a minimum of
£36,000 (approximately $60,000) in net assets as of the closing
date.An additional £5,000
(approximately $8,000) is to be paid to Edward Jones on the one-year anniversary
of the closing).  In addition, Edward Jones may receive additional
payments from the purchaser based on any utilization of tax loss carry-forwards
in the 12 years following the closing.  Although there is no assurance
that the purchaser will be able to utilize the tax loss carry-forwards and
therefore that Edward Jones will receive any additional future
payments.  In connection with this sale transaction, the Partnership
anticipates that it will record charges ranging from approximately $70,000 to
$75,000.  The charges include a loss on the sale, as well as future
cash expenditures, including approximately $15,000 of contract termination costs
primarily related to the head office lease.  In addition, Edward Jones
has agreed to provide certain transition services to the purchaser for up to
nine months following the closing of the transaction.  The Partnership
anticipates the transaction, which is subject to receipt of necessary regulatory
approvals by the FSA and other customary closing conditions, to close in the
fourth quarter of 2009 or in the first quarter of 2010.  The major
categories of assets and liabilities as of September 25, 2009 and December 31,
2008 related to EDJ Limited are as follows:
 
 19
 PART
I.FINANCIAL
INFORMATION
  Item
1.  Financial Statements, continued
 (Unaudited)September
      25,
                  
                  December
      31,(Dollars
      in millions)
                  
                  2009
                  
                  
                  2008Cash and cash
      equivalents including segregated cash
                  
                  $
                  128.5
                  
                  
                  $
                  71.8Receivables
                  
                  
                  11.6
                  
                  
                  
                  6.6Securities
      owned, at fair value
                  
                  
                  2.7
                  
                  
                  
                  8.2Equipment,
      property and improvements, at cost,net of
      accumulated depreciation
                  
                  
                  9.6
                  
                  
                  
                  8.1Other
      assets
                  
                  
                  3.2
                  
                  
                  
                  2.9TOTAL
      ASSETS
                  
                  $
                  155.6
                  
                  
                  $
                  97.6Payables
                  
                  
                  70.3
                  
                  
                  
                  41.7Securities
      sold, not yet purchased, at fair value
                  
                  
                  0.4
                  
                  
                  
                  2.1Accounts
      payable and accrued expenses
                  
                  
                  13.3
                  
                  
                  
                  12.3TOTAL
      LIABILITIES
                  
                  $
                  84.0
                  
                  
                  $
                  56.1NET
      ASSETS
                  
                  $
                  71.6
                  
                  
                  $
                  41.5
  In
October 2009, the Partnership entered into a $30,000 financing agreement with
three banks to fund the purchases of office equipment.  This financing
agreement will be paid over a term of 48 months at a rate of 315 basis points
(3.15%) in excess of LIBOR and is secured by the equipment being
financed.  On October 30, 2009, the Partnership drew $13,671 on this
agreement to fund the purchase of branch office equipment.  Additional
amounts are expected to be executed in future periods to fund additional
purchases of office equipment.
  Subsequent
to September 25, 2009, an additional $5,000 was drawn on the Partnership's
$120,000 revolving unsecured line of credit resulting in $79,000 total
outstanding on the revolving unsecured line of credit as of November 6,
2009.
 
 
 20
 PART
I.FINANCIAL
INFORMATION
  Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 
 BASIS
OF PRESENTATION
 
 For
internal analysis, the Partnership broadly categorizes its revenues as trade
revenue (revenue from customers' buy or sell transactions of securities) and net
fee revenue (sources other than trade revenue).  In the Partnership’s
Consolidated Statements of Income, trade revenue is composed of revenues from
commissions, principal transactions and investment banking.  Net fee
revenue is composed of asset fees, account and activity fees, interest and
dividends (net of interest expense) and other revenues.
 
 RESULTS
OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 25, 2009 AND SEPTEMBER 26,
2008
 
 As
noted in the Partnership's second quarter Form 10-Q filing for the three months
ended June 26, 2009, the Partnership has not been immune to the weakening
economic conditions and market turmoil that has occurred since September
2008.  Although the market conditions have recently improved, the
quarter to date results as of September 25, 2009 are down as compared to the
same period last year due to the significant market declines related to the
severe economic contraction that occurred towards the end of 2008 and into
2009.   This discussion compares the three months ended September
25, 2009 to the three months ended September 26, 2008.
  Net
revenue decreased 5% ($43.5 million) to $886.9 million for the third
quarter of 2009 as compared to the third quarter of 2008, primarily due to
reduced trade revenue, net interest income and asset fees, which were partially
offset by increases in account and activity fee revenue and other
revenue.  For further details on these fluctuations, see the
discussion in the Trade Revenue and Net Fee Revenue sections below.
  Compensation
and benefits expenses decreased primarily due to reduced revenues and reduced
Partnership profitability.  Remaining operating expenses (excluding
compensation and benefits expenses) decreased primarily due to the Partnership's
focus on reducing operating costs.  The Partnership added 220
financial advisors, an increase of 2% during the three months ended September
25, 2009 and September 26, 2008, compared to an increase of 217 financial
advisors during the three months ended September 26, 2008.  During the
twelve months ended September 25, 2009, the Partnership added 877 financial
advisors ending the period with 12,777 financial advisors, an increase of 7%
from 11,900 as of September 26, 2008.
  Income
before allocations to partners decreased 30% ($22.2 million) to $50.6
million.  The Partnership’s profit margin based on income before
allocations to partners decreased to 5.6% in the third quarter of 2009 from 7.7%
in the third quarter of 2008.
  Trade
Revenue
 
 Trade
revenue comprised 55% of net revenue for the third quarters of both 2009 and
2008.  Conversely, net fee revenue comprised 45% for the third
quarters of both 2009 and 2008.
  Trade
revenue of $488.2 million, which consists of revenue from commissions, principal
transactions and investment banking, decreased 5% ($26.0 million) compared to
the third quarter of 2008.  The decrease in trade revenue was due to a
decrease in customer dollars invested (the principal
 21
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                    Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 
 amount
of customer buy and sell transactions generating a commission) in the third
quarter of 2009 compared to the third quarter of 2008, which was partially
offset by an increase in the margin earned on overall customer dollars
invested.  Total customer dollars invested were $21.1 billion
during the third quarter of 2009, a 27% ($7.9 billion) decrease from the
third quarter of 2008.  The Partnership's margin earned on each $1,000
invested increased to $23.10 for the third quarter of 2009 from $17.80 for the
third quarter of 2008. This increase was caused by customers shifting from lower
margin certificate of deposit products to higher margin equity and mutual fund
products.
  Commissions
revenue decreased 6% ($23.5 million) for the third quarter of 2009 to
$349.6 million due to a decrease in customer dollars invested partially
offset by an increase in margins earned.  Customer dollars invested
decreased 10% ($1.5 billion) to $13.5 billion.  The Partnership's
margin earned on commission generating transactions for each $1,000 invested
increased to $25.90 during the third quarter of 2009 from $24.90 during the
third quarter of 2008.  The overall decrease in commissions revenues
in the third quarter of 2009 was a result of customers investing less in mutual
fund and insurance products compared to the same period last year.
  The
following table summarizes commissions revenue
quarter-over-quarter:
  (Dollars in
      millions)
                  
                  Three Months
      EndedSeptember
      25,
                  
                  
                  September
      26,
                  
                  
                  $
                  
                  
                  %2009
                  
                  
                  2008
                  
                  
                  Change
                  
                  
                  ChangeMutual
      funds
                  
                  $
                  199.5
                  
                  
                  $
                  219.2
                  
                  
                  $
                  (19.7
                  )
                  
                  
                  (9
                  )Equities
                  
                  
                  83.5
                  
                  
                  
                  77.1
                  
                  
                  
                  6.4
                  
                  
                  
                  8Insurance
                  
                  
                  66.1
                  
                  
                  
                  76.7
                  
                  
                  
                  (10.6
                  )
                  
                  
                  (14
                  )Corporate
      bonds
                  
                  
                  0.5
                  
                  
                  
                  0.1
                  
                  
                  
                  0.4
                  
                  
                  
                  400$
                  349.6
                  
                  
                  $
                  373.1
                  
                  
                  $
                  (23.5
                  )
                  
                  
                  (6
                  )
   
 Principal
transactions revenue decreased 11% ($14.5 million) to $115.4 million compared to
the third quarter of 2008.  Customers invested $6.8 billion in
products that resulted in principal transactions revenue in the third quarter of
2009, a 50% decrease compared to $13.6 billion in the third quarter of
2008.  The Partnership’s margin earned on these products for each
$1,000 invested increased to $16.70 during the third quarter of 2009 from $9.70
during the third quarter of 2008 primarily due to a shift into higher margin,
tax-free fixed income products from lower margin certificates of
deposit.  Certificates of deposit are the Partnership's lowest margin
product averaging $3.20 per $1,000 invested in the current
quarter.  In the third quarter of 2009, revenue from municipal bonds
increased 1% ($0.9 million), unit investment trusts increased 463%
($16.2 million) and government bonds increased 32% ($1.6 million),
while corporate bonds decreased 57% ($16.5 million), certificates of
deposit decreased 65% ($14.9 million) and collateralized mortgage
obligations decreased 44% ($1.8 million).  Unit investment trusts
revenue increased because of an increase in traditional tax free trusts and the
introduction of a new trust for taxable municipal bonds.  Corporate
bonds revenue decreased as a result of reduced activity due to the current
interest rate and market environment as well as a shift from customers investing
in taxable corporate bonds to investing in taxable municipal bonds.
   22
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                      Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 The
following table summarizes principal transactions revenue
quarter-over-quarter:
 
 (Dollars in
      millions)
                  
                  Three Months
      EndedSeptember
      25,
                  
                  
                  September
      26,
                  
                  
                  $
                  
                  
                  %2009
                  
                  
                  2008
                  
                  
                  Change
                  
                  
                  ChangeMunicipal
      bonds
                  
                  $
                  66.2
                  
                  
                  $
                  65.3
                  
                  
                  $
                  0.9
                  
                  
                  
                  1Unit
      investment trusts
                  
                  
                  19.7
                  
                  
                  
                  3.5
                  
                  
                  
                  16.2
                  
                  
                  
                  463Corporate
      bonds
                  
                  
                  12.5
                  
                  
                  
                  29.0
                  
                  
                  
                  (16.5
                  )
                  
                  
                  (57
                  )Certificates
      of deposit
                  
                  
                  8.1
                  
                  
                  
                  23.0
                  
                  
                  
                  (14.9
                  )
                  
                  
                  (65
                  )Government
      bonds
                  
                  
                  6.6
                  
                  
                  
                  5.0
                  
                  
                  
                  1.6
                  
                  
                  
                  32Collateralized
      mortgage obligations
                  
                  
                  2.3
                  
                  
                  
                  4.1
                  
                  
                  
                  (1.8
                  )
                  
                  
                  (44
                  )$
                  115.4
                  
                  
                  $
                  129.9
                  
                  
                  $
                  (14.5
                  )
                  
                  
                  (11
                  )
 
 Investment
banking revenue increased 108% ($12.1 million) to $23.3 million compared to the
third quarter of 2008 primarily because of increased unit investment trust
underwriting and taxable municipal bond offerings in the current
quarter.
 
 Net
Fee Revenue
 
 Net
fee revenue, which is fee revenue net of interest expense, decreased 4% ($17.5
million) to $398.6 million compared to the third quarter of
2008.
  Asset
fees decreased 9% ($24.3 million) to $251.7 million due primarily to a
decrease in the market value of customer mutual fund assets held resulting from
the significant decline in asset values which is a reflection of the decline in
the stock market as compared to September 2008.  This decrease was
partially offset by an increase in Advisory Solutions program revenue, which was
first offered by the Partnership in June 2008.  This program provides
investment advisory services to its customers for a monthly fee based upon the
customers' average asset values in the program.  This advisory program
consists of an Edward Jones managed account invested in mutual funds,
exchange-traded funds (ETFs) and money market funds.  The revenue from
the Advisory Solutions program was $43.2 million for the third quarter of 2009
as compared to $5.6 million for the third quarter of 2008, a
$37.6 million increase, due to the increase in customer dollars invested in
Advisory Solutions.  Gross customer dollars invested in the Advisory
Solutions program were $7.4 billion for the third quarter of
2009.  This was an increase of 95% ($3.6 billion) compared to $3.8
billion for the same period of 2008.
  The
following table summarizes average U.S. customer asset values
quarter-over-quarter, which relate to U.S. asset fee revenue representing the
vast majority of consolidated asset fee revenue for the three months ended
September 25, 2009.
   23
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                      Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 (Dollars in
      billions)
                  
                  Average U.S.
      customer assetvalues as
      ofSeptember
      25,
                  
                  
                  September
      26,
                  
                  
                  $
                  
                  
                  %2009
                  
                  
                  2008
                  
                  
                  Change
                  
                  
                  ChangeMutual fund
      assets held outsideof Advisory
      Solutions
                  
                  $
                  228.5
                  
                  
                  $
                  265.8
                  
                  
                  $
                  (37.3
                  )
                  
                  
                  (14
                  )Money
      market
                  
                  
                  20.8
                  
                  
                  
                  22.7
                  
                  
                  
                  (1.9
                  )
                  
                  
                  (8
                  )Insurance
                  
                  
                  38.2
                  
                  
                  
                  39.3
                  
                  
                  
                  (1.1
                  )
                  
                  
                  (3
                  )Advisory
      Solutions
                  
                  
                  14.2
                  
                  
                  
                  2.1
                  
                  
                  
                  12.1
                  
                  
                  
                  576$
                  301.7
                  
                  
                  $
                  329.9
                  
                  
                  $
                  (28.2
                  )
                  
                  
                  (9
                  )
 
 As
a 49.5% limited partner of Passport Research Limited, the investment advisor to
money market funds made available to Edward Jones customers, the Partnership
receives a portion of the income of the investment advisor.  Beginning
in March 2009, the investment advisor has voluntarily chosen to reduce certain
fees charged to the funds to a level that will maintain a positive customer
yield on the funds due to the current low interest rate
environment.  This reduction in fees reduced the Partnership's revenue
by $18.0 million in the third quarter of 2009.  Depending upon the
overall interest rate environment, the reduction in fees charged to the funds is
expected to continue in future periods.
  Account
and activity fees of $125.3 million increased 5% ($5.8 million)
quarter-over-quarter.  Revenue received from sub-transfer agent
services performed for mutual fund companies decreased 3% ($1.8 million) to
$67.2 million.  In addition, retirement account fees increased 6%
($1.9 million) to $32.7 million for the third quarter of 2009 compared to the
third quarter of 2008, primarily due to an increase in the number of retirement
accounts.
  Net
interest and dividend income decreased 51% ($15.2 million) to $14.6 million
compared to the third quarter of 2008 primarily because of a decrease in
interest rates.  Interest income from cash and investments segregated
under federal and other regulations and securities purchased under agreements to
resell decreased 82% ($9.6 million).  The average funds invested
in cash and cash equivalents, cash and investments segregated under federal and
other regulations and securities purchased under agreements to resell during the
third quarter of 2009 were $3.0 billion compared to $2.2 billion in
the third quarter of 2008.  The average rate earned on these
investments decreased to 0.26% during the third quarter of 2009 from 2.06%
during the third quarter of 2008.  The rates earned on these
investments trended down throughout 2008 and into the first quarter of 2009 with
the most significant declines toward the end of 2008, and have remained at
historically low rates through the third quarter of
2009.  Additionally, interest income from customer loans decreased 18%
($5.7 million) to $25.5 million.  The average aggregate
customer loan balance in the third quarter of 2009 decreased 9% ($180 million)
to $1.9 billion, and the average rate earned on those customer loan balances
decreased as a result of the decline in interest rates during the past year to
approximately 5.29% during the third quarter of 2009 from 5.91% during the third
quarter of 2008.  In addition, interest expense decreased 20% ($3.5
million) to $14.1 million during the third quarter of 2009 primarily due to
reductions in customer credit interest and bank interest expense.
 
 24
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                      Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 Other
revenue increased $16.2 million quarter-over-quarter.  The increase
between quarters isprimarily attributable to gains resulting from an
increase in value in the investments held related to the Partnership's
non-qualified deferred compensation plan and foreign currency translation
gains.  The investments held related to the non-qualified deferred
compensation plan increased in fair value by $7.3 million during the three
months ended September 25, 2009, versus a decrease of $6.1 million in the same
period last year, resulting in a $13.4 million increase in revenue between
the comparable quarters.  As the fair value of the investments held
related to the non-qualified compensation plan fluctuates, the gains or losses
are reflected in other revenue with an offset in compensation and benefits
expense, resulting in no impact to the Partnership's income before allocations
to partners.  The translation of the Partnership's foreign subsidiary
financial statements from local currencies to U.S. dollars resulted in a $1.9
million loss during the third quarter of 2009 compared to a $5.3 million
loss in the third quarter of 2008, resulting in a $3.4 million increase in other
revenue.  The Partnership records foreign currency gains or losses
when it translates the balance sheets of its Canadian and U.K. subsidiaries from
local currency into U.S. dollars.  When the U.S. dollar strengthens
against the Canadian dollar and the British pound, the Partnership records a
loss.  Likewise, when the U.S. dollar weakens against the Canadian
dollar and the pound, the Partnership records a gain.
 
 Operating
Expenses
 
 Operating
expenses decreased 2% ($21.3 million) to $836.2 million compared to the third
quarter of 2008.  Compensation and benefits costs decreased $2.3
million, net of the $13.5 million increase related to the Partnership's
non-qualified deferred compensation plan mentioned above, to
$573.4 million.  Within compensation and benefits costs,
financial advisor compensation decreased 1% ($3.2 million) due to decreased
trade revenues and service fee revenue, while financial advisor salary and
subsidy increased 5% ($1.9 million) as a result of new financial advisor
compensation programs as well as an increased number of financial advisors
participating in the programs.  Variable compensation (which includes
bonuses and profit sharing paid to financial advisors, branch office assistants
and headquarters associates) expands and contracts in relation to revenues,
income before allocations to partners and the Partnership’s related profit
margin.  In the third quarter of 2009, variable compensation decreased
17% ($6.5 million) as compared to the third quarter of
2008.  Headquarters salary and benefit expense increased 2% ($1.9
million) to $86.3 million in the third quarter of 2009.  Branch salary
and benefit expense increased 4% ($4.1 million) to
$110.6 million.  Salary and benefit costs increased as the
Partnership grew its financial advisor network.
  On
a full-time equivalent basis, the Partnership had 5,061 headquarters associates
and contractors and 12,427 branch staff associates as of September 25, 2009,
compared to 5,253 headquarters associates and contractors and 11,929 branch
staff associates as of September 26, 2008.   The decrease in
headquarter associates and contractors during the past year is primarily the
result of reduced Information System and other third-party contractors due to
the Partnership's efforts to reduce costs.  The increase in branch
associates is to directly support the increased number of financial
advisors.
  Occupancy
and equipment expense increased 6% ($4.8 million) to $84.9 million compared to
the third quarter of 2008 due to increased costs related to the continued
expansion of the Partnership's branch office network and home office
facilities.
  The
remaining operating expenses decreased 12% ($23.9 million) to $177.9 million
compared to the third quarter of 2008 primarily due to the Partnership's focus
on reducing operating costs most
notably in the communications and data processing, advertising and other
operating expense categories.
 
 25
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                      Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 
 RESULTS
OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 25, 2009 AND JUNE 26,
2009
 
 As
noted above, the Partnership has not been immune to the weakening economic
conditions and market turmoil that has occurred over the past
year.  Although the Partnership is still experiencing the impact of
weak economic conditions, the Partnership's net revenue has improved from the
second quarter of 2009 due to the continued recovery in the stock
market.  The Dow Jones Industrial Average was up 15% for the quarter,
which marked the best quarterly gain since the fourth quarter of
1998.  The overall market recovery has resulted in market averages
being up over 50% from their low in March 2009, but still down 33% from the high
reached in October 2007.  This discussion compares the third quarter
of 2009 to the second quarter of 2009 to provide a more current comparison than
a year-over-year comparison.
  Net
revenue increased 2% ($20.2 million) in the third quarter of 2009 to $886.9
million as compared to $866.7 million in the second quarter of
2009.
  Trade
revenue of $488.2 million increased 2% ($7.8 million) from $480.4
million for the third quarter of 2009.  The increase in trade revenue
was primarily the result of an increase in the margin earned on overall customer
dollars invested in the third quarter of 2009, which was partially offset by a
decrease in customer dollars invested.  Total customer dollars
invested were $21.1 billion during the third quarter of 2009, a 3%
($0.7 billion) decrease from the second quarter of 2009.  The
Partnership's margin earned on each $1,000 invested increased to $23.10 for the
third quarter of 2009 from $22.00 for the second quarter of 2009, primarily due
to a shift in product mix to higher margin mutual fund products from lower
margin certificates of deposit.
  Net
fee revenue of $398.7 million for the third quarter of 2009 increased 3% ($12.4
million) as compared to $386.3 million for the second quarter of
2009.  The primary drivers of this increase were increased asset fee
revenue of $25.9 million, due to the increase in the third quarter of 2009 in
the market value of the assets on which the fees are earned in addition to an
increase in Advisory Solutions revenue, which increased 84% ($19.7 million)
quarter-over-quarter.  This increase was partially offset by a
decrease of $13.3 million in foreign currency gains, as a result of
translating foreign balance sheets to U.S. dollars for consolidated
reporting.
  Operating
expenses increased 4% ($34.7 million) to $836.3 million for the third quarter of
2009 from $801.6 million for the second quarter of 2009.  This
increase in operating expenses was primarily the result of higher compensation
and benefits costs due to increased revenue subject to payout to financial
advisors and variable compensation in the third quarter of 2009, partially
offset by decreases in communications and other operating expenses resulting
from increased cost savings measures.
  Income
before allocations to partners decreased 22% ($14.5 million) in the third
quarter of 2009 to $50.6 million as compared to $65.2 million in the second
quarter of 2009, primarily as a result of an increase in variable compensation,
which is based on the Partnership's profit margin, quarter over
quarter.  This increase in variable compensation was attributed to
additional bonus expense recorded in the third quarter for financial advisors,
branch staff and headquarters associates, which is based on the Partnership's
profit margin.
  26
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                      Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 RESULTS
OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 25, 2009 AND SEPTEMBER
26, 2008
 
 As
of the end of the third quarter of 2009, the stock market has significantly
improved from the severe decline that the market experienced beginning in the
third quarter of 2008, which had caused investors to sell securities and
purchase more conservative products such as certificates of deposit and other
fixed income products.  This discussion incorporates the impact of the
improving conditions on the Partnership's results of operations in the later
portion of the nine months ended September 25, 2009 as compared to the declining
conditions in the later portion of the nine months ended September 26,
2008.
  For
the first nine months of 2009, net revenue decreased 14% ($402.2 million) to
$2.5 billion, which was primarily attributable to decreased trade revenue, asset
fee revenue and net interest income, which were partially offset by an increase
in account and activity fee revenue and other revenue.  For further
details on these fluctuations, see the discussion in the Trade Revenue and Net
Fee Revenue sections below.
  Compensation
and benefits expenses decreased primarily due to reduced revenues and reduced
Partnership profitability.  Remaining operating expenses (excluding
compensation and benefits expenses) decreased primarily due to the Partnership's
focus on reducing operating costs.  The Partnership added 622
financial advisors, and increase of 5%, during the nine months ended September
25, 2009, compared to an increase of 6%, or 698 financial advisors, during the
nine months ended September 26, 2008.  During the twelve months ended
September 25, 2009, the Partnership added 877 financial advisors ending the
period with 12,777 financial advisors, an increase of 7% from 11,900 as of
September 26, 2008.
  Income
before allocations to partners decreased 45% ($122.6 million) to $152.1
million.  The Partnership’s profit margin based on income before
allocations to partners decreased to 5.9% for the first nine months of 2009 from
9.1% in the first nine months of 2008.
 
 Trade
Revenue
 
 Trade
revenue comprised 56% of net revenue for the first nine months of both 2009 and
2008.  Conversely, net fee revenue comprised 44% for the first nine
months of 2009 and 2008.
  Trade
revenue of $1.4 billion decreased 14% ($230.7 million) during the first nine
months of 2009 compared to the same period in the prior year.  This
decrease in trade revenue was due to a decrease in customer dollars invested
(the principal amount of customers' buy and sell transactions generating a
commission) and two less business days in the first nine months of 2009, which
was partially offset by an increase in the margin earned on overall customer
dollars invested.  Total customer dollars invested were $65.2 billion
during the first nine months of 2009, a 25% ($21.3 billion) decrease from the
first nine months of 2008 primarily caused by current market conditions and
weakened investor confidence.  The Partnership's margin earned on each
$1,000 invested increased to $22.00 for the first nine months of 2009 from
$19.30 in 2008.  This increase was caused by customers shifting from
lower margin certificate of deposit products to higher margin insurance and
fixed income products.
  27
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                      Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 Commissions
revenue decreased 19% ($238.0 million) for the first nine months of 2009 to
$1.0 billion.  Commissions revenue decreased year-over-year due
primarily to a 21% ($10.3 billion) decrease in customer dollars invested in
commission generating transactions to $39.4 billion, which was partially
offset by an increase in the margin earned on customer dollars
invested.  The Partnership's margin earned on each $1,000 invested
increased to $25.60 for the first nine months of 2009 from $25.10 in
2008.  Underlying the decrease in commission revenues, mutual fund
commissions decreased 29% ($233.6 million) and insurance commissions decreased
4% ($8.9 million), which were partially offset by an increase in equity
commissions of 2% ($4.1 million).
  The
following table summarizes commissions revenue year-over-year:
 
 (Dollars in
      millions)
                  
                  Nine Months
      EndedSeptember
      25,
                  
                  
                  September
      26,
                  
                  
                  $
                  
                  
                  %2009
                  
                  
                  2008
                  
                  
                  Change
                  
                  
                  ChangeMutual
      funds
                  
                  $
                  565.6
                  
                  
                  $
                  799.2
                  
                  
                  $
                  (233.6
                  )
                  
                  
                  (29
                  )Equities
                  
                  
                  234.0
                  
                  
                  
                  229.9
                  
                  
                  
                  4.1
                  
                  
                  
                  2Insurance
                  
                  
                  208.6
                  
                  
                  
                  217.5
                  
                  
                  
                  (8.9
                  )
                  
                  
                  (4
                  )Corporate
      bonds
                  
                  
                  0.7
                  
                  
                  
                  0.3
                  
                  
                  
                  0.4
                  
                  
                  
                  133$
                  1,008.9
                  
                  
                  $
                  1,246.9
                  
                  
                  $
                  (238.0
                  )
                  
                  
                  (19
                  )
 
 Principal
transactions revenue decreased 5% ($20.6 million) to $360.6 million compared to
the first nine months of 2008, primarily attributable to a decrease in customer
dollars invested, partially offset by an increase in the margin earned on
overall customer dollars invested.  Customers invested $23.8 billion
in products that resulted in principal transactions revenue in the first nine
months of 2009 compared to $35.5 billion in the first nine months of
2008.  The Partnership’s margin earned on principal transactions for
each $1,000 invested increased to $15.10 during the first nine months of 2009
from $10.80 during the first nine months of 2008 primarily a result of a shift
into higher margin, longer-term fixed income products from lower margin
certificates of deposit.  Year-over-year, revenue from municipal bonds
increased 9% ($17.5 million), unit investment trust revenue increased 238%
($28.5 million), and government bond revenue increased 25% ($3.8 million), while
revenue from corporate bonds decreased 45% ($47.5 million), certificate of
deposit revenue decreased 42% ($19.1 million), and revenue from collateralized
mortgage obligations decreased 33% ($3.8 million).  The increase in
municipal bonds revenue was due to the attractive yields on municipal bonds
relative to treasury securities.  In addition, unit investment trusts
revenue increased because of an increase in traditional tax free trusts and the
introduction of a new trust for taxable municipal bonds.  Corporate
bonds revenue decreased as a result of reduced activity due to the current
interest rate and market environment as well as a shift from taxable corporate
bonds to taxable municipal bonds.
   28
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                      Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 The
following table summarizes principal transaction revenue
year-over-year:
 
 (Dollars in
      millions)
                  
                  Nine Months
      EndedSeptember
      25,
                  
                  
                  September
      26,
                  
                  
                  $
                  
                  
                  %2009
                  
                  
                  2008
                  
                  
                  Change
                  
                  
                  ChangeMunicipal
      bonds
                  
                  $
                  208.6
                  
                  
                  $
                  191.1
                  
                  
                  $
                  17.5
                  
                  
                  
                  9Corporate
      bonds
                  
                  
                  57.8
                  
                  
                  
                  105.3
                  
                  
                  
                  (47.5
                  )
                  
                  
                  (45
                  )Unit
      investment trusts
                  
                  
                  40.5
                  
                  
                  
                  12.0
                  
                  
                  
                  28.5
                  
                  
                  
                  238Certificates
      of deposit
                  
                  
                  26.6
                  
                  
                  
                  45.7
                  
                  
                  
                  (19.1
                  )
                  
                  
                  (42
                  )Government
      bonds
                  
                  
                  19.3
                  
                  
                  
                  15.5
                  
                  
                  
                  3.8
                  
                  
                  
                  25Collateralized
      mortgage obligations
                  
                  
                  7.8
                  
                  
                  
                  11.6
                  
                  
                  
                  (3.8
                  )
                  
                  
                  (33
                  )$
                  360.6
                  
                  
                  $
                  381.2
                  
                  
                  $
                  (20.6
                  )
                  
                  
                  (5
                  )
 
 Investment
banking revenue increased 77% ($27.9 million) compared to the first nine months
of 2008 to $64.0 million, due primarily to increased unit investment trust
underwriting and taxable municipal bond offerings in the current
year.
 
 Net
Fee Revenue
 
 Net
fee revenue, which is fee revenue net of interest expense, decreased 13% ($171.5
million) to $1.1 billion compared to the first nine months of
2008.
  Asset
fees decreased 19% ($163.8 million) to $681.4 million due primarily to a
decrease in the market value of customer mutual fund assets held resulting from
the significant decline in asset values which is a reflection of the decline in
the stock market as compared to September 2008.  This decrease was
partially offset by an increase in the Advisory Solutions program revenue, which
was first offered by the Partnership in June 2008.  This program
provides investment advisory services to its customers for a monthly fee based
upon the customers' average asset values in the program.  This
advisory program consists of an Edward Jones managed account invested in mutual
funds, exchange-traded funds (ETFs) and money market funds.  The
revenue from the Advisory Solutions program was $80.7 million for the first nine
months of 2009 as compared to $5.8 million for the first nine months of 2008, a
$74.9 million increase.  Gross customer dollars invested in the
Advisory Solutions program were $12.0 billion for the nine months ended
September 25, 2009.  This was an increase of 186% ($7.8 billion)
compared to $4.2 billion for the same period of 2008.  The value of
customer assets in the Advisory Solutions program was $18.1 billion as of
September 25, 2009 compared to $4.0 billion as of September 26,
2008.
 
 The
following table summarizes average U.S. customer asset values for the first nine
months of 2009 compared to the first nine months of 2008, which relate to U.S.
asset fee revenue representing the vast majority of consolidated asset fee
revenue for the nine months ended September 25, 2009.
   29
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                      Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 
  (Dollars in
      billions)
                  
                  Average U.S.
      customer assetvalues as
      ofSeptember
      25,
                  
                  
                  September
      26,
                  
                  
                  $
                  
                  
                  %2009
                  
                  
                  2008
                  
                  
                  Change
                  
                  
                  ChangeMutual fund
      assets held outsideof Advisory
      Solutions
                  
                  $
                  206.4
                  
                  
                  $
                  276.8
                  
                  
                  $
                  (70.4
                  )
                  
                  
                  (25
                  )Money
      market
                  
                  
                  21.8
                  
                  
                  
                  23.2
                  
                  
                  
                  (1.4
                  )
                  
                  
                  (6
                  )Insurance
                  
                  
                  34.7
                  
                  
                  
                  40.4
                  
                  
                  
                  (5.7
                  )
                  
                  
                  (14
                  )Advisory
      Solutions
                  
                  
                  9.0
                  
                  
                  
                  1.3
                  
                  
                  
                  7.7
                  
                  
                  
                  592$
                  271.9
                  
                  
                  $
                  341.7
                  
                  
                  $
                  (69.8
                  )
                  
                  
                  (20
                  )
   As
a 49.5% limited partner of Passport Research Limited, the investment advisor to
money market funds made available to Edward Jones customers, the Partnership
receives a portion of the income of the investment advisor.  Beginning
in March 2009, the investment advisor has voluntarily chosen to reduce certain
fees charged to the funds to a level that will maintain a positive customer
yield on the funds due to the current low interest rate
environment.  This reduction in fees reduced the Partnership's revenue
by $29.7 million in the first nine months of 2009.  Depending upon the
overall interest rate environment, the reduction in fees charged to the funds is
expected to continue in future periods.
  Account
and activity fees of $366.7 million increased 4% ($12.6 million)
year-over-year.  Revenue received from sub-transfer agent services
performed for mutual fund companies decreased $2.2 million to $201.7
million.  In addition, retirement account fees increased 6% ($5.4
million) to $95.5 million compared to the first nine months of 2009, due
primarily to an increase in the number of U.S. retirement accounts.
  Net
interest and dividend income decreased 61% ($60.2 million) to $38.4 million
year-over-year due primarily to a decrease in interest
rates.  Interest income from cash and cash equivalents, cash and
investments segregated under federal and other regulations and securities
purchased under agreements to resell decreased 89%
($39.3 million).  The average funds invested in cash and cash
equivalents, cash and investments segregated under federal and other regulations
and securities purchased under agreements to resell during the first nine months
of 2009 was $3.1 billion, compared to $2.3 billion in the first nine months
of 2008.  The average rate earned on these investments decreased to
0.21% during the first nine months of 2009 from 2.50% during the first nine
months of 2008.  Additionally, interest income from customer loans
decreased 24% ($22.9 million) to $71.7 million.  The average aggregate
customer loan balance decreased 6% ($129.9 million) to $1.9 billion, and the
average rate earned on those customer loan balances decreased as a result of the
decline in interest rates during the past year to approximately 5.17% during the
first nine months of 2009 from approximately 6.34% during the first nine months
of 2008.  In addition, interest expense decreased 22% ($12.2 million)
to $43.4 million during the first nine months of 2009 due primarily to
reductions in customer credit interest and bank interest expense.
  Other
revenue increased $39.8 million year-over-year.  The increase between
years is primarily attributable to the increase in value in the investments held
related to the Partnership's non-qualified deferred compensation plan and
foreign currency translation gains.  The investments held related to
the non-qualified deferred compensation plan increased in fair value by
$11.0 million through September 25, 2009, versus a decrease of
 
 30
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                    Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 
 
 $13.7
million in the same nine-month period last year, resulting in a $24.7 million
increase in revenue year-over-year.  As the fair value of the
investments held related to the non-qualified compensation plan fluctuates, the
gains or losses are reflected in other revenue with an offset in compensation
and benefits expense, which results in no impact to the Partnership's income
before allocations to partners.  The translation of the Partnership's
foreign subsidiary financial statements from local currencies to U.S. dollars
resulted in a $7.7 million gain during the first nine months of 2009
compared to a $5.2 million loss in the same period of 2008, resulting in a $12.9
million increase in revenue.  The Partnership records foreign currency
gains or losses when it translates the balance sheets of its Canadian and U.K.
subsidiaries from local currency into U.S. dollars.  When the U.S.
dollar strengthens against the Canadian dollar and the pound, the Partnership
records a loss.  Likewise, when the U.S. dollar weakens against the
Canadian dollar and the British pound, the Partnership records a
gain.
 
 Operating
Expenses
 
 Operating
expenses decreased 10% ($279.6 million) to $2.4 billion compared to the first
nine months of 2008.  Compensation and benefits costs decreased 12%
($212.2 million), net of the $24.7 million increase related to the Partnership's
non-qualified deferred compensation plan mentioned above, to $1.6
billion.  Within compensation and benefits costs, financial advisor
compensation decreased 14% ($132.5 million) due to decreased trade and service
fee revenues, while financial advisor salary and subsidy increased 10%
($12.1 million) as a result of new financial advisor compensation programs
as well as an increased number of financial advisors participating in the
programs.  Variable compensation (which includes bonuses and profit
sharing paid to financial advisors, branch office assistants and headquarters
associates) expands and contracts in relation to revenues, income before
allocations to partners and the Partnership’s related profit
margin.  In the first nine months of 2009, variable compensation
decreased 66% ($114.8 million) as compared to the first nine months of
2008.  Headquarters salary and fringe expense increased 5% ($11.3
million) to $255.7 million year-over-year.  Branch salary and fringe
benefit expense increased 5% ($13.9 million) to $324.9
million.  Headquarters and branch salary and fringe benefit expense
increased due to increased salary and benefit costs as the Partnership expands
its financial advisor network.
  On
a full-time equivalent basis, the Partnership had 5,061 headquarters associates
and contractors and 12,427 branch staff associates as of September 25, 2009,
compared to 5,253 headquarters associates and contractors and 11,929 branch
staff associates as of September 26, 2008.  The decrease in
headquarter associates and contractors during the past year is primarily the
result of reduced Information System and other third-party contractors due to
the Partnership's efforts to reduce costs.  The increase in branch
associates is to directly support the increased number of financial
advisors.
  Occupancy
and equipment expense increased 6% ($13.4 million) to $247.0 million compared to
the first nine months of 2008 due to increased costs related to the continued
expansion of the Partnership's branch office network and home office
facilities.
  The
remaining operating expenses decreased 13% ($80.8 million) primarily due to the
Partnership's focus on reducing operating costs, most notably in the
communications and data processing, advertising and other operating expense
categories.
 
 31
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                      Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 FOREIGN
OPERATION MATTERS
 
 During
the second quarter of 2009, the Partnership's Canadian subsidiary became
self-clearing.  In this new self-clearing environment, the Canadian
subsidiary no longer relies on National Bank Correspondent Network and National
Bank Financial for processing customer transactions and maintaining the related
customer books and records.  The Canadian subsidiary has become the
custodian for customer securities and manages all related securities and cash
processing, such as trades, dividends, corporate actions, customer cash receipts
and disbursements, customer tax reporting, and statements.  Trades are
executed by the Canadian subsidiary directly with the Toronto Stock Exchange or
other venues, and the firm has become a member of the Canadian Depository of
Securities and FundServ for clearing and settlement of
transactions.  In order to support this new self-clearing environment,
the Canadian subsidiary executed agreements with Broadridge Financial Solutions,
Inc. to provide the securities processing systems along with other agreements
with other providers to perform selected services.
  As
of July 29, 2009, the FSA approved the EDJ Limited's request to become a limited
license firm, at which point the U.K. subsidiary's fixed income trading is done
on an agency basis only.  See Subsequent Events note for further
details of the U.K. subsidiary.
 
 MUTUAL
FUNDS AND ANNUITIES
 
 There
are regulatory proposals being considered that could significantly impact the
related disclosure and potentially the amount of compensation that
broker-dealers derive from mutual funds and annuity products.  The
Partnership believes it is likely in the future that broker-dealers will be
required to provide more disclosure to their customers with respect to payments
received by them from the sales of these products.  It is also
possible that such payments may be restricted by law or
regulation.  For additional discussion of mutual fund regulatory
initiatives, refer to "Item 1A - Risk Factors, Regulatory Initiatives" in the
Partnership's Annual Report on Form 10-K for the fiscal year ended December 31,
2008.
  The
Partnership derived 56% of its total revenue from sales and services related to
mutual fund and annuity products in the first nine months of 2009 and 64% in the
first nine months of 2008.  The Partnership derived approximately 34%
of its total revenue for the first nine months of 2009 and 35% of its total
revenue for the first nine months of 2008 from one mutual fund
vendor.  Significant reductions in the revenues from these mutual fund
sources could have a material impact on the Partnership's results of
operations.
 
 FINANCIAL
SERVICES REGULATORY MATTERS
 
 During
the second quarter of 2009, significant financial services industry regulatory
reform was proposed by the current presidential administration.  This
proposed regulatory reform includes creating a new Consumer Financial Protection
Agency, adding new fiduciary standards for broker-dealers, and other provisions
that could potentially impact the Partnership's operations.  While
this regulatory reform is only proposed, the industry and the Partnership are
still assessing the specific impact.
 
 32
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                    Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 
 LIQUIDITY
AND CAPITAL RESOURCES
 
 The
Partnership's capital subject to mandatory redemption at September 25, 2009,
excludingthe reserve for anticipated withdrawals, was $1.4 billion, an
increase of $29.2 million from December 31, 2008.  The increase in the
Partnership's capital subject to mandatory redemption is primarily due to the
retention of General Partner earnings ($32.8 million) and the issuance of
subordinated limited partner interests ($25.3 million), offset by redemption of
limited partner, subordinated limited partner and general partner interests
($14.5 million, $5.9 million and $8.5 million, respectively).  It
has been the Partnership's practice to retain approximately 28% of income
allocated to General Partners.  During the first nine months of 2009
and 2008, the Partnership retained 27.6% of income allocated to General
Partners.
  Under
the terms of the Partnership Agreement, a partner’s capital will be redeemed by
the Partnership in the event of the partner’s death, resignation or termination
from the Partnership.  In the event of a partner’s death, the
Partnership must redeem the partner’s capital within six months of
death.  Limited partners withdrawing from the Partnership due to the
partner's termination or resignation from the Partnership are repaid their
capital in three equal annual installments beginning the month after their
resignation or termination.  The capital of general partners resigning
or terminating from the Partnership is converted to subordinated limited
partnership capital or redeemed by the Partnership.  Subordinated
limited partners are repaid their capital in four equal annual installments
beginning the month after their request for withdrawal of contributed
capital.  The Partnership’s managing partner has discretion to waive
these withdrawal restrictions and to accelerate the return of
capital.
  As
a partnership, any withdrawals by general partners, subordinated limited
partners or limited partners would reduce the Partnership's available liquidity
and capital.  Factors that could result in an increased level of
individual partner capital withdrawal requests could include reduced
profitability or potential operating losses of the Partnership or financial
needs of the individual partners.  To date, individual partner
withdrawal requests as indicated above have not had a significant impact on the
Partnership's liquidity or capital resources.
  At
September 25, 2009, the Partnership had $265.8 million in cash and cash
equivalents.  In addition, the Partnership had $618.7 million in
securities purchased under agreements to resell, which have maturities of less
than one week.  The Partnership also had $2.5 billion in cash and
investments segregated under federal and other regulations, which was not
available for general use.  The following table shows the composition
of the Partnership's aggregate bank lines of credit in place as of September 25,
2009, June 26, 2009 and December 31, 2008.
 
 (Dollars in
      thousands)September
      25,
                  
                  June
      26,
                  
                  
                  December
      31,2009
                  
                  
                  2009
                  
                  
                  2008Uncommitted
      secured
                  
                  $
                  510,000
                  
                  
                  $
                  595,000
                  
                  
                  $
                  745,000Uncommitted
      unsecured
                  
                  
                  50,000
                  
                  
                  
                  50,000
                  
                  
                  
                  100,000Committed
      secured
                  
                  
                  -
                  
                  
                  
                  100,000
                  
                  
                  
                  100,000Total
                  
                  $
                  560,000
                  
                  
                  $
                  745,000
                  
                  
                  $
                  945,000
 
 In
addition to the lines of credit noted above, as of September 25, 2009, the
Partnership is currently in the process of renewing lines of credit consisting
of a $100.0 million uncommitted secured line of credit and a $50.0 million
committed secured line of credit.  These lines of credit expired on
August 12, 2009 and consisted of a $100.0 million committed secured line of
credit and a $75.0 million uncommitted secured line of
credit.  The
 
 33
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                      Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 Partnership's
uncommitted lines of credit are subject to change at the discretion of the banks
and, therefore, due to credit market conditions and the uncommitted nature of
these credit facilities, it is possible that these lines of credit could
decrease or not be available in the future.
  Actual
borrowing availability on the secured lines is based on customer margin
securities and Partnership securities which serve as collateral on
loans.   There were no amounts outstanding on these lines of
credit at September 25, 2009 or December 31, 2008.  In addition, the
Partnership did not borrow against these lines of credit during the first nine
months of 2009 and 2008.  However, on October 15, 2009, the
Partnership had an overnight draw in the amount of $35.0 million on an
uncommitted unsecured line of credit.
  In
October 2009, the Partnership entered into a $30.0 million financing agreement
with three banks to fund the purchases of office equipment.  This
financing agreement will be paid over a term of 48 months at a rate of 315 basis
points (3.15%) in excess of LIBOR and is secured by the equipment being
financed.  On October 30, 2009, the Partnership drew $13.7 million on
this agreement to fund the purchase of branch office
equipment.  Additional amounts are expected to be executed in future
periods to fund additional purchases of office equipment.
  In
2008, the Partnership entered into a $120 million revolving unsecured line
of credit which the Partnership has used for funding the construction of the new
buildings and parking garages at its home office facilities in St. Louis,
Missouri and Tempe, Arizona.  The revolving unsecured line of credit
has a final maturity date of August 22, 2010.  To the extent that the
Partnership obtains permanent financing for its South Campus facility prior to
this maturity date, such proceeds from this financing must be applied towards
the amounts outstanding on the revolving unsecured line of
credit.  However, any financing obtained on the South Campus facility
will not reduce the total availability of the revolving unsecured line of
credit.  As of September 25, 2009, $74.0 million was drawn on the
revolving unsecured line of credit (of which $31.0 million was drawn in the
first nine months of 2009) to fund the construction
projects.  Subsequent to September 25, 2009, an additional $5.0
million was drawn on the revolving unsecured line of credit resulting in $79.0
million total outstanding on the revolving unsecured line of credit as of
November 6, 2009.  Each draw is for a period of up to six months, at
which time interest is due and the Partnership has the option to renew the
draw.  The Partnership plans to renew the existing and future draws at
their maturities and anticipates that at final maturity the revolving unsecured
line of credit will have an aggregate balance outstanding of $120
million.  The weighted average interest rate for outstanding amounts
under the line of credit is 1.0% as of September 25, 2009, and fluctuates with
LIBOR.
  The
Partnership is in the process of expanding its home office facilities in order
to support its current and future growth plans.  Construction
activities for 2009 include an office building at its St. Louis, Missouri, North
Campus location, a building addition and garage at its South Campus location,
and a parking garage at its Tempe, Arizona campus.  The office
building at the St. Louis, Missouri, North Campus location was completed
and placed into service in September 2009.  The total capitalized
costs related to this building as of September 25, 2009 was $111.0 million and
is included in the buildings and improvements and equipment, furniture and
fixtures categories of equipment, property and improvements.  The
remaining estimated costs related to this building consist of estimated costs
accrued for but not yet paid, as well as costs not yet incurred primarily
related to office equipment.  The parking garage at the Tempe, Arizona
campus was completed and placed into service in July 2009.  The total
 34
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                    Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 
 capitalized
costs related to this parking garage as of September 25, 2009 was $19.6 million
and is included in the buildings and improvements category of equipment,
property and improvements.  The costs related to construction
activities not yet placed into service are reflected in the construction in
progress, which is reflected in the equipment, property and improvements line
item on the Consolidated Statement of Financial Condition.  The
Partnership had $110.1 million and $118.1 million in construction in progress as
of September 25, 2009 and December 31, 2008, respectively.
  The
following table shows the estimated construction, furniture, fixtures and
equipment and infrastructure costs for each construction project, the amounts
associated with executed agreements, amounts paid as of September 25, 2009 and
remaining estimated costs.
  (All
amounts in thousands)
 EstimatedCostsBuilding/
                  
                  
                  
                  
                  
                  
                  
                  
                  Amounts
                  
                  
                  RemainingAddition
                  
                  
                  
                  
                  
                  
                  
                  
                  Paid
      as of
                  
                  
                  as
      ofCompletion
                  
                  Square
                  
                  
                  Estimated
                  
                  Executed
                  
                  
                  Sept.
      25,
                  
                  
                  Sept.
      25,Construction
      Project
                  Date
                  
                  Footage
                  
                  
                  Costs
                  
                  Agreements
                  
                  
                  2009
                  
                  
                  2009130 Edward
      Jones Blvd.(North
      Campus)
                  September
      2009
                  
                  
                  370,000
                  
                  
                  $
                  129,147
                  
                  
                  $
                  115,110
                  
                  
                  $
                  107,115
                  
                  
                  $
                  22,03212555
      Manchester addition and
                  Estimatedrelated
      garage (South Campus)
                  December
      2009
                  
                  
                  225,000
                  
                  
                  
                  137,651
                  
                  
                  
                  119,482
                  
                  
                  
                  97,074
                  
                  
                  
                  40,577Tempe Campus
      garage
                  July
      2009
                  
                  
                  
                  
                  
                  
                  19,960
                  
                  
                  
                  19,098
                  
                  
                  
                  18,258
                  
                  
                  
                  1,702Total
                  
                  
                  
                  
                  
                  
                  $
                  286,758
                  
                  
                  $
                  253,690
                  
                  
                  $
                  222,447
                  
                  
                  $
                  64,311
   The
total estimated amount remaining of $64.3 million needed to complete the above
construction projects will be financed by the remaining available balance of
$41.0 million, as of November 6, 2009, on the $120.0 million revolving unsecured
line of credit (which matures August 2010) and the Partnership's existing
working capital. The Partnership plans to obtain additional financing in the
future, including the refinancing of the $120.0 million revolving unsecured line
of credit.  There can be no assurance that such financing will be
available at attractive terms, or at all, in the future.  The
Partnership anticipates the estimated amounts remaining to be paid of $64.3
million will be incurred and paid throughout 2009 and the first quarter of
2010.  Of this amount, the Partnership has recorded $19.8 million as
accrued costs included in equipment, property and improvements in the
Consolidated Financial Statements as of September 25, 2009.  In
addition to the cost of expanding the home office facilities, the Partnership
expects operating expenses including depreciation to increase as the new
facilities are placed into service.
  In
addition to the construction activities previously mentioned, the Partnership
committed, in October 2009, to construct an additional parking garage at its St.
Louis, Missouri, North Campus location.  The costs associated with
constructing this parking garage are estimated to be $24.0 million and will
be paid for throughout 2010 and into the early portion of 2011 from the
Partnership's existing working capital.
 
 35
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                    Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 
 In
the first nine months of 2009, cash and cash equivalents increased
$49.1 million to $265.8 million.  Cash provided by operating
activities was $339.0 million.  The primary sourcesof cash
provided by operating activities include income before allocations to partners
($152.1 million) adjusted for depreciation expense ($68.5 million) and a
net decrease in assets ($566.8 million), partially offset by a net decrease in
liabilities ($448.4).  In the first nine months of 2009, cash used in
investing activities was $167.3 million consisting of capital expenditures
supporting the growth of the Partnership’s operations and for the construction
of new office space as noted above.  In the first nine months of 2009,
cash used in financing activities was $122.5 million, consisting primarily of
partnership withdrawals and distributions ($145.7 million), redemption of
partnership interests ($28.8 million), repayment of subordinated debt
($3.7 million) and repayment of long-term debt ($0.6 million), offset by
the issuance of bank loans ($31.0 million) and the issuance of partnership
interests ($25.3 million).
  As
a result of its activities as a broker-dealer, Edward Jones, the Partnership's
principal subsidiary, is subject to the net capital provisions of Rule 15c3-1 of
the Securities Exchange Act of 1934.  Under the alternative method
permitted by the rules, Edward Jones must maintain minimum net capital, as
defined, equal to the greater of $0.25 million or 2% of aggregate debit items
arising from customer transactions.  The net capital rules also
provide that partnership capital may not be withdrawn if the resulting net
capital would be less than 5% of aggregate debit items.  Additionally,
certain withdrawals require the consent of the SEC to the extent they exceed
defined levels, even though such withdrawals would not cause net capital to be
less than 5% of aggregate debit items.  At September 25, 2009, Edward
Jones' net capital of $704.2 million was 36.6% of aggregate debit items and
its net capital in excess of the minimum required was $665.7
million.  Net capital as a percentage of aggregate debit items after
anticipated withdrawals was 36.6%.  Net capital and the related
capital percentage may fluctuate on a daily basis.  At September 25,
2009, the Partnership’s foreign broker-dealer subsidiaries and EJTC were in
compliance with regulatory capital requirements in the jurisdictions in which
they operate.  During the second quarter of 2009, the FSA completed a
new supervisory review requirement of the ICAAP for the U.K. subsidiary of
Edward Jones.  This review established an amount of required capital
for the Partnership's U.K. subsidiary.  The existing capital of the
U.K. subsidiary was already in excess of the increased minimum capital required
by the FSA and therefore no additional capital was required to be contributed to
the U.K. subsidiary as a result of the ICAAP review.  See Subsequent
Events note for further details on the U.K. subsidiary.
  The
Partnership believes that the liquidity provided by existing cash balances and
securities purchased under agreements to resell and borrowing arrangements will
be sufficient to meet the Partnership's capital and liquidity
requirements.  Depending on conditions in the capital markets and
other factors, the Partnership will, from time to time, consider the issuance of
debt, the proceeds of which could be used to meet growth needs or for other
purposes.
  A
portion of the Partnership's growth in capital has historically been expanded
through the sale of limited partnership interests to its employees and existing
limited partners, the sale of subordinated limited partnership interests to its
current or retiring general partners, retention of general partner earnings,
private placements of subordinated debt, long-term secured debt and operating
leases under which the Partnership rents facilities.  In October 2009,
the Partnership announced its intent to undertake a registered offering of
limited partnership interests during 2010.  There can be no assurance
that such offering will take place in 2010 or, if it does, the amount of limited
partnership interests that will be offered or purchased.  For further
information on this offering, see the Current Report on Form 8-K filed with the
SEC on October 13, 2009.
 
 36
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                    Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 
 CRITICAL
ACCOUNTING POLICIES
 
 The
Partnership’s financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, which may require
judgment and involve estimation processes to determine its assets, liabilities,
revenues and expenses which affect its results of operations.
  The
Partnership believes that of its significant accounting policies, the following
critical policies may involve a higher degree of judgment and
complexity.
  Customers'
transactions are recorded on a settlement date basis with the related revenue
and expenses recorded on a trade date basis.  The Partnership may be
exposed to risk of loss in the event customers, other brokers and dealers,
banks, depositories or clearing organizations are unable to fulfill contractual
obligations.  For transactions in which it extends credit to
customers, the Partnership seeks to control the risks associated with these
activities by requiring customers to maintain margin collateral in compliance
with various regulatory and internal guidelines.  Securities owned and
sold, not yet purchased, including inventory securities and investment
securities, are recorded at fair value.
  The
Partnership further believes that of its significant accounting policies, the
following significant accounting policies require estimates that involve a
higher degree of judgment and complexity.
  The
Partnership provides for potential losses that may arise out of litigation,
regulatory proceedings and other contingencies to the extent that such losses
can be estimated, in accordance with FASB ASC 450, Contingencies.  See
Part II, Item 1 − Legal Proceedings, and Part I, Item 2 − Management’s
Discussion and Analysis of Financial Condition and Results of Operations −
Mutual Funds and Annuities for further discussion of these items.  The
Partnership regularly monitors its exposures for potential
losses.  The Partnership’s total liability with respect to litigation
and regulatory proceedings represents the best estimate of probable losses after
considering, among other factors, the progress of each case, the Partnership’s
experience and discussions with legal counsel.
  The
Partnership’s periodic evaluation of the estimated useful lives of equipment,
property and improvements is based on the original life determined at the time
of purchase and any events or changes in circumstances that would result in a
change in the useful life.
  For
additional discussions of the Partnership’s accounting policies, refer to
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations - Critical Accounting Policies” included in the Partnership's Annual
Report on Form 10-K for the fiscal year ended December 31, 2008.
 
 THE
EFFECTS OF INFLATION
 
 The
Partnership's net assets are primarily monetary, consisting of cash and cash
equivalents, securities inventories and receivables less
liabilities.  Monetary net assets are primarily liquid in nature and
would not be significantly affected by inflation.  Inflation and
future expectations of inflation influence securities prices, as well as
activity levels in the securities markets.  As a result, profitability
and capital may be impacted by inflation and inflationary
expectations.
  37
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                      Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 Additionally,
inflation's impact on the Partnership's operating expenses may affect
profitability to the extent that additional costs are not recoverable through
increased prices of services offered by the Partnership.
 
 RECENTLY
ISSUED ACCOUNTING STANDARDS
 
 In
July 2009, the Financial Accounting Standards Board ("FASB") launched the
Accounting Standards Codification ("ASC"), a structural overhaul to U.S. GAAP
that changes from a standards-based model to a topically-based model. The topics
are organized by ASC number and are updated with Accounting Standards Updates
("ASUs"). ASUs will replace accounting changes that historically were issued as
FASB Statements (SFASs), FASB Interpretations (FINs), FASB Staff Positions
(FSPs), or other types of FASB standards.  FASB ASC 105, Generally
Accepted Accounting Principles ("ASC 105") identifies the FASB Accounting
Standards Codification as the authoritative source of GAAP in the United States
of America.  It also identifies rules and interpretive releases of the
SEC under federal securities laws also as sources of authoritative GAAP for SEC
registrants.  ASC 105 was effective for financial statements issued
for interim and annual periods ending after September 15, 2009.  The
adoption of ASC 105 did not have a material impact on the Partnership's
Consolidated Financial Statements.
  In
April 2009, the FASB issued two pronouncements intended to provide additional
application guidance and enhance disclosures about fair value measurements. The
first pronouncement, Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly, clarifies the objective and method of fair
value measurement even when there has been a significant decrease in market
activity for the asset being measured.  The second position, Interim
Disclosures about Fair Value of Financial Instruments, expands the fair value
disclosures required for all financial instruments, within the scope of FASB ASC
825, Financial
Instruments, to interim periods.  These pronouncements were
effective beginning April 1, 2009.  Adoption of these pronouncements
did not have a material impact on the Partnership's Consolidated Financial
Statements.
  In
April 2009, the FASB issued FASB ASC 855, Subsequent
Events ("ASC 855").  ASC 855 establishes general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or available to be
issued.  Although this standard is based on the same principles as
those that existed in previous accounting standards, it includes a new required
disclosure of the date through which an entity has evaluated subsequent
events.  Adoption of ASC 855 did not have a material impact on the
Partnership's Consolidated Financial Statements.  See the "Basis of
Presentation" section for this new disclosure.
 
 FORWARD-LOOKING
STATEMENTS
 
 This
report on Form 10-Q and, in particular, Management’s Discussion and Analysis
of Financial Condition and Results of Operations, contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 (the
"1933 Act") and Section 21E of the Securities and Exchange Act of 1934 and are
intended to come within the safe harbor protection provided by those
sections.  You can identify forward-looking statements by the use of
the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,”
“will,” “should,” and other expressions which
 
 38
 PART I.FINANCIAL INFORMATION
 
 Item 2.
                    Management's
      Discussion and Analysis of Financial Condition and Results of Operations,
      continued
 
 predict
or indicate future events and trends and which do not relate to historical
matters.  You should not rely on forward-looking statements because
they involve known and unknown risks, uncertainties and other factors, some of
which are beyond the control of the Partnership.  These risks,
uncertainties and other factors may cause the actual results, performance or
achievements of the Partnership to be materially different from the anticipated
future results, performance or achievements expressed or implied by the
forward-looking statements.
  Some
of the factors that might cause differences include, but are not limited to, the
following: (1) regulatory actions; (2) litigation; (3) changes in legislation;
(4) actions of competitors; (5) changes in technology; (6) fluctuation or
decline in the fair value of securities; (7) changes in interest rates; (8)
securities theft; (9) the ability of customers, other broker-dealers, banks,
depositories and clearing organizations to fulfill contractual obligations; and
(10) general economic conditions.  These forward-looking statements
were based on information, plans and estimates at the date of this report, and
the Partnership does not undertake to update any forward-looking statements to
reflect changes in underlying assumptions or factors, new information, future
events or other changes.
  39
 PART I.FINANCIAL
INFORMATION
 ITEM 3. 
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  The
SEC issued market risk disclosure requirements to enhance disclosures of
accounting policies for derivatives and other financial instruments and to
provide quantitative and qualitative disclosures about market risk inherent in
derivatives and other financial instruments.  Various levels of
management within the Partnership manage the Partnership’s risk
exposure.  Position limits in trading and inventory accounts are
established and monitored on an ongoing basis.  Credit risk related to
various financing activities is reduced by the industry practice of obtaining
and maintaining collateral.  The Partnership monitors its exposure to
counterparty risk through the use of credit exposure information, the monitoring
of collateral values and the establishment of credit limits.
  The
Partnership is exposed to market risk from changes in interest
rates.  Such changes in interest rates impact the income from interest
earning assets, primarily receivables from customers on margin balances, which
were $2.0 billion as of September 25, 2009.  The changes in interest
rates may also have an impact on the expense related to liabilities that finance
these assets, such as amounts payable to customers and other interest and
non-interest bearing liabilities.
  The
Partnership performed an analysis of its financial instruments and assessed the
related interest rate risk and materiality in accordance with the SEC
rules.  Under current market conditions and based on current levels of
interest earning assets and the liabilities that finance these assets, the
Partnership estimates that a 100 basis point (1.00%) increase in short-term
interest rates could increase its annual net interest income by approximately
$25.0 million.  Conversely, the Partnership estimates that a 100 basis
point (1.00%) decrease in short-term interest rates could decrease the
Partnership’s annual net interest income by approximately $5.0
million.  A decrease in short-term interest rates currently has a less
significant impact on net interest income due to the current low interest rate
environment.  The Partnership has two distinct types of interest
bearing assets: customer receivables from margin accounts and overnight
investments, which are comprised of cash segregated under federal and other
regulations and securities purchased under agreements to resell.  The
Partnership has put in place an interest rate floor for the interest charged
related to its customer margin loans, which helps to limit the negative impact
of declining interest rates.  Overnight investments have earned
interest at an average rate of approximately 21 basis points (0.21%) for the
nine months ended September 25, 2009, and therefore the financial dollar impact
of further declines in rates is minimal.
 
 40
 PART
I.FINANCIAL
INFORMATION
 ITEM 4. 
CONTROLS AND PROCEDURES
  The
Partnership maintains a system of disclosure controls and procedures which are
designed to ensure that information required to be disclosed by the Partnership
in the reports filed or submitted under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms and is accumulated and communicated to management,
including the Partnership’s certifying officers, as appropriate to allow timely
decisions regarding required disclosure.
  An
evaluation performed as of the end of the period covered by this report,
provided reasonable assurance to the Partnership's certifying officers, the
Chief Executive Officer and the Chief Financial Officer, that the Partnership's
disclosure controls and procedures were effective as of September 25,
2009.
  There
have been no changes in the Partnership's last fiscal quarter that have
materially affected, or are reasonably likely to materially affect, the
Partnership's internal control over financial reporting.
 
 41
 PART
II.FINANCIAL
INFORMATION
  ITEM 1. 
LEGAL PROCEEDINGS
  The
following information supplements the discussion in Part II, Item 1 "Legal
Proceedings" in the Partnership's Quarterly Report on Form 10-Q for the
quarterly period ended June 26, 2009:
  Tennessee
Investigation.  One individual claim within the Givens, et al.
v. Edward D. Jones & Co., L.P. arbitration remains.  This
claim is scheduled for a hearing in January of 2010.  Another matter
known as Craighead vs.
Edward D. Jones & Co., et al., which was pending in state court in
Tennessee, has been compelled to arbitration by the court. No arbitration has
been filed to date.
  FINRA Hood
Investigation.  Financial Industry Regulatory Authority
("FINRA") notified Edward Jones that it has made a preliminary determination to
recommend that a formal disciplinary action be brought against Edward Jones for
failing to establish and maintain procedures designed to review and monitor
transmittal of funds from customer accounts to third party accounts and failed
to establish a reasonably adequate supervisory system.  Edward Jones
has been invited to provide FINRA with a Wells submission detailing why this
determination is incorrect.  This arises out of actions by a deceased
Edward Jones financial advisor.
  Lehman
Bonds.  In October 2008, a class action suit was filed in
Arkansas state court, Saline County, under Sections 11, 12(a)(2) and 15 of the
1933 Act, against certain officers and directors of Lehman Brothers Holdings,
Inc. and a syndicate of underwriters, including Edward Jones, of Lehman Bonds
sold pursuant to the registration statement and prospectus dated May 30, 2006
and various prospectus supplements dated October 22, 2006 and
thereafter.  In November 2008, a similar suit was filed in Arkansas
state court, Benton County against the same defendants stemming from the sale of
6.5% Lehman Bonds maturing October 25, 2007 pursuant to the registration
statement and prospectus and prospectus supplement dated August 2, 2007
(collectively referred to as "Lehman Bonds").  Plaintiffs in both
actions allege that the defendants made material misrepresentations to the
purchasers of the Lehman Bonds.  While each lawsuit relates to a
different series of Lehman Bonds, the plaintiffs in each suit are seeking
unspecified compensatory damages, attorneys' fees, costs and
expenses.  In February 2009, the United States Judicial Panel on
Multidistrict Litigation transferred these two actions to the Southern District
of New York ("SDNY") for coordinated or consolidated pretrial proceedings with
similar actions currently pending in the SDNY.  Defendants filed a
Motion to Dismiss plaintiffs' Securities Act Claims in April of 2009, which is
currently pending in the SDNY.
  Wage and Hour
Class Actions.  On September 28, 2007, Edward Jones entered
into a settlement agreement that resolved several wage and hour class action
lawsuits, which were filed against Edward Jones.  These various cases
were consolidated into two lawsuits in the United States District Court for the
Northern District of Ohio (the “Court”).  One of these cases asserted
primarily federal law claims (the “Collective Action”), and the other asserted
primarily state law claims (the “State Law Class Action”).
  Edward
Jones reached a settlement in both the Collective Action and the State Law Class
Action, which resolved the federal and state claims of certain individuals in
each of the United States, excluding the State of California (the “National
Settlements”).
  
 42
 PART
II.FINANCIAL
INFORMATION
 In
June 2008, the Court granted preliminary approval of the National Settlements,
and Edward Jones transferred $19 million to an escrow account to fund the
National Settlements (the “National Class Fund”).  The National Class
Fund also included attorney’s fees, litigation
 
 On
January 5, 2009, the Court entered several orders relating to the National
Settlements.  The Court certified a Collective Action Class and
entered judgment on the federal claims asserted in the Collective
Action.  The Court also granted final approval of the settlements in
the State Law Class Action, and entered a judgment dismissing all claims
asserted in that case.  These judgments became final on February 5,
2009, and the checks were mailed to participating class members in late
February.  The National Class Fund was paid to class members on a
claims-made basis and unclaimed funds were returned to Edward Jones in June of
2009.
  For
further discussion of legal proceedings, see Part I, Item 3 "Legal Proceedings"
in the Partnership's Annual Report on Form 10-K for the fiscal year ended
December 31, 2008 and the Partnership's Current Report on Form 8-K filed on
April 10, 2009.
  ITEM 1A. 
RISK FACTORS
 
 There
have been no material changes from the risk factors disclosed in the
Partnership's Form 10-K for the fiscal year ended December 31,
2008.
 
 
 43
 PART
II.FINANCIAL
INFORMATION
 ITEM 6. 
EXHIBITS
  ExhibitNumber
                  
                  Description3.1
                  *
                  Sixteenth
      Amended and Restated Agreement of Registered Limited Liability Limited
      Partnership of The Jones Financial Companies, L.L.L.P., dated as of May
      12, 2006, incorporated by reference to Exhibit 3.1 to the Partnership's
      Quarterly Report on Form 10-Q for the quarter ended March 31,
      2006.3.2
                  *
                  Sixteenth
      Restated Certificate of Limited Partnership of The Jones Financial
      Companies, L.L.L.P., dated as of July 11, 2007, as amended, incorporated
      herein by reference to Exhibit 3.2 to the Partnership's Quarterly Report
      on Form 10-Q for the quarter ended June 29, 2007.3.3
                  *
                  Form of
      Limited Partnership Agreement of Edward D. Jones & Co., L.P.,
      incorporated by reference to Exhibit 2 to the Partnership's Annual Report
      on Form 10-K for the year ended December 31, 1993.31.1
                  **
                  Certification
      of Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a) of the
      Securities Act of 1934, as amended, as adopted pursuant to section 302 of
      the Sarbanes-Oxley Act of 2002.31.2
                  **
                  Certification
      of Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a) of the
      Securities Act of 1934, as amended, as adopted pursuant to section 302 of
      the Sarbanes-Oxley Act of 2002.32.1
                  **
                  Certification
      of Chief Executive Officer pursuant to 18 U.S.C. section 1350, as adopted
      pursuant to section 906 of the Sarbanes-Oxley Act of
  2002.32.2
                  **
                  Certification
      of Chief Financial Officer pursuant to 18 U.S.C. section 1350, as adopted
      pursuant to section 906 of the Sarbanes-Oxley Act of
  2002.
 *
                  Incorporated
      by reference to previously filed exhibits.**
                  Filed
      herewith.
 
 44
 
 SIGNATURES
 
 
 
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized:
 
 THE JONES
      FINANCIAL COMPANIES, L.L.L.P.(Registrant)Date:
      November 6, 2009
                  /s/
                  James D.
      WeddleJames D.
      Weddle, Chief Executive OfficerDate:
      November 6, 2009
                  /s/
                  Kevin D.
      BastienKevin D.
      Bastien, Chief Financial Officer(Principal
      Accounting Officer)
  45