富蘭克林資源 (BEN) 2005 Q1 法說會逐字稿

Good afternoon, my name is Matthew, and I will be your conference facilitator.

At this time, I would like to welcome everyone to the Franklin Resources quarterly analysts conference call, joining us today are Co-CEO Marty Flanagan, and Co-CEO Greg Johnson.

All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question and and answer period.

If you would like to ask a question during this time, simply press star then the number 1 on your telephone keypad.

If you would like to withdraw your question, press star then the number 2.

Thank you.

I would now like to turn the call over to Mr. Marty Flanagan.

Please go ahead, sir.

Thank you and good day, everybody.

This is Marty Flanagan, along with Greg Johnson.

We would like to welcome you to our first fiscal quarter earnings conference call.

Thank you for joining us.

Today, the format will follow as we have in the past.

We'll give some highlights, talk about assets under management flows, business commentary, and then most importantly open it up to question and answer for everybody.

Before I get started, I would like to refer everybody to our forward-looking statements.

There's a copy in the 10-K, it's also on our website, but I would like to highlight some portion of that which states that forward-looking statements involve a number of risks, uncertainties, and other important factors that could cause actual results and outcome to differ materially from any future results or outcomes expressed or implied by such forward-looking statements which may be discussed here today.

Well, getting started, our first fiscal quarter was a very strong one.

Driven principally by the increase in assets under management.

We continue to have done, in our opinion a good job controlling costs, and we did see another quarter of margin expansion, resulting in net income increasing 28% quarter over quarter to $239 million.

We think we're -- we continue to be well positioned for growth with continued strong investment performance and strong service levels across the organization.

We did end the quarter with assets under management of $402 billion.

That's 11% quarter over quarter, the average increase in assets quarter over quarter was just under 8%.

Market appreciation was an important part of that growth, representing $33 billion of the increase, net flow was $8.8 billion, and you'll hear much more about that in the next few minutes.

If you take a look at the mix of the assets under management of the $402 billion, how equity assets represent 56.9% of the assets, increasing from 55 percent last quarter, fixed income is now 25 percent of the assets under management, down slightly from last quarter of 26.7%.

Hybrid assets were 16.5%, flat principally quarter over quarter, and money market funds continued to be approximately 1.5% of our total assets under management.

As an organization, we continue to benefit across -- from diversification from our different investment styles, different objectives, strong channel participation, and also a benefit from our businesses around the world.

With that, I'm go to pass it over to Greg.

Thanks, Marty, and good afternoon.

The -- as Marty mentioned, it was a strong quarter for performance and asset appreciation of about $32.5 billion.

We saw net flows increase 33% from 6.6 to 8.8 billion, and that's a 33% increase over the prior quarter.

The gross sales were up approximately 21%, and 19% versus the prior year's quarter.

In terms of the detail behind the flows, equity net flows increased from 3.7 to 4.7 billion, and fixed income from .4 or 400 million to 1.7 billion.

The majority of the equity increase was seen in the global international equity sector, and as you would expect, the dollar was weak, global markets were strong, and the Templeton fund benefited from that trend.

We saw the overall global net flows increase from 3 billion to 4.4, and domestic equity about flat, just down slightly from 700 million to 300 million.

The hybrid sales which is primarily the Franklin income fund net increase from 2.3 to 3.1.

Tax-free was relatively flat, taxable fixed increased from 600 million to 1.7 billion.

The investment performance continues to be very strong and again the Templeton funds do not hedge, and the dollar trend benefited the relative performance for year end over 90% of the long term mutual fund assets in the top two quartiles for 3, 5 and 10 year period.

Templeton growth ranked in the top quartile of the Lipper peer group for the 1, 3, 5, and 10 year period.

Mutual Beacon and Qualified ranked in the top quartile for their respective Lipper peer groups over the 1, 3, 5, and 10 year period.

The Franklin Flex Cap growth ranked in the top quartile Lipper group for 3, 5, and 10, and our largest seller the Franklin Income Fund was in the top 20% of its Lipper peer group for the 1 year period, and top 5% for the 3 and 5 year period.

So very steady performance across the entire complex.

Some of the business highlights for the quarter, on the U.S. retail side, we launched 2 new funds, basically a shorter duration taxable bond fund to position us better for a rise in interest rates.

We completed a road show and campaign celebrating the 50th anniversary of the Templeton growth fund, which happened to turn out very good timing as far as global flows and we saw some real strong interest and real follow up with a number of new advisors representing the Templeton fund.

We were pleased to see that our -- FranklinTempleton.com received the Dow Bar seal and was among casinos top 10 websites.

On the international side, we had a fund in India, which was named mutual fund of the year.

Mexico we're getting ready to kick off, and opened up an office in Mexico City, and signed an agreement for local product there.

Devy, first foreign asset manager licensed to operate there.

Germany, recently ranked number 1 in product quality, and in Canada, we're pleased to see the Templeton emerging markets fund was named the fund of the year in the Canadian marketplace.

On the institutional side, again, like retail, we saw strong flows, and had 1.7 billion in new mandates and additions for the quarter, and in high net worth we had 180 million new assets during the quarter, and recently launched a new presentation for clients with over 10 million in assets.

Now I'll turn it back to Marty for the operating results.

All of these activities that Greg highlighted are really the principal factors in what drove the strong results for the quarter, operating revenue increased just under 12% to $986 million during the quarter, principally off the level of assets under management, also the change in mix of assets.

Net income was up 28% quarter over quarter, and let me take a minute to highlight a few points for everybody.

Investment management fees increased 10.8% to $566 million during the quarter.

We -- as we talk about this mix, of course equity it did result in our effective fee rate increasing to 59.4 basis points as compared to 57.9 last quarter.

Underwriting and distribution was up 16% to $340 million, off the back of the strong sales during the quarter, and we saw shareholder servicing fees increased 4.6% during the quarter, and that was directly due to an increase of approximately 600,000 new shareholder accounts during the quarter, taking us back to 15.9 million shareholder accounts around the world.

Taking a look at operating expenses.

We think we are continuing to to do a good job controlling them.

And let me just highlight a few points.

Comp and benefits had the biggest increase during the quarter, but there's some interesting points within there.

We did have a salary increase during -- that started October 1, of our fiscal year, which was 4% of salaries.

In total that was the full.

We have added 83 people during the quarter to 6,779 individuals.

The bonus pool as you would imagine was up during this quarter because of the operating performance.

The bonus pool is very much tied to how we operate as a Company.

But something to really highlight is last quarter we talked about the use of options and the questions around option expensing with that coming down the path.

As an organization, you know, we're very committed to having equity in people's hands, but we thought the mismatch in the cost of options to granting restricted stock was such that we went ahead and granted restricted stock to individuals, which we call performance shares that is -- there's $1.5 million of expense in the quarter to that we amortized it over the period, which is 3 years.

You're also going to see, later in the year for us, the historical options that we have granted will be -- we will begin expensing in our fourth fiscal quarter, so beginning July 1, of this year, and, you know, we just have estimates of what that cost might be right now, and we will -- give you more detail as we get closer to that.

The other area, IT and occupancy continues to be flat to down a little bit.

We are continuing to invest in technology.

You know, I think we will see as some of these -- our programs complete that we'll see some increase in IT expense over time.

It's really the roll-off of old depreciation and the timing of new projects waiting to get completed.

The other thing I would highlight, sponsored investment product gains was quite large this quarter $16 million, as opposed to a negative $3 million last quarter.

There's really not much we can say other than we'll continue to see volatility that is really just driven by what markets do to us.

The other thing to highlight in this quarter is that as you know we have had these lines outstanding and during this quarter the accounting rules changed where we are now in fully diluted shares outstanding including 8.2 million shares, assuming the lines were converted, and we -- so that is what caused this higher share count during the period.

With regard to stock repurchases, we bought back 1.7 million shares during the quarter.

If you look at total cash dividends paid during the quarter, and repurchases, we have upped net income at a total payback of just under 60% this quarter.

And with that, 1 of the topics is repatriation legislation, what is going on there.

As you know, we've been long supporters of it.

We think it's good for the country, we think it's good for Franklin Resources.

As many of you know, the most recent guidance focuses companies to bring back the money, spend it and invest it within the Company, and we're very supportive of that.

Currently, our best estimate is that we still think we could bring up to $1.9 billion back into the United States.

We are actively working through the legislation to see how that might work in a plan.

We have not come to a conclusion yet, but we're still optimistic, and think it makes quite of bit of sense.

Separately, on capital management, as I've mentioned, it was a pretty active quarter, buying back 1.7 million shares.

We're committed to using our capital wisely, whether it be investing in the Company to promote our growth, or putting it back in the shareholder's hands, whether it be stock buybacks or cash dividends, if that makes economic sense.

So to sum it up, very strong quarter driven by good flows, good performance, increase in asset levels.

We're clearly benefiting from the depth and breadth of our global footprint, and we think as we continue to do a good job for our clients, we'll continue to improve our position as a premier global investment management firm, and with that, Greg and I will take any questions.

At this time, I would like to remind everyone if you have a question, press star then the number 1 on your telephone keypad.

We'll pause for just a moment to compile the Q&A roster.

Our first question comes from the line of Mark Constant.

Hi, good afternoon, guys.

Hey, Mark.

Just a couple of things.

One, Greg, were there any particular notable or lumpy sales in this quarter, institutional mandates like the Anna Brookes stuff that you highlighted in the past, anything like that?

I think there was one account that was about a .5 billion, the European Schmitt, but other than that, just normal things, and some additions.

So that would have been in Global international, right?

Yes.

And Marty, the big jump in underwriting distribution revenue and expense this quarter is that just, I assume that's sales mix, but particularly a function of the elimination of B shares?

No, that hasn't happened yet, so it's really just -- that just kicked in in January, so that was not in effect that last quarter.

Was there anything else in there, or was it just the mix shifted that much anyway

It did that much anyway.

Wow.

And on your point about the change in prospective equity competition strategy?

Yes.

The -- A, wanted to make sure -- you did $18 million worth of performance share grants that are expensing 1.5 million straight line per quarter over 3 years, is that right?

It was --

I mean, can I straight line the 1.5?

Yes, you can straight line the 1.5 over 3 years, 1.25, right?

Okay.

And that, if I remember correctly from the K, at least at full Black-Scholes is maybe half I guess of what at least full Black-Scholes value maybe a less less was for option grants last year?

Yes.

Is there -- is that sort of where you find the point of indifference in your mind, does this effectively replace those option grants?

Yes, that's exactly what we're trying to do.

It doesn't say that we won't -- as we've talked about, it's the cost of the Company and it devalues the employee.

It's just such a mismatch when you expense them, that we think this is the best way to go.

So where you stand today, this is a fair trade?

We think so.

As opposed to there being another sort of mid-year grant the Company?

No, our intention was that it was a fair trade.

And then last question, actually is a bit of a correlary to that, then.

As I understand the new modified prospective accounting effective July 1 for the historical cost of previous options, the hit is going to be based on full Black Scholes, if that's how you originally disclosed it?

And you obviously view them as not having truly been worth full, Black-Scholes.

Is there -- are you sort of stuck with what you put in the FAS 123 footnote in the past, or is there, you know, can you use binomial or any of the other alternative valuation models, or how does that work?

Yes we are using the same assumptions that you have seen.

So you don't use full Black-Scholes?

Right.

Our next question comes from the line of David Haas.

Hi there.

Quick question on the international business.

The growth there has been tremendous over the last, let's call it year and a half or so.

Are there any sort of steps you're taking, or are you thinking about any protection to the downside if sort of the weakness in the dollar flips, and is there any sort of negative operating leverage that you'll see as a result, and any steps you're taking to combat that?

I'll make a comment.

It's really, you know, part of the investment process, the portfolio managers follow the investment process and we support it very much we don't try to get in the way of that separately, just as a business, Greg and I have talked about over the past, really what we're trying to do is build out the business multichannel retail, institutional, high net worth, globally, and that's probably the best, you know, way to do that.

I would only add, I think we -- the -- certainly some of the Asian markets, where there's been a heavy concentration of fixed income, which the dollar would have more of an impact on, we have been more aggressive in cross-selling global equity and been very successful in places like Hong Kong, and getting interest in the -- on the global equity side, and that's been a real push over the last couple of years.

Okay.

And then just next question on -- on the compensation ratio.

It seems like it's coming in fairly low.

Obviously, you know, a reflection of the rapid rise in assets.

If -- if in our models we're sort of assuming a smooth couple of percentage sequential growth in assets going forward, at what point do we get back to this 33, 34% level that we have sort of have talked about historically?

Is this sort of a long term level that we get back to

It's not inconsistent, if you go back it depends on what you think historical is.

We're now at the lower end of the range, but if you go back to 2000, we're really where we were in 2000 at those levels, and our principal driver is making sure that we incentivise people appropriately, and we think we're doing that, so I -- that's about as specific, I think, as we can be.

Okay.

Okay.

And the last question, I know that you went over the repatriation issue in your comments, and I guess I would just throw this out there.

I guess it seems like it's fairly -- at least the first set of guidelines have been fairly straightforward, and ultimately just simply a pay down of debt or use of cash or capital for advertising and IS&T, and then maybe some training and professional fees, seems like an allowable use.

Is that something that we would expect if the guidelines sort of stay as they are?

Would we pursue that is that the question?

Yes.

In that sort of form.

No, that's right.

I mean, we -- you know, the first round was a little different, clearly, than what we thought it was going to, but we still think it's a good thing, and we're working to try to solve for what they put forward and to try to take advantage of it.

Okay.

Thanks very much.

Your next question comes from the line of Jeff Hopson.

Thanks.

I had a question on the growth products.

I know you've tended to have a campaign to highlight some of your growth products and their strong performance.

Where are we in that process?

And then in general, in terms of advertising, where do you think that level is going to go from here, advertising expenses?

I think the -- you know, one of those performance numbers that I mentioned, and the reason I mentioned the Flex Cap because that is one of the funds that we think really has good a potential to fill that category that we haven't had a lot of penetration in, with the Franklin Flex Cap Growth Fund.

We have been very pleased, as we talked about before, we have combined some of the funds, and those equity funds, the founding funds are up 78% from the prior year sales, so it's still a relatively -- it's not a big number, but it's certainly increasing, and that's creeping into our top 5 sold funds using the combination of some of our equity funds, so it is working.

I thing on the advertising side, you know, I don't think there's a whole lot of changes afoot.

I think it's fairly steady, and we'll continue to have a presence, and you don't see any special campaigns coming in next year, but we expect to continue to do same level of TV and prints that we've done in the past.

Okay.

Great.

Thanks.

Okay.

Our next question comes from the line of Robert Lee.

Thank you, good afternoon.

A question on the deferred sales charges.

I guess this relates to the B shares.

How should we -- should we expect that expense to start eventually trending down once you stop selling B shares, or are there other sales of deferred load products outside the U.S. that may keep that moving higher?

It -- there are other products outside the United States that are -- that have a deferral to them, and interestingly, they are also less popular than they were in years gone by, but that won't prevent them from growing in the future, but if you look, clearly, as you're pointing out, you would expect it to decrease as we discontinue sales of these shares in the United States.

Okay.

And is it possible just to get a rough idea, once you -- once you stop, at least within the U.S., selling B shares, a sense of how much capital that actually frees up, you know, given what sales trends have been?

You know what, Robert, I don't know that off the top of my head, and we'll try to get -- we'll put some of that in the Q how is that?

That would be great.

Thank a lot.

Yes.

Your next question comes from the line of Chris Meyer.

Yes, hi, good afternoon.

Marty, if I could just ask a -- I think a slight variation of the question we've already had which is on operating leverage.

If I look -- since the market trust in Q1 of '03, your assets ar up about 60 percent yet your headcount is more or less flat, and your spin is actually done.

So that's tremendous operating leverage.

I just wonder at what point you need to reinvest in infrastructure to account for the higher asset level.

I'm glad you asked the question, because, you know, on the IT line that's what I was trying to highlight, we have, like everybody, lots of demand for IT projects, and we're very aggressively working through a number of them right now, whether they be sales and marketing systems, some portfolio management, you know, tools, and very, very aggressive.

The mismatch that we have is the roll-off of depreciation, a lot of it was probably prior years' buildup even back, you know, year 2K, and et cetera, et cetera.

You see all of that depreciation roll-off, that's really what you're seeing, but we are absolutely investing, so there's a mismatch with expense and cash investment there.

And on the people side, we are adding people.

You're really starting to see that.

We're trying to be very thoughtful about it, but we are investing for the future, it's just not fully showing up in the P&L.

So there sort of 83 that you added this quarter that's kind of a run rate we should expect or--.

Yes, that's -- I can -- you know, speaking to our plan, that would be consistent with what we see through the next year.

Right.

Okay.

And secondly, just I think another variation of the growth fund question, but really with regard to call funds.

You guys have certainly outpunched your market shares in terms of flows this year, but I guess it could have been better if you had been represented in the core blend category a bit more.

Can you just tell us what's going on there with your product launches?

Well, you know, I think the -- those categories and the Flex Cap is still -- they're positioned, whether you call them core growth or kind of something in between, so, you know, I think we've got plenty of funds that put us, and we're pushing both core and growth right now.

And then maybe finally, just in terms of whether this strength in the international flows that you've seen is, in your view, you know, a function of the cyclical weakness of the dollar, or whether this is, you know, a return to, I guess, the more secular trend of people diversifying their assets away from just pure U.S. equity.

Yes, I think that's hard to say, but it tends to move where performance goes, and the fact is, the question is how long, forget about the dollar if it does nothing will these stocks in Asia outperform the U.S. market, or in Europe, and if that happens, you'll so that percentage continue to grow.

I think for a long time the mindset became well we don't need to take risks outside the U.S., because the U.S. market is doing better than all of the other ones, and that seems to have been shifting a bit, so I think we're still at the beginning of a trend of increasing that exposure outside the U.S.

Okay.

Thank you.

Your next question comes from Daniel Goldberg.

Good afternoon.

It's been a pretty rough January so far.

Can you just comment on what you're seeing in terms of flows both in the U.S. and outside the U.S.?

Yes, we really can't comment on the flows, other than to say January, historically, is a strong month, so, you know, you have that going for you, but it is, as you said, the dollars reversible, the market has been weak, and that will have an impact, but we really can't comment any further than that.

Okay.

And just a follow-up on the headcount question.

You said you grew headcount by 83 people.

Any particular areas of the business where you added people this quarter?

It's pretty, you know across the board.

I mean, you wouldn't be surprised, there is also quite a bit of demand and there's the result of Sarbanes-Oxley and the like, but it's been pretty broad.

And going forward you said it's a pretty decent quarterly run rate of headcount additions.

Any specific areas that you would point out that might be much more of a focus?

Not -- not really.

I mean, it's no different than any business, it'svery much bottom up, and nothing sort of sticks out as a very specific area.

Okay.

And your U.S. -- the U.S. retail assets, it looks like their distribution about 4 .9 billion, looks like it's the highest that we've seen in a while.

Is this just -- anything specific going on there, or is it just kind of the level of market depreciation and assets?

Yes, I think it's really that, and just if you look at the industry as a whole, most of the equity funds were coming from the global side, so clearly, you know, that's going to benefit our numbers relative to the industry.

Okay.

And then just finally, can you just give us an update on your alternative investment strategy?

Yes.

We, you know, have for a number of years have been focusing on it, and what we call sort of natural extensions of what we do.

The most recent was we purchased Darby which was a private equity emerging market for the team, and then a distressed product called Future Series a global launch short off Templeton and U.S. offshore off of Franklin, and right now, alternatives would be somewhere around $2.5 billion, roughly.

Any specific target going forward?

No, I think our main thing is just to do a very good job of it, but, no, we haven't, you know, targeted an asset level.

Great.

Thank you.

Your next question comes from the line of Cynthia Meyer.

Hi, good afternoon.

Just ask a little more about flows.

Could you -- and maybe you said this.

If you did, I apologize.

But did you get a sense of what percentage of the net flows in the quarter came from outside the U.S., from clients outside the U.S.?

And, you know, how that might differ from past quarters?

You know, I would say just -- and this is a general statement, because I don't have those exact numbers in front of me, that probably around a quarter of the flows were from outside of the U.S., and that may be down slightly, because of the effect of the dollar in some of those markets relative to the pace it was growing before that, where the U.S. retail actually -- and the retirement business was strong in the last quarter.

Right.

So the kind of the surge in global international investing was especially strong among U.S. retail investors?

Right.

Right.

It looked as though the incremental flows in the quarter were more on the retail side than on the international side.

Was that a function of that, or were there also -- and maybe you touched on this before, some outflows on that institutional side?

No, it was a function of that, and just a function of the retail flows in some of the markets that are impacted by the dollar going the other way outside of the U.S. had an effect, versus what was happening in the U.S., so you really just had a stronger U.S. retail, and, again, retirement.

Okay.

And just so the Income Fund, which has had such incredible flow, should we still assume that that's not capacity constraint, I mean, is this a fund that could just double in size, and we shouldn't even worry about it being capacity constrained for a year or more?

I think that's a good question.

It's a big fund and it's a big part of our flows, but if I looked at the landscape and had to pick any fund that's probably as diversified as any mutual fund in terms of it's -- the various asset categories it has, within it, you know, we feel pretty comfortable, and it has always had a large cap, more of a bias, so we're not hearing anything from the portfolio manager that, you know, indicating that we would have to consider closing it, but if that person felt it was the right thing to do, we would certainly close it.

So I don't have an answer to say it's going to be this or that, other than it doesn't appear to be a problem today, and if it is, we will have to close it.

Okay.

Great.

Thanks a lot.

Our next question comes from the line of Bill Katz.

Thank you.

Good afternoon.

Sort of curious, Marty on your commentary on sort of expense growth over the next 12 months, or so, sort of 2 part question.

Number 1 is if markets continue to be choppy, which we think sort of the expansion plans, and then number 2 if you assume sort of assume a more normalized market backdrop, will your model still sort of kick out some natural efficiencies or margin expansion even as you're investing into it?

Well, a couple -- a few things.

One, you know, every part of the business is constantly looking for, you know, profit improvement, and, you know, it's really very much a part of the fabric, and that's ongoing.

We also, as we've talked in the past, you know, everybody very much remembers the period we went through in '98-'99, so when we build out a plan, we look longer term, put it into 1 year plan like everybody does, but we have contingencies built into it, and we have a very quick ability to turn it on and turn it off, and we're very focused on dollars being really investments for growth and improvements in the Company, so we think, you know, we have built in as many levers as possible, but as we've seen in the past, as these assets have gone up, and we're benefiting from that very nicely, but as you clearly remember, Bill, when markets depreciating, it's very hard to turn the ship, but we are building in as many safety nets as possible in the way we operate the business.

So is it fair to say that your investments today give you a faster pay back, in terms of building the business?

I don't know if I could answer that, but I can tell you every plan and every investment dollar has some payback to it for some absolute need, whether it be driven by regulatory requirements or the like, so we're very focused on it.

Okay.

And also another question.

With the focus in the annualized jump in billable shareholders accounts.

I was sort of curious if you could talk about where the growth is coming from U.S. versus nonU.S., and what kind of lead lag indicators there are between sort of new account growth and sort of further inflow into those accounts.

I don't have the details, other than to say of that about 2.5 million of those shareholder accounts are nonU.S.

Maybe Greg has some more color than that.

I think if you have incremental sales, you get incremental accounts, and I don't think it's a leading indicator one way or the other on what flows are doing, but it's certainly in the direction we would like to see.

And sort of a final question, wonder if you could sort of talk about where you are in terms of penetrating in the retirement market a little bit.

It's been about a year or so now since you sort of rejiggered the platforms.

Wondering are you seeing an acceleration of mandates, what is your sense of that going forward?

It's still been very strong.

The investment only side, and, you know, we continue to, you know, win new mandates, and it's just been very steady, and still looks like a pretty good pipeline there.

So I think the smaller end -- smaller plan is becoming less and less important to us in really focusing on the bigger strategic relationships that we've had, and the variable annuity business has just been tremendous over the last year for us.

Okay.

Thank you.

Your next question comes from John Hall.

Yes, I guess your need or desire to invest in technology dove tails nicely with your eventual repatriation plan.

Is there a time frame attached to the plan there?

Of when we think we'll have it done?

Right.

We don't have a specific time other than to tell you we're working on it actively, and, as soon as -- as you know, it has to get in front of the board to be approved, but we're -- you know, we have been working on it, and we will, you know, get it done as quick as we can.

Okay.

And I guess is -- as you think about the plan, and how it all eventually works, the fungibility of cash, is that at the top of your mind?

No, I'm trying to be very specific as the you know, repatriation guidelines are very specific, we are following those, and if we bring back cash, you know, we'll very much invest it accordingly, and, you know, separately, our conversation around capital management has not changed, and, you know, we will continue to do what we've done in the past, and whether it be invest in the Company on put money back in shareholders' hand by buybacks or dividends.

Thank you.

Gentlemen, at this time, there are no further questions.

You may proceed with any closing remarks or--.

Thank you very much, everybody, for joining us, and Greg and I appreciate it very much, and we will talk to you next quarter.

Thank you.

Ladies and gentlemen, that concludes Franklin Resources' quarterly analysts call.

We thank you for your participation.

You may now disconnect.