富蘭克林資源 (BEN) 2007 Q4 法說會逐字稿

Welcome to Franklin Resource's earnings conference call for the quarter ended September 30, 2007.

Please note that the financial results to be discussed in this conference call are preliminary.

Statements made in this conference call regarding Franklin Resources, Inc., which are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward looking statements involve a number of known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from any future results expressed or implied by such forward-looking statements.

These and other risks, uncertainties and other important factors are described in more detail in Franklin's recent filings with the Securities & Exchange Commission.

Including in the risk factors an MD&A sections of Franklin's most recent Form 10K and 10Q filings.

I will now turn the call over to Greg Johnson, CEO.

Mr.

Johnson, you may begin.

Well, thank you, and good afternoon, and thank you for joining us today.

This is Greg Johnson, CEO of Franklin Resources, and joining me today is Ken Lewis our CFO.

I might say it's a solid quarter, but a challenging quarter to look at the volatility that we've seen.

Really the first volatility that we've seen for quite a few quarters in the market.

Looking at the assets under management, they increased slightly to $645.9 billion which is up 3.5%, and the average assets increased from 605 to 627 or about 3.6%.

The mix really didn't shift much, but the net sales did shift towards fixed income and money funds and at quarter end, equities represented 60% of our assets, fixed income, 20.7%, hybrid 18.1%, and money funds 1.2%.

Looking at the overall net sales, I think we're pleased with the $9.8 billion inflows in a very difficult quarter, and also, during the summer months, which tend to be slower.

This compares to 15.9 in the prior quarter and 2.4 in the September '06 quarter.

We had appreciation of $12.8 billion for the quarter, overall sales were up 1.3%, but redemptions were up 19% resulting in the $9.8 billion in net flows.

It was our 27th consecutive quarter with positive sales, and just looking at some of the fiscal year numbers, gross sales were up 44%, to $185.5 billion, redemptions were up 19% to 139, and net sales of $46.6 billion, which compares very favorably to 12.2 in the prior year.

Some of the flows by region.

The non-U.S.

flows led the way for the quarter, U.S.

sales sold off or had the biggest increase in redemptions, and U.S.

net sales were 2.7 versus 9.1 in the prior quarter.

Non-U.S.

sales were $6.1 billion versus 6.8 and again, resulting in 9.8 versus 15.9.

In the non-U.S., we did have a strong quarter and it was led by institutional flows in Europe and Asia, where existing Middle Eastern client funded an additional $500 million, and a Korean pension fund added $380 million to a global equity mandate.

The Sicav products had another very strong quarter led by the Templeton Asian Growth Fund, Franklin Mutual European fund and they both had net sales of over $800 million.

For the year, the Templeton Global Bond Fund for non-U.S.

sales had sales of $2.6 billion, and Mutual European had net sales of 2.2.

Looking at some of the country highlights year-over-year, again Sicav was very strong in many of these countries.

In Taiwan, assets increased to over $8 billion, or up 66%, Italy up 86% over $7 billion, Switzerland up 64% to over $5 billion and South America up 78% to over $3 billion dollars.

India had another strong year and assets crossed $7 billion in Korea, crossed $3 billion.

We're pleased to see that institutional AUM in the Middle East more than doubled to almost $10 billion for the firm.

Looking at some of the net sales by client, retail sales dropped from $13.4 billion to $4.3 billion.

Institutional increased from 2.6 to 5.4 for the quarter.

The Franklin Income Fund continues to generate strong sales, but as you'd expect in the kind of quarter with the volatility in the fixed income marketplace, those net flows did decline from $3 billion to $1 billion.

Mutual shares continues to be very attractive in the retail channel with $840 million in net sales versus $1 billion in the prior quarter and our fixed income campaign continues to attract assets and our Templeton Global Fund continues to be the strongest leader there with a 200% increase year-over-year.

We continue to see weakness in the Templeton Foreign Fund with $1.8 billion in outflows versus $1.5 billion, but performance has improved considerably there in the one-year numbers as Asia's turned around on a relative basis for that fund.

In the institutional side we funded a $260 million Japanese equity mandate for our group in Japan from a European pension fund, and $100 million Indian equity mandate from a Middle Eastern institutional client.

The global fixed income flows remain strong, $7.7 billion year-to-date, and over 20 different strategies led by emerging market debt, and the FTPA which is a separately managed high-yield Muni product had $2.9 billion and $1.3 billion inflows.

Looking at the sales by--net sales by investment objective, we had very strong equity flows again on the back of some of those international separate accounts, but overall equity net flows declined slightly from $4.5 billion to $4.4 billion.

Hybrid, led by the decrease in the income fund dropped from 3.9 to 1.8 and fixed income sales had the biggest drop in 6.8 to 2.2, again, what you would expect with the kind of market environment that we had, and one of the areas that--for the industry experienced quite a bit of net outflows was the floating rate funds, and that had approximately a $500 million net outflow for our various floating rate funds.

Looking at investment performance, it was a--really two stories, the fixed income actually got stronger and the one-year numbers have improved, and I think of note, the municipal bond funds which have been under pressure from some of the more aggressive funds out there, that use leverage and other derivatives and we've always taken a--kind of a plain vanilla approach there, and they had very strong relative performance, and I think that puts us in a good position going forward.

Some of the performance at Templeton then has led into the 3 and 5 year numbers and that's led to a decline there, where the domestic equity and global international and equity total assets have declined from higher levels.

I'll now turn it over to Ken for the operating results.

Thank you, Greg, hello, everyone.

Well, 2007 was a record setting year for Franklin Templeton.

We couldn't really think of a better way to mark our 60th anniversary than to set all time highs for sales, assets under management, net income and earnings per share.

Comparing the fiscal year results, we ended the year with earnings per share of $7.03 which was an increase of 45%.

Net income of $1.8 billion an increase of 40%, and that was on revenues of $6.2 billion which was an increase of 23% year-over-year.

For the quarter, we were pleased to see operating profits grow 4%, driven by a 4% growth in average assets under management and Investment Management fees, but increased taxes and less non-operating income caused quarterly earnings to decrease by 6.7% from the prior quarter.

So we ended the quarter with net income of $437 million and earnings per share of $1.76.

So there are really three main themes to highlight for the quarter.

The first is that we were able to maintain consistent operating margins, despite increased cost of distribution.

Second, that we generated less non-operating income, and third, we experienced a more normalized tax rate.

Taking a look at some of the line items in revenue.

Investment Management fees increased 3.8%, driven by increased assets under management.

The effective fee rate was relatively unchanged.

You may recall last quarter we had about $5 million of performance fees that we didn't have this quarter, and I think the big story here is the underwriting distribution, the revenue decreased reflection lower U.S.

retail sales, and higher international institutional sales this quarter as Greg discussed.

And while net underwriting distribution revenue increased in absolute dollar terms, our underwriting distribution margin declined to 4.35% for the quarter.

As institutional and international products are more expensive to distribute than their U.S.

counterparts.

Now I think it's important to note that this really is a point of sale issue, and it's not indicative of overall profitability of the various products, and we have seen a general decline in the underwriting distribution margin, and that trend will probably continue as we expand our global reach.

For the year that margin came in just over 5%.

Shareholder servicing fees increased 1.3%, reflective of a 3% increase in open accounts.

The decrease in total shareholder accounts quarter-over-quarter is due to a decrease in closed accounts which have a lower fee structure, open accounts increased 3% and that's positive.

Other net revenue decreased as we mentioned last quarter, we had a gain of $2.7 million from a securitization, and a non-recurring revenue reduction this quarter of about $2 million.

I think some of the expense line items bear some discussion.

While many of those line items were up, I think the good news is that most of the sequential increases were from discretionary items, and even with that, we experienced some margin expansion during the quarter.

The first item that I think pops up is IT and occupancy, it increased almost 12% as we mentioned in prior calls, we are generally seeing an increased demand from the businesses for automation.

Which is a good thing, not only because it will increase our scalability, but also because it's discretionary spend that can be quickly curtailed.

Advertising and promotion, this increase this quarter is due primarily to promotional activities, both within and outside the U.S.

, and amortization of deferred sales commission increased by $5 million, and that was indicative of increased sales of relevant share classes.

Other expenses decreased this quarter as last quarter's level was unusually high.

Much of the line--this expense line is comprised of variable expenses such as legal and professional fees as well as expense that are AUM based.

The second theme was non-operating income.

One of the big drivers of that decrease was--are sponsored investment product gains.

That decreased by $20 million and that's reflective of the market volatility this quarter, and investment and other income decreased approximately $19 million, and that's reflective of smaller gains taken in the corporate portfolio this quarter and last quarter had $13 million of equity from affiliates that did not occur in this quarter.

Interest expense is running less than historical levels as we pay down some of our commercial paper.

And then the third theme, income taxes, the effective rate for the quarter increased to 29.5%, and the effective tax rate for the year was 28.1%.

And that was right in line--in the range that we expected.

Last quarter's rate was unusually low due to non-recurring tax benefits and this quarter's rate had approximately $2 million of non-recurring tax expense.

So as I mentioned, operating profit margins remain strong, and consistent with historical trends both on the quarter and the fiscal year, and a word about capital management.

We repurchased almost 1 million shares this quarter, when combined with dividends, we returned over 80% of current year earnings to shareholders this fiscal year, and total shareholder return for the year was over 20%.

So in summary, Franklin Templeton had a record fiscal year for its 60th anniversary, despite a challenging quarter, where we saw consistent margins despite increased distribution costs, and more normalized non-operating income and tax expense.

So I'll turn the mic back to Greg, who will go over some business

Thank you, Ken.

Looking in the United States our fixed income sales and marketing campaign that we started last January continues to be very successful, not only have we seen very strong growth in net flows, but we've seen our market share within the retail channel continue to improve.

In Canada, we had one of our best years in net sales there on record.

We announced a strategic joint venture in Dubai with a new firm called Algebra Capital, which really allows us to build out our local asset management strategy, and offer--and build a retail business in the Middle East and North Africa region.

In Europe, we acquired a majority stake in Riva Financial Systems which is the creator of the Riva Transfer Agent Software Solution suite and it really allows us to control our next generation, building our offshore transfer agency capability in multi-currencies.

In Poland we announced our second global servicing center outside of the U.S., and that will help service the growing European business and especially Germany, and in Japan, as I mentioned earlier, we won our first offshore Japanese equity separate account mandate.

On the institutional side, we launched our fourth global private real estate fund, the Franklin International Real Estate Fund.

So in sum, it was a strong quarter, a solid quarter, as far as earnings and flows go in a somewhat difficult environment, and we'd like to now open it up for your questions.

(OPERATOR INSTRUCTIONS)

Your first question comes from the line of Ken Worthington with JPMorgan.

(technical difficulty)--the question before, but with growth outperforming value, what are your feelings towards Franklin having a more meaningful presence in growth style products and given the magnitude of the outperformance of growth over value, do you feel you have the time, the resources and the desire to maybe continue to build those organically?

I think that obviously is a timely question with the rotation that we've seen, and I--one of the areas that I didn't mention that has had very strong performance is the Franklin Growth Funds, and the Capital Growth Fund, the Flex Cap Growth Fund have all had very good performance and we're starting to see flows pick up there.

So regardless of what we do in the future, I think we feel that we do have those funds and the track records now are at a period of time that make them very marketable, and more importantly, the performance has been very solid there, so I think we're in a good position to--if the market continues to rotate and flows continue to go there, to capture some of that.

Okay, and then maybe for Ken.

On the two expense lines on IT spending, you said a bunch of the spending this quarter was discretionary.

Is that recurring, should we expect IT to remain at the elevated level for the next couple quarters, or is that going to fall back down to 1Q, 2Q, 3Q levels of '07?

Well, we definitely plan on continuing to invest in the IT projects.

As the business expands, I think that's a good use of company resources.

I would say that the sequential increase--the 12% was a little bit on the high side, but as long as the business expands, I think you'll see increased spending there.

All right, and then lastly on other income, I think in 3Q there was some litigation expense, 4Q is a little high as well.

Was--I guess maybe that's an unusual bucket anyway, but is that level of expense also recurring, or should that fall back down also?

I think that in that line item, there was kind of a mixed bag of recurring and non-recurring items.

So as we think about 1Q '08 and 2Q '08, any help there?

That's a tough one.

There's a lot of things in that line, and don't forget that that line is also driven by AUM's, so if you see a big change in that, that will affect that line as well.

There's some expenses in there, that are on a percentage basis, so that's (inaudible).

Okay.

Thank you very much.

Your next question comes from the line of Cynthia Mayer with Merrill Lynch.

Hi, good afternoon.

Very quickly, I sort of had a similar question on the amortization line, it seemed like a big jump for something that's just driven by sales of particular share classes, I guess that would be B shares outside the U.S.

I'm just wondering if that's a good run rate.

This is the deferred sales commission line I think you're referring to.

That one is definitely dependent on share classes like B shares and C shares, in our case, it's more C share driven and it has a lag effect too.

So when you see the increase in rate, it's from sales from previous quarters.

So given the fact that in this quarter we had sort of a pull back in U.S.

sales relative to total, you might expect that line to level out in the short term.

Oh, so it's lagged, but sometimes the lag is as little as a quarter?

It can be, yes.

Okay, and then on the foreign fund, the performances improved but, of course, the star ratings reflect 3, 5, 10 years.

I'm wondering how you think the outlook is for a turn and flows there, and what controls more, the short term performance or the star rating?

Well, I think the short term performance helps with the bulk of the redemptions, which is around the investment only side, which is a big part of that fund, but I don't expect to see it turn around quickly.

I just hope that the number--the redemption number should drop as the relative performance improves, and then how quickly the retail new flows come in, that's going to lag more than the improvement in the redemption number.

That's more dependent on the Morning Star ratings and things.

Right, okay, and then I was just wondering if you could give us an update on the repatriated earnings at this point, are they being worked through the system, or do you have any thoughts on--?

There's not much to report on that, it's working through the system, nicely, and we'll probably use those funds sooner than the 5-year time horizon.

Okay, thank you.

Your next question comes from the line of Michael Hecht with Banc of America.

All right, guys, thanks.

Can you hear me?

Yes, thank you.

Oh, hi, sorry about that.

I thought you could just update us on the capital management thinking here, I guess your current assets, and we'll get the cash and stuff in the Q--K rather to reflect on $5 billion at the quarter end, but can you give us a sense of how much cash or excess is available with the parent for buybacks and such?

Our strategy is going to continue to be opportunistic in the share repurchase.

As I mentioned before, in terms of returning capital to shareholders, we do try to focus on not adding to the cash coffers.

We think that having a strong balance sheet is strategic, and a strategic competitive advantage, and the preferred method of--we like the flexibility of share repurchases, but anything that we've done in the past--we're open to anything that we've done in the past in terms of returning money to shareholders.

Okay.

That's fair.

I mean, any updated thoughts on kind of the outlook for acquisitions?

I mean, you note that you feel pretty well positioned from a growth--in a perfect world, I mean, any areas where you'd like to be bigger?

Nothing that we haven't mentioned before.

We feel pretty comfortable about our prospects in the growth area, organically, but we're always out there kind of beating the pavement and looking for new opportunities and we'll continue to do that.

Okay, and can we talk a little bit more about the performance at Templeton?

Is there any kind of FX impact that you had kind of in the quarter driving weaker performance and I don't know if that has any impacted mutual series given they had some international equity product as well, and then any products you feel you're getting capacity constrained on since flows and asset growth have actually been pretty strong, so do you expect that to--products?

We're not seeing any capacity constraints.

I mean, the big one is the income fund and that's a question that we see quite a bit, but I think the nature of the income fund with utilities and corporate bonds and highly liquid investments, we don't really feel that that is reaching capacity at this stage, but as we've always said, if we think it is crimping performance, we will go ahead and close that.

Okay, and then just last question, any expectations for kind of growth in head count from here?

Should we expect a similar trajectory that we saw last year or--just again, 2008 kind of budgeting and stuff?

Yes, you know it's going to be a function of how the business grows, obviously, having said that, we're kind of partial to longer term planning around here.

I can say this, the bulk of the growth, we will try to fund in these lower cost centers going-forward, so if there is growth in head count, the per capita increase I think in the expense line won't be as much as it has been in the past.

Okay.

I'm sorry, one more.

Tax rate next year, do we think similar to what you guys saw this year, full year?

Yes, putting the mix of earnings aside, which, of course, is the major factor in what drives the tax rate, they're probably--I was looking for--looking into the future, there's probably at least a dozen variables that could drive the rate one way or the other, and I think on balance I'd have to say that the variables that have an upward bias slightly out weight the ones that have a negative bias in terms of tax rate.

Okay, thanks a lot.

Thanks.

Your next question comes from the line of Mike Carrier with UBS.

Thanks.

Just a quick question, you guys went over the underwriting distribution margin and it came in a bit lower than where it was kind of trending over the past maybe eight quarters, I know some of the new funds--when you have new funds, it has some impact on that, but I just wanted to get your color on what you were thinking going-forward?

Yes, you're going to--it's normal to see volatility there., I think this quarter kind of illustrated what really drives that line, when you have sales mixed shift in a quarter towards non-U.S.

retail--I mean, from non-U.S.

retail to non-U.S.

and institutional, you're going to see that margin contract a little bit.

So you'll see that volatility quarter to quarter, but I do think over the long term we're seeing a trend--a downward trend there.

Okay, and then just during the quarter, you announced that joint venture with Algebra Capital, just not too familiar with the region and just on the asset management side, Just curious, why them as a partner, what's the competition there, whether it's local, or international, and then also, what's the opportunity, is it more on the institutional side, or any on the retail side, and if you can size it up at all?

I'll start it and Greg will probably add.

It's one of our strategies for growth, we look at that region, there's a lot of opportunities, there's a lot of potential for business growth in that region, and we did it not have local expertise, and so we found some partners that we thought did have that local expertise.

I think the opportunities are both, on the institutional and the retail side.

I don't--that's fair.

Okay.

Okay, thanks.

(OPERATOR INSTRUCTIONS)

Your next question comes from the line of William Katz with Buckingham Research.

Okay, thank you, good afternoon, everyone.

I'm struggling a little bit trying to see where the earnings leverage is going to come from, Ken, I'm trying to balance your discussion that some of these lines that we would focus on are variable in nature.

You've had 12% AUM growth over the last 9 months or so, and your operating income growth has been lagging that, and then if I look even sequentially at your revenues, and I realize distribution has impacted here, but your revenues were flattish, and you had double-digit growth in some of these line items.

So how do we think about the margin on a go-forward basis?

It sort of feels like things have peaked out, but help me understand that better, please.

Well, I'm going to start with the caveat that a lot of it is driven by what happens in the market.

The other thing I'll point out is that this firm really is, I think biased towards long term decisions and so we don't really manage to the short term profit margin, but having said that, if you look over the year we have been running at a fairly consistent operating margin, which has just kind of been a residual of all the things that we do here.

I think that--so I guess in answer to your question, what I'm saying is, if we see a sharp increase in AUM in a given quarter, we're not likely to go out and spend it all, and the same thing would hold true on the down side.

Okay, and then just--so distribution margins erode, and the tax rate's edging higher, you really need to sort of a step up in the manufacturing margin at this point, is that fair?

For the margin to continue?

Well, to sort of see some material earnings leverages at in point.

That's fair.

Okay, the other question I have to sort of send us back on capital management, and I guess that a million shares seems a little underwhelming, relative to your capital base and your earnings leverage.

Can you talk a little bit about your thinking in the quarter?

You've seen a lot of the other asset managers stepping in and being more assertive on capital management whether it's adding leverage to the balance sheet or whether it's just being more proactive in terms of buyback, is it just a husbandry of capital for uncertain times, product development?

I appreciate it's 80% of net income going out, but I'm just trying to understand how you think about incremental returns on capital.

I think it's a combination of product development, strategic competitive advantage going forward and--but from a capital perspective, we're going to continue on the path that we've had in the last year, but we will be opportunistic, and this was a pretty volatile quarter.

Okay, and then--just sort of curious, you haven't talked about it directly in a little while, Greg, this big focus, I guess this might be the year of a shift from defined benefits, of defined contribution.

Can you give me an update a little bit on where you stand in terms of the push into retirement services?

I think the view we've always taken is that we try to provide our funds in as many retirement vehicles as possible, and I think the shift from defined benefit to defined contributions benefits our style more than the shift to the other way just because of our mix of funds, and we're not out there trying to develop retirement platforms or compete in record keeping, and we've gotten away from that, that's really been our strategy, and really be an independent asset manager that can--because of our scale can have service teams really going after every part of the market where they have--where they're using outside funds.

So that's really been our retirement plan, and people talk about IRA rollovers, what's your strategy there.

We're not in a position where we're losing assets like many firms can, from that trend.

We're in the position of gaining assets, so our strategy is always to build as many relationships with as many advisors as possible, and that's really the best strategy to capture rollover assets.

So I think we're in a very good position with regard to the bigger trends in retirement.

Okay.

Just one last thing, thanks for answering all the questions.

As I look at the U.S.

business, at least based on the [Symfund] data, it seems like you're lagging in the industry and some of your key peers in terms of shifts in equity, and just trying to understand how we should think about organic growth, if, in fact, there is a more decisive style of shift here.

Is your growth platform robust enough to potentially offset some attrition that might start to come on from a macro level on value?

Well, I think that's a hard one to answer.

Obviously, it's not as large, it doesn't have the kind of brand awareness that you have on the value side between Franklin and Templeton, but I think we have addressed that, and it's one thing going out and starting funds and saying you're in a position to capture assets, these funds have been around, they have significant assets in them already, and they have very good track records, so I don't think there's any reason why we can't go out and market those successfully and get very significant flows, but whether or not you can capture whatever you're going to lose if there is a big rotation, I think that's the question for the distribution teams and how they execute.

And like your peers, are you seeing a big shift going on, sort of seemingly at the moment?

Well, you see the numbers, I think we haven't seen the big shift yet.

We've been talking about a shift for a lot of years, I think the more recent relative performance you will start to see a movement because it's fairly dramatic, but one could argue it's a shift to technology stocks instead of--the whole large cap and growth versus value, I get more confused the more I look at it, and I think that tech stocks have done very well, large cap stocks because of the decline in the dollar, and I see a lot of value funds that are positioned in both of those sectors.

So I just don't think we're going to see this kind of rotation that was so crazy a few years back for a lot of reasons, for the internet and tech stocks and things, and then it took a lot of years to get back to a more normalized valuations, and now you see both sides buying the two.

So I think it really comes down to just relative performance, and probably the dollar's been driving a lot of the large cap movement lately.

Sure, okay, thanks for answering all my questions.

Your next question comes from the line of [Mark Arizari] with Goldman Sachs.

Oh, great, thanks.

Greg, you guys obviously mentioned the quarter in terms of being a little bit abnormal in terms of volatility and seeing money market flows increasing, an maybe some investor behavior that's maybe not sustainable, but what have you seen so far in terms of the way retail versus institutional investors have sort of reacted post the Fed (inaudible)?

Thanks.

I think you will always see, you will--there's more volatility with retail relating to what's happening in the marketplace and headlines and daily and that's going to affect the redemption rates and certainly the new sales coming in a lot faster than it will in the institutional markets.

The institutional market, and that's consistent with our results, didn't really seem to be disruptive--disrupted by the volatility in the quarter, and clearly the retail market was disrupted, and a lot of times people will just put off purchases until something like the Fed cut, and then you saw things move back pretty quickly, in more of a normalized environment, but clearly as quick as the market's come back, the mind-set of the retail investors probably not where it was four or five months ago, because that was a fairly significant shock as far--and still today reading all the headlines and things, people are going to be a bit more cautious.

Okay, great, and I know, there's probably not much more help you can give, but on the other income line, can you give maybe a little bit of the--maybe color behind the characteristics of those investments so we can get a better sense of--how we should be thinking about the change in that line item?

Thanks.

Yes, I think--well, I could give you a little color.

Look at last quarter, we talked about we have $13 million of earnings from affiliates, that's an annual event so that's seasonal, and so we didn't have that this quarter, and then the sponsored investment products is--you're probably talking mostly about equity funds there, whether it be international or domestic.

Okay, thanks.

Your next question comes from the line of [Chris Favre] with Deutsche Bank.

Good afternoon, I was wondering if we could just take a step back and get a sense of how much of your AUM are held by non-U.S.

clients and what was the total level of flows by these clients during the quarter?

Non-AUM--

Non-U.S.

domiciled AUM.

--40%.

40%?

In terms of sales this quarter, or total?

No, that's of assets from clients that reside outside of the U.S.

Okay.

At quarter end?

I would have to look at what--I think we would have to look at what the flows were for the--U.S.

net was 3.7 and non was 6, so 60% or so with the exact reverse for the quarter for non-U.S.

versus the asset base.

So 60% non-U.S.

in terms of net flows for the quarter, on an asset base that's 40%.

If that makes sense.

Yes.

Okay, and--

I wouldn't draw anything from that, because as I mentioned, there were a couple big chunky institutional accounts that came in that were non-U.S.

investors.

And any sense of the--like momentum going into the December quarter whether it's institutional or international?

I think as we mentioned, one, we really can't give you any guidance on that, but I think this is the first shock that we've seen in the retail marketplace, and I don't think the institutional market will be affected by what we've seen.

That's as specific as I can get.

Thank you.

There are no further questions at this time, sir.

Okay.

Well, thank you, everyone for participating on the call, and we look forward to chatting next quarter.

Thank you.

Thank you.

This does conclude today's conference call.

You may now disconnect your line.