Federated Hermes Inc (FHI) 2002 Q2 法說會逐字稿

Good Morning, my name is Dawn and I will be your conference facilitator today. At this time I would like to welcome everyone to the Federated Investor's second quarter earnings conference call. All lines have been placed on reach to prevent any background noise. After the speakers remarks there will be a question and answer period if you would like to ask a question during this time press * and the number one on your telephone key pad, if you would like to withdraw your question press the pound key. Thank you Mr Hanley you may begin your conference.

Good Morning and welcome, today we have about a 20 minute presentation before we get to your question. Leading today's discussion will be Chris Donahue, Federated Chief Executive Officer and Tom Donahue, Chief Financial Officer. Also here today are from the Finance Group. By way of safe harbour let me say that this discussion will include forward looking statements and actual results could vary materially. For discussion are the factors which could cause actual results to vary from these forward looking statements. See the section titled risk factors in the companies registration statement and in its annual report on Form 10K for the year ended December 31st 2001 on file with the Security Commission. Now I will turn it over to Chris to talk about the second quarter.

Thanks Ray, Good morning and welcome to our fellow shareholders, analysts and media representatives who have joined us today on this call, to discuss the second quarters results. In an extremely challenging operating environment for investment managers Federated once again has demonstrated the value of its varied business mix. We were able to continue to grow our fixed income and cash management businesses and to have positive flows in equity fund products. On the fixed income side our assets grew five percent during the quarter, and are up 28 percent over the last 12 months as sales remain strong. On the cash side the addition of the $13 billion tax pool drove our increase in total managed assets, in total money market assets for the quarter, while our total cash management assets increased. Money market mutual fund assets decreased as late redemptions caused quarter and assets to be lower than average assets. This has reversed itself so far in July. Taking a look at each asset class now, in more detail, money market average asset in both mutual funds in separate accounts increased by $6 billion during Q2, compared to Q1.

Focusing on money market mutual funds we ended the quarter managing $131 billion, we averaged $133 billion during the quarter and ended the quarter at $128 billion. Money market mutual fund assets have increased to $139 billion as of July 22nd.

Our experience on the cash side during the second quarter was not unusual at all by historical standards. Last years growth was exceptional as money market assets increased by about nine percent during the second quarter with the said aggressively lowering rates. However over the previous five years we averaged growth of less than two percent in money market assets during the second quarter. Money market asset levels typically fluctuate in this quarter due to tax payments. In addition Federated's money market assets tend to bounce around reflecting the underlying customer use of these products for large-scale cash management. For example during the last week of the quarter, clients in the Institutional and Corporate market drew down 5.5 billion dollars over a few days.

By July 19th, assets increased by 6.5 billion to begin another cycle of building up and drawing out cash. We also see this cycle in large customers, who have an institutional client base. As such average assets are an important measurement of growth in this area. The future continues to look bright for Federated's cash management business. Given recent market conditions and comments from the Fed, we remain optimistic that short-term rates will not move sharply upward in the near term. We also think, as credit issues have surfaced in the paper market, some investors, who in the past would consider going direct in a rising rate environment, will choose to remain in our money market funds for the professional management diversification and credit analysis advantages, and as you see when we talk about distribution, we continue to have success in expanding our client relationships. On the bond side gross and net sales remain strong, as I have said. Slows were positive in the corporate government and to a lesser extent new and blended product. Sales continue to be weighted towards ultra short and short duration fund products in these areas. High yield funds had negative flows, as did mortgage and global funds.

Second quarter equity fund gross and net sales decreased slightly from Q1 as equity market volatility took its toll. Flows however were positive, and were trending upward in April, leveled off in May, and were slightly negative in June. Leading funds include the capital appreciation blend fund. The Federated Crop and growth fund, and our value fund products. As you might expect given recent market environments, bond fund flows have increased, while equity fund flows are negative during the first three weeks in July. Once again we caution against drawing conclusions for the quarter from this early return data.

Turning to investment performance. As most of you are aware Morning Star changed its rating systems significantly with the June 30th ratings. For equity funds the changes had limited impact on our percentage assets in funds rated four or five star, they remained at 40 percent, and our percentage of three, four, or five star rated assets went from 78 to 73 percent. However, our percentage of five star rated equity assets increased from five percent to 28 percent, due largely to the capital appreciation fund, moving from four to five stars. In the fixed income area, where these ratings have relatively low impact with much of our institutional client base, the new methodology resulted in a decrease in the percentage of four and five star rated assets, from 40 to 29 percent. While assets in the funds rated three, four, or five star, remained at two thirds. In general we have found that the new methodology made it more difficult for cross sector funds that use a wide variety of categories to achieve higher rating, and that funds package for sale through intermediate areas where also disadvantaged. . We also think more categories are needed so that like funds are compared and we understand that the project to change and improve the rating for fixed income funds is a continuing effort and .

On the distribution side in the trusts channel we continue to drilling down into our distribution and are having much success in adding our court and fixed income products into back retirement and private banking products, for example the capital fund Federated stock and bond fund where recently added by South Trust Bank to there retirement product offerings and bank recently added 10 of our funds into there 401K product. Interest we reaches a agreement to merge about 250 million in assets from there priority funds into Federated funds the merge is subject to approval to fund share holders which we expect will occur next month.

Upon approval about 200 million will go into one of our money funds and 50 million into the capital appreciation funds. In the brochure deal market equities funds sales increased in the second quarter and we continue to have success distribution the Federated fund. Across the company sales of this product average just about 100 million per month in the second quarter, up about 35 percent from the first quarter average.

Yesterday Wall Street Journal highlighted this fund as one of only 11 funds opened and least 10 years ago that bested the S&P and produced 10 years of positive gains with the same portfolio manager. We have also had success in this market on the retirement front working with large distributors like Merrill Lynch, , to increase the usage of our fund products in their various retirement products. We recently launched our retirement ally a variable product that teams up the Nation Wide Finical. This new product features a very structure and one of our top tear names in the industry in this business. We expect to raise significant new retirement assets with this product over the next couple of years.

This product will be important product in the system where it is being launched this week. In the system we are benefiting from growth and sales of fixed income products. In the month of June our market share mutual funds shares was just under five percent up from four percent last quarter with a target of hitting seven percent this year. With the system our mutual funds sales have increased every month scene February and we are the only fund company in there system to recorded higher sales in June than in May.

We continue to grow our customer base with cash management, in addition to we recently by a government to manage a $500 million cash account beginning in October 1st in partnership with a client and are working out the contact which we expect to finalize soon. We worked with the state of during the second quarter to manage hundreds of millions of dollars in cash from there tobacco settlement , and we expect to manage cash from state of Florida to define contribution program this quarter and expect to se a couple of hundred million this year from that Florida plan.

We are growing our corporate and public cash management accounts with 13 additions bring in $1 billion in the second quarter... . This brings total new accounts in this area to 26 year to date. We continue also to have success with the related customers. This is the commodities future trading commission activity, which we have discussed previously. Our assets there have grown too one and a half billion during the second quarter up from about one billion at the end of the first quarter.

In our investment advisor segment we're developing new distribution opportunity, and expanding use of our products in existing relationships. For example, during the second quarter a large registered investment advisor in Dallas selected our capital appreciation fund for a $38 million retirement product application, and an Ohio based advisor began to use our government one to three year fund for about 40 million to start, and we expect this account to grow.

In the insurance channel we continue to have success with the separate account that was the Beta site for our successful market opportunity mid cap value product. Within 100 million in new assets have been added to this account bringing this account to just under 400 million. Now based on the success of this account we started market opportunity fund inn December of 2000. recently ranked the fund with its $278 million in assets second out of 210 mid cap value equity products for its year to date performance, and we have seen accelerating sales each quarter over the last year. We're also having success with capital appreciation fund in the insurance channel. We recently entered into a new relationship with Great West Life who use this fund in their 401-K product. Initial funding is 15 million, and we expect further growth there.

The principal growth hired us to manage a separate account clone of capital appreciation fund, which has been funded with 80 million, and they have added an annuity product on May 1st with the same discipline.

Now briefly an update on some other key initiatives. We are continuing to develop distribution opportunities for a newly launched managed account product structured for accounts between 100,000, and 10 million. We recently presented the product to a large group of our bank trust clients, and are receiving strong feedback. Our first new accounts are funded with approximately 13 million, and our focus remains expansion of our distribution into the major programs.

On the international front we're developing prospects for additional business through our London based wholesaler we recently added. We're having discussions in developing operational links with multi national banks, and other organizations that can use our liquidity, and other fund products.

Our sales in Germany so far this year are nearly equal to sales for all of last year. Assets in our retail funds, and our partnership with the insurance organization have increased to about $250 million. We recently won a 100 million separate account for U.S. fixed income from a German customer, and we look forward to more success on the institutional side. We're also developing additional distribution opportunities in Germany, and looking for partners in other countries as well. We continue to develop our product in partnership with , which is State Street's program for the plan. We expect the launch to be sometime in the fourth quarter.

At this point I would turn it over to to discuss the financials.

Thank you Chris. We were pleased with our financial results for Q2. With much of the volatility in the equities market occurring late in the quarter we carried about the same average equity assets during Q2 as in Q1. Obviously with the market decline our equity assets today are below the average of the last two quarters while growth in fixed income and cash management businesses can offset decreases in equities. The magnitude of the market driven decrease in equity assets will pressure our revenues into the future.

As I comment on the Q2 results, the comparison to Q2 '01 will take into account the previously discussed changes from our program and the change in the accounting treatment of goodwill in order to have proper comparison to current periods result. Once again these adjustments to last years results are shown in the Press Release, so for Q2 investment advisory fees grew ten percent year over year. Increases in cash management, the addition of and growth in the Federated fund acquired last April and growth in fixed income assets more than offset lower equity asset revenue ex the fund.

Investment advisory fees decreased by about 500,000 or less than one half of one percent from the prior quarter. Last quarter we discussed a non recurring increase in advisory revenue of 1.4 million related to a change in STCPs paid by our fund. Adjusting for the non recurring revenue in Q1 and the extra day in Q2, our management fees were about the same in Q2 as in Q1. Administrative service fees increased year over year as growth in fixed income and money markets more than offset lower fees from equity assets. These fees decreased from Q1 due to lower money market funds average assets. And as we have previously discussed the internalisation of the $9 billion fund administration business as a result of the acquisition by First Union. These assets were moved in June so we will have downward pressure in this area during Q3.

Other service fees increased from adjusted Q2 2001, largely due to fund acquisition and growth. These fees increased from Q1 due to higher sales, higher fixed income assets and the extra day in the quarter.

On the expense side, compensation and related increase year over year, due to higher incentive compensational growth, compensation decreased from the prior quarter due mainly to seasonal decreases in payroll taxes. Within GNA systems and communications expense increased year over year and sequentially as costs moved to a more normalised level compared to the prior quarter. We had previously discussed Q1 as low due to temporary usage and some credits. We continue to expect that at the full year these expenses will be comparable to last years total. Professional service fees decreased from Q2 '01 due to lower usage of outside services and non recurring expenses that happened in 2001. Advertising and promotional expense increased year by year, due to higher marketing allowance expense related to asset and sales growth. The increase from prior quarter was mostly due to seasonally higher conference expense, and higher product literature costs. For Q2 our operating margin was 46.1 compared to 43.3 for the full year 2001. Our goal for the rest of the year would be to sustain our margin, such that the full year margin would be comparable or greater than last years. This is clearly subject to what happens in the market the rest of the year. On the balance sheet our cash level stands at 76.5 million, about the same as at the beginning of the year. During the second quarter we used 33 million to make the first earn-off payment from the acquisition, 13 million per share repurchases, and six and a half million on our recently increased dividend.

In summary the second quarter once again demonstrated the value of our varied business mix, with multiple asset classes, and broad distribution channels, enabling Federated to continue to produce strong earnings growth in a difficult environment. These results are ongoing share repurchases and, our dividends; we continue to produce exceptional shareholder value. I would now like to open up the conference call to questions.

At this time I would like to remind everyone, in order to ask a question, please press star, then the number one on your telephone key pad. Then pause for just a moment to compile the queue at a roster.

Your first question comes from with the CIBC.

Hi! Good morning. Could you talk a little bit about the use of your cash flow going forward? I guess giving market conditions, are you still looking at portfolios to acquire, maybe repeat the success you had with or can we expect the access cash to be used to repurchase stock, given that you don't really have much debt outstanding anymore.

We remain enthusiastic to participate in our share-buy-back program. We have about six million shares left in the program, so we would expect to continue that program. Obviously we pay a dividend and that speaks for itself, and we continue to look into the pipeline for acquisitions, so we have seen there is a continual interest on the part of various forms of acquisitions, whether they are the type like , which is an area of excellence, where we'd want to keep it, and keep the record, and the people, and sell the products, or the other type which is the rollup where, we simple merge the assets into the fund, and both of these kinds of opportunities exist, but we can't really say when or how many any of them were actually really come to fruition.

OK, but there are still a bunch of properties that you're still looking at right now.

Yes.

OK.

Yes. Like you get. What you get in this kind of a market is what we affectionately refer to sometimes as . Where people have created funds that are not working, or island funds that used to work before, and it just becomes obvious that those funds need a grand home like Federated Investors, and it's better for the shareholders, it's better for the organizers of the fund and we think it is a good deal for us to so we are looking at a number of those kinds of opportunities.

Great and given the decline in the market should we expect to see bank trust customers begin to rebalance from into, sorry not to from money market funds. And is that sort of a risk at al in the near term for you know your money market funds?

What we have discovered historically is that in a trust department, a trust department will run about 15 percent cash in all environments even when fully invested because our products are as much if not more a cash management service than they are a an investment vehicle and. So historically even when the bank trust compartments have decided to reinvest in the market we have not seen note able down drafts in the money markets assets. This compares with times when you have rapidly increasing rates when those trust compartments may at the margin tend to go direct and if they decide to go into products we have a few buckets lined up for them to take the money over there and $1 that comes out of a money fund and goes into a fund for us is a good trade.

Great understood, thank you very much.

Our next question comes from with Merrill Lynch.

Thank you good morning, couple of questions. Tom and made be Chris if you want to try mate could you clarify a little bit you comments on margin expectations I understood you sort of want to hold where you are so that you are next year better than last year but that was some significant margin pressure in the second half of the year so if you clarify that and maybe more badly it sounds as like there is tremendous lot of new business that are either early on or doing very well and I was just sort of curious of what we should think about or you are thinking about your goal of gradual margin increase year over year and whether you want to for go that for a little bit more volume and that is the following question?

I'll answer it first and then Chris will follow it up the we what we have always said and I will try to be precise on it is that we have looked in the past looked at increase our margin year over year and so OK hear me say I either want to keep it comfortable for the last year or slightly increase it for this year and that is looking at where our today and you know trying to figure out where things are going to go. So you know I am making some estimations and i said as, as a goal that we would try and do that.

You know when you start to switch that to new business and think about how you are going to do I am going to turn it over to Chris to comment on those.

Bill you know when we started off in this going public we where in between 50 and 100 billion and we said that we where going to do that in five years. Then we said once we hit 100 we said we where going to go from 100 to 200 in five years and then guess what Chris is going to say when we get to 200 we are going to say we are going to go from 200 to 400 in five years. This way you will know the plan over all, this added to about the numbers the margin comment so a direct answer to your question. If in the future in 03 we see great opportunities to increase business that we think is good long term profitable business then we are going to be incline to go there. We are not enthusiastic or to see margins go down, you will notice where our margins are they are in the mid 40's and to have an attitude that you can increase them almost the way your question implied into the future, forever going up, is sort of a, sort of a challenge, so that's how I would respond to how we'd look at that.

In terms of, from a strategic prospective, you know, you're one of the few companies who's actually had a sort of a bump up in advertising and promotion. Sequentially in year over year, and I'm just sort of curious, how much of that just sort of came from daily strength in the money market department the last couple of days in the quarter, versus your sort of, strategic decision to maybe amp-up some branding, or, you know, other type of third party inititives, and what sort of drive got you to think about the next six months to a year or so, particularly given the obviously, the ongoing market .

Bill, what's really driven me, the increase in the advertising and promotions, are the marketing allowances that we make with our distribution partners, and those are tied to the growth that we've had on the fixed income side, and on the cash side. We've actually maintained fairly steady advertising expense, we've ended up with more purchases for that same dollar amount of advertising expense given the environment for advertising, but, you should expect to continue to see that driven by our overall change in assets in sale.

OK. Final question. Sort of talks about credit, but I just sort of wondering, if you could maybe just talk a little bit about, in the money market channel, if there's any sort of change in the underlying research that you use in, given all the, sort of, they see changes that are happening between investment grade and non investment grade in the corporate area, and are there any sort of underlying concentration issues either within the product, or across the distribution lines within money markets.

Bill, as you might imagine, because of the nature of this franchise, and its relationship to Federated, we have been extremely attentive to the securities that we've purchased in our money market funds. We have not experienced any of the kinds of ownerships that have caused other people problems in the last several years, and it is because of a, just rigorous, thorough credit review on each one of those securities that we own in those money market funds. Further part of the normal reporting of this operation is the total combination of all exposures of all credits, including money funds that goes all the way up to the independent directors of the board on a quarterly basis, and is reviewed by the PMs on a daily basis, and the CIOs on a weekly basis. So, and this has been going on for years at Federated, its just not something we've ever gotten into before, but now it obviously becomes more important for people to know exactly what you're doing, and we have not changed the methodologies that we have used. Obviously we're more attentive to accounting issues, but it is all within the context of building a franchise where you can offer a money market fund, dollar in, dollar out, which is the of that business.

So, but there're no concentration issues, you know.

No.

OK. Right, thank you very much.

Your next question comes from with Lehman Brothers.

Good morning guys. I just wondered if you have got a sense yet, or have you been able to tell from looking at the assets, before you had, what seasonal patterns might apply specifically to the tax pool assets which I assume have a very different dynamic than the, your bank trust channel for, for money market products.

Mark, interestingly the, for different reasons the tax pool, turns out, they have a similar seasonality, in that the assets are probably typically lowest in the second quarter. It is really based on the underlying cashflows of the 1700 municipalities that use that pool product and typically those balances pick up over the tail end of the year Q4 into Q1 actually as tax receipts are received, so we expect to see fluctuations in the billions in that product that came in at about 13 billion. It ended the quarter a little under 12 billion. There has been no change in the underlying municipalities, it is simply a question of their cash flow and we are also looking at additional product opportunities there, we are looking at beginning a second product there that would be a commercial paper based product that would complement the existing government product and hopefully that will be up by the end of the year.

OK, and Chris if I could ask a bit of an addendum to the path that Bill was going down a little bit earlier, but with sort of a shorter term focus, thinking about these more short term variables, sort of less investment oriented expenses if you will most notably compensation and other sort of shorter term discoursenry expenses. How do you balance that against what you stated in the past or your at least objectives of generating 15 to 20 percent sequential growth, obviously you are walking forward here into '03 with sort of a lower run rate of particularly equity advisory fees, I just wondered how variable you would view some of those shorter term expenses.

Well, one of the expenses is obviously the bonuses and the bonuses of function as a reward system for employees who do good jobs, and so we will continue to do those as the good jobs continue, we described those type of expenses as "success" items. So if we have good portfolio management and good portfolios then those bonus programs will be paid out, the same with the sales people. You have a lot more flexibility on the bonuses for the senior management of the company in terms of addressing the issues that you are talking about we would be very attentive to those in terms of meeting our goals of 15 to 20 percent EPS increase year over year. If you hypothesise a stock market that stays roughly where it is right now and you don't get hammered on the NAB declined inside the funds, you know then I think we are going to be OK on that, without causing too much consternation inside the bonus pool. If you have bigger down drafts then we are going to have to examine it and it is really hard right now to decide how exactly you would do that, but it gives you some of the outlines of how we would look at the decision process.

OK Thank you.

Your next question comes from Stephen Swartz with Raymond James

Good Morning everybody, Chris I just want to note you down on what you just said there, if the market were to stay where it currently is, you are still thinking 15 to 20 percent type of target growth is still good, is that correct?

That is correct.

OK That is statement.

If it was uncorrect, I would have said it was incorrect

OK Could we really go over the fee realisation rates, they looked a little low, I am wondering if tax pool maybe had something to do with that on the moneymarket side?

I didn't understand what you meant by B realization rate?

Fee realisation!

OH Fee realisation rate. The realisation rate change would have been related to what Tom mentioned and what we talked about Q1 with the additional fees we received from the change in the worked at the fund level. So that would have being tied into that revenue coming in Q1 and that was the one point four of a one time hit, now clearly by putting and other separate accounts into the mix there is going to be some impact there and but what we are seeing in Q2 is more related to the unusual item in Q1.

OK and could you possibly go over as a reminder the pay out schedule for Federated assuming there performance stays as good as it has being?

Well the max the max payment that they would get or the 33 million so the payments that we made this year they hit the max. And you know it ranges down to zero.

And continues for how long Tom?

Five years. With a one year claw back, look back but they don't hit it all in five years they can get it in the sixth year.

OK, Tax rate looked a little bit low in the quarter Tom is there anything there or just one of those things?

It just timing and the you know the adjustments we carried some over the year that we have used up and that came in on the second quarter.

OK great thank you.

Your next comes from with Salomon Smith Barney.

Good morning guys, just a couple of questions on the really the of the business you had 10 billion in money finances that was in July and I am trying to get a word portion of that with view to the typical corporate client reshuffling around the end of the quarter and what percentage truly new clients or what you would consider truly organic?

And then secondly if you could just outlook that you are seeing in July so far?

On the cash side the in flows we would attribute to typical corporate industrial accounts flowing in and out we did have some new accounts Q2 and they become like everybody else funding according to there sources and uses of cash. We have had inflow on the in the cash from a retail standpoint but they have being dramatic. Even into the first couple weeks of July, so the growth has really being driven by companies how we mentioned earlier typically take cash out at the end of the quarter and perhaps use to pay down labiates and do some balance sheet work and then typically at the beginning of the period we se more and more money coming back in and as we add more and more of those customers and grow the underline bases of that customers you kind of get the movement that we have seen really over the last couple of quarters on the cash front.

Right.

On your second question, about the flows over the last several months we have being running about a billion dollars or more in fixed incomes sales and in the neighborhood of $500 million in sales so far in July and again it is difficult to project from this but I know you are interested in it the fixed income numbers are higher than paid and the numbers are a little lower than that pace, and on the net side the fixed income remains strong, and you know almost half of the sales being net sales, and on the equity side, those numbers were negative for the first three weeks of the quarter by a modest amount, so it wasn't even in the hundreds of millions of dollars, so without giving you the specifics, that's a pretty much, a good gauge of what was going on here in the last three weeks.

Right OK, and are you seeing an increase of your equity assets, an increase in portion in the fund over the course of this year, and is, in terms of new sales of that fund, and the interest in the distributions channel in that fund, do you expect that will increase in the next, over the course of the year.

Well, let me see if I've got the question right. Because the fund sales have been averaging numbers that get pretty close to about one hundred million a month, and that's pretty strong as regards other funds in our mix. The fund is attracting a higher percentage of the sales of the federated organization, than it used to have, OK, so it's getting a higher percentage.

Right.

Of course, the NAV declines that go on in the market place, also impact that fund, you know, you've only got to look in the paper every day to see what the NAV decline is, and it has that effect on it as well. So, where do you want us to come out on this question?

Yeah. I'm just trying to get a sense of, you know, to what degree that, that fund would become a bigger part of the mix.

Let make a comment here too.

Well clearly it has become a big part, as has mentioned, but the top selling equity product this year has been the capital depreciation fund, the blend fund, and you heard some good examples of that being slotted in to program systematic investments programs, and that particular product, the flows have not really been retail driven, it has been driven by these types of application, so we're hopeful that that continues.

OK. Great. In a very general sense, of all the distribution imitative that you mentioned earlier, and you mentioned the number of, even the number of mandates, what portion of this has already been funded, and what do you expect to be funded over the next couple of quarters?

The breakdown of that is pretty hard for me to zip in on, because we went through those on different distribution channels.

Right.

The ones in Germany, I don't think have funded yet. The one hundred million, so that'll be coming in, and on the other accounts, if you're talking about the 529, that's much later. If you're talking about the small accounts program. The separate accounts program, those continue to fund as we move along, and remember the goal there is hundreds of millions this year, and then billions into the future. So, on the CFTT we expect that thing to continue to grow from a billion now to a billion and a half, and we look forward to more money there.

A couple of the others, the Illinois mandate won't fund until the beginning of the fourth quarter, and we expect State of Florida to begin to come in late in this quarter, but that would be also more of a Q4 event, and the bank partnership that Chris talked about with assets being immerged into our fund, we expect that to happen this quarter as well. In the London sales efforts is already producing .

Sorry I didn't hear that.

The London sales office is already in full production.

In full production that's great. Great thanks very much guys.

Again if you would like to ask a question please press * then the number on one your telephone key pad.

Mr there are no further questions.

OK well that concludes the call thank you for joining us today. operator: Thank you for participating in today's Federated Investors ,investors second quarter earning conference call. This call will be for replay beginning at 12 o'clock July 31st 2002 eastern standard time 11.59 eastern standard time.

July the 31st 2002 the conference ID number for the replay is 463 6496 thank you.