Operator: Welcome to Franklin Resources Earnings Commentary for the quarter ended June 30, 2012. Statements made in this commentary 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 and Exchange Commission including in the risk factors and MD&A sections of Franklin's most recent Form 10-K and 10-Q filings.
This commentary was prerecorded.
Gregory E. Johnson - CEO and President: Hello and welcome to the third quarter earnings commentary. I'm Greg Johnson, CEO, along with Ken Lewis, our CFO. We’re pleased to report another strong quarter of results despite persistent global market headwinds.
Most importantly, relative investment performance remains solid across all time periods. Long-term net new flows were $4.7 billion reflecting continued penetration of our global investment capabilities into institutional distribution channels and profitability remains strong as did capital management where a combination of opportunistic share repurchases and cash dividends have returned $1.7 billion or 92% of net income to shareholders over the trailing four quarters.
Overall U.S. relative performance rankings remained strong, especially within our fixed income and hybrid funds. Taxable and tax-free fixed income, relative performance percentages were essentially unchanged from March with strong long-term performance in municipal bonds and global fixed income.
Franklin equity performance continues to be a standout with strong relative performance across hybrid growth and value strategies. Mutual series was essentially unchanged, although we did see modest improvements in long-term performance since March. Eurozone exposure in a corresponding underweight to a more resilient U.S. market contributed to weakness in Templeton Equity performance. As and when eurozone market conditions improve, we expect to see a rebound in the performance of Templeton products.
Assets under management ended the quarter about 2.5% lower at $707 billion and the simple monthly average AUM increased slightly to almost $711 billion. The change in monthly average AUM, however, does not fully reflect the daily market movements that we experienced.
Daily average AUM, which was about $711 billion in Q2 decreased almost 1% to $705 billion this quarter. As you know, it's the daily average AUM that drives much of our revenue. The European debt crisis and concerns of a weakening global economy pushed equity markets lower during the quarter, reflected in the 7% decrease in equity AUM.
However, as I already mentioned, AUM ended the quarter only about 2.5% lower because of the strength of our fixed income and hybrid products illustrating a key benefit of diversification. The decline in equity AUM is also evident, the change in AUM by sales region where internationally sourced AUM declined almost 5% compared with only 1% decrease in U.S. AUM.