10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

 (MARK ONE)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2012

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to      

Commission file number: 001-09318

FRANKLIN RESOURCES, INC.

(Exact name of registrant as specified in its charter)

Delaware	13-2670991
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One Franklin Parkway, San Mateo, California	94403
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (650) 312-2000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $.10 per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

x  YES    o  NO

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

o  YES   x  NO

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    

x  YES    o  NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    

x  YES    o  NO

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

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

Large accelerated filer     x	Accelerated filer     o
Non-accelerated filer     o (Do not check if a smaller reporting company)	Smaller reporting company    o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    o  YES   x  NO

The aggregate market value of the voting common equity (“common stock”) held by non-affiliates of the registrant, as of March 30, 2012 (the last business day of registrant’s second quarter of fiscal year 2012), was approximately $15.6 billion based upon the last sale price reported for such date on the New York Stock Exchange.

Number of shares of the registrant’s common stock outstanding at October 31, 2012: 212,293,567.

DOCUMENTS INCORPORATED BY REFERENCE:

Certain portions of the registrant’s definitive proxy statement for its annual meeting of stockholders, to be filed with the Securities and Exchange Commission within 120 days after September 30, 2012, are incorporated by reference into Part III of this report.

INDEX TO ANNUAL REPORT ON FORM 10-K

FORM 10-K ITEM			PAGE NUMBER
PART I
	ITEM 1.	BUSINESS	3
		Overview	3
		Company History and Acquisitions	4
		Investment Management and Related Services	5
		Financial Information About Segment and Geographic Areas	14
		Regulatory Considerations	14
		Competition	20
		Intellectual Property	21
		Employees	21
		Available Information	21
	ITEM 1A.	RISK FACTORS	21
	ITEM 1B.	UNRESOLVED STAFF COMMENTS	29
	ITEM 2.	PROPERTIES	30
	ITEM 3.	LEGAL PROCEEDINGS	30
		Executive Officers of the Registrant	30
	ITEM 4.	MINE SAFETY DISCLOSURES	31
PART II
	ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	32
	ITEM 6.	SELECTED FINANCIAL DATA	33
	ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	33
	ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	58
	ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	61
	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	109
	ITEM 9A.	CONTROLS AND PROCEDURES	109
	ITEM 9B.	OTHER INFORMATION	109
PART III
	ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	110
	ITEM 11.	EXECUTIVE COMPENSATION	110
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	110
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	111
	ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	111
PART IV
	ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	112
	SIGNATURES		115
EXHIBIT INDEX

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PART I

Forward-looking Statements. In addition to historical information, this Annual Report on Form 10-K contains forward-looking statements that involve a number of known and unknown risks, uncertainties and other important factors, including the risks and other factors discussed in Item 1A (“Risk Factors”), that could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements. When used in this report, words or phrases generally written in the future tense and/or preceded by words such as “will,” “may,” “could,” “expect,” “believe,” “anticipate,” “intend,” “plan,” “seek,” “estimate,” or other similar words are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Moreover, statements in Risk Factors, “Management's Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) and elsewhere in this report that speculate about future events are forward-looking statements.

While forward-looking statements are our best prediction at the time that they are made, you should not rely on them. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. We caution you against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. If a circumstance occurs after the date of this Annual Report on Form 10-K that causes any of our forward-looking statements to be inaccurate, whether as a result of new information, future developments or otherwise, we do not have an obligation, and we undertake no obligation, to announce publicly the change to our expectations, or to make any revision to our forward-looking statements, unless required by law.

Item 1.Business.

OVERVIEW

Franklin Resources, Inc. (“Franklin”) is a holding company that, together with its various subsidiaries (collectively, the “Company”), operates as Franklin Templeton Investments^®. We are a global investment management organization committed to the aim of delivering strong investment performance for our clients by drawing on the experience and perspective gained throughout our 65 years in the investment management business. We believe in the value of active investment management, and plan to continue to build on our strengths while pursuing new growth opportunities. Franklin is regulated as a bank holding company under the Bank Holding Company Act of 1956, as amended (the “BHC Act”), and has elected to be a financial holding company under the Gramm-Leach-Bliley Act (the “GLB Act”). The common stock of Franklin is traded on the New York Stock Exchange (the “NYSE”) under the ticker symbol “BEN,” and is included in the Standard & Poor's 500 Index.

We offer investment choices under our Franklin^®, Templeton^®, Mutual Series^®, Bissett^®, Fiduciary Trust™, Darby^® and Balanced Equity Management™ brand names. When used in this report, unless the context otherwise makes clear, our “funds” means all of the Franklin, Templeton, Mutual Series and Bissett mutual funds. In this report, words such as “we,” “us,” “our” and similar terms refer to the Company.

We provide investment management and related services to investors in jurisdictions worldwide through products that include U.S.- and non-U.S.-registered open-end and closed-end funds (“U.S. Funds” and “Non-U.S. Funds”), unregistered funds, and institutional, high net-worth and separately-managed accounts (collectively, our “sponsored investment products”). As of September 30, 2012, we had $749.9 billion in assets under management (“AUM”) with approximately 23.0 million billable shareholder accounts worldwide. In addition to investment management, our services include fund administration, sales, distribution, shareholder services, transfer agency, trustee, custodial and other fiduciary services, as well as select private banking services. Our sponsored investment products include a broad range of equity, hybrid, fixed-income and cash management funds and accounts, including multi-asset allocation strategies and alternative investment products. We also manage certain sub-advised investment products which may be sold to the public under one of our brand names or those of other companies or on a co-branded basis.

The investment funds that we manage have various investment objectives designed to meet the needs and goals of different investors. Most of the investment funds we manage are open-end mutual funds that continuously offer their shares to investors. We also offer closed-end funds that issue a set number of shares to investors in a public offering and the shares are then traded on a public stock exchange. Since the funds themselves do not have direct employees,

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to support their operations, the funds contract with separate entities, including our subsidiaries, to provide the investment management and related services they require. An investment advisory entity manages a fund's portfolio of securities in accordance with the fund's stated objectives. Investors may purchase shares of an open-end fund through a broker/dealer, bank or other intermediary which may provide investment advice to the investor, while investors may purchase shares of a closed-end fund on the stock exchange where the fund is traded. Broker/dealers and other intermediaries may earn fees and commissions and receive other compensation with respect to the fund shares sold to investors.

The business and regulatory environments in which we operate remain complex, uncertain and subject to change. In the U.S., the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Reform Act”) imposes additional restrictions and limitations on our business, and we expect that the Foreign Account Tax Compliance Act (“FATCA”) will cause us to incur significant administrative and compliance costs. We will continue to review and evaluate the Reform Act and FATCA and the extent of their impact on our business as the various rules and regulations required for implementation are adopted. We are also subject to numerous regulations by U.S. and non-U.S. regulators that add further complexity to our ongoing global compliance operations.

We continue to focus on the long-term investment performance of our sponsored investment products and on providing high quality customer service to our clients. The success of these and other strategies may be affected by the Risk Factors discussed below in Item 1A of Part I of this Annual Report, and other factors as discussed in this section.

COMPANY HISTORY AND ACQUISITIONS

The Company and its predecessors have been engaged in the investment management and related services business since 1947. Franklin was incorporated in Delaware in November 1969 and originated our mutual fund business with the Franklin family of funds. The Franklin Funds are known for U.S. taxable and tax-free fixed-income funds, hybrid funds and growth-oriented equity funds. We have expanded our business, in part, by acquiring companies engaged in the investment management and/or related services business.

In October 1992, we acquired substantially all of the assets and liabilities of the investment management and related services business of Templeton, Galbraith & Hansberger Ltd. This acquisition added the Templeton family of funds to our organization. The Templeton funds are known for their global investment strategies and value style of investing.

In November 1996, we acquired certain assets and liabilities of Heine Securities Corporation, including Mutual Series Fund Inc., now known as Franklin Mutual Series Fund Inc. (“Mutual Series”), which provided investment management services to various accounts and investment companies. Mutual Series is known for its value-oriented equity funds.

In July 2000, we expanded our business in Korea when we purchased all of the remaining outstanding shares of a Korean investment management company, Ssangyong Templeton Investment Trust Management Co., Ltd., in which we previously held a partial interest, making us one of the largest independent foreign money managers in Korea. The company has been renamed Franklin Templeton Investment Trust Management Co., Ltd.

In October 2000, we acquired all of the outstanding shares of Bissett & Associates Investment Management Ltd. (“Bissett”). Bissett now operates as part of our Canadian subsidiary, Franklin Templeton Investments Corp. With the acquisition of Bissett, we added Bissett’s family of Canadian taxable fixed-income and growth-oriented equity mutual funds to our then existing Canadian based funds (some of which we previously acquired as part of the Templeton family of funds).

In April 2001, we acquired all of the outstanding shares of Fiduciary Trust Company International (“Fiduciary Trust”), a bank organized under the New York State Banking Law. Fiduciary Trust provides investment management and related services to high net-worth individuals and families and institutional clients.

In July 2002, our subsidiary, Franklin Templeton Asset Management (India) Private Limited (“FTAMIPL”), acquired all of the outstanding shares of Pioneer ITI AMC Limited (“Pioneer”). In April 2007, we completed the purchase of the remaining 25% interest in each of FTAMIPL and Franklin Templeton Trustee Services Private Limited, each located in India, making us the largest wholly foreign owned investment manager in India.

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In October 2003, we expanded our private equity investment management services in emerging markets when we acquired all of the remaining outstanding shares of Darby Overseas Investments, Ltd. and all of the remaining outstanding limited partnership interests of Darby Overseas Partners, L.P. (collectively, “Darby”), in which we previously held a partial interest. Darby, based in Washington, D.C., sponsors and manages funds for institutional investors and high net-worth individuals that invest primarily in emerging markets through private equity and mezzanine finance transactions, including regional and specialized sector funds.

In July 2006, we completed the purchase of all of the remaining interests in a Brazilian investment management company, Bradesco Templeton Asset Management Ltda., in which we previously held a partial interest. The company has been renamed Franklin Templeton Investimentos (Brasil) Ltda.

In January 2011, we acquired all of the outstanding shares of a specialty U.K. equity manager, Rensburg Fund Management Limited (“Rensburg”). Rensburg has been renamed Franklin Templeton Fund Management Limited.

In July 2011, we acquired all of the outstanding shares of a specialty Australian equity manager, Balanced Equity Management Pty. Limited.

INVESTMENT MANAGEMENT AND RELATED SERVICES

We derive our revenues from providing investment management and related services to our sponsored investment products and the sub-advised products that we manage. Our investment management fees, which represent a majority of our revenues, depend to a large extent on the amount of AUM and the types of services provided. Sales and distribution fees, also a large source of our revenues, consist of sales charges and commissions derived from sales and distribution of our sponsored investment products.

Our business is conducted through our subsidiaries, including those registered with the United States Securities and Exchange Commission (the “SEC”) as investment advisers under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), subsidiaries registered as equivalent investment advisers in jurisdictions including Australia, Brazil, Canada, Hong Kong, India, Japan, Korea, Malaysia, Mexico, Singapore, The Bahamas, the United Arab Emirates, the U.K. and certain other subsidiaries.

Categories of AUM

Our fees for providing investment management services are generally based upon the market value of AUM in the accounts that we advise, the investment category of the account and the types of services that we provide for an account. As of September 30, 2012, AUM by investment category held by investors on a worldwide basis was as follows:

Type of Asset	Value in Billions		Percentage of Total AUM
Equity
Growth potential, income potential, value or various combinations thereof	$	297.1	39	%
Hybrid
Asset allocation, balanced, flexible and income-mixed funds	110.1		15	%
Fixed-Income
Both long-term and short-term	336.3		45	%
Cash Management
Short-term liquid assets	6.4		1	%
Total	$	749.9	100	%

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Broadly speaking, the change in the net assets of our sponsored investment products depends primarily upon two factors: (1) the increase or decrease in the market value of the securities held in the portfolio of investments; and (2) the level of sales (inflows) as compared to the level of redemptions (outflows). We are subject to the risk of asset volatility resulting from changes in the global financial and equity markets. In addition, changing market conditions may cause a shift in our asset mix between international and U.S. assets, potentially resulting in a decline in our revenues and income depending upon the nature of our AUM and the level of management fees we earn based on our AUM. Despite the risk of volatility, we believe that we are more competitive as a result of the greater diversity of our sponsored investment products available to our clients.

Types of Investment Management and Related Services

1.    Investment Management Services

We provide our investment management services pursuant to agreements in effect with each of our sponsored investment products and the sub-advised products that we manage. Our investment management services include services to managed accounts for which we have full investment discretion, and to advisory accounts for which we have no investment discretion. Advisory accounts for which we do not have investment discretion may or may not include the authority to trade for the account. Our services include fundamental investment research and valuation analyses, including original economic, political, industry and company research, and analyses of suppliers, customers and competitors. Our company research utilizes such sources as company public records and other publicly available information, management interviews, company prepared information, and company visits and inspections. Research services provided by brokerage firms are also used to support our findings. Our management fee on an account varies, among other things, with the types of services that we provide for the account.

Our subsidiaries that provide discretionary investment management services for our sponsored investment products and sub-advised products either perform or obtain investment research and determine which securities the sponsored investment products or sub-advised products will purchase, hold or sell under the supervision and oversight of the funds’ boards of directors or trustees, if applicable. In addition, these subsidiaries may take all appropriate steps to implement such decisions, including arranging for the selection of brokers and dealers and the execution and settlement of trades in accordance with detailed criteria set forth in the management agreement for each account, internal policies, and applicable law and practice. Our subsidiaries conducting non-discretionary investment management services perform investment research for our clients and make recommendations as to which securities the clients purchase, hold or sell. In such cases, the subsidiaries may or may not perform trading activities for the products.

Through our subsidiaries, we compensate the personnel who serve as officers of our funds, in addition to the personnel necessary to conduct such funds’ day-to-day business operations. The funds themselves do not have direct employees. Our subsidiaries either provide or arrange for the provision of: office space, telephone, office equipment and supplies; trading desk facilities; authorization of expenditures and approval of bills for payment; preparation of registration statements, proxy statements and annual and semi-annual reports to fund shareholders, notices of dividends, capital gains distributions and tax credits, and other regulatory reports; the daily pricing of fund investment portfolios, including collecting quotations from pricing services; accounting services, including preparing and supervising publication of daily net asset value quotations, periodic earnings reports and other financial data; services to ensure compliance with securities regulations, including recordkeeping requirements; preparation and filing of tax reports; the maintenance of accounting systems and controls; and other administrative services. The funds generally pay their own expenses, such as external legal, custody and independent audit fees, regulatory registration fees, and other related expenses. The funds also share in board and shareholder meeting and reporting costs.

Most of our investment management agreements between our subsidiaries and our U.S. Funds must be renewed each year (after an initial two-year term), and must be specifically approved at least annually by a vote of each fund’s board of directors or trustees as a whole and separately by the directors/trustees that are not interested persons of such fund under the Investment Company Act of 1940 (the “Investment Company Act”), or by a vote of the holders of a majority of such fund’s outstanding voting securities. Our U.S. agreements automatically terminate in the event of their “assignment,” as defined in the Investment Company Act. In addition, either party may terminate such an agreement without penalty after prior written notice. If agreements representing a significant portion of our AUM were terminated, it would have a material adverse impact on us.

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Under the majority of our investment management agreements, the funds pay us a monthly fee in arrears based upon the fund’s average daily net assets. Annual fee rates under our various global agreements are often reduced as net assets exceed various threshold levels. Annual rates also vary by investment objective and type of services provided. Our agreements generally permit us to provide services to more than one fund and to other clients so long as our ability to render services to each of the funds is not impaired, and so long as purchases and sales of portfolio securities for various advised funds are made on an equitable basis.

We use a “master/feeder” fund of funds structure in certain situations. This structure allows an investment adviser to manage a single portfolio of securities at the “master fund” level and have multiple “feeder funds” that invest substantially all of their respective assets into the master fund. Individual and institutional shareholders invest in the “feeder funds,” which can offer a variety of service and distribution options. A management fee may be charged either at the master fund level or the feeder fund level depending on the specific requirements of the fund, although funds also involving performance fees or carried interest will typically charge these together with management fees at the master fund level. Administrative, shareholder servicing and custodian fees are often waived at the feeder fund level and only charged at the master fund level, although the feeder funds will indirectly bear their pro-rata share of the expenses of the master fund as an investor in the master fund. Fees and expenses specific to a feeder fund may be charged at the level of that feeder fund. In the U.S., our funds of funds enter into expense allocation arrangements with their affiliated underlying funds pursuant to which the underlying funds pay certain expenses of the fund of funds.

For our U.S. Funds, our management personnel and the fund directors or trustees regularly review the investment management fee structures for the funds in light of fund performance, the level and range of services provided, industry conditions and other relevant factors. Investment management fees are generally waived or voluntarily reduced when a new fund is established and then increased to contractual levels within an established timeline or as net asset values reach certain levels.

Our Non-U.S. Funds, unregistered funds, institutional, high net-worth and separately-managed accounts, and the sub-advised products that we manage, have various termination rights and review and renewal provisions.

2.    Sales, Distribution and Marketing

A significant portion of our revenues are generated from providing sales and distribution services. Our mutual funds and certain other products generally pay us distribution fees in return for sales, distribution and marketing efforts on their behalf. Fund shares are sold primarily through a large network of independent intermediaries, including broker/dealers, financial advisers and other third parties.

Franklin/Templeton Distributors, Inc. (“FTDI”) acts as the principal underwriter and distributor of shares of most of our open-end U.S. Funds. Certain of our non-U.S. subsidiaries provide sales, distribution and marketing services to our Non-U.S. Funds distributed outside the U.S. Some of our Non-U.S. Funds, particularly the Luxembourg-domiciled Franklin Templeton Investment Funds Société d’Investissement à Capital Variable (“SICAV”), are distributed globally on a cross-border basis, while others are distributed exclusively in local markets. We earn sales and distribution fees primarily by distributing our funds pursuant to distribution agreements between FTDI or our non-U.S. subsidiaries and the funds. Under each distribution agreement, we offer and sell the fund’s shares on a continuous basis and pay certain costs associated with selling, distributing and marketing the fund’s shares, including the costs of developing and producing sales literature, shareholder reports and prospectuses, which may then be either partially or fully reimbursed by the funds.

Most of our retail funds are distributed with a multi-class share structure. We adopted this share structure to provide investors with more sales charge alternatives for their investments. Certain share classes, such as Class A shares, are sold without a front-end sales charge to shareholders when certain investment criteria are met, although our distribution subsidiaries pay an up-front commission to financial intermediaries on these sales. Class B shares, which are available in some of our Non-U.S. Funds, have no front-end sales charges, but instead have a declining schedule of sales charges (called contingent deferred sales charges) if the investor redeems within a certain number of years from the original purchase date. Although our open-end U.S. Funds that had offered Class B shares no longer offer these shares, existing Class B shareholders may continue to exchange shares into Class B shares of different funds and may continue to reinvest dividends on Class B shares in additional Class B shares. All remaining Class B shares in our U.S. Funds will convert to Class A shares by March 2013. Class C shares also have no front-end sales charges, although

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our distribution subsidiaries pay an up-front commission to financial intermediaries on these sales. Class C shares do have a back-end sales charge for redemptions within 12 months from the date of purchase. Although Class C shares are generally more costly to us in the year of sale, they allow us to be competitive by increasing our presence in various distribution channels. Class R shares are available for purchase by certain retirement, college savings and health savings plan accounts in the U.S. only. Outside of the U.S., we offer additional share classes and unit series in response to local needs.

In the U.S., we also offer Advisor Class shares in many of our Franklin and Templeton funds, and we offer Class Z shares in the Mutual Series funds, both of which have no sales charges. Advisor and Class Z shares are offered to certain qualified financial intermediaries, institutions and high net-worth clients (both affiliated and unaffiliated) who have assets held in accounts managed by a subsidiary of Franklin and are also available to our full-time employees and current and former officers, trustees and directors. In the U.S., we also offer money market funds to investors without a sales charge. Under the terms and conditions described in the prospectuses or the statements of additional information for some funds, certain investors can purchase shares at net asset value or at reduced sales charges. Outside the U.S., we offer share classes similar to the Advisor Class shares to certain types of investors, although depending upon the fund and the country(ies) in which the fund is domiciled, the equivalent share class may be offered on a more restrictive or less restrictive basis than the similar U.S. Advisor Class shares.

Some of our insurance products funds offered for sale in the U.S. offer a four-class share structure, Class 1, Class 2, Class 3 and Class 4 shares, which are offered at net asset value without a sales charge directly to insurance company separate accounts, certain qualified plans and other mutual funds (funds of funds).

Internationally, we offer types of share classes based on the local needs of the investors in a particular market, subject to applicable regulations which may change over time. In the majority of cases, investors in any class of shares may exchange their shares for a like class of shares in another fund, subject to certain fees that may apply. Our Non-U.S. Funds have sales charges and fee structures that vary by region.

We derive nearly all of our fund sales through third-party broker/dealers and other similar intermediaries. The distribution agreements with our open-end U.S. Funds generally provide for FTDI to pay commission expenses for sales of fund shares to qualifying broker/dealers and intermediaries. These broker/dealers receive various sales commissions and other fees from FTDI for services in matching investors with funds whose investment objectives match such investors’ goals and risk profiles. Broker/dealers may also receive fees for their assistance in explaining the operations of the funds and in servicing and maintaining investors’ accounts, and for reporting and various other distribution services. We are heavily dependent upon these third-party distribution and sales channels and business relationships. FTDI may also make payments to certain broker/dealers who provide marketing support services, as described further below. There is increasing competition for access to these channels, which has caused our distribution costs to rise and could cause further increases in the future as competition continues and service expectations increase. As of September 30, 2012, approximately 1,500 local, regional and national banks, securities firms and financial adviser firms offered shares of our open-end U.S. Funds for sale to the U.S. investing public, and approximately 3,600 banks, securities firms and financial adviser firms offered shares of our cross-border Non-U.S. Funds for sale outside of the U.S. In the U.S., we have approximately 90 general wholesalers who interface with financial intermediaries.

Most of our open-end U.S. Funds, with the exception of certain of our money market funds as well as certain high net-worth and institutional funds, have adopted distribution plans under Rule 12b-1 (the “Rule 12b-1 Plans”) promulgated under the Investment Company Act (“Rule 12b-1”). Under the Rule 12b-1 Plans, the funds bear certain expenses relating to the distribution of their shares, such as expenses for marketing, marketing support, advertising, printing and sales promotion, and may provide for the funds to reimburse such expenses that FTDI incurs in distributing the funds, subject to the Rule 12b-1 Plans’ limitations on amounts. Each fund has a percentage limit for these types of expenses based on its average daily net AUM. In 2010, the SEC proposed changes to Rule 12b-1 which, if adopted, could limit our ability to recover expenses relating to the distribution of our funds.

The Rule 12b-1 Plans are established for one year terms and must be approved annually by each fund’s board of directors or trustees and by a majority of its directors or trustees who are not interested persons of the fund under the Investment Company Act (the “disinterested fund directors/trustees”). All of these Rule 12b-1 Plans are subject to termination at any time by a majority vote of the disinterested fund directors/trustees or by the particular fund

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shareholders. Fees from the Rule 12b-1 Plans that FTDI receives as revenues are paid primarily to third-party broker/dealers who provide services to the shareholder accounts and engage in distribution activities. Similar arrangements exist with the distribution of our Non-U.S. Funds where, generally, our subsidiary that distributes the funds in the local market arranges for and pays commissions and certain other fees to banks and other intermediaries, a portion of which fees is paid from maintenance fees received by the subsidiary and a portion of which may derive from the management fees paid to our various affiliates by the funds.

FTDI and/or its affiliates may make the following additional payments to broker/dealers that sell shares of our funds:

Marketing support payments. FTDI may make payments to certain broker/dealers who are holders or dealers of record for accounts in one or more of our open-end U.S. Funds. Consistent with the provisions and limitations set forth in a fund’s Rule 12b-1 Plan, the fund may reimburse FTDI for payments made to broker/dealers for the cost of some or all of the marketing support payments. A broker/dealer’s marketing support services may include business planning assistance, advertising, educating broker/dealer personnel about the funds and shareholder financial planning needs, placement on the broker/dealer’s list of offered funds, and access to sales meetings, sales representatives and management representatives of the broker/dealer. FTDI compensates broker/dealers differently depending upon, among other factors, sales and asset levels, and the level and/or type of marketing and educational activities provided by the broker/dealer. Such compensation may include financial assistance to broker/dealers that enable FTDI to participate in and/or present at conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events and other broker/dealer-sponsored events. These payments may vary depending upon the nature of the event. FTDI periodically reviews its marketing support arrangements to determine whether to continue such payments. The statement of additional information for each retail U.S. Fund, provided to investors in such funds upon request, provides a list of broker/dealers that receive such marketing support payments and the maximum payments received. FTDI may also make marketing support payments to financial intermediaries that serve as plan service providers to certain employer sponsored retirement plans in connection with activities intended to assist in the sale of our open-end U.S. Funds to such plans. A portion of the marketing support payments may be reimbursable to FTDI under the terms of a fund's Rule 12b-1 Plan. We may also make marketing support or similar payments to intermediaries located outside the U.S. with respect to investments in Non-U.S. Funds.

Transaction support and other payments. FTDI may pay ticket charges per purchase or exchange order placed by a broker/dealer or one-time payments for ancillary services, such as setting up funds on a broker/dealer’s fund trading system. From time to time, FTDI, at its expense, may make additional payments to broker/dealers that sell or arrange for the sale of shares of our U.S. Funds. FTDI routinely sponsors due diligence meetings for registered representatives during which they receive updates on various funds and are afforded the opportunity to speak with portfolio managers. Invitation to these meetings is not conditioned on selling a specific number of shares. Those who have shown an interest in our funds, however, are more likely to be considered. To the extent permitted by their firm’s policies and procedures, registered representatives’ expenses in attending these meetings may be covered by FTDI. Similar payments may be made by our non-U.S. subsidiaries that distribute our Non-U.S. Funds to third party distributors of such funds.

Other compensation may be offered to the extent not prohibited by federal or state laws or any self-regulatory agency, such as the Financial Industry Regulatory Authority (“FINRA”). FTDI makes payments for events it deems appropriate, subject to FTDI’s guidelines and applicable law.

3.    Shareholder and Transfer Agency Services

We receive shareholder servicing fees for providing transfer agency services, which include providing customer statements, transaction processing, customer service, and tax reporting. One of our subsidiaries, Franklin Templeton Investor Services, LLC (“FTIS”), serves as shareholder servicing and dividend-paying agent for our open-end U.S. Funds. FTIS is registered with the SEC as a transfer agent under the Securities Exchange Act of 1934. Generally, FTIS is compensated under an agreement with each fund on the basis of an annual per account fee that varies with the fund and the type of services being provided. FTIS also is reimbursed for out-of-pocket expenses. Other subsidiaries provide similar services to our Non-U.S. Funds, and in some cases are compensated based on AUM.

FTIS may also pay servicing fees to third-party intermediaries primarily to help offset costs associated with client account maintenance support, statement preparation and transaction processing. Such third parties: (i) maintain omnibus

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accounts with the fund in the institution’s name on behalf of numerous beneficial owners of fund shares; or (ii) provide support for fund shareholder accounts by sharing account data with FTIS through the Depository Trust & Clearing Corporation systems. The funds reimburse FTIS for these third party payments.

4.    High Net-Worth Investment Management and Related Services

Through Fiduciary Trust (including its trust company and investment adviser subsidiaries), we provide investment management and related services to, among others, high net-worth individuals and families, foundations and institutional clients. Similarly, through our Canadian high net-worth business unit, Fiduciary Trust Company of Canada (“FTCC”), we provide services and offer sponsored investment products to high net-worth individuals and families. Our high net-worth client business seeks to maintain relationships that span generations and help families plan the most appropriate method of intergenerational wealth transfer.

Individual client assets are typically held in accounts separately managed by individual portfolio managers. These portfolio managers determine asset allocation and stock selection for client accounts, taking into consideration each client’s specific long-term objectives while utilizing our macroeconomic and individual stock research.

Fiduciary Trust services that focus on managing family wealth from generation to generation include wealth management and estate and tax planning. We offer clients personalized attention and estate planning expertise in an integrated package of services known as Family Resource Management^® (“FRM”). Services under FRM provide clients with an integrated strategy to optimize wealth accumulation and maximize after-tax wealth transfer to the next generation. Evaluation of third-party investment management products or services is performed by the Strategic Advisory Group, an investment advisory group within Fiduciary Trust.

5.    Institutional Investment Management

We provide a broad array of investment management services to institutional clients, focusing on foundations, endowment funds and government and corporate pension plans. Our subsidiaries offer a wide range of both U.S. and international equity, fixed-income and alternative strategies through a variety of investment vehicles, including separate accounts, open-end and closed-end funds and unregistered funds. In the U.S., we generally operate our institutional business under the trade name “Franklin Templeton Institutional.”

Through various legal entities, including Franklin Templeton Institutional, LLC and various non-U.S. subsidiaries, we distribute and market globally the different capabilities of our various subsidiaries under the Franklin, Templeton, Mutual Series, Bissett, Darby and Balanced Equity Management brand names. We primarily attract new institutional business through our strong relationships with pension and management consultants, direct sales efforts and additional mandates from our existing client relationships, as well as from our responses to requests for proposals.

Our U.S. retirement business is conducted through divisions of FTDI that work closely with sponsors, consultants, record keepers and financial advisors of defined contribution plans, including 401(k) plans, variable annuity products and individual retirement accounts (“IRAs”). We offer our capabilities to the U.S. retirement industry through a number of investment options, including sub-advised portfolios, funds, education savings plans and variable insurance funds.

Through our various subsidiaries, we also market and distribute our sponsored investment products to separately-managed accounts. Our subsidiaries, Franklin Templeton Financial Services Corp. and Templeton/Franklin Investment Services, Inc., also serve as direct marketing broker/dealers for institutional investors for certain of our institutional mutual and private funds.

6.    Trust and Custody

Through various trust company subsidiaries, including Fiduciary Trust, we offer trust, custody and related services, including administration, performance measurement, estate planning, tax planning and private banking. We provide planned giving administration and related custody services for non-profit organizations, including pooled income funds, charitable remainder trusts, charitable lead trusts and gift annuities, for which we may or may not act as trustee. Our other subsidiaries involved in the trust business, either as trust companies or companies investing in trust companies, have full trust powers. Our subsidiary, Franklin Templeton Bank & Trust, F.S.B. (“FTB&T”), a federally chartered savings bank, among other functions, exercises full trust powers and serves primarily as custodian of IRAs and business

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retirement plans invested solely in Franklin Templeton funds. FTB&T also provides Advisor Directed Trust^®, a directed trust service.

7.    Alternative Investment Products Management

Darby is primarily engaged in sponsoring and managing funds that invest in private equity and mezzanine finance transactions in emerging markets in Asia, Latin America and Central/Eastern Europe. Darby offers these investment funds through private placements to institutional and high net-worth individual investors.

Templeton Asset Management Ltd., an investment adviser, sponsors and manages a limited number of investment partnerships that also invest primarily in emerging markets in Asia, Latin America and Central/Eastern Europe.

Franklin Templeton Institutional, LLC, an investment adviser, manages investment partnerships that invest in funds with exposure to global real estate opportunities.

Franklin Advisers, Inc. (“FAI”), an investment adviser, manages an investment partnership that invests in derivatives across the global equity, global government bond and currency markets. FAI creates tactical long and short positions within the partnership based on a daily review of macroeconomic and valuation factors to determine the relative attractiveness of asset classes to each other as well as the attractiveness of individual factors within asset classes.

8.    Select Private Banking

Fiduciary Trust, with assets of $901.6 million and deposits of $611.0 million as of September 30, 2012, is insured by the Federal Deposit Insurance Corporation (“FDIC”), and provides private banking services primarily to high net-worth clients who maintain trust, custody and/or management accounts. Fiduciary Trust's private banking and credit products include, among others, loans secured by marketable securities, deposit accounts and other banking services. Deposits generally include demand and savings deposits, primarily from our private banking clients.

FTB&T, with assets of $187.6 million and deposits of $60.7 million as of September 30, 2012, is also insured by the FDIC. FTB&T currently provides limited lending services to existing Fiduciary Trust and FTB&T customers.

Summary of Our Sponsored Investment Products

Our sponsored investment products are offered globally to retail, institutional, high net-worth and separate account clients, which include individual investors, qualified groups, trustees, tax-deferred (such as IRAs in the U.S. and retirement saving plans, or RSPs, in Canada) or money purchase plans, employee benefit and profit sharing plans, trust companies, bank trust departments and institutional investors. Our sponsored investment products include portfolios managed for some of the world’s largest corporations, endowments, charitable foundations and pension funds, as well as wealthy individuals and other institutions. We use various investment techniques to focus on specific client objectives for these specialized portfolios.

1.    Investment Objectives Overview

The sponsored investment products that we offer accommodate a variety of investment goals, spanning the spectrum of our clients’ risk tolerance - from capital appreciation (with our more growth-oriented products) to capital preservation (with our fixed-income offerings). In seeking to achieve such objectives, each portfolio emphasizes different strategies and invests in different types of instruments.

Our equity investment products include some that are considered value-oriented, others that are considered growth-oriented, and some that use a combination of growth and value characteristics, generally identified as blend or core products. Value investing focuses on identifying companies that our research analysts and portfolio managers believe are undervalued based on a number of different factors, usually put in the context of historical ratios such as price-to-earnings or price-to-book value; however, we also consider the future earnings potential of each individual company on a multi-year basis. Growth investing focuses on identifying companies that our research analysts and portfolio managers believe have sustainable growth characteristics, meeting our criteria for sustainable growth potential, quality and valuation. In this effort, the key variables we examine include: market opportunity (overall size and growth); competitive positioning of the company; assessment of management (strength, breadth, depth, and integrity) and

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execution of plans; and the general financial strength and profitability of the enterprise, to determine whether the growth and quality aspects are properly reflected in the current share price. Paramount to all of our different equity products is the incorporation of independent, fundamental research through our own collaborative in-house group of investment professionals. Our approach across the variety of equity products we manage emphasizes bottom-up stock selection within a disciplined portfolio construction process, and is complemented by our ongoing assessment of risk at both the security and portfolio levels.

Portfolios seeking income generally focus on one or more of the following securities: taxable and tax-exempt money market instruments; tax-exempt municipal bonds; global fixed-income securities; and fixed-income debt securities of corporations, of the U.S. government and its sponsored agencies and instrumentalities, such as the Government National Mortgage Association, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, or of the various states in the U.S. Others focus on investments in particular countries and regions.

2.    Types of Sponsored Investment Products

As of September 30, 2012, our AUM was $749.9 billion.

Our U.S. Funds (including open-end and closed-end funds and our insurance products trust) accounted for $416.3 billion of AUM as of September 30, 2012. Our five largest U.S. Funds and their AUM were Franklin Income Fund ($68.6 billion), Templeton Global Bond Fund ($63.2 billion), Mutual Global Discovery Fund ($18.1 billion), Templeton Growth Fund ($15.1 billion) and Franklin California Tax-Free Income Fund ($14.8 billion). These five funds represented, in the aggregate, 24% of total AUM.

Our cross-border products, which are comprised of a variety of investment funds domiciled in Luxembourg and Ireland and registered for sale to non-U.S. investors in 39 countries, accounted for $143.6 billion of AUM as of September 30, 2012. Our three largest cross-border funds and their AUM were FTIF - Templeton Global Bond Fund ($42.5 billion), FTIF - Templeton Global Total Return Fund ($25.9 billion) and FTIF - Templeton Asian Growth Fund ($16.8 billion). These three funds represented, in the aggregate, 11% of total AUM.

In addition to our cross-border products, in some countries we offer products for the particular local market. These local/regional funds accounted for $41.6 billion of AUM as of September 30, 2012.

On a company-wide basis, our managed accounts, alternative investment products and trusts accounted for $148.4 billion of AUM as of September 30, 2012, of which $5.2 billion included Darby products and real estate, emerging markets and global fixed-income investment partnerships.

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3.    AUM by Product and Investment Categories

The following table shows AUM by the various types of our sponsored investment products and investment categories as of September 30, 2012:

(in billions) CATEGORY	INVESTMENT CLASSIFICATION	U.S. Funds		Cross-Border Funds		Local/Regional Funds		Other Managed Accounts, Alternative Investment Products and Trusts		Total
Equity
Asia-Pacific	Invests primarily in equity securities of companies located in the Asia-Pacific region	$	2.2	$	21.0	$	3.6	$	20.7	$	47.5
Canada	Invests primarily in equity securities of companies located in Canada	—		—		4.2		4.4		8.6
Europe, the Middle East and Africa	Invests primarily in equity securities of companies located in Europe, the Middle East and Africa	1.9		4.2		5.4		0.5		12.0
U.S.	Invests primarily in equity securities of companies located in the U.S.	67.1		5.7		1.5		7.9		82.2
Emerging Markets	Invests primarily in equity securities of companies located in developing regions of the world	4.9		7.2		3.9		4.7		20.7
Global/International	Invests primarily in equity securities of companies doing business either worldwide or only outside of the U.S.	61.5		10.1		6.0		48.5		126.1
Total Equity		137.6		48.2		24.6		86.7		297.1
Hybrid/Balanced
Asia-Pacific	Invests primarily in equity and fixed-income securities of companies located in the Asia-Pacific region	—		—		1.2		1.9		3.1
Canada	Invests primarily in equity and fixed-income securities of companies located in Canada	—		—		1.9		2.7		4.6
Europe, the Middle East and Africa	Invests primarily in equity and fixed-income securities of companies located in Europe, the Middle East and Africa	—		0.7		—		—		0.7
U.S.	Invests primarily in equity and fixed-income securities of companies located in the U.S.	80.3		1.3		—		17.5		99.1
Global/International	Invests primarily in equity and fixed-income securities of companies doing business either worldwide or only outside of the U.S.	1.1		1.2		0.2		0.1		2.6
Total Hybrid/Balanced		81.4		3.2		3.3		22.2		110.1

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(in billions) CATEGORY	INVESTMENT CLASSIFICATION	U.S. Funds		Cross-Border Funds		Local/Regional Funds		Other Managed Accounts, Alternative Investment Products and Trusts		Total
Fixed-Income
Asia-Pacific	Invests primarily in debt securities offered by companies and governments located in the Asia-Pacific region	$	—	$	4.0	$	4.6	$	1.0	$	9.6
Canada	Invests primarily in debt securities of companies and governments located in Canada	—		—		3.5		0.4		3.9
Europe, the Middle East and Africa	Invests primarily in debt securities of companies and governments located in Europe, the Middle East and Africa	—		1.0		—		4.7		5.7
Tax-Free	Invests primarily in municipal bond issuers located in the U.S.	78.5		—		—		4.7		83.2
U.S. Taxable	Invests primarily in taxable debt securities of companies and governments located in the U.S.	39.7		8.9		1.8		6.3		56.7
Emerging Markets	Invests primarily in taxable debt securities of companies and governments located in developing countries worldwide	1.3		8.1		—		7.5		16.9
Global/International	Invests primarily in debt securities of companies and governments doing business either worldwide or only outside of the U.S.	73.0		69.6		2.8		14.9		160.3
Total Fixed- Income		192.5		91.6		12.7		39.5		336.3
Cash Management	Invests primarily in money market instruments and short-term securities	4.8		0.6		1.0		—		6.4
Total		$	416.3	$	143.6	$	41.6	$	148.4	$	749.9

FINANCIAL INFORMATION ABOUT SEGMENT AND GEOGRAPHIC AREAS

Certain financial information about the Company's business segment and geographic areas is contained in Note 18 – Segment Information in the notes to consolidated financial statements in Item 8 of Part II of this Form 10-K, which is incorporated herein by reference.

REGULATORY CONSIDERATIONS

Virtually all aspects of our business are subject to various federal, state, and international regulation and supervision which continue to change and evolve over time. Consequently, there is uncertainty associated with the regulatory environments in which we operate.

U.S. Regulation

In the U.S., we are currently subject to regulation and supervision by, among others, the SEC, FINRA, the Board of Governors of the Federal Reserve System (the “FRB”), the FDIC, the Office of the Comptroller of the Currency (the “OCC”), the Commodity Futures Trading Commission (“CFTC”) and the New York State Department of Financial Services (“NYDFS”).

The regulatory environments in which we operate remain uncertain and subject to change. The Reform Act, as well as other legislative and regulatory changes, impose additional restrictions and limitations on us and will likely

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result in increased scrutiny and oversight of our financial services and products. Due to the complexity and broad scope of the Reform Act and the time required for ongoing regulatory implementation, we are not able to predict at this time all of the specific requirements that will be adopted by regulatory agencies having authority over us pursuant to the Reform Act, or the impact that further changes in regulation would have on our business. The so-called “Volcker Rule” provisions of the Reform Act restrict the ability of affiliates of insured depository institutions, such as Franklin, to sponsor or invest in private funds or to engage in certain types of proprietary trading. While the Volcker Rule became effective on July 21, 2012, final rules for its implementation have not yet been adopted. On April 19, 2012, the FRB issued a Statement of Policy that confirmed that banking institutions will have two years from the effective date to conform their activities to the requirements of the Volcker Rule. In addition to the rulemaking mandated by the Reform Act, new rules adopted by the CFTC removed or limited previously available exemptions and exclusions which will impose additional registration and reporting requirements for operators of certain mutual funds and certain other pooled vehicles that use or trade in futures, swaps and other derivatives regulated by CFTC. These regulatory amendments may require us to change certain of our mutual fund or other pooled vehicle business practices or register additional entities with the CFTC.

We also expect that FATCA will cause us to incur significant administrative and compliance costs. FATCA, which is intended to address tax compliance issues related to U.S. taxpayers holding non-U.S. accounts, will require non-U.S. financial institutions to report to the Internal Revenue Service (“IRS”) information about financial accounts held by U.S. taxpayers and impose withholding, documentation and reporting requirements on non-U.S. financial institutions. FATCA remains subject to the adoption of applicable regulations by the IRS, and full implementation will be phased in over a multi-year period, commencing in 2013. In addition, changes to the regulation of money market funds currently under discussion could significantly change the structure and operations of those funds.

To the extent our operations or trading in our securities take place outside the U.S., we are subject to regulation by non-U.S. regulations and regulators, and U.S. regulations and regulators such as the Department of Justice and the SEC with respect to the Foreign Corrupt Practices Act of 1977.

The Advisers Act imposes numerous obligations on certain of our subsidiaries registered with the SEC as investment advisers, including record keeping, operating and marketing requirements, disclosure obligations and prohibitions on fraudulent activities. The Investment Company Act imposes similar obligations on the investment companies that are advised by our subsidiaries. The SEC is authorized to institute proceedings and impose sanctions for violations of the Advisers Act and the Investment Company Act, ranging from fines and censure to termination of an investment adviser’s registration.

The Company and many of the investment companies advised by our various subsidiaries are subject to federal securities laws and state securities and corporate laws, including those affecting corporate governance, such as the Sarbanes-Oxley Act of 2002 and rules adopted by the SEC. As a NYSE-listed company, we are also subject to the rules of the NYSE, including its corporate governance standards. The federal securities laws have also been augmented by other measures, including the USA Patriot Act of 2001.

FINRA Conduct Rules limit the amount of aggregate sales charges that may be paid in connection with the purchase and holding of investment company shares sold through broker/dealers. The effect of the rule is to limit the amount of fees that could be paid pursuant to a fund’s Rule 12b-1 Plan to FTDI, our principal sales and distribution subsidiary in the U.S., which earns distribution fees on the distribution of fund shares in the U.S. In 2010, the SEC proposed changes to Rule 12b-1 which, if adopted, could limit our ability to recover expenses relating to the distribution of our funds.

In addition, in connection with our banking services, we are a bank holding company and a financial holding company subject to the supervision and regulation of the FRB and the restrictions, limitations and prohibitions of the BHC Act, as amended by the GLB Act. Significant aspects of the Reform Act relate to changes in the regulation of banks, thrifts, holding companies and related institutions, and the imposition of various restrictions and limitations on certain activities of such entities. The Reform Act includes a number of measures that will increase capital and liquidity requirements, impose limits on leverage, subject dividend payments, stock buybacks and other reductions of capital to heightened regulatory scrutiny, and enhance supervisory authority and regulatory oversight of non-banking entities, which may apply to our business.

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FRB policy historically has required bank holding companies to act as a source of strength to their banking subsidiaries and to commit capital and financial resources to support those subsidiaries. The Reform Act codified this policy as a statutory requirement. Such support may be required by the FRB at times when we might otherwise determine not to provide it. In addition, under FRB policy bank holding companies should pay cash dividends on common stock only out of income available from the previous fiscal year and only if prospective earnings retention is consistent with anticipated future needs and financial condition.

The Federal banking agencies apply risk-based and leverage capital guidelines to evaluate the capital adequacy of bank holding companies and depository institutions. The FRB's capital adequacy guidelines applicable to Franklin, the FDIC's capital adequacy guidelines applicable to Fiduciary Trust, and the OCC's capital adequacy guidelines applicable to FTB&T are substantially the same. Under the banking agencies' capital guidelines, Franklin and our banking subsidiaries must meet specific capital adequacy requirements that involve quantitative measures of our assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. To be considered “well capitalized” under the current guidelines, a bank holding company must maintain a minimum Tier 1 risk-based capital ratio of 6% and a minimum total risk-based capital ratio of 10%, and a bank must maintain a minimum Tier 1 leverage ratio of 5%. Bank holding companies are also subject to a leverage requirement, generally at least 5%, but that requirement is not a condition for “well capitalized” status. As of September 30, 2012, our Tier 1 leverage ratio was 59%, and our Tier 1 risk-based capital and total risk-based capital ratios were 54%. In addition, both Fiduciary Trust and FTB&T were well capitalized as of September 30, 2012. A depository institution generally is prohibited from making capital distributions, including paying dividends, or paying management fees to a holding company if the institution would thereafter be undercapitalized. Moreover, undercapitalized institutions may not accept, renew or roll over brokered deposits. Bank regulators are required to take prompt corrective action to resolve any problems associated with insured depository institutions, such as Fiduciary Trust and FTB&T, if they become undercapitalized. The GLB Act, however, generally prohibits the FRB from imposing similar capital requirements on regulated non-bank subsidiaries of a financial holding company.

Franklin has elected to be a financial holding company under the GLB Act. Pursuant to the GLB Act, a qualifying bank holding company may elect to become a financial holding company to engage in a broader range of activities that are financial in nature, including securities underwriting, dealing and market making, securitizing assets, sponsoring mutual funds and investment companies, engaging in insurance underwriting and brokerage activities and investing (without providing routine management) in companies engaged in non-financial activities. To qualify as a financial holding company, each of a bank holding company’s U.S. subsidiary banks and other depository institution subsidiaries must be well capitalized and well managed. The Reform Act added the condition that the bank holding company itself must be well capitalized and well managed. In addition, each such subsidiary must have achieved at least a “satisfactory” rating under the Community Reinvestment Act (“CRA”) in the evaluation preceding the financial holding company election. While FTB&T is subject to CRA requirements, Fiduciary Trust remains exempt from such requirements because it qualifies as a special purpose bank. Under this regulatory framework and the environment in which we operate, we are subject to significant constraints that may adversely affect our ability to implement our business plans and strategies.

The BHC Act generally requires that a bank holding company obtain prior approval of the FRB before acquiring control of any bank. In addition, the FRB may impose limitations, restrictions, or prohibitions on the activities or acquisitions of a financial holding company if the FRB believes that the financial holding company does not have appropriate financial and managerial resources. The FRB has broad authority to prohibit activities of bank holding companies and their non-banking subsidiaries that represent unsafe and unsound banking practices or that constitute violations of law or regulation. Civil money penalties may be imposed against bank holding companies, their non-bank affiliates and officers and directors of such entities for certain activities conducted on a knowing or reckless basis if those activities cause a substantial loss to the bank holding company.

Each of our banking subsidiaries is subject to restrictions under federal law that limit transactions with Franklin and its non-bank subsidiaries, including loans and other extensions of credit, investments, or asset purchases. These and various other transactions, including any payment of money to Franklin and its non-bank subsidiaries, must be on terms and conditions that are, or in good faith would be, offered to companies that are not affiliated with these entities. In addition, these laws and related regulations may limit the Company’s ability to obtain funds from subsidiary banks or affiliates.

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The operations and activities of Fiduciary Trust and its subsidiaries are subject to extensive regulation, supervision and examination by the FDIC and the NYDFS. Certain of the subsidiaries may also be subject to oversight by various other state regulators depending upon the specific business that is conducted by the particular subsidiary. FTB&T is subject to regulation, supervision and examination by the OCC. The laws and regulations of these regulators generally impose restrictions and requirements, with which we must comply, on capital adequacy, anti-money laundering, management practices, liquidity, branching, earnings, loans, dividends, investments, reserves against deposits and the provision of services.

The federal banking agencies and the NYDFS have broad enforcement powers, including the power to terminate deposit insurance, impose substantial fines and other civil and criminal penalties and appoint a conservator or receiver. Failure to comply with applicable laws, regulations and supervisory agreements could subject Franklin, our thrift and banking subsidiaries, as well as officers, directors and other so-called “institution-affiliated parties” of these organizations to administrative sanctions and potentially substantial civil money penalties. In addition, the appropriate state or federal chartering agency may appoint the FDIC as conservator or receiver for a banking institution, or the FDIC may appoint itself if certain circumstances exist.

Non-U.S. Regulation

Our operations outside the U.S. are subject to the laws and regulations of certain non-U.S. jurisdictions and non-U.S. regulatory agencies and bodies. As we continue to expand our international presence, a number of our subsidiaries and international operations have become subject to regulatory systems, in various jurisdictions, comparable to those covering our operations in the U.S. Regulators in these non-U.S. jurisdictions may have broad authority with respect to the regulation of financial services including, among other things, the authority to grant or cancel required licenses or registrations. In addition, these regulators may subject certain of our subsidiaries to net capital requirements.

The Financial Services Authority (the “FSA”) currently regulates certain of our subsidiaries in the U.K. Authorization by the FSA is required to conduct any financial services related business in the U.K. pursuant to the Financial Services and Markets Act 2000. The FSA’s rules under that act govern a firm’s capital resources requirements, senior management arrangements, conduct of business, interaction with clients, and systems and controls. Breaches of these rules could result in a wide range of disciplinary actions against our U.K.-regulated subsidiaries.

In addition to the above, our U.K.-regulated subsidiaries and other European subsidiaries and branches, must comply with the pan-European regime established by the Markets in Financial Instruments Directive (“MiFID”), which became effective on November 1, 2007 and regulates the provision of investment services and conduct of investment activities throughout the European Economic Area (“EEA”), as well as the Capital Requirements Directive, which delineates regulatory capital requirements. MiFID sets out detailed requirements governing the organization and conduct of business of investment firms and regulated markets. It also includes pre- and post-trade transparency requirements for equity markets and extensive transaction reporting requirements.

The U.K. has adopted the MiFID rules into national legislation and FSA regulations, as have those other European jurisdictions in which we have a presence. A review of MiFID by the European Commission has led to the publication of a draft replacement directive (“MiFID 2”) and a draft new regulation. The proposals, if implemented, are likely to result in changes to pre- and post-trade reporting obligations and an expansion of the types of instruments subject to these requirements. They may affect the buying and selling of derivatives by moving most derivative trading onto regulated trading venues and may control the activities of algorithmic trading. The proposals may also result in changes to conduct of business requirements including selling practices, intermediary inducements and client categorization, as well as the conduct of activities within the European Union (“EU”) by non-EU advisers including ours. The proposals also envision giving the European Commission power to ban certain products and services. In addition, a European Commission proposal (the European Market Infrastructure Regulation), when implemented, will require the central clearing of standardized OTC derivatives.

In addition, the FSA has adopted new rules following its retail distribution review (“RDR” rules). These rules, which come into effect on December 31, 2012, will change how retail clients pay for investment advice given in respect of all retail investment products, including open-end and closed-end funds, structured products and insurance-based savings products. In preparation for RDR rule implementation, we have developed new share classes for our funds offered in the U.K., and we are in the process of amending our distribution agreements.

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In the aftermath of the financial crisis, the European Commission set out a detailed plan for EU financial reform, outlining a number of initiatives to be reflected in new or updated directives, regulations and recommendations of which the MiFID review was part. These will have direct and indirect effects on our operations in the EEA and the sale into that region of products managed outside of the EEA.

The EU Alternative Investment Fund Managers Directive (“AIFMD”), which became effective on July 21, 2011, must be implemented by EU member states by July 22, 2013. The AIFMD will regulate managers of, and service providers to, alternative investment funds not authorized as UCITS retail funds (“AIFs”) domiciled within and outside the EU that are offered in the EU. The AIFMD will also regulate the marketing of all AIFs inside the EEA. In general, the AIFMD is expected to have a staged implementation between mid-2013 and 2018. Compliance with the AIFMD’s requirements may restrict AIF marketing and place additional compliance obligations in the form of remuneration policies, capital requirements, reporting requirements, leverage oversight, valuation, stakes in EU companies, the domicile, duties and liability of custodians and liquidity management.

The European Commission has also published proposals to replace the Market Abuse Directive with a regulation on insider dealing and market manipulation and with an accompanying directive on criminal sanctions. There are also ongoing plans to reform the framework to which regulated firms are subject, including in relation to regulatory capital and the protection of client assets, which will have a direct effect on some of our European operations.

The next iteration of the Undertakings for Collective Investment in Transferable Securities Directive (“UCITS IV”), which governs authorized retail funds (“UCITS”), was required to be adopted into the national law of each EU member state by July 1, 2011. Various EU states including the U.K., Luxembourg and Ireland have adopted UCITS IV requirements into national legislation and regulation. However, several other EU member states are still in various stages of the adoption process. UCITS IV introduced new requirements including a requirement on UCITS to provide a key investor information document (“KIID”) prior to any fund sale. The KIID is a two-page summary of the key aspects of each share class of a fund. There are also European Commission consultations in process that are intended to enhance retail investor protection, including UCITS V, which is intended to address, among other items, custodial liability and remuneration policies.

Recent proposals on packaged retail investment products (“PRIPs”) are to be implemented through the strengthening of MiFID standards (for non-insurance PRIPs), revisions to the Insurance Mediation Directive’s selling standard (for all insurance-based PRIPs) and new investor disclosure requirements for all PRIPs though a separate EU legislative process.

In addition, in September 2011, the European Commission proposed a financial transaction tax (“FTT proposal”) in the EU, which would, if approved by all 27 Member States, apply to all financial transactions where at least one party is established in an EU Member State and either that party or another party to the transaction is a financial institution. While the specific terms of the FTT proposal remain subject to negotiation, any tax on securities transactions could likely have a negative impact on the liquidity of the derivatives and securities markets in Europe and could adversely impact our European clients’ assets and our non-European clients to the extent that they are or want to be invested in European assets.

In Canada, our subsidiaries are subject to provincial and territorial laws and are registered with and regulated by provincial and territorial securities regulatory authorities. The mandate of Canadian securities regulatory authorities is generally to protect investors and to foster fair and efficient capital markets. Securities regulatory authorities impose certain requirements on registrants, including a standard of conduct, capital and insurance, record keeping, regulatory financial reporting, conflict of interest management, compliance systems and securityholder reporting. Failure to comply with applicable securities laws, regulations and rules could result in, among other things, reprimands, suspension of or restrictions on an individual's or firm's registration, prohibitions from becoming or acting as a registrant, administrative penalties or disgorgement. In addition, as a federally licensed trust company, FTCC is subject to regulation and supervision by the Office of the Superintendent of Financial Institutions Canada and another subsidiary, FTC Investor Services Inc., is a member of and regulated by the Mutual Fund Dealers Association of Canada. These regulatory bodies have similar requirements to those of the securities regulatory authorities with a view to ensuring the capital adequacy and sound business practices of the subsidiaries and the appropriate treatment of their clients.

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In June 2012, the Canadian Securities Administrators, the umbrella organization of provincial and territorial securities regulatory authorities, released for comment proposed amendments to its rules regarding registrant obligations that will, if implemented, require additional disclosure by registrants to their clients, including enhanced disclosure at account opening of all operating charges and fees a client would be required to pay, pre-trade disclosure of any charges a client would be required to pay, enhanced reporting on client statements that includes charges paid by the client and all compensation received by registrants in respect of a client's account and new reporting regarding the performance

of investments held in the account. If adopted, these new rules would require us to make changes to our systems to comply with these new disclosure and reporting standards.

In Singapore, our subsidiaries are subject to, among others, the Securities and Futures Act (“SFA”), the Financial Advisers Act (“FAA”) and subsidiary legislation promulgated pursuant to these Acts. This legislation is administered by the Monetary Authority of Singapore (“MAS”). Our asset management subsidiary and its employees conducting regulated activities specified in the SFA and/or the FAA are required to be licensed with the MAS. Failure to comply with applicable laws, regulations, codes, directives, notices and guidelines issued by the MAS may result in penalties including fines, censures and the suspension or revocation of licenses granted by the MAS.

In Australia, our subsidiaries are subject to various Australian federal and state laws and are regulated by the Australian Securities and Investments Commission (“ASIC”). ASIC regulates companies, financial markets and financial services in Australia. ASIC imposes certain conditions on licensed financial services organizations that apply to our subsidiaries, including requirements relating to capital resources, operational capability and controls. Failure to comply with applicable law, regulations or conditions could result in various sanctions being imposed including cancellation, suspension or variation of the licenses held by our Australian subsidiaries.

In Hong Kong, our subsidiary is subject to the Securities and Futures Ordinance (the “SFO”), which governs the securities and futures markets and regulates, among others, offers of investments to the public and provides for the licensing of trading activities and intermediaries. The SFO is administered by the Securities and Futures Commission (the “SFC”). The SFC is also empowered under the SFO to establish standards for compliance as well as codes and guidelines. Our subsidiary and its employees conducting any of the regulated activities specified in the SFO are required to be licensed with the SFC, and are subject to the rules, codes and guidelines issued by the SFC from time to time. Failure to comply with the applicable laws, regulations, codes and guidelines issued by the SFC could result in the suspension or revocation of the licenses granted by the SFC.

In India, our subsidiaries are primarily subject to relevant regulations promulgated by the Securities and Exchange Board of India (“SEBI”), the Reserve Bank of India (“RBI”) and the Foreign Investment Promotion Board (“FIPB”). A failure to comply with the applicable laws, regulations, codes, notices, directives, guidelines, orders, circulars and schemes issued by SEBI, RBI or FIPB may result in penalties including fines, censures and/or suspension or revocation of licenses, approvals or registration status.

In Japan, our subsidiary is subject to the Financial Instruments and Exchange Law (the “FIEL”) and the Law Concerning Investment Trusts and Investment Corporations. These laws are administered and enforced by the Japanese Financial Services Agency (the “JFSA”), which establishes standards for compliance, including capital adequacy and financial soundness requirements, customer protection requirements and conduct of business rules. The JFSA is empowered to conduct administrative proceedings that can result in censure, fine, the issuance of cease and desist orders or the suspension or revocation of registrations and licenses granted under the FIEL.

There are similar legal and regulatory arrangements in force in many other non-U.S. jurisdictions where our subsidiaries, branches and representative offices, as well as certain joint ventures or companies in which we own minority stakes, are authorized to conduct business. We are subject to regulation and supervision by, among others, the Securities Commission of The Bahamas; the Comissão de Valores Mobiliários in Brazil; the Cayman Islands Monetary Authority; the China Securities Regulatory Commission in the People’s Republic of China; the Autorité des Marchés Financiers in France; the Federal Financial Supervisory Authority in Germany; the Central Bank of Ireland; the Commissione Nazionale per le Società e la Borsa in Italy; the Financial Services Commission and the Financial Supervisory Service in Korea; the Commission de Surveillance du Secteur Financier in Luxembourg; the Securities Commission in Malaysia; the Comision Nacional Bancaria y de Valores in Mexico; the Autoriteit Financiële Markten in The Netherlands; the Polish Securities and Exchange Commission; the Romanian National Securities Commission;

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the Comisión Nacional del Mercado de Valores in Spain; the Finansinspektionen in Sweden; the Swiss Federal Banking Commission; the Securities and Futures Bureau of the Ministry of Finance in the Republic of China; the Dubai Financial Services Authority in the United Arab Emirates; and the State Securities Commission of Vietnam.

COMPETITION

The financial services industry is a highly competitive global industry. There are approximately 9,600 open-end investment funds of varying sizes, and with varying investment policies and objectives, whose shares are offered to the public in the U.S., and there are approximately 63,000 open-end investment funds whose shares are offered to the public outside the U.S.

We face strong competition from numerous investment management companies, securities brokerage and investment banking firms, insurance companies, banks and other financial institutions, which offer a wide range of financial and investment management services to the same institutional accounts, separate accounts, retail investors and high net-worth clients that we are seeking to attract. Competition is based on various factors, including, among others, business reputation, investment performance, product mix and offerings, service quality and innovation, distribution relationships, and fees charged.

Due to our international presence and varied product mix, it is difficult to assess our market position relative to other investment managers on a worldwide basis, but we believe that we are one of the more widely diversified asset managers based in the U.S. We believe that our equity and fixed-income asset mix coupled with our global presence will serve our competitive needs well over the long term. We continue to focus on the long-term performance of our investment products, service to clients and extensive marketing activities through our strong broker/dealer and other financial institution distribution network as well as with high net-worth and institutional clients. We believe that performance, diversity of products and customer service, along with fees and costs, are the primary drivers of competition in the financial services industry.

The periodic establishment of new investment management firms and investment products increases the competition that we face. Many of our competitors have long-standing and established relationships with broker/dealers, investment advisers and their clients. Others have focused on, offer and market specific product lines, which provide strong competition to certain of our asset classes. In addition, consolidation in the financial services industry has created stronger competitors, some with greater financial resources and broader distribution channels than our own.

We rely largely on third-party broker/dealers and other similar intermediaries to distribute and sell our fund shares. We have and continue to pursue sales relationships with all types of intermediaries to broaden our distribution network. We have experienced increased costs related to maintaining our distribution channels and we anticipate that this trend will continue. A failure to maintain strong business relationships with the major intermediaries who currently distribute our products may also impair our distribution and sales operations. Additionally, competing broker/dealers whom we rely upon to distribute and sell our mutual funds may also sell their own proprietary funds and investment products, which could further limit the distribution of our investment products. Any inability to access and successfully sell our products to clients through third-party distribution channels could have a negative effect on our level of AUM, related revenues and overall business and financial condition.

We maintain a technology platform to compete with the rapidly developing and evolving marketplace. However, technology is subject to rapid change and we cannot guarantee that our competitors may not implement more advanced platforms for their products, which could affect our business.

We believe that we are well positioned to deal with changes in marketing trends as a result of our already extensive advertising activities and broad based marketplace recognition. We conduct advertising and promotional campaigns through various media sources to promote brand recognition. We advertise in major financial publications, as well as on television and the Internet, to promote brand name recognition and to assist our distribution network. Such activities include purchasing network and cable programming, sponsorship of sporting events, newspaper and magazine advertising, online and paid search advertising and social media marketing.

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INTELLECTUAL PROPERTY

We have used, registered, and/or applied to register certain trademarks, service marks and trade names to distinguish our sponsored investment products and services from those of our competitors in the U.S. and in other countries and jurisdictions, including, but not limited to, Franklin^®, Templeton^®, Mutual Series^®, Bissett^®, Fiduciary Trust™, Darby^® and Balanced Equity Management™. Our trademarks, service marks and trade names are important to us and, accordingly, we enforce our trademark, service mark and trade name rights. The Franklin Templeton Investments^® brand has been, and continues to be, extremely well received both in our industry and with our clients, reflecting the fact that our brand, like our business, is based in part on trust and confidence. If our brand is harmed, our future business prospects may be adversely affected.

EMPLOYEES

As of September 30, 2012, we employed approximately 8,600 employees and operated offices in 35 countries. We consider our relations with our employees to be satisfactory.

AVAILABLE INFORMATION

Franklin files reports with the SEC, including current and periodic reports, proxy statements and other information filed with or furnished to the SEC from time to time. The public may read and copy any of these filings at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.

The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers, including Franklin, who file electronically with the SEC, at www.sec.gov. Additional information about the Company’s filings can also be obtained at our website at www.franklinresources.com under “Investor Relations.” We make available free of charge on our website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Corporate Governance Guidelines. The Company has adopted Corporate Governance Guidelines. The Corporate Governance Guidelines are posted on the Company’s website under “Corporate Governance” and are available in print to any stockholder who requests a copy.

Committee Charters. The Company’s Board of Directors has an Audit Committee, Compensation Committee and Corporate Governance Committee. The Board of Directors has adopted written charters for each such committee, which are posted on the Company’s website under “Corporate Governance” and are available in print to any stockholder who requests a copy.

Item 1A. Risk Factors.

Volatility and disruption of the capital and credit markets, and adverse changes in the global economy, may significantly affect our results of operations and may put pressure on our financial results. The capital and credit markets continue to experience volatility and disruption worldwide. Declines in global financial market conditions have in the past resulted in significant decreases in our assets under management (“AUM”), revenues and income, and future declines may negatively impact our performance. Such declines have had and may in the future have an adverse impact on our results of operations. We may need to modify our business, strategies or operations and we may be subject to additional constraints or costs in order to satisfy new regulatory requirements or to compete in a changed business environment.

The amount and mix of our AUM are subject to significant fluctuations. Fluctuations in the amount and mix of our AUM may be attributable in part to market conditions outside of our control that have had, and in the future could have, a negative impact on our revenues and income. We derive our operating revenues and net income from providing investment management and related services. The level of our revenues depends largely on the level and mix of AUM. Any decrease in the value or amount of our AUM because of market volatility or other factors negatively impacts our revenues and income. We are subject to an increased risk of asset volatility from changes in the global financial and

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equity markets. Individual financial and equity markets may be adversely affected by economic, political, financial or other instabilities that are particular to the country or regions in which a market is located, including without limitation local acts of terrorism, economic crises, political protests, insurrection or other business, social or political crises. Declines in these markets have caused in the past, and may cause in the future, a decline in our revenues and income. Global economic conditions, exacerbated by war, terrorism, natural disasters or financial crises, changes in the equity marketplace, unanticipated changes in currency exchange rates, interest rates, inflation rates, the yield curve, defaults by derivative counterparties, bond default risks, the sovereign debt crisis in Europe and other factors that are difficult to predict affect the mix, market values and levels of our AUM. The funds we manage may be subject to an unanticipated large number of redemptions as a result of such events, causing the funds to sell securities they hold, possibly at a loss, or draw on any available lines of credit to obtain cash to settle these redemptions, or settle in-kind with securities held in the applicable fund. We may also, in our discretion, provide financial support to a fund to enable it to maintain sufficient liquidity in such event. Our investment management fee revenues are primarily based on a percentage of the value of AUM and vary with the nature of the account or product managed. A decline in the price of stocks or bonds, or in particular market segments, or in the securities market generally, could cause the value and returns on our AUM to decline, resulting in a decline in our revenues and income. Moreover, changing market conditions may cause a shift in our asset mix between international and U.S. assets, potentially resulting in a decline in our revenues and income depending upon the nature of our AUM and the level of management fees we earn based on our AUM. We generally derive higher investment management and distribution fees from our international products than from our U.S. products, and higher sales fees from our U.S. products than from our international products. Additionally, changing market conditions may cause a shift in our asset mix towards fixed-income products and a related decline in our revenues and income, as we generally derive higher fee revenues and income from equity products than from fixed-income products we manage. On the other hand, increases in interest rates, in particular if rapid, or high interest rates, as well as any uncertainty in the future direction of interest rates, may have a negative impact on our fixed-income products as rising interest rates or interest rate uncertainty typically decrease the total return on many bond investments due to lower market valuations of existing bonds. Any decrease in the level of our AUM resulting from price declines, interest rate volatility or uncertainty, increased redemptions or other factors could negatively impact our revenues and income.

We are subject to extensive and complex, overlapping and frequently changing rules, regulations and legal interpretations. There is uncertainty associated with the regulatory environment in which we operate. Our business is subject to extensive and complex, overlapping and frequently changing rules, regulations and legal interpretations in the countries in which we operate, including, among others, securities, banking, accounting, tax, ethics and privacy laws and regulations.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Reform Act”) imposes additional restrictions and limitations on us and will likely result in increased scrutiny and oversight of our financial services and products as the various rules and regulations required for implementation continue to be adopted. Due to the complexity and broad scope of the Reform Act and the time required for regulatory implementation, we are not able to predict at this time all of the specific requirements that will be adopted by regulatory agencies having authority over us pursuant to the Reform Act, or the impact of all of the changes in regulation. The so-called “Volcker Rule” provisions of the Reform Act restrict the ability of affiliates of insured depository institutions, such as Franklin, to sponsor or invest in private funds or to engage in certain types of proprietary trading. While the Volcker Rule became effective on July 21, 2012, final rules for its implementation have not yet been adopted. On April 19, 2012, the Board of Governors of the Federal Reserve System (the “FRB”) issued a Statement of Policy that confirmed that banking institutions will have two years from the effective date to conform their activities to the requirements of the Volcker Rule. In addition to the rulemaking mandated by the Reform Act, new rules adopted by the Commodity Futures Trading Commission (“CFTC”) removed or limited previously available exemptions and exclusions which will impose additional registration and reporting requirements for operators of certain mutual funds and certain other pooled vehicles that use or trade in futures, swaps and other derivatives regulated by the CFTC. These regulatory amendments may require us to change certain of our mutual fund or other pooled vehicle business practices or register additional entities with the CFTC. Further, upon implementation, the Foreign Account Tax Compliance Act (“FATCA”), which is intended to address tax compliance issues related to U.S. taxpayers holding non-U.S. accounts, will require non-U.S. financial institutions to report to the Internal Revenue Service (“IRS”) information about financial accounts held by U.S. taxpayers and impose withholding, documentation and reporting requirements on non-U.S. financial institutions. FATCA remains subject to the adoption of applicable regulations by the IRS, and full implementation will be phased in over a multi-year period,

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commencing in 2013. We expect that FATCA will cause us to incur significant administrative and compliance costs. Changes to the regulation of money market funds currently under discussion could significantly change the structure and operations of those funds.

Financial reporting requirements, and the processes, controls and procedures that have been put in place to address them, are often comprehensive and complex. We may be adversely affected as a result of new or revised legislation or regulations or by changes in the interpretation of existing laws and regulations. While management has focused attention and resources on our compliance policies, procedures and practices, non-compliance with applicable laws or rules or regulations, conflicts of interest requirements or fiduciary principles, or our inability to keep up with, or adapt to, an ever changing, complex regulatory environment, could result in civil liability, criminal liability and/or sanctions against us, including fines and censures, injunctive relief, suspension or expulsion from a particular jurisdiction or market or the revocation of licenses, any of which could adversely affect our reputation, prospects, revenues and income.

We are subject to U.S. federal securities laws, state laws regarding securities fraud, other federal and state laws and rules and regulations of certain regulatory and self-regulatory organizations, including those rules and regulations promulgated by, among others, the SEC, the Financial Industry Regulatory Authority and the New York Stock Exchange. Because of our non-U.S. operations and/or trading in our securities that take place outside the U.S., we are also subject to regulation by non-U.S. regulators and U.S. regulators such as the Department of Justice and the SEC with respect to the Foreign Corrupt Practices Act of 1977. Certain of our subsidiaries are registered with the SEC under the Investment Advisers Act of 1940 and many of our funds are registered with the SEC under the Investment Company Act, both of which impose numerous obligations, as well as detailed operational requirements, on our subsidiaries which are investment advisers to registered investment companies. Our subsidiaries must comply with a myriad of complex and changing U.S. and/or non-U.S. rules and regulations, some of which may conflict, as well as complex tax regimes. Additionally, as we continue to expand our operations, sometimes rapidly, into additional non-U.S. jurisdictions, the rules and regulations of these non-U.S. jurisdictions become applicable, sometimes with short compliance deadlines, and add further regulatory complexity to our ongoing global compliance operations.

We are also a bank holding company and a financial holding company subject to the supervision and regulation of the FRB and are subject to the restrictions, limitations and prohibitions of the Bank Holding Company Act of 1956 (the “BHC Act”) and the Gramm-Leach-Bliley Act. In addition, significant aspects of the Reform Act relate to changes in the regulation of banks, thrifts, holding companies and related institutions, including with respect to regulation and supervision in the banking industry, and the imposition of various restrictions and limitations on certain activities of such entities. The Reform Act includes a number of measures that will increase capital and liquidity requirements, impose limits on leverage, and enhance supervisory authority and regulatory oversight of non-banking entities which may apply to our business. The FRB may impose additional limitations or restrictions on our activities, including if the FRB believes that we do not have the appropriate financial and managerial resources to commence or conduct an activity or make an acquisition. Further, our banking subsidiary, Fiduciary Trust Company International (“Fiduciary Trust”), is subject to extensive regulation, supervision and examination by the Federal Deposit Insurance Corporation and the New York State Department of Financial Services, while other subsidiaries are subject to oversight by the Office of the Comptroller of the Currency (the “OCC”) and various state regulators.

The laws and regulations imposed by our banking regulators generally involve restrictions and requirements in connection with a variety of technical, specialized, and expanding matters and concerns. For example, compliance with anti-money laundering and Know-Your-Customer requirements, both domestically and internationally, and the Bank Secrecy Act has taken on heightened importance with regulators as a result of efforts to, among other things, limit terrorism. At the same time, there has been increased regulation with respect to the protection of customer privacy and the need to secure sensitive customer information. As we continue to address these requirements or focus on meeting new or expanded ones, we may expend a substantial amount of time and resources. Any inability to meet these requirements, within the timeframes set by regulators, may subject us to sanctions or other restrictions by the regulators that could impact our broader business. Moreover, being subject to banking regulation may put us at a disadvantage compared to our competitors which are not subject to such requirements.

On March 5, 2012, Fiduciary Trust submitted an application to the OCC to convert from a New York state-chartered bank to an uninsured national banking association with fiduciary powers, the activities of which would be limited to those authorized by the OCC for a trust bank and activities related thereto. Franklin Templeton Bank & Trust,

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F.S.B. would be merged into this entity and our status as a bank holding company would end. In September 2012, the OCC advised us that it had changed its policy. We understand that it generally will no longer charter uninsured national trust banks. In light of this, we are considering alternative structures for our banking subsidiaries. There is no assurance that we will be able to successfully restructure our subsidiaries or cease to be regulated as a bank holding company. Moreover, even if such restructuring were to be completed, we could still be subject to enhanced prudential standards and FRB supervision if the Financial Stability Oversight Council were to designate us as a systemically important non-bank financial company under the Reform Act.

Regulatory and legislative actions and reforms have made the regulatory environment in which we operate more costly and future actions and reforms could adversely impact our AUM, increase costs and negatively impact our profitability and future financial results. Since 2001, the federal securities laws have been augmented substantially and made significantly more complex by, among other measures, the Sarbanes-Oxley Act of 2002, the USA Patriot Act of 2001 and the Reform Act. Moreover, the adoption of new laws or regulations and changes in the interpretation or enforcement of existing laws or regulations have directly affected, and may continue to affect, our business. With new laws and changes in interpretation of existing requirements, the associated time we must dedicate to, and related costs we must incur in, meeting the regulatory complexities of our business have increased. In particular, many provisions of the Reform Act still require the adoption of rules to implement the Reform Act and mandate multiple studies, which could result in additional legislative or regulatory action. We may be required to invest significant management time and resources to address the various provisions of the Reform Act and the numerous regulations that are required to be issued under it. In addition, the SEC has proposed changes to Rule 12b-1 promulgated under the Investment Company Act which, if adopted, could limit our ability to recover expenses relating to the distribution of our funds. Outlays associated with meeting regulatory complexities have also increased as we expand our business into new jurisdictions. Compliance activities to meet these and other new legal requirements have required us to expend additional time and resources, and, consequently, we are incurring increased costs of doing business, which potentially negatively impacts our profitability and future financial results. Moreover, any potential accounting or reporting error, whether financial or otherwise, if material, could damage our reputation, adversely affect our ability to conduct business, and decrease revenues and income. Finally, any regulatory and legislative actions and reforms affecting the mutual fund industry, including compliance initiatives, may negatively impact revenues by increasing our costs of accessing or dealing in the financial markets or by making certain investment offerings less favorable to our clients.

Failure to comply with the laws, rules or regulations in any of the non-U.S. jurisdictions in which we operate could result in substantial harm to our reputation and results of operations. As with all investment management companies, our activities are highly regulated in almost all countries in which we conduct business. The regulatory environments of the non-U.S. jurisdictions where we conduct our business or where the funds and products we manage are organized or sold are complex, uncertain and subject to change. Local regulatory environments may vary widely and place additional demands on our sales, legal and compliance personnel. Failure to comply with the applicable laws, rules, regulations, codes, directives, notices or guidelines in any of our non-U.S. jurisdictions could result in a wide range of penalties and disciplinary actions, including fines, censures and the suspension or expulsion from a particular jurisdiction or market or the revocation of licenses, any of which could adversely affect our reputation and operations. In recent years, the non-U.S. regulatory environments in which we operate have seen significant increased and evolving regulation, which has imposed and may continue to impose additional compliance and operational costs on us in the applicable jurisdictions. Regulators in non-U.S. jurisdictions could also change their policies or laws in a manner that might restrict or otherwise impede our ability to offer our investment products and services in their respective markets, or we may be unable to keep up with, or adapt to, the ever changing, complex regulatory requirements in such jurisdictions or markets, which could further negatively impact our business.

Changes in tax laws or exposure to additional income tax liabilities could have a material impact on our financial condition, results of operations and liquidity. We are subject to income taxes as well as non-income based taxes, in both the U.S. and various non-U.S. jurisdictions and are subject to ongoing tax audits in the U.S. and various non-U.S. jurisdictions. Tax authorities may disagree with certain positions we have taken and assess additional taxes. We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provision. However, there can be no assurance that we will accurately predict the outcomes of these audits, and the actual outcomes of these audits could have a material impact on our net income or financial condition. Changes in tax laws or tax rulings could materially impact our effective tax rate. For example, proposals for fundamental U.S. corporate tax reform, if enacted,

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could change the amount of taxes we are required to pay and have a significant impact on our future results of operations, profitability and financial condition.

Any significant limitation, failure or security breach of our software applications, technology or other systems that are critical to our operations could constrain our operations. We are highly dependent upon the use of various proprietary and third-party software applications and other technology systems to operate our business. We use our technology to, among other things, obtain securities pricing information, process client transactions, and provide reports and other customer services to the clients of the funds we manage. Any inaccuracies, delays, systems failures or security breaches in these and other processes could subject us to client dissatisfaction and losses. Although we take protective measures, including measures to effectively secure information through system security technology, our technology systems may still be vulnerable to unauthorized access, computer viruses or other events that have a security impact, such as an authorized employee or vendor inadvertently causing us to release confidential information, which could materially damage our operations or cause the disclosure or modification of sensitive or confidential information. Breach of our technology systems could result in the loss of valuable information, liability for stolen assets or information, remediation costs to repair damage caused by the breach, additional security costs to mitigate against future incidents and litigation costs resulting from the incident. Moreover, loss of confidential customer identification information could harm our reputation and subject us to liability under laws that protect confidential personal data, resulting in increased costs or loss of revenues.

Further, although we take precautions to password protect and encrypt our laptops and other mobile electronic hardware, if such hardware is stolen, misplaced or left unattended, it may become vulnerable to hacking or other unauthorized use, creating a possible security risk and resulting in potentially costly actions by us. Most of the software applications that we use in our business are licensed from, and supported, upgraded and maintained by, third-party vendors. A suspension or termination of certain of these licenses or the related support, upgrades and maintenance could cause temporary system delays or interruption. In addition, our failure to properly manage and operate our data centers could have an adverse impact on our business. Although we have in place certain disaster recovery plans, we may experience system delays and interruptions as a result of natural disasters, power failures, acts of war, and third-party failures. Technology is subject to rapid change and we cannot guarantee that our competitors may not implement more advanced technology platforms for their products, which could affect our business. Potential system failures or breaches, or advancements in technology, and the cost necessary to address them, could result in material financial loss or costs, regulatory actions, breach of client contracts, reputational harm or legal claims and liability, which in turn could negatively impact our revenues and income.

Our business operations are complex and a failure to properly perform operational tasks or the misrepresentation of our products and services, or the termination of investment management agreements representing a significant portion of our AUM, could have an adverse effect on our revenues and income. Through our subsidiaries, we provide investment management and related services to our sponsored investment products, that consist of investment funds and institutional, high net-worth and separately-managed accounts. In addition to investment management, our services include fund administration, sales, distribution, shareholder services, transfer agency, trustee, custodial and other fiduciary services, as well as select private banking services. In order to be competitive, we must properly perform our fund and portfolio administration and related responsibilities, including portfolio recordkeeping and accounting, security pricing, corporate actions, investment restrictions compliance, daily net asset value computations, account reconciliations, and required distributions to fund shareholders. In addition, the intentional or unintentional misrepresentation of our products and services in advertising materials, public relations information, social media or other external communications could adversely affect our reputation and business prospects. Our investment management fees, which represent a majority of our revenues, are dependent on fees earned under investment management agreements that we have with the sponsored investment products we advise. Our revenues could be adversely affected if such agreements representing a significant portion of our AUM are terminated or significantly altered. Further, certain of our subsidiaries may act as general partner for various investment partnerships, which may subject them to liability for the partnerships' liabilities. If we fail to properly perform and monitor our operations, our business could suffer and our revenues and income could be adversely affected.

We face risks, and corresponding potential costs and expenses, associated with conducting operations and growing our business in numerous countries. We sell mutual funds and offer investment management and related services in many different regulatory jurisdictions around the world, and intend to continue to expand our operations internationally.

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As we do so, we will continue to face challenges to the adequacy of our resources, procedures and controls to consistently and effectively operate our business. In order to remain competitive, we must be proactive and prepared to implement necessary resources when growth opportunities present themselves, whether as a result of a business acquisition or rapidly increasing business activities in particular markets or regions. As we grow, we face a heightened risk that the necessary resources and/or personnel will be unavailable to take full advantage of strategic opportunities when they appear or that strategic decisions can be efficiently implemented. Local regulatory environments may vary widely, as may the adequacy and sophistication of each. Similarly, local distributors, and their policies and practices as well as financial viability, may be inconsistent or less developed or mature. Notwithstanding potential long-term cost savings by increasing certain operations, such as transfer agent and other back-office operations, in countries or regions of the world with lower operating costs, growth of our international operations may involve near-term increases in expenses as well as additional capital costs, such as information systems and technology costs and costs related to compliance with particular regulatory or other local requirements or needs. Local requirements or needs may also place additional demands on sales and compliance personnel and resources, such as meeting local language requirements, while also integrating personnel into an organization with a single operating language. Finding, hiring and retaining additional, well-qualified personnel and crafting and adopting policies, procedures and controls to address local or regional requirements remain a challenge as we expand our operations internationally. Moreover, regulators in non-U.S. jurisdictions could also change their policies or laws in a manner that might restrict or otherwise impede our ability to distribute or register investment products in their respective markets. Any of these local requirements, activities, or needs could increase the costs and expenses we incur in a specific jurisdiction without any corresponding increase in revenues and income from operating in the jurisdiction. In addition, from time to time we enter into international joint ventures in which we may not have control. These investments in joint ventures may involve risks, including the risk that the controlling joint venture partner may have business interests, strategies or goals that are inconsistent with ours, and the risk that business decisions or other actions or omissions of the controlling joint venture partner or the joint venture company may result in harm to our reputation or adversely affect the value of our investment in the joint venture.

We depend on key personnel and our financial performance could be negatively affected by the loss of their services. The success of our business will continue to depend upon our key personnel, including our portfolio and fund managers, investment analysts, investment advisers, sales and management personnel and other professionals as well as our executive officers and business unit heads. Competition for qualified, motivated, and highly skilled executives, professionals and other key personnel in the investment management industry remains significant. Our success depends to a substantial degree upon our ability to find, attract, retain, and motivate qualified individuals, including through competitive compensation packages, and upon the continued contributions of these people. Regulations, including those required to be adopted under the Reform Act, could impose restrictions on compensation paid by financial institutions, which could restrict our ability to compete effectively for qualified professionals. As our business grows, we are likely to need to increase correspondingly the overall number of individuals that we employ. Moreover, in order to retain certain key personnel, we may be required to increase compensation to such individuals, resulting in additional expense without a corresponding increase in potential revenues. We cannot assure you that we will be successful in finding, attracting and retaining qualified individuals, and the departure of key investment personnel, in particular, if not replaced, could cause us to lose clients, which could have a material adverse effect on our financial condition, results of operations and business prospects.

Strong competition from numerous and sometimes larger companies with competing offerings and products could limit or reduce sales of our products, potentially resulting in a decline in our market share, revenues and income. We compete with numerous investment management companies, securities brokerage and investment banking firms, insurance companies, banks and other financial institutions. Our investment products also compete with products offered by these competitors as well as real estate investment trusts, hedge funds and others. The periodic establishment of new investment management companies and other competitors increases the competition that we face. At the same time, consolidation in the financial services industry has created stronger competitors with greater financial resources and broader distribution channels than our own. Competition is based on various factors, including, among others, business reputation, investment performance, product mix and offerings, service quality and innovation, distribution relationships, and fees charged. Additionally, competing securities broker/dealers whom we rely upon to distribute and sell our mutual funds may also sell their own proprietary funds and investment products, which could limit the distribution of our investment products. To the extent that existing or potential clients, including securities broker/dealers, decide to invest in or distribute the products of our competitors, the sales of our products as well as our market

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share, revenues and income could decline. Our ability to attract and retain AUM is also dependent on the relative investment performance of our funds and other managed investment portfolios, offering a mix of sponsored investment products that meets investor demand and our ability to maintain our investment management fees at competitive levels.

Changes in the third-party distribution and sales channels on which we depend could reduce our income and hinder our growth. We derive nearly all of our fund sales through third-party broker/dealers and other similar investment advisers. Increasing competition for these distribution channels and regulatory initiatives have caused our distribution costs to rise and could cause further increases in the future or could otherwise negatively impact the distribution of our products. Pursuant to the Reform Act, the SEC may establish different standards for broker/dealers in their interaction with retail customers, which could have an impact on sales and/or distribution costs. Higher distribution costs lower our income; consolidations in the broker/dealer industry could also adversely impact our income. Moreover, if several of the major financial advisers who distribute our products were to cease operations or limit or otherwise end the distribution of our products, it could have a significant adverse impact on our income. There is no assurance we will continue to have access to the third-party broker/dealers and similar investment advisers that currently distribute our products, or continue to have the opportunity to offer all or some of our existing products through them. A failure to maintain strong business relationships with the major investment advisers who currently distribute our products may also impair our distribution and sales operations. Because we use broker/dealers and other similar investment advisers to sell our products, we do not control the ultimate investment recommendations given to clients. Any inability to access and successfully sell our products to clients through third-party distribution channels could have a negative effect on our level of AUM, income and overall business and financial condition.

Our increasing focus on international markets as a source of investments and sales of investment products subjects us to increased exchange rate and other risks in connection with our revenues and income generated overseas. While we maintain a significant portion of our operations in the U.S., we also provide services and earn revenues in The Bahamas, Asia-Pacific, Europe, Canada, Latin America, the Middle East and Africa. As a result, we are subject to foreign exchange risk through our non-U.S. operations. Fluctuations in the exchange rates to the U.S. dollar may affect our financial results from one period to the next. While we have taken steps to reduce our exposure to foreign exchange risk, for example, by denominating a significant amount of our transactions in U.S. dollars, the situation may change in the future as our business continues to grow outside the U.S. Appreciation of the U.S. dollar could moderate revenues from managing investment products internationally or could affect relative investment performance of certain funds invested in non-U.S. securities. In addition, we have risk associated with the foreign exchange revaluation of U.S. dollar balances held by certain non-U.S. subsidiaries for which the local currency is the functional currency. Separately, management fees that we earn tend to be higher in connection with international AUM than with U.S. AUM. Consequently, a downturn in international markets could have a significant effect on our revenues and income. Moreover, as our business continues to grow in non-U.S. markets, any ongoing and future business, economic, social or political unrest affecting these markets, in addition to any direct consequences such unrest may have on our personnel and facilities located in the affected area, may also have a more lasting impact on the long-term investment climate in these and other areas and, as a result, our AUM and the corresponding revenues and income that we generate from them may be negatively affected.

Harm to our reputation or poor investment performance of our products could reduce the level of our AUM or affect our sales, potentially negatively impacting our revenues and income. Our reputation is critical to the success of our business. We believe that our Franklin Templeton Investments brand has been, and continues to be, well received both in our industry and with our clients, reflecting the fact that our brand, like our business, is based in part on trust and confidence. If our reputation is harmed, existing clients may reduce amounts held in, or withdraw entirely from, funds that we advise or funds may terminate their management agreements with us, which could reduce the amount of AUM and cause us to suffer a corresponding loss in our revenues and income. Our investment performance, along with achieving and maintaining superior distribution and client services, is also critical to the success of our business. Strong investment performance often stimulates sales of our investment products. Poor investment performance as compared to third-party benchmarks or competitive products could lead to a decrease in sales of investment products we manage and stimulate redemptions from existing products, generally lowering the overall level of AUM and reducing the management fees we earn. We cannot assure you that past or present investment performance in the investment products we manage will be indicative of future performance. Any poor investment performance may negatively impact our revenues and income. Reputational harm or poor investment performance may cause us to lose current employees and we may be unable to continue to attract new ones with similar qualifications, motivations, or skills. If we fail to address,

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or appear to fail to address, successfully and promptly the underlying causes of any reputational harm or poor investment performance, we may be unsuccessful in repairing any existing harm to our reputation or performance and our future business prospects would likely be affected.

Our future results are dependent upon maintaining an appropriate level of expenses, which is subject to fluctuation. The level of our expenses is subject to fluctuation and may increase for the following or other reasons: changes in the level and scope of our advertising expenses in response to market conditions; variations in the level of total compensation expense due to, among other things, bonuses, changes in our employee count and mix, and competitive factors; changes in expenses and capital costs, including costs incurred to maintain and enhance our administrative and operating services infrastructure or to cover uninsured losses and an increase in insurance expenses including through the assumption of higher deductibles and/or co-insurance liability.

Our ability to successfully integrate widely varied business lines can be impeded by systems and other technological limitations. Our continued success in effectively managing and growing our business depends on our ability to integrate the varied accounting, financial, information, and operational systems of our various businesses on a global basis. Moreover, adapting or developing our existing technology systems to meet our internal needs, as well as client needs, industry demands and new regulatory requirements, is also critical for our business. The constant introduction of new technologies presents new challenges to us. We have an ongoing need to continually upgrade and improve our various technology systems, including our data processing, financial, accounting, shareholder servicing and trading systems. Further, we also must be proactive and prepared to implement technology systems when growth opportunities present themselves, whether as a result of a business acquisition or rapidly increasing business activities in particular markets or regions. These needs could present operational issues or require, from time to time, significant capital spending. It also may require us to reevaluate the current value and/or expected useful lives of our technology systems, which could negatively impact our results of operations.

Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm, or legal liability. Should we experience a local or regional disaster or other business continuity problem, such as an earthquake, tsunami, terrorist attack, pandemic or other natural or man-made disaster, our continued success will depend, in part, on the safety and availability of our personnel, our office facilities, and the proper functioning of our computer, telecommunication and other related systems and operations. While our operational size, the diversity of locations from which we operate, and our redundant back-up systems provide us with a strong advantage should we experience a local or regional disaster or other business continuity event, we could still experience near-term operational challenges, in particular depending upon how a local or regional event may affect our human capital across our operations or with regard to particular aspects of our operations, such as key executive officers or personnel in our technology group. Moreover, as we grow our operations in new geographic regions, the potential for particular types of natural or man-made disasters, political, economic or infrastructure instabilities, or other country- or region-specific business continuity risks increases. Past disaster recovery efforts have demonstrated that even seemingly localized events may require broader disaster recovery efforts throughout our operations and, consequently, we regularly assess and take steps to improve upon our existing business continuity plans and key management succession. However, a disaster on a significant scale or affecting certain of our key operating areas within or across regions, or our inability to successfully recover should we experience a disaster or other business continuity problem, could materially interrupt our business operations and cause material financial loss, loss of human capital, regulatory actions, reputational harm, or legal liability.

Certain of the portfolios we manage, including our emerging market portfolios, are vulnerable to significant market-specific political, economic or other risks, any of which may negatively impact our revenues andincome. Our emerging market portfolios and revenues derived from managing these portfolios are subject to significant risks of loss from political, economic, and diplomatic developments, currency fluctuations, social instability, changes in governmental policies, expropriation, nationalization, asset confiscation and changes in legislation related to non-U.S. ownership. International trading markets, particularly in some emerging market countries, are often smaller, less liquid, less regulated and significantly more volatile than those in the U.S.

Regulatory and governmental examinations and/or investigations, litigation and the legal risks associated with our business, could adversely impact our AUM, increase costs and negatively impact our profitability and/or our future financial results. From time to time we may receive requests for documents or other information from governmental

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authorities or regulatory bodies or we also may become the subject of governmental or regulatory investigations and/or examinations, and governmental or regulatory investigations and/or examinations that have been inactive could become active. In addition, we may be named in litigation. We may be obligated, and under our certificate of incorporation and by-laws and our standard form of indemnification agreement with certain directors in some instances, we are obligated, or we may choose, to indemnify directors, officers or employees against liabilities and expenses they may incur in connection with such matters to the extent permitted under applicable law. Even if claims made against us are without merit, litigation typically is an expensive process. Risks associated with legal liability often are difficult to assess or quantify and their existence and magnitude can remain unknown for significant periods of time. Eventual exposures from and expenses incurred relating to any litigation, investigations, examinations and settlements could adversely impact our AUM, increase costs and negatively impact our profitability and/or our financial results. Judgments, findings or allegations of wrongdoing by regulatory or governmental authorities or in litigation against us or settlements with respect thereto could affect our reputation, increase our costs of doing business and/or negatively impact our revenues, any of which could have a material negative impact on our financial results.

Our ability to meet cash needs depends upon certain factors, including the market value of our assets, operating cash flows and our perceived creditworthiness. Our ability to meet anticipated cash needs depends upon factors such as the market value of our assets, our operating cash flows and our creditworthiness as perceived by lenders. If we are unable to obtain funds and financing, we may be forced to incur unanticipated costs or revise our business plans. Further, our access to the capital markets depends significantly on our credit ratings. A reduction in our long- or short-term credit ratings could increase our borrowing costs and limit our access to the capital markets. Volatility in the global financing markets may also impact our ability to access the capital markets should we seek to do so, and have an adverse effect on investors' willingness to purchase our securities, interest rates, credit spreads and the valuation levels of equity markets. If we are unable to obtain funds and financing, or access the capital markets in a timely manner, we may be forced to incur unanticipated costs or revise our business plans, and our business could be adversely impacted.

Our business could be negatively affected if we or our banking subsidiaries fail to satisfy capital and other regulatory standards, and liquidity needs could affect our banking services. Our bank and thrift subsidiaries are subject to significant regulation and supervision, which includes minimum regulatory capital standards. Franklin is also subject to minimum capital and other regulatory standards because it is a bank holding company and financial holding company registered with the FRB under the BHC Act. Our business could be negatively affected if Franklin or its bank or thrift subsidiaries fail to meet these standards. Loss of financial holding company status could require that we either cease activities that are only permissible for us to engage in as a financial holding company or divest our banking subsidiaries if we desire to continue such activities. The banking regulators are authorized (and sometimes required) to impose a wide range of requirements, conditions, and restrictions on banks, thrifts, and bank holding companies that fail to maintain adequate capital levels. The Reform Act imposes more stringent capital, liquidity and leverage ratio requirements on bank holding companies. In addition, liquidity needs could affect our banking services, which may be subject to an unanticipated large number of withdrawals as a result of a number of factors, such as changed or unstable economic conditions, adverse trends or events, interest rates paid by competitors, general interest rate levels, and returns available to clients on alternative investments. Our banking subsidiaries may be required from time to time to rely on secondary sources of liquidity, such as the sale of investment securities, Federal Home Loan Bank (“FHLB”) advances and federal funds lines to enable them to meet such withdrawal demands. These secondary sources may not be sufficient to meet liquidity needs.

We are dependent on the earnings of our subsidiaries. Substantially all of our operations are conducted through our subsidiaries. As a result, our cash flow and our ability to fund operations are dependent upon the earnings of our subsidiaries and the distribution of earnings, loans or other payments by our subsidiaries. Our subsidiaries are separate and distinct legal entities and have no obligation to provide us with funds for our payment obligations, whether by dividends, distributions, loans or other payments. Any payments to us by our subsidiaries could be subject to statutory or contractual restrictions and are contingent upon our subsidiaries' earnings and business considerations.

Item  1B. Unresolved Staff Comments.

None.

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Item 2. Properties.

We conduct our worldwide operations using a combination of leased and owned facilities. While we believe we have sufficient facilities to conduct our business at present, we will continue to lease, acquire and dispose of facilities throughout the world as necessary.

We lease space in various states in the U.S., including California, Connecticut, Delaware, Florida, New Jersey, New York, Utah and the District of Columbia, and in various non-U.S. locations, including Australia, Austria, Brazil, Canada, China (including Hong Kong), Colombia, France, Germany, Hungary, India, Isle of Man, Italy, Japan, Korea, Luxembourg, Malaysia, Mexico, The Netherlands, Poland, Romania, Russia, Singapore, Slovakia, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, United Arab Emirates, the U.K. (including England and Scotland) and Vietnam. As of September 30, 2012, we leased and occupied approximately 1,061,000 square feet of space. We have also leased and subsequently subleased to third parties approximately 77,000 square feet of excess leased space.

In addition, we own four buildings in San Mateo, California; five buildings in Rancho Cordova, California; two buildings in Stockton, California; five buildings in St. Petersburg, Florida; one building in Ft. Lauderdale, Florida; three buildings in Hyderabad, India; and two buildings in Nassau, The Bahamas, as well as space in office buildings in Argentina, India and Singapore. The buildings we own consist of approximately 2,113,000 square feet of space. We have leased to third parties approximately 351,000 square feet of excess owned space.

Item  3. Legal Proceedings.

The information set forth in response to this Item 3 of Regulation S-K under “Legal Proceedings” is incorporated by reference from the “Legal Proceedings” section in Note 15 – Commitments and Contingencies in the notes to consolidated financial statements in Item 8 of Part II of this Form 10-K, which is incorporated herein by reference.

EXECUTIVE OFFICERS OF THE REGISTRANT

Pursuant to General Instruction G(3) to Form 10-K, the following description of our executive officers is included as an unnumbered item in Part I of this report in lieu of being included in our definitive proxy statement for our annual meeting of stockholders. Set forth below are the name, age, present title, and certain other information for each of our executive officers as of November 14, 2012. Each executive officer is appointed by Franklin’s Board of Directors and holds his/her office until the earlier of his/her death, resignation, retirement, disqualification or removal.

VIJAY C. ADVANI

AGE 51

Executive Vice President - Global Advisory Services since March 2011; formerly, Executive Vice President-Global Distribution of Franklin from June 2008 to March 2011, and Executive Vice President-Global Advisor Services of Franklin from December 2005 to June 2008; officer and/or director of various subsidiaries of Franklin; employed by Franklin or its subsidiaries in various other capacities for more than the past five years.

CHARLES B. JOHNSON

AGE 79

Chairman of the Board since December 1999 and director of Franklin since 1969; formerly, Chief Executive Officer of Franklin; officer and/or director of various subsidiaries of Franklin; officer and/or director or trustee of various investment companies managed or advised by subsidiaries of Franklin.

GREGORY E. JOHNSON

AGE 51

President of Franklin since December 1999 and Chief Executive Officer of Franklin since January 2004; officer and/or director of various subsidiaries of Franklin.

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JENNIFER M. JOHNSON

AGE 48

Executive Vice President and Chief Operating Officer of Franklin since March 2010; formerly, Executive Vice President–Operations and Technology of Franklin from December 2005 to March 2010, and Senior Vice President and Chief Information Officer of Franklin from May 2003 to December 2005; officer of Franklin for more than the past five years; officer or director of various subsidiaries of Franklin. Director, Keynote Systems, Inc. since April 2004.

RUPERT H. JOHNSON, JR.

AGE 72

Vice Chairman since December 1999 and director of Franklin since 1969; officer and/or director of various subsidiaries of Franklin; officer and/or director or trustee of various investment companies managed or advised by subsidiaries of Franklin.

KENNETH A. LEWIS

AGE 51

Executive Vice President of Franklin since October 2007 and Chief Financial Officer of Franklin since October 2006; formerly, Senior Vice–President and Treasurer of Franklin from October 2006 to October 2007, Vice President–Enterprise Risk Management of Franklin from April 2006 to October 2006 and Vice President and Treasurer of Franklin from June 2002 to April 2006; officer and/or director of various subsidiaries of Franklin for more than the past five years.

JOHN M. LUSK

AGE 54

Executive Vice President - Investment Management since March 2011; formerly,Executive Vice President-Portfolio Operations of Franklin from December 2005 to March 2011, and Vice President of Franklin from January 2004 to December 2005; officer and/or director of various subsidiaries of Franklin; employed by Franklin or its subsidiaries in various other capacities for more than the past five years.

CRAIG S. TYLE

AGE 52

Executive Vice President and General Counsel of Franklin since August 2005; formerly, a partner at Shearman & Sterling LLP (a law firm) from March 2004 to July 2005 and General Counsel for the Investment Company Institute (a trade group for the U.S. fund industry) from September 1997 through March 2004; officer of various investment companies managed or advised by subsidiaries of Franklin.

WILLIAM Y. YUN

AGE 53

Executive Vice President–Alternative Strategies of Franklin since June 2008, and formerly Executive Vice President– Institutional of Franklin from December 2005 to June 2008; President of Fiduciary Trust, a subsidiary of Franklin, from 2000 to December 2005; officer and/or director of other subsidiaries of Franklin; employed by Franklin or its subsidiaries in various other capacities since the acquisition of Fiduciary Trust in April 2001.

Family Relations. Charles B. Johnson and Rupert H. Johnson, Jr. are brothers. Gregory E. Johnson is the son of Charles B. Johnson, the nephew of Rupert H. Johnson, Jr. and the brother of Jennifer M. Johnson. Jennifer M. Johnson is the daughter of Charles B. Johnson, the niece of Rupert H. Johnson, Jr. and the sister of Gregory E. Johnson.

Item  4. Mine Safety Disclosures.

Not applicable.

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PART II

Item  5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is traded on the NYSE under the ticker symbol “BEN.” On September 28, 2012 (the last trading day of our fiscal year), the closing price of our common stock on the NYSE was $125.07 per share. At October 31, 2012, there were approximately 4,650 stockholders of record of our common stock.

The following table sets forth the high and low sales prices for our common stock on the NYSE for each full quarterly period of the two most recently completed fiscal years.

Quarter	2012 Fiscal Year				2011 Fiscal Year
	High		Low		High		Low
October-December	$	112.38	$	87.71	$	125.00	$	106.04
January-March	$	126.48	$	94.38	$	130.97	$	108.33
April-June	$	127.83	$	100.91	$	131.65	$	120.50
July-September	$	128.20	$	105.98	$	137.56	$	93.58

We declared regular cash dividends of $1.08 per share ($0.27 per share per quarter) and a special cash dividend of $2.00 per share in the fiscal year ended September 30, 2012 (“fiscal year 2012”), and regular cash dividends of $1.00 per share ($0.25 per share per quarter) in the fiscal year ended September 30, 2011 (“fiscal year 2011”). We currently expect to continue paying comparable regular cash dividends on a quarterly basis to holders of our common stock depending upon earnings and other relevant factors.

The equity compensation plan information called for by Item 201(d) of Regulation S-K is set forth in Item 12 of Part III of this Form 10-K under the heading “Equity Compensation Plan Information.”

On July 6, 2011, our subsidiary Franklin Templeton Investments Australia Limited transferred 85,000 unregistered shares of our common stock having an aggregate value of $11.4 million as of that date in a private placement in accordance with Rule 506 under the Securities Act of 1933, as amended, in connection with the subsidiary's acquisition of all of the outstanding shares of Balanced Equity Management Pty. Limited, a specialty Australian equity manager.

The following table provides information with respect to the shares of our common stock that we repurchased during the three months ended September 30, 2012.

Month	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 2012	—	$	—	—	8,084,963
August 2012	651,826	$	116.46	651,826	7,433,137
September 2012	184,800	$	122.90	184,800	7,248,337
Total	836,626			836,626

Under our stock repurchase program, we can repurchase shares of our common stock from time to time in the open market and in private transactions in accordance with applicable laws and regulations, including without limitation applicable federal securities laws. From time to time we have announced the existence of and updates to our continuing policy of repurchasing shares of our common stock. In December 2011, our Board of Directors authorized the repurchase of up to 10.0 million additional shares of our common stock under our stock repurchase program. At September 30, 2012, approximately 7.2 million shares remained available for repurchase under the program, which is not subject to an expiration date.

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Item 6. Selected Financial Data.

FINANCIAL HIGHLIGHTS

as of and for the fiscal years ended September 30,	2012				2011				2010			2009			2008
Summary of Operations (in millions)
Operating revenues	$	7,101.0			$	7,140.0			$	5,853.0		$	4,194.1		$	6,032.4
Operating income	2,515.2				2,659.8				1,958.7			1,202.6			2,099.0
Operating margin	35.4		%		37.3		%		33.5		%	28.7		%	34.8		%
Net income attributable to Franklin Resources, Inc.	1,931.4				1,923.6				1,445.7			896.8			1,588.2
Financial Data (in millions)
Total assets	$	14,751.5		1	$	13,775.8		1	$	10,708.1		$	9,468.5		$	9,176.5
Debt	1,566.1				998.2				979.9			121.2			269.3
Debt of consolidated sponsored investment products	110.2				134.9				—			—			—
Debt of consolidated variable interest entities	1,100.9				1,035.4				—			—			—
Franklin Resources, Inc. stockholders’ equity	9,201.3				8,524.7				7,727.0			7,632.2			7,074.4
Operating cash flows	1,066.2				1,621.8				1,651.0			641.4			1,409.2
Investing cash flows	873.4				435.9				(32.7		)	289.9			(1,096.1		)
Financing cash flows	(1,084.9		)		(968.2		)		(594.9		)	(340.6		)	(1,300.0		)
Assets Under Management (in billions)
Ending	$	749.9			$	659.9			$	644.9		$	523.4		$	507.3
Average2	705.7				694.4				571.1			442.2			604.9
Per Common Share
Earnings
Basic	$	8.98			$	8.66			$	6.36		$	3.87		$	6.68
Diluted	8.95				8.62				6.33			3.85			6.62
Cash dividends	3.08				1.00				3.88			0.84			0.80
Book value	43.36				41.82				34.49			33.28			30.39
Employee Headcount	8,558				8,453				7,927			7,745			8,809

^{__________________} 

¹    Includes balances of variable interest entities not consolidated prior to October 1, 2010.

²    Represents simple monthly average AUM.

Item  7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

In this section, we discuss and analyze the results of operations and financial condition of Franklin Resources, Inc. (“Franklin”) and its subsidiaries (collectively, the “Company”). In addition to historical information, we also make statements relating to the future, called “forward-looking” statements, which are provided under the “safe harbor” protection of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally written in the future tense and/or are preceded by words such as “will,” “may,” “could,” “expect,” “believe,” “anticipate,” “intend,” “plan,” “seek,” “estimate,” or other similar words. Moreover, statements that speculate about future events are forward-looking statements. These forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors that could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements. You should carefully review the “Risk Factors” section set forth in Item 1A of Part I of this Annual Report on Form 10-K and in any more recent filings

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with the U.S. Securities and Exchange Commission (the “SEC”), each of which describe these risks, uncertainties and other important factors in more detail.

While forward-looking statements are our best prediction at the time that they are made, you should not rely on them. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. If a circumstance occurs after the date of this Annual Report on Form 10-K that causes any of our forward-looking statements to be inaccurate, whether as a result of new information, future developments or otherwise, we do not have an obligation, and we undertake no obligation, to announce publicly the change to our expectations, or to make any revisions to our forward-looking statements, unless required by law.

Overview

We are a global investment management organization and derive our operating revenues and net income from providing investment management and related services to investors in jurisdictions worldwide through products that include investment funds and institutional, high net-worth and separately-managed accounts (collectively, our “sponsored investment products” or “SIPs”). In addition to investment management, our services include fund administration, sales, distribution, shareholder services, transfer agency, trustee, custodial and other fiduciary services, as well as select private banking services. Our sponsored investment products and investment management and related services are distributed or marketed to the public globally under seven distinct brand names: Franklin^®, Templeton^®, Mutual Series^®, Bissett^®, Fiduciary Trust™, Darby^® and Balanced Equity Management™. We offer a broad range of SIPs under equity, hybrid, fixed-income and cash management funds and accounts, including alternative investment products, that meet a wide variety of specific investment needs of individual and institutional investors. We also manage certain sub-advised investment products which may be sold to the public under one of our brand names or those of other companies or on a co-branded basis.

Effective July 1, 2012, we have one operating segment, investment management and related services. Previously, we had a secondary operating segment, banking/finance, which offered select retail banking, private banking and consumer lending services. During the fiscal year ended September 30, 2012 (“fiscal year 2012”), we significantly reduced these services and now only offer select private banking services to investment management clients.

The level of our revenues depends largely on the level and relative mix of assets under management (“AUM”). As noted in the “Risk Factors” section set forth above in Item 1A of Part I of this Annual Report on Form 10-K, the amount and mix of our AUM are subject to significant fluctuations and can negatively impact our revenues and income. The level of our revenues also depends on mutual fund sales and the number of mutual fund shareholder accounts. The fees charged for our services are based on contracts with our SIPs or our clients. These arrangements could change in the future.

During fiscal year 2012, global financial markets produced strong positive returns, evidenced by a 22% increase in the MSCI World Index, a 30% increase in the S&P 500 Index, and a 5% increase in the Barclays Global Aggregate Index. The markets recovered from the significant volatility and negative sentiment experienced during the fourth quarter of the fiscal year ended September 30, 2011 (“fiscal year 2011”), but remained volatile throughout the year amid continued investor concerns related to the European sovereign debt crisis and the global economy. In this environment our simple monthly average AUM (“average AUM”) and earnings per share increased slightly from fiscal year 2011.

Our total AUM at September 30, 2012 was $749.9 billion, 14% higher than at September 30, 2011. The increase was almost entirely due to $96.4 billion in market appreciation as the strong market returns resulted in valuation increases in all investment objectives. The increase in average AUM was lower, at 2%, due to market volatility and depreciation experienced in the fourth quarter of fiscal year 2011. Long-term sales decreased 23% to $170.8 billion for fiscal year 2012, primarily due to reduced demand for global/international fixed-income and equity products. Redemption activity decreased 7% to $172.7 billion, as global/international equity and tax-free fixed-income product redemptions declined, but were partially offset by an increase in redemptions in global/international fixed-income products.

34

The business and regulatory environments in which we operate remain complex, uncertain and subject to change. In the U.S., the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Reform Act”) imposes additional restrictions and limitations on our business, and we expect that the Foreign Account Tax Compliance Act (“FATCA”) will cause us to incur significant administrative and compliance costs. We are also subject to numerous regulations by U.S. and non-U.S. regulators that add further complexity to our ongoing global compliance operations.

Uncertainties regarding economic stabilization and improvement remain in the foreseeable future. As we continue to confront the challenges of the current economic and regulatory environments, we remain focused on the investment performance of our SIPs and on providing high quality customer service to our clients. While we are focused on expense management, we will also seek to attract, retain and develop employees and invest strategically in systems and technology that will provide a secure and stable environment. We will continue to protect and further our brand recognition while developing and maintaining broker/dealer and client relationships. The success of these and other strategies may be influenced by the factors discussed in the “Risk Factors” section in Part I of this Annual Report.

Results of Operations

(dollar amounts in millions, except per share data)
for the fiscal years ended September 30,	2012			2011			2010			2012 vs. 2011		2011 vs. 2010
Operating Income	$	2,515.2		$	2,659.8		$	1,958.7		(5	)%	36	%
Net Income Attributable to Franklin Resources, Inc.	1,931.4			1,923.6			1,445.7			0	%	33	%
Earnings Per Share
Basic	$	8.98		$	8.66		$	6.36		4	%	36	%
Diluted	8.95			8.62			6.33			4	%	36	%
Operating Margin1	35.4		%	37.3		%	33.5		%

^{___________________} 

¹    Defined as operating income divided by total operating revenues.

Operating income decreased $144.6 million in fiscal year 2012 primarily due to a 2% decrease in investment management fee revenues, which resulted from a lower effective management fee rate partially offset by a 2% increase in average AUM, and $38.5 million of net insurance recoveries during fiscal year 2011 for losses incurred in previous years. Net income attributable to Franklin Resources, Inc. increased $7.8 million as higher investment and other income, net more than offset the decrease in operating income.

Operating income increased $701.1 million and net income attributable to Franklin Resources, Inc. increased $477.9 million in fiscal year 2011 primarily due to a 27% increase in investment management fee revenues, which was driven by a 22% increase in average AUM and a higher effective management fee rate.

Diluted earnings per share increased in fiscal year 2012 despite the minimal increase in net income due to a 3% decrease in diluted average common shares outstanding primarily resulting from the repurchase of shares of our common stock. Diluted earnings per share increased in fiscal year 2011 consistent with the increase in net income and a 2% decrease in diluted average common shares outstanding.

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Assets Under Management

AUM by investment objective was as follows:

(dollar amounts in billions)							2012 vs. 2011		2011 vs. 2010
as of September 30,	2012		2011		2010
Equity
Global/international	$	214.9	$	185.8	$	204.2	16	%	(9	)%
United States	82.2		68.4		69.5		20	%	(2	)%
Total equity	297.1		254.2		273.7		17	%	(7	)%
Hybrid	110.1		101.3		110.8		9	%	(9	)%
Fixed-Income
Tax-free	83.2		72.0		77.7		16	%	(7	)%
Taxable
Global/international	196.4		178.8		130.7		10	%	37	%
United States	56.7		46.9		45.4		21	%	3	%
Total fixed-income	336.3		297.7		253.8		13	%	17	%
Cash Management	6.4		6.7		6.6		(4	)%	2	%
Total	$	749.9	$	659.9	$	644.9	14	%	2	%
Average for the Year	$	705.7	$	694.4	$	571.1	2	%	22	%

AUM at September 30, 2012 increased 14% from September 30, 2011, almost entirely due to $96.4 billion in market appreciation as strong positive returns in global markets resulted in valuation increases in all investment objectives. AUM increased 2% during fiscal year 2011, driven by $36.4 billion of net new flows and $12.5 billion from acquisitions, largely offset by $30.5 billion in market depreciation as volatile market conditions led to valuation decreases.

Average AUM, which is generally more indicative of trends in revenue for providing investment management and fund administration services than the year-over-year change in ending AUM, increased by 2% and 22% during fiscal years 2012 and 2011.

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The average mix of AUM by investment objective is shown below. The change in mix towards fixed-income products during fiscal years 2012 and 2011 reflects investor preference for globally diversified fixed-income investments. We expect this trend to continue in the near future.

for the fiscal years ended September 30,	2012		2011		2010
Equity
Global/international	29	%	32	%	32	%
United States	11	%	11	%	12	%
Total equity	40	%	43	%	44	%
Hybrid	14	%	16	%	18	%
Fixed-Income
Tax-free	11	%	10	%	13	%
Taxable
Global/international	26	%	23	%	17	%
United States	8	%	7	%	7	%
Total fixed-income	45	%	40	%	37	%
Cash Management	1	%	1	%	1	%
Total	100	%	100	%	100	%

Components of the change in AUM were as follows:

(dollar amounts in billions)										2012 vs. 2011		2011 vs. 2010
for the fiscal year ended September 30,	2012			2011			2010
Beginning AUM	$	659.9		$	644.9		$	523.4		2	%	23	%
Long-term sales	170.8			220.8			188.5			(23	)%	17	%
Long-term redemptions	(172.7		)	(184.8		)	(122.8		)	(7	)%	50	%
Net cash management	(0.4		)	0.4			4.2			NM		(90	)%
Net new flows	(2.3		)	36.4			69.9			NM		(48	)%
Reinvested distributions	18.4			16.3			11.5			13	%	42	%
Net flows	16.1			52.7			81.4			(69	)%	(35	)%
Distributions	(22.5		)	(19.7		)	(14.2		)	14	%	39	%
Acquisitions	—			12.5			—			(100	)%	NM
Appreciation (depreciation) and other	96.4			(30.5		)	54.3			NM		NM
Ending AUM	$	749.9		$	659.9		$	644.9		14	%	2	%

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Components of the change in AUM by investment objective were as follows:

(in billions)	Equity									Fixed-Income
for the fiscal year ended September 30, 2012	Global/ International			United States			Hybrid			Tax-Free			Taxable Global/ International			Taxable United States			Cash Management			Total
AUM at October 1, 2011	$	185.8		$	68.4		$	101.3		$	72.0		$	178.8		$	46.9		$	6.7		$	659.9
Long-term sales	40.8			16.1			19.3			13.5			64.0			17.1			—			170.8
Long-term redemptions	(41.7		)	(18.7		)	(26.5		)	(8.9		)	(64.2		)	(12.7		)	—			(172.7		)
Net exchanges	(1.5		)	0.2			0.5			0.3			(0.9		)	1.4			—			—
Net cash management	—			—			—			—			—			—			(0.4		)	(0.4		)
Net new flows	(2.4		)	(2.4		)	(6.7		)	4.9			(1.1		)	5.8			(0.4		)	(2.3		)
Reinvested distributions	2.2			1.7			4.9			2.3			5.6			1.7			—			18.4
Net flows	(0.2		)	(0.7		)	(1.8		)	7.2			4.5			7.5			(0.4		)	16.1
Distributions	(2.4		)	(1.8		)	(5.7		)	(3.0		)	(7.5		)	(2.1		)	—			(22.5		)
Appreciation and other	31.7			16.3			16.3			7.0			20.6			4.4			0.1			96.4
AUM at September 30, 2012	$	214.9		$	82.2		$	110.1		$	83.2		$	196.4		$	56.7		$	6.4		$	749.9

(in billions)	Equity									Fixed-Income
for the fiscal year ended September 30, 2011	Global/ International			United States			Hybrid			Tax-Free			Taxable Global/ International			Taxable United States			Cash Management			Total
AUM at October 1, 2010	$	204.2		$	69.5		$	110.8		$	77.7		$	130.7		$	45.4		$	6.6		$	644.9
Long-term sales	53.3			19.6			21.4			9.5			102.8			14.2			—			220.8
Long-term redemptions	(61.0		)	(19.1		)	(29.0		)	(14.3		)	(48.5		)	(12.9		)	—			(184.8		)
Net exchanges	(0.5		)	0.3			0.5			(1.9		)	2.4			(0.5		)	(0.3		)	—
Net cash management	—			—			—			—			—			—			0.4			0.4
Net new flows	(8.2		)	0.8			(7.1		)	(6.7		)	56.7			0.8			0.1			36.4
Reinvested distributions	2.7			1.6			4.2			2.2			4.3			1.3			—			16.3
Net flows	(5.5		)	2.4			(2.9		)	(4.5		)	61.0			2.1			0.1			52.7
Distributions	(3.3		)	(1.7		)	(5.2		)	(3.2		)	(4.6		)	(1.7		)	—			(19.7		)
Acquisitions	12.5			—			—			—			—			—			—			12.5
Appreciation (depreciation) and other	(22.1		)	(1.8		)	(1.4		)	2.0			(8.3		)	1.1			—			(30.5		)
AUM at September 30, 2011	$	185.8		$	68.4		$	101.3		$	72.0		$	178.8		$	46.9		$	6.7		$	659.9

(in billions)	Equity									Fixed-Income
for the fiscal year ended September 30, 2010	Global/ International			United States			Hybrid			Tax-Free			Taxable Global/ International			Taxable United States			Cash Management			Total
AUM at October 1, 2009	$	183.1		$	63.9		$	98.2		$	69.6		$	63.3		$	38.4		$	6.9		$	523.4
Long-term sales	50.5			13.4			16.7			14.3			79.5			14.1			—			188.5
Long-term redemptions	(47.0		)	(14.1		)	(13.2		)	(9.1		)	(29.2		)	(10.2		)	—			(122.8		)
Net exchanges	(0.6		)	(0.3		)	(0.2		)	(0.1		)	5.4			0.3			(4.5		)	—
Net cash management	—			—			—			—			—			—			4.2			4.2
Net new flows	2.9			(1.0		)	3.3			5.1			55.7			4.2			(0.3		)	69.9
Reinvested distributions	1.5			0.7			3.8			2.0			2.3			1.2			—			11.5
Net flows	4.4			(0.3		)	7.1			7.1			58.0			5.4			(0.3		)	81.4
Distributions	(1.5		)	(0.8		)	(4.9		)	(3.2		)	(2.3		)	(1.5		)	—			(14.2		)
Appreciation and other	18.2			6.7			10.4			4.2			11.7			3.1			—			54.3
AUM at September 30, 2010	$	204.2		$	69.5		$	110.8		$	77.7		$	130.7		$	45.4		$	6.6		$	644.9

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AUM increased $90.0 billion or 14% during fiscal year 2012, almost entirely due to market appreciation of $96.4 billion, partially offset by $2.3 billion in net new outflows. Strong positive returns in global markets, evidenced by increases in the MSCI World, S&P 500 and Barclays Global Aggregate indexes of 22%, 30% and 5%, resulted in market appreciation across all investment objectives. Long-term sales decreased 23% to $170.8 billion, primarily due to reduced demand for global/international fixed-income and equity products as a result of ongoing investor concerns related to the European sovereign debt crisis and the strength of the global economic recovery. Long-term redemptions decreased 7% to $172.7 billion, as global/international equity and tax-free fixed-income product redemptions declined, but were partially offset by an increase in redemptions in global/international fixed-income products. Redemptions included $11.1 billion from an institutional advisory account in the hybrid objective.

AUM increased $15.0 billion or 2% during fiscal year 2011, driven by $36.4 billion of net new flows and $12.5 billion from acquisitions, largely offset by $30.5 billion in market depreciation. Net new flows decreased 48% from the prior year, despite a 17% increase in long-term sales led by growth in global/international fixed-income products, as long-term redemptions increased 50%, with increases in all investment objectives as a result of persistent market volatility amid investor concerns about economic growth, the sovereign debt crisis in Europe and default risk associated with municipal bonds. The negative sentiment in the global financial markets, evidenced by a decrease in the MSCI World Index of 4%, also resulted in significant market depreciation in global/international equity and fixed-income products. Redemptions included $12.0 billion from an institutional advisory account in the hybrid objective and losses of a few global equity institutional accounts.

The average mix of AUM by sales region is shown below.

(dollar amounts in billions)			% of Total				% of Total				% of Total
for the fiscal years ended September 30,	2012				2011				2010
United States	$	461.3	65	%	$	459.4	66	%	$	404.3	71	%
International
Europe, the Middle East and Africa	112.1		16	%	109.3		16	%	68.2		12	%
Asia-Pacific	74.3		10	%	66.5		9	%	50.0		9	%
Canada	32.1		5	%	33.8		5	%	31.3		5	%
Latin America1	25.9		4	%	25.4		4	%	17.3		3	%
Total international	$	244.4	35	%	$	235.0	34	%	$	166.8	29	%
Total	$	705.7	100	%	$	694.4	100	%	$	571.1	100	%

________________

¹        Latin America sales region includes North America-based advisors serving non-resident clients.

Due to the global nature of our business operations, investment management and related services may be performed in locations unrelated to the sales region.

Investment Performance Overview

A key driver of our overall success is the long-term investment performance of our SIPs. A standard measure of the performance of these investment products is the percentage of AUM exceeding benchmarks and peer group medians. The long-term investment performance of our fixed-income products has been strong with AUM frequently outperforming the benchmarks and peer group medians for the three-, five- and ten-year periods ended September 30, 2012. Our global/international fixed-income funds generated exceptional results with at least 87% of AUM exceeding the benchmarks and peer group medians for all periods presented, as did our hybrid products with at least 94% of AUM exceeding the peer group median for all periods. In addition, at least 95% of AUM of our tax-free fixed-income products exceeded the peer group medians for the five- and ten-year periods. The long-term performance of our equity products has also been solid with AUM regularly exceeding the peer group medians for the three-, five- and ten-year periods.

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The performance of our products against benchmarks and peer group medians is presented in the table below.

	Benchmark Comparison								Peer Group Comparison
	% of AUM Exceeding Benchmark								% of AUM in Top Two Peer Group Quartiles
As of September 30, 2012	1-Year		3-Year		5-Year		10-Year		1-Year		3-Year		5-Year		10-Year
Equity
Global/international	43	%	36	%	54	%	50	%	62	%	60	%	67	%	66	%
United States	2	%	13	%	36	%	38	%	17	%	44	%	75	%	46	%
Total equity	30	%	28	%	48	%	46	%	48	%	54	%	70	%	58	%
Hybrid	87	%	85	%	13	%	96	%	96	%	95	%	94	%	98	%
Fixed-Income
Tax-free	75	%	61	%	2	%	31	%	41	%	70	%	95	%	100	%
Taxable
Global/international	87	%	88	%	90	%	91	%	93	%	92	%	99	%	99	%
United States	84	%	72	%	67	%	78	%	67	%	54	%	54	%	68	%
Total fixed-income	83	%	78	%	62	%	70	%	74	%	80	%	90	%	94	%

AUM measured in the benchmark and peer group rankings represents 89% of our total AUM as of September 30, 2012. The benchmark comparisons are based on each fund's return as compared to a market index that has been selected to be generally consistent with the investment objectives of the fund. The peer group rankings are sourced from Lipper, Morningstar or eVestment in each fund's market and were based on an absolute ranking of returns as of September 30, 2012. For products with multiple share classes, rankings for the primary share class are applied to the entire product. Private equity, certain privately-offered emerging market and real estate funds and cash management are not included. Certain other funds and products were also excluded because of limited benchmark or peer group data. Had this data been available, the results may have been different. These results assume the reinvestment of dividends, are based on data available as of October 16, 2012 and are subject to revision. While we remain focused on achieving strong long-term performance, our future benchmark and peer group rankings may vary from our past performance.

Operating Revenues

The table below presents the percentage change in each revenue category and the percentage of total operating revenues represented by each category.

for the fiscal years ended September 30,	Percentage Change				Percentage of Total Operating Revenues
	2012 vs. 2011		2011 vs. 2010		2012		2011		2010
Investment management fees	(2	)%	27	%	63	%	63	%	61	%
Sales and distribution fees	0	%	16	%	32	%	32	%	33	%
Shareholder servicing fees	1	%	6	%	4	%	4	%	5	%
Other, net	82	%	(7	)%	1	%	1	%	1	%
Total Operating Revenues	(1	)%	22	%	100	%	100	%	100	%

Investment Management Fees

Investment management fees are generally calculated under contractual arrangements with our SIPs and the sub-advised products that we manage as a percentage of the market value of AUM. Annual rates vary by investment objective and type of services provided. Rates for products sold outside of the U.S. are generally higher than for U.S. products because they are structured to compensate for certain distribution costs.

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Investment management fees decreased $72.7 million in fiscal year 2012. The decrease in fees was primarily due to a lower effective fee rate as described below, partially offset by a 2% increase in average AUM which originated from non-U.S. products, primarily in the global/international fixed-income objective.

Investment management fees increased $956.8 million in fiscal year 2011. Approximately 87% of the increase was due to a 22% increase in average AUM, which was driven by net new flows from global/international fixed-income products and acquisitions, as well as higher valuation levels resulting from market appreciation across most investment objectives during the first nine months of the fiscal year. The increase in fees was also impacted to a lesser extent by higher effective fee rates.

Our effective investment management fee rate (investment management fees divided by average AUM) was 63.2 basis points for fiscal year 2012, as compared to 65.3 basis points for fiscal year 2011 and 62.6 basis points for fiscal year 2010. The rate decrease in fiscal year 2012 primarily resulted from lower levels and weighting of global/international equity AUM, which generally carry the highest fee rates, and lower performance-based fees, partially offset by an increase in the U.S. hybrid rate due to the loss of an $11.1 billion institutional advisory account that had a low fee rate. The rate increase in fiscal year 2011 primarily resulted from higher levels and relative weighting of international AUM, which were driven by growth in cross-border products.

Performance-based investment management fees were $13.6 million, $63.9 million, and $30.0 million for fiscal years 2012, 2011 and 2010.

U.S. industry asset-weighted average management fee rates were as follows¹.

(in basis points)	Industry Average
for the fiscal years ended September 30,	2012	2011	2010
Equity
Global/international	61	63	64
United States	45	47	47
Hybrid	39	40	39
Fixed-Income
Tax-free	37	37	37
Taxable
Global/international	58	56	54
United States	37	38	38
Cash Management	13	16	17

________________

¹  U.S. industry asset-weighted average management fee rates were calculated using information available from Lipper® Inc. as of September 30, 2012, 2011 and 2010 and include all U.S.-registered open-end funds that reported expense data to Lipper Inc. as of the funds’ most recent annual report date, and for which expenses were equal to or greater than zero. As defined by Lipper Inc., management fees include fees from providing advisory and fund administration services. The averages combine retail and institutional funds data and include all share classes and distribution channels, without exception. Variable annuity products are not included.

Our actual effective investment management fee rates are generally higher than the U.S. industry average rates as we actively manage our products and have a higher level of international AUM, both of which generate higher fees. Changes to our effective investment management fee rates in the U.S. have not varied significantly from changes in industry rates. During fiscal years 2012 and 2011, our U.S. hybrid rate increased by approximately five basis points more than the industry rate due to losses of institutional advisory accounts of $11.1 billion and $12.0 billion that had low fee rates.

Our product offerings and global operations are diverse. As such, the impact of future changes in the market value of AUM on investment management fees will be affected by the relative mix of investment objective, geographic region, distribution channel and investment vehicle of the assets.

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Sales and Distribution Fees

We earn fees from the sale of certain classes of SIPs on which investors pay a commission at the time of purchase (“commissionable sales”). Sales commissions are reduced or eliminated on some share classes and for some sale transactions depending upon the amount invested and the type of investor. Therefore, sales fees will change with the overall level of gross sales, the size of individual transactions, and the relative mix of sales between different share classes and types of investors.

Globally, our mutual funds and certain other products generally pay us distribution fees in return for sales, marketing and distribution efforts on their behalf. Specifically, the majority of U.S.-registered mutual funds, with the exception of certain of our money market mutual funds, have adopted distribution plans under Rule 12b-1 (the “Rule 12b-1 Plans”) promulgated under the Investment Company Act of 1940. The Rule 12b-1 Plans permit the mutual funds to bear certain expenses relating to the distribution of their shares, such as expenses for marketing, advertising, printing and sales promotion, subject to the Rule 12b-1 Plans’ limitations on amounts. The individual Rule 12b-1 Plans set a percentage limit for Rule 12b-1 expenses based on average daily net AUM of the mutual fund. Similar arrangements exist for the distribution of our non-U.S. funds where, generally, the distributor of the funds in the local market arranges for and pays commissions.

We pay substantially all of our sales and distribution fees to the financial advisers and other intermediaries who sell our SIPs to the public on our behalf. See the description of sales, distribution and marketing expenses below.

Sales and distribution fees by revenue driver are presented below:

(dollar amounts in millions)							Percentage Change
for the fiscal years ended September 30,	2012		2011		2010		2012 vs. 2011		2011 vs. 2010
Asset-based fees	$	1,522.8	$	1,511.5	$	1,209.1	1	%	25	%
Sales-based fees	725.7		737.0		724.8		(2	)%	2	%
Contingent sales charges	10.8		15.0		13.2		(28	)%	14	%
Sales and Distribution Fees	$	2,259.3	$	2,263.5	$	1,947.1	0	%	16	%

Asset-based distribution fees increased $11.3 million in fiscal year 2012 primarily due to a 2% increase in average AUM and a higher mix of international AUM, partially offset by a higher mix of fixed-income AUM. Asset-based distribution fees increased $302.4 million in fiscal year 2011 primarily due to a 22% increase in average AUM and a higher mix of international AUM. Equity products typically generate higher distribution fees than fixed-income products, and international products typically generate higher distribution fees than U.S. products. Distribution fees as a percentage of average AUM were 0.22% for fiscal years 2012 and 2011, and 0.21% for fiscal year 2010.

Sales-based fees decreased $11.3 million in fiscal year 2012 primarily due to an 8% decrease in total commissionable sales and a higher mix of commissionable fixed-income product sales, substantially offset by a higher mix of U.S. product sales. Sales fees increased $12.2 million in fiscal year 2011 primarily due to a higher mix of commissionable equity product sales. Total commissionable sales increased 3% in fiscal year 2011, however the increase had no impact on sales fees due to a higher mix of international products. Equity products typically generate higher sales fees than fixed-income products, and U.S. products typically generate higher sales fees than international products. Sales fees as a percentage of commissionable sales were 3.4%, 3.1% and 3.2% for fiscal years 2012, 2011 and 2010. Commissionable sales represented 13%, 11% and 12% of total sales for fiscal years 2012 , 2011 and 2010.

Contingent sales charges are earned from investor redemptions within a certain contracted period of time. These charges are levied only on certain shares sold without a front-end sales charge, and vary with the mix of redemptions of these shares.

Shareholder Servicing Fees

We receive shareholder servicing fees as compensation for providing transfer agency services, which include providing customer statements, transaction processing, customer service, and tax reporting. These fees are generally fixed charges per shareholder account that vary with the particular type of fund and the service being rendered. In some

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instances, we charge SIPs these fees based on the level of AUM. In the U.S., transfer agency service agreements provide that accounts closed in a calendar year generally remain billable at a reduced rate through the second quarter of the following calendar year. In Canada, such agreements provide that accounts closed in the calendar year remain billable for four months after the end of the calendar year. Accordingly, the level of fees will vary with the change in open accounts and the level of closed accounts that remain billable. Approximately 4.3 million accounts closed in the U.S. during calendar year 2011 were no longer billable effective July 1, 2012, as compared to approximately 2.2 million accounts closed during calendar year 2010 that were no longer billable effective July 1, 2011. Approximately 0.2 million accounts closed in Canada during calendar year 2011 were no longer billable effective May 1, 2012, compared to approximately 0.3 million accounts closed during calendar year 2010 that were no longer billable effective May 1, 2011.

Other services include tax planning and return preparation for individual and trust clients, for which fees are primarily account based, and trustee services, for which fees are based on the level of AUM.

Shareholder servicing fees increased $1.7 million in fiscal year 2012 primarily due to a $3.5 million increase in other service fees, mainly resulting from higher tax planning and return preparation fee rates and levels of trust AUM. Transfer agency service fees decreased $1.8 million primarily due to unfavorable currency impacts from the stronger U.S. dollar in all regions and an 8% decrease in billable shareholder accounts in Canada, partially offset by increases in Europe from a change in fee structures that became effective on January 1, 2011 and a 2% increase in billable shareholder accounts.

Shareholder servicing fees increased $16.9 million in fiscal year 2011 primarily due to an $11.8 million increase in Europe resulting from the change in fee structures, a 15% increase in simple monthly average billable shareholder accounts and a 3% increase in the value of the Euro against the U.S. dollar. Shareholder servicing fees increased $2.3 million in the U.S. mainly due to a 9% increase in simple monthly average billable shareholder accounts, partially offset by the impact of account conversions to omnibus accounts that earn lower fees.

Other, Net

Other, net revenue primarily consists of dividend and interest income from consolidated SIPs. It also includes interest income and expense and provisions for loan losses from lending activities.

Other, net revenue increased $36.2 million in fiscal year 2012, primarily due to a $51.4 million increase in income from consolidated SIPs, including $30.4 million related to limited partnerships and similar structures that were consolidated as of September 30, 2011 or during fiscal year 2012. The increase was partially offset by a $13.1 million decrease in net revenue from banking/finance services due to a significant reduction in these services during the year. We no longer offer retail banking or consumer lending services, but continue to provide private banking services to investment management clients.

Other, net revenue decreased $3.1 million in fiscal year 2011 primarily due to an $11.5 million decrease in net revenue from banking/finance services resulting from reduced activities, partially offset by a $6.7 million increase in income from consolidated SIPs.

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Operating Expenses

The table below presents the percentage change in each operating expense category and the percentage of total operating expenses represented by each category.

for the fiscal years ended September 30,	Percentage Change				Percentage of Total Operating Expenses
	2012 vs. 2011		2011 vs. 2010		2012		2011		2010
Sales, distribution and marketing	1	%	19	%	60	%	61	%	59	%
Compensation and benefits	2	%	14	%	27	%	27	%	28	%
Information systems and technology	6	%	5	%	4	%	4	%	4	%
Occupancy	(1	)%	1	%	3	%	3	%	3	%
General, administrative and other	20	%	(1	)%	6	%	5	%	6	%
Total Operating Expenses	2	%	15	%	100	%	100	%	100	%

Sales, Distribution and Marketing

Sales, distribution and marketing expenses primarily consist of payments to financial advisers, broker/dealers and other third parties for providing services to investors in our SIPs, including marketing support services. Sales expenses are determined as percentages of sales and are incurred from the same commissionable sales transactions that generate sales fee revenues. Distribution expenses are determined as percentages of AUM and are incurred from assets that generate either distribution fees or higher levels of investment management fees. Marketing support expenses are based on sales, AUM or a combination thereof. Also included is the amortization of deferred sales commissions related to up-front commissions on shares sold without a front-end sales charge to shareholders. The deferred sales commissions are amortized over the periods in which commissions are generally recovered from distribution fee revenues and contingent sales charges received from shareholders of the funds upon redemption of their shares.

Sales, distribution and marketing expenses by cost driver are presented below:

(dollar amounts in millions)							Percentage Change
for the fiscal years ended September 30,	2012		2011		2010		2012 vs. 2011		2011 vs. 2010
Asset-based expenses	$	1,946.9	$	1,881.8	$	1,418.2	3	%	33	%
Sales-based expenses	662.9		675.8		676.0		(2	)%	0	%
Amortization of deferred sales commissions	129.9		155.2		188.7		(16	)%	(18	)%
Sales, Distribution and Marketing	$	2,739.7	$	2,712.8	$	2,282.9	1	%	19	%

Asset-based expenses increased $65.1 million in fiscal year 2012 due to a $35.2 million increase in distribution expenses on non-U.S. products primarily resulting from a 3% increase in the related average international AUM, a $25.2 million increase in distribution expenses on U.S. products resulting from a 2% increase in the related average U.S. AUM and a higher mix of Class C assets, which have higher expense rates than other U.S. product classes, and a $4.7 million increase in marketing support expenses resulting from a higher mix of the expenses that are based on AUM.

Asset-based expenses increased $463.6 million in fiscal year 2011 primarily due to a $331.7 million increase in distribution expenses on non-U.S. products resulting from a 41% increase in average international AUM, and a $117.0 million increase in distribution expenses on U.S. products resulting from a 14% increase in average U.S. AUM.

Asset-based expenses as a percentage of average AUM were 0.28%, 0.27% and 0.25% for fiscal years 2012, 2011 and 2010. Distribution expenses, which are typically higher for non-U.S. products, are generally not directly correlated with distribution fee revenues due to international fee structures which provide for recovery of certain distribution costs through investment management fees.

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Sales-based expenses decreased $12.9 million in fiscal year 2012 primarily due to an 8% decrease in total commissionable sales, substantially offset by a higher mix of U.S. product sales, which typically generate higher commissions than non-U.S. products. Sales-based marketing support expenses contributed $4.3 million to the decrease due to a lower mix of the expenses that are based on sales. Sales-based expenses decreased $0.2 million in fiscal year 2011, as total commissionable sales increased 3%, but higher non-U.S. product sales were substantially offset by lower U.S. product sales and resulted in essentially flat sales commission expenses. Sales-based expenses as a percentage of sales-based fees were 91%, 92% and 93% for fiscal years 2012, 2011 and 2010.

Amortization of deferred sales commissions decreased $25.3 million in fiscal year 2012 primarily due to a $17.3 million decrease related to lower sales of U.S. Class A and C shares sold without a front-end sales charge to shareholders, and a $5.7 million decrease related to U.S. Class B shares which were fully amortized in the prior year. Amortization of deferred sales commissions decreased $33.5 million in fiscal year 2011 primarily due to the full amortization of the U.S. Class B shares.

Compensation and Benefits

Compensation and benefit expenses increased $24.3 million in fiscal year 2012 primarily due to an increase in salaries, wages and benefits, partially offset by decreases in commission and variable compensation. Salaries, wages and benefits increased $38.4 million, primarily due to a $25.1 million increase in salaries and wages resulting from higher staffing levels and annual merit salary adjustments that were effective December 1, 2011 and a $9.5 million increase in severance benefits related to various employee terminations. Commissions decreased $11.5 million, reflecting the 23% decrease in long-term sales. Variable compensation decreased $1.8 million, as an $8.8 million decrease related to private equity performance fees was substantially offset by higher bonus expense based on our performance. Compensation and benefit expenses as a percentage of operating revenues were 18%, 17% and 18% for fiscal years 2012, 2011 and 2010. At September 30, 2012, our global workforce had increased to approximately 8,600 employees from approximately 8,500 employees at September 30, 2011.

Compensation and benefit expenses increased $150.2 million in fiscal year 2011 primarily due to increases in variable compensation and salaries, wages and benefits. Variable compensation increased $79.0 million, mainly due to higher bonus expense based on our performance and a $7.0 million increase related to private equity performance fees. Salaries, wages and benefits increased $74.6 million, primarily due to a $49.7 million increase in salaries and wages resulting from higher staffing levels, annual merit salary adjustments and unfavorable currency impacts, as well as an increase of $16.5 million in 401(k) plan matching contributions.

We continue to place a high emphasis on our pay for performance philosophy. As such, any changes in the underlying performance of our SIPs or changes in the composition of our incentive compensation offerings could have an impact on compensation and benefit expenses going forward. However, in order to attract and retain talented individuals, our level of compensation and benefit expenses may increase more quickly or decrease more slowly than our revenue.

Information Systems and Technology

Information systems and technology costs increased $9.8 million and $7.5 million in fiscal years 2012 and 2011 primarily due to higher investments in strategic technology projects for operational purposes.

Details of capitalized information systems and technology costs are shown below.

(in millions)
for the fiscal years ended September 30,	2012			2011			2010
Net carrying value at beginning of year	$	67.9		$	63.9		$	65.2
Additions, net of disposals	54.9			40.4			34.0
Amortization	(32.5		)	(36.4		)	(35.3		)
Net Carrying Value at End of Year	$	90.3		$	67.9		$	63.9

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Occupancy

We conduct our worldwide operations using a combination of leased and owned facilities. Occupancy costs include rent and other facilities-related costs including depreciation and utilities.

Occupancy costs decreased $1.1 million in fiscal year 2012 primarily due to lower building repairs and maintenance costs. Occupancy costs increased $1.0 million in fiscal year 2011 primarily due to facility improvement costs.

General, Administrative and Other

General, administrative and other operating expenses primarily consist of fund administration services and shareholder servicing fees payable to external parties, advertising and promotion costs, corporate travel and entertainment, professional fees, and other miscellaneous expenses.

General, administrative and other operating expenses increased $45.7 million in fiscal year 2012 primarily due to $38.5 million of net insurance recoveries during fiscal year 2011 for losses incurred in previous years, $12.9 million in current year expenses of limited partnerships and similar structures that were consolidated as of September 30, 2011 and an $8.8 million increase in professional fees mainly related to acquisition activities and changes to our banking/finance business. The increases were partially offset by a $13.6 million decrease in consulting fees related to private equity performance fees.

General, administrative and other operating expenses decreased $2.7 million in fiscal year 2011 primarily due to $38.5 million of net insurance recoveries for losses incurred in prior years, which were substantially offset by various expense increases. Fund administration services and shareholder servicing fees payable to external parties increased $10.6 million due to higher average AUM and consulting fees related to private equity performance fees increased $10.2 million. In addition, advertising and sales and promotion expenses increased $10.1 million and corporate travel expenses increased $5.8 million due to higher levels of business activity.

We are committed to investing in advertising and promotion in response to changing business conditions, and to advance our products where we see continued or potential new growth opportunities. As a result of potential changes in our strategic marketing campaigns, the level of advertising and promotion expenditures may increase more rapidly, or decrease more slowly, than our revenues.

Other Income (Expenses)

(in millions)
for the fiscal years ended September 30,	2012			2011			2010
Investment and other income, net	$	199.7		$	1.8		$	127.6
Interest expense	(36.7		)	(37.4		)	(16.5		)
Other income (expenses), net	$	163.0		$	(35.6	)	$	111.1

Other income (expenses) consists of net investment and other income and interest expense, excluding interest income and expense from banking/finance activities. Net investment and other income consists primarily of gains (losses) on trading investment securities, investments of consolidated SIPs and assets and liabilities of consolidated variable interest entities (“VIEs”); realized gains (losses) on sale of available-for-sale investment securities; income (losses) from equity method investees; dividend and interest income; other-than-temporary impairments and foreign currency exchange gains (losses).

Other income (expenses) increased $198.6 million in fiscal year 2012 primarily due to market valuation gains. Higher market valuations resulted in $25.6 million of net gains from the changes in fair value of the assets and liabilities of consolidated collateralized loan obligations (“CLOs”) as compared to $80.0 million of net losses in the prior year. Recovery in the financial markets also resulted in a $69.7 million increase in income from equity method investees, a $36.0 million increase in net gains on trading investment securities, and a $20.2 million decrease in net losses from securities held by consolidated SIPs. These increases were partially offset by a $24.5 million decrease in realized gains on available-for-sale investment securities and a $13.2 million decrease in dividend income.

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Other income (expenses) decreased $146.7 million in fiscal year 2011 primarily due to market valuation losses, partially offset by higher realized gains. Lower market valuations resulted in $80.0 million of net losses from the changes in fair value of the assets and liabilities of consolidated CLOs following implementation of new accounting guidance related to consolidation of VIEs, and in $36.1 million of net losses from securities held by consolidated SIPs as compared to $8.5 million of net gains in the prior year. Lower market valuations also resulted in a $31.6 million decrease in net gains on trading investment securities, a $21.0 million decrease in income from equity method investees, and a $12.1 million increase in other-than-temporary impairments on certain available-for-sale and other equity investments. In addition, interest expense increased by $20.9 million, primarily due to $900 million of long-term debt issued in May 2010. These decreases were partially offset by a $47.6 million increase in realized gains on available-for-sale investment securities.

Substantially all of the net gains (losses) of consolidated CLOs and limited partnerships and similar structures, and a significant noncontrolling percentage of the net gains (losses) from other consolidated SIPs are offset in noncontrolling interests in our consolidated statements of income.

Our investments in SIPs include initial cash investments made in the course of launching mutual fund and other investment product offerings, as well as investments for other business reasons. The market conditions that impact our AUM similarly affect the investment income earned or losses incurred on our SIPs investments.

The consolidated cash, cash equivalents and investments portfolio by investment objective at September 30, 2012 was as follows:

(dollar amounts in millions)	Total Portfolio		Percent of Total Portfolio		Trading Securities Included in Portfolio		Percent of Total Trading Securities		Assets of Consolidated SIPs and VIEs Included in Total Portfolio		Percent of Total
Cash and Cash Equivalents	$	6,051.4	57	%	$	—	0	%	$	267.1	12	%
Investment Securities
Equity
Global/international	459.5		5	%	—		0	%	346.0		15	%
United States	26.7		0	%	—		0	%	0.2		0	%
Total equity	486.2		5	%	—		0	%	346.2		15	%
Hybrid	199.2		2	%	—		0	%	121.3		5	%
Fixed-Income
Tax-free	26.8		0	%	—		0	%	—		0	%
Taxable
Global/international	1,002.0		9	%	84.2		7	%	579.1		25	%
United States	2,317.1		22	%	1,046.4		93	%	984.1		43	%
Total fixed-income	3,345.9		31	%	1,130.6		100	%	1,563.2		68	%
Total Investment Securities	4,031.3		38	%	1,130.6		100	%	2,030.7		88	%
Other Investments	583.2		5	%	—		0	%	—		0	%
Total Cash and Cash Equivalents and Investments	$	10,665.9	100	%	$	1,130.6	100	%	$	2,297.8	100	%

Investments of consolidated SIPs and VIEs are generally assigned a classification in the table above based on the investment objective of the consolidated SIPs and VIEs holding the securities. Other investments include $424.1 million of investments in equity method investees that hold securities which primarily have a global/international equity investment objective, are subject to market valuation risks and are readily marketable.

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Taxes on Income

As a multi-national corporation, we often provide our services from locations outside the U.S. Some of these jurisdictions have lower tax rates than the U.S. The mix of pre-tax income subject to these lower rates, when aggregated with income originating in the U.S., produces a lower overall effective income tax rate than existing U.S. federal and state income tax rates.

Our effective income tax rate for fiscal year 2012 was 28.5% as compared to 30.6% in fiscal year 2011 and 29.9% in fiscal year 2010. The decrease in fiscal year 2012 was primarily due to changes in state tax legislation and lower net losses attributable to noncontrolling interests, partially offset by earnings in higher tax jurisdictions. The increase in fiscal year 2011 was primarily due to net losses attributable to noncontrolling interests, partially offset by the recognition of higher tax reserves in the prior year resulting from new legislation.

The effective income tax rate for future reporting periods will continue to reflect the relative contributions of non-U.S. earnings that are subject to reduced tax rates and that are not currently included in U.S. taxable income. Changes in tax rates in these jurisdictions may affect our effective income tax rate and net income.

Liquidity and Capital Resources

Cash flows were as follows:

(in millions)
for the fiscal years ended September 30,	2012			2011			2010
Cash Flow Data
Operating cash flows	$	1,066.2		$	1,621.8		$	1,651.0
Investing cash flows	873.4			435.9			(32.7		)
Financing cash flows	(1,084.9		)	(968.2		)	(594.9		)

Net cash provided by operating activities decreased in fiscal year 2012, despite an increase in net income, primarily due to higher purchases of trading securities, net gains of consolidated VIEs compared to net losses in the prior year, and a decrease in income taxes payable. Net cash provided by investing activities increased mainly due to cash recognized due to consolidation of a VIE, proceeds from sale of loans, higher liquidations of investments, net of purchases, and prior year acquisitions, partially offset by lower collections of loans receivable by consolidated VIEs. Net cash used in financing activities increased primarily due to a decrease in deposits and higher dividends paid on common stock, partially offset by proceeds from issuance of senior notes and lower repurchases of common stock.

Net cash provided by operating activities decreased in fiscal year 2011, despite an increase in net income, due to higher purchases of trading securities, a decrease in income taxes payable and higher net gains on sales of assets, partially offset by net losses of consolidated VIEs. Investing cash inflows in fiscal year 2011, as compared to investing cash outflows in the prior fiscal year, were mainly due to higher liquidations of investments, net of purchases, and a decrease in loans receivable held by consolidated VIEs. Net cash used in financing activities increased primarily due to proceeds from issuance of debt in the prior fiscal year, repayment of debt by consolidated VIEs, and higher repurchases of common stock, substantially offset by lower dividends paid on common stock, an increase in deposits, and higher net subscriptions of noncontrolling interests.

The assets and liabilities of our consolidated VIEs and consolidated SIPs attributable to third-party investors do not impact our liquidity and capital resources. We have no right to these consolidated entities' assets, other than our direct equity investment in them, and management fees earned from them. The debt holders of these consolidated entities have no recourse to our assets beyond the level of our direct investment, therefore we bear no risks associated with the entities' liabilities. Accordingly, the assets and liabilities of our consolidated VIEs and consolidated SIPs, other than our direct investments in them, are excluded from the amounts and discussion below.

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Our liquid assets and debt consisted of the following:

(in millions)
as of September 30,	2012		2011		2010
Assets
Cash and cash equivalents	$	5,784.3	$	5,028.9	$	4,119.7
Receivables	823.8		745.9		671.8
Investments	2,266.7		1,952.0		2,024.0
Total liquid assets	$	8,874.8	$	7,726.8	$	6,815.5
Liabilities
Debt
Commercial paper	$	—	$	30.0	$	30.0
Federal Home Loan Bank advances	69.0		69.0		51.0
Senior notes	1,497.1		899.2		898.9
Total debt	$	1,566.1	$	998.2	$	979.9

Liquidity

Liquid assets consist of cash and cash equivalents, receivables, and certain investments. Cash and cash equivalents primarily consist of cash on hand, deposits with financial institutions, money market funds, securities of U.S. government-sponsored enterprises and the U.S. Treasury, and time deposits. Liquid investments consist of trading and available-for-sale securities, investments in equity method investees consisting of mutual fund SIPs, direct investments in redeemable consolidated SIPs, and time deposits with maturities greater than three months.

Cash and cash equivalents at September 30, 2012 increased primarily due to net cash provided by operating and investing activities, partially offset by net cash used in financing activities. The percentages of cash and cash equivalents held by our U.S. and non-U.S. operations were 46% and 54% at September 30, 2012, and 45% and 55% at September 30, 2011.

We utilize a significant portion of our liquid assets to fund operational and regulatory requirements and capital contributions relating to our SIPs. Certain of our subsidiaries are required by our internal policy or regulation to maintain minimum levels of capital which are partially maintained by retaining cash and cash equivalents. As a result, such subsidiaries may be restricted in their ability to transfer cash to their parent companies. Also, as a multi-national corporation, we operate in various locations outside of the U.S. Certain of our non-U.S. subsidiaries are subject to regulatory or contractual repatriation restrictions or requirements. Such restrictions and requirements limit our ability to transfer cash between various international jurisdictions, including repatriation to the U.S. Should we require more capital in the U.S. than is generated domestically, we could elect to reduce the level of discretionary activities, such as share repurchases, or we could elect to repatriate future earnings from non-U.S. jurisdictions or raise capital through debt or equity issuance. Certain of these alternatives could result in higher effective tax rates, increased interest expense or other dilution to our earnings. At September 30, 2012 our U.S. and non-U.S. subsidiaries held approximately $2,094.3 million and $1,988.8 million of our liquid assets to satisfy operational and regulatory requirements and capital contributions to our SIPs, as compared to approximately $2,140.4 million and $1,933.5 million held at September 30, 2011.

Capital Resources

We believe that we can meet our present and reasonably foreseeable operating cash needs and future commitments through existing liquid assets, continuing cash flows from operations, the ability to issue debt or equity securities and borrowing capacity under current credit facilities.

In September 2012, we issued senior unsecured and unsubordinated notes with a total face value of $600.0 million. The notes consist of $300.0 million issued at a fixed interest rate of 1.375% per annum which mature in September 2017 and $300.0 million issued at a fixed rate of 2.800% per annum which mature in September 2022. Net proceeds

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from the issuance of the notes were used in October 2012 to redeem our 2.000% senior notes due in May 2013 at a make-whole redemption price of $305.4 million, and in November 2012 to finance the acquisition of a majority interest in K2 Advisors Holdings LLC for $182.9 million in cash; the remaining net proceeds will be used for general corporate purposes.

In May 2010, we issued senior unsecured and unsubordinated notes with a total face value of $900.0 million. Of the notes, $300.0 million was issued at a fixed interest rate of 2.000% per annum and matures in 2013, $250.0 million was issued at a fixed interest rate of 3.125% per annum and matures in 2015, and $350.0 million was issued at a fixed interest rate of 4.625% per annum and matures in 2020. Net proceeds from the issuance of the notes were used for general corporate purposes.

Interest on our senior notes is payable semi-annually. The notes contain an optional redemption feature that allows us to redeem each series of notes prior to maturity in whole or in part at any time, at a make-whole redemption price. The indentures governing the notes contain limitations on our ability and the ability of our subsidiaries to pledge voting stock or profit participating equity interests in our subsidiaries to secure other debt without similarly securing the notes equally and ratably. The indentures also include requirements that must be met if we consolidate or merge with, or sell all of our assets to, another entity. As of September 30, 2012, we were in compliance with the covenants of the notes.

In prior years, we secured advances from the Federal Home Loan Bank (“FHLB”) to fund our banking services. At September 30, 2012, we had $69.0 million of FHLB advances outstanding with a weighted-average interest rate of 3.30%. FHLB advances are subject to collateralization requirements.

At September 30, 2012, we had $500.0 million of short-term commercial paper available for issuance under an uncommitted private placement program which has been inactive since April 2012, $270.0 million available in uncommitted short-term bank lines of credit under the Federal Reserve system, $117.8 million available through the secured Federal Reserve Bank short-term discount window, $15.3 million available in uncommitted short-term bank lines of credit and $12.3 million available in secured FHLB short-term borrowing capacity.

Our ability to access the capital markets in a timely manner depends on a number of factors, including our credit rating, the condition of the global economy, investors’ willingness to purchase our securities, interest rates, credit spreads and the valuation levels of equity markets. If we are unable to access capital markets in a timely manner, our business could be adversely impacted.

Uses of Capital

We expect that our main uses of cash will be to invest in and grow our business, acquire shares of our common stock, fund property and equipment purchases, invest in our SIPs, pay operating expenses of the business, enhance technology infrastructure and business processes, pay stockholder dividends and repay and service debt.

We declare and pay dividends on a quarterly basis. We declared regular cash dividends of $1.08 per share ($0.27 per share per quarter) and a special cash dividend of $2.00 per share in fiscal year 2012, and regular cash dividends of $1.00 per share ($0.25 per share per quarter) in fiscal year 2011. We currently expect to continue paying comparable regular cash dividends on a quarterly basis to holders of our common stock depending upon earnings and other relevant factors.

We maintain a stock repurchase program to manage our equity capital with the objective of maximizing shareholder value. Our stock repurchase program is effected through regular open-market purchases and private transactions in accordance with applicable laws and regulations. During fiscal years 2012 and 2011, we repurchased 7.5 million and 8.2 million shares of our common stock at a cost of $797.4 million and $954.2 million. At September 30, 2012, approximately 7.2 million shares of our common stock remained available for repurchase under our stock repurchase program, which is not subject to an expiration date.

During fiscal years 2012 and 2011, we invested $365.0 million and $264.0 million, net of redemptions, in our SIPs.

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In July 2011, we acquired all of the outstanding shares of Balanced Equity Management Pty. Limited, a specialty Australian equity manager, for $53.7 million in cash and 85,000 shares of Franklin common stock with an aggregate value of $11.4 million at the acquisition date, for a total purchase consideration of $65.1 million.

In January 2011, we acquired all of the outstanding shares of Rensburg Fund Management Limited, a specialty U.K. equity manager, for $72.9 million in cash.

In December 2010, we purchased an office building to be used in business operations in Fort Lauderdale, Florida for $29.7 million in cash.

The funds that we manage have their own resources available for purposes of providing liquidity to meet shareholder redemptions, including securities that can be sold or provided to investors as in-kind redemptions, and lines of credit. While we have no contractual obligation to do so, we may voluntarily elect to provide the funds with direct or indirect financial support based on our business objectives.

Contractual Obligations and Commercial Commitments

Contractual Obligations and Commitments

The following table summarizes our contractual cash obligations and commitments. We believe that we can meet these obligations and commitments through existing liquid assets, continuing cash flows from operations and borrowing capacity under current credit facilities.

(in millions)	Payments Due by Period
as of September 30, 2012	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Time deposits1	$	56.4	$	29.7	$	1.5	$	10.5	$	14.7
Debt1	1,848.3		363.1		336.8		366.6		781.8
Debt of consolidated SIPs1	128.2		49.9		8.7		21.5		48.1
Debt of consolidated VIEs1	1,233.0		14.6		30.2		52.2		1,136.0
Operating leases	198.4		46.8		79.0		43.3		29.3
Purchase obligations2	126.3		59.7		55.7		5.2		5.7
Total Contractual Obligations	3,590.6		563.8		511.9		499.3		2,015.6
Committed capital contributions3	68.8		41.3		18.2		2.9		6.4
Total Contractual Obligations and Commitments	$	3,659.4	$	605.1	$	530.1	$	502.2	$	2,022.0

__________________________

¹  Time deposits and debt amounts include scheduled principal and interest payments.

^2.  Purchase obligations include contractual amounts that will be due to purchase goods and services to be used in our operations and may be canceled at earlier times than those indicated under certain conditions that may include termination fees.

^3.  Committed capital contributions primarily relate to discretionary commitments to invest in planned SIP launches.

The debt holders of consolidated VIEs and consolidated SIPs have no recourse to our assets beyond the level of our direct investments, therefore we bear no risks associated with these entities' liabilities. See Note 13 – Variable Interest Entities and Consolidated Sponsored Investment Products, in the notes to consolidated financial statements in Item 8 of Part II of this Form 10-K.

At September 30, 2012, our consolidated balance sheet includes liabilities for unrecognized tax benefits of $101.3 million and related accrued interest of $14.6 million (see Note 14 – Taxes on Income in the notes to consolidated financial statements in Item 8 of Part II of this Form 10-K). The amounts of unrecognized tax benefits and related interest that are expected to be paid in the next twelve months are de minimus. However, because of the high degree of uncertainty regarding the timing of future cash outflows of liabilities for unrecognized tax benefits, a reasonable estimate of the period of cash payments beyond the next twelve months from the balance sheet date of September 30, 2012 cannot be made. Consequently, unrecognized tax benefits have not been included in the table above.

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Off-Balance Sheet Arrangements

In our role as agent or trustee, we facilitate the settlement of investor share purchase, redemption, and other transactions with affiliated mutual funds. We are appointed by the affiliated mutual funds as agent or trustee to manage, on their behalf, bank deposit accounts that contain only (i) cash remitted by investors to the affiliated mutual funds for the direct purchase of fund shares, or (ii) cash remitted by the affiliated mutual funds for direct delivery to the investors for either the proceeds of fund shares liquidated at the investors’ direction, or dividends and capital gains earned on fund shares. As of September 30, 2012 and 2011, we held cash of approximately $202.4 million and $124.5 million off-balance sheet in agency or trust for investors and the affiliated mutual funds.

Critical Accounting Policies

Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, which require the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. These estimates, judgments, and assumptions are affected by our application of accounting policies. Described below are the accounting policies that we believe are most critical to understanding our results of operations and financial position. For additional information about our accounting policies, see Note 1 - Significant Accounting Policies in the notes to consolidated financial statements in Item 8 of Part II of this Form 10-K.

Consolidation

We consolidate our subsidiaries and SIPs in which we have a controlling financial interest. We are generally considered to have a controlling financial interest when we own a majority of the voting interest in an entity. We also consolidate VIEs for which we are considered the primary beneficiary and non-VIE limited partnerships and similar structures for which we are deemed to have control.

A VIE is an entity in which the equity investment holders have not contributed sufficient capital to finance its activities or the equity investment holders do not have defined rights and obligations normally associated with an equity investment.

The assessment of whether an entity is a VIE or voting interest entity (“VOE”) involves judgment and analysis on a structure by structure basis. When performing the assessment we consider factors such as the entity's legal organization and our contractual involvement with and ownership interest in the entity. A limited partnership or similar structure entity for which we are the general partner or managing member, our aggregate investment is not substantive and the limited partners or other investors do not have the substantive ability to remove us as the general partner or managing member, liquidate the entity or otherwise participate in the decision making of the entity is a VIE. Otherwise the entity is a VOE and we are presumed to control the entity unless the limited partners or other investors have the substantive ability to remove us as the general partner or managing member, liquidate the entity or otherwise participate in the decision making of the entity.

We use two models for determining whether we are the primary beneficiary of VIEs. For all investment entities with the exception of CLOs, we are considered to be the primary beneficiary if we have the majority of the risks or rewards of ownership. For all other VIEs, including CLOs, we are considered to be the primary beneficiary if we have the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses of or right to receive benefits from the VIE that could potentially be significant to the VIE.

The variable interests that we have in investment entity VIEs consist of our equity ownership interest in and/or investment management and related service fees earned from these VIEs. We use expected cash flow scenarios to determine if our investment management and related service fees and/or equity ownership interests provide us with a majority of the VIE's expected losses or residual returns. Based on our evaluation, we determined that we are not the primary beneficiary of these VIEs.

We provide collateral management services to our sponsored CLOs, which are asset-backed financing entities collateralized by a pool of corporate debt securities, and are considered VIEs. We generally earn senior and subordinated management fees from the CLOs based on the par value of outstanding debt securities and, in certain instances, may also receive performance-based fees. In addition, we hold equity interests in certain of these entities. We determined

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that we are the primary beneficiary of the CLOs as we have the power to direct the activities that most significantly impact the CLOs' economic performance in our role as collateral manager and hold a variable interest for which we have the right to receive benefits that could potentially be significant to the CLOs.

Our evaluation of whether we are the primary beneficiary of VIEs is highly complex and involves significant judgments, estimates and assumptions. The key estimates and assumptions used in our analyses may include the amount of AUM, investment management and related service fee rates, the life of the investment product, and the discount rate. These estimates and assumptions are subject to variability. For example, AUM is impacted by market volatility and the level of sales, redemptions, contributions, withdrawals and dividend reinvestments of mutual fund shares that occur daily. In addition, third-party purchases and redemptions, which are outside of our control, can impact our evaluation. Collateralized assets of CLOs are impacted by market volatility and prepayment rates. There is judgment involved in assessing whether we have the power to direct the activities that most significantly impact VIEs' economic performance and the obligation to absorb losses of or the right to receive benefits from VIEs that could potentially be significant to the VIEs.

While we believe that our evaluation is appropriate, future changes in estimates, judgments, and assumptions may affect the determination of primary beneficiary status and the resulting consolidation of VIEs in our consolidated financial statements.

Fair Value Measurements

We use a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based on whether the inputs to those valuation techniques are observable or unobservable. The three levels of fair value hierarchy are set forth below. Our assessment of the hierarchy level of the assets or liabilities measured at fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Transfers between levels are recognized at the end of each quarter.

Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2	Observable inputs other than Level 1 quoted prices, such as non-binding quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable or corroborated by observable market data. Level 2 quoted prices are generally obtained from two independent third-party brokers or dealers, including prices derived from model-based valuation techniques for which the significant assumptions are observable in the market or corroborated by observable market data. Quoted prices are validated through price variance analysis, subsequent sales testing, stale price review, price comparison across pricing vendors and due diligence reviews of third-party vendors.
Level 3	Unobservable inputs that are supported by little or no market activity. These inputs require significant management judgment and reflect our estimation of assumptions that market participants would use in pricing the asset or liability. Level 3 valuations are derived primarily from model-based valuation techniques in which one or more significant inputs are unobservable in the market.

The fair values for Level 3 assets and liabilities are determined using various methodologies in accordance with our global pricing policy which defines valuation and pricing conventions for each security type. When available, we measure fair value based on the reported net asset value of underlying investments or independent third-party broker or dealer price quotes. These inputs are evaluated for reasonableness through various procedures which include due diligence reviews of the third parties, price comparisons across pricing vendors, stale price reviews and subsequent sales testing. If these inputs are not available, we primarily employ a market-based method, using purchase multiples observed for comparable third-party transactions, valuations of comparable entities, projected operating results of the investee entity or subsequent financing transactions entered into by the investee entity. If the inputs for a market-based method are not available, we utilize an income-based method, which considers the net present value of anticipated future cash flows of the investment. A discount may be applied due to the nature or duration of any restrictions on the disposition of the investment. We review and approve the market-based and income-based methods on a periodic basis for changes that would impact the unobservable inputs incorporated into the valuation process. The fair value measurements from these methods are further validated through price variance analysis, subsequent sales testing and market comparable sales.

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We record the majority of our investments at fair value or amounts that approximate fair value. We may also measure certain assets at fair value on a nonrecurring basis. These fair value measurements generally result from the application of lower of cost or fair value accounting or write-downs of individual assets. Fair values are estimated for disclosure purposes for financial instruments that are not measured at fair value.

As of September 30, 2012, Level 3 assets represented 20% of total assets measured at fair value, substantially all of which related to investments of consolidated SIPs in equity and secured and unsecured debt securities of entities in emerging markets which are not traded in active markets. Level 3 liabilities, comprised of long-term debt of consolidated VIEs, represented 6% of total liabilities measured at fair value at September 30, 2012. Transfers into and out of Level 3 during fiscal year 2012 were immaterial.

Following are descriptions of the significant assets and liabilities measured at fair value, including the fair value methodologies used and hierarchy levels.

Investment Securities, Trading consist of non-consolidated SIPs. Changes in the fair value of trading securities are recognized as gains and losses in earnings. The fair value of these securities is determined based on their published net asset values and they are classified as Level 1.

Investment Securities, Available-for-Sale consist primarily of non-consolidated SIPs, debt securities including securities of U.S. states and political subdivisions, securities of the U.S. Treasury and federal agencies, corporate debt securities, mortgage-backed securities, and other equity securities. Realized gains and losses are included in investment income using either the average cost method or specific identification method. Unrealized gains and losses are recorded net of tax as part of accumulated other comprehensive income until realized. The fair value of SIPs is determined based on their published net asset values and they are classified as Level 1. The fair value of debt securities is determined using quoted market prices, if available, or independent third-party broker or dealer price quotes, which are evaluated for reasonableness, and they are generally classified as Level 2, except for certain U.S. Treasury securities which are classified as Level 1.

The fair value of other equity securities, which consist primarily of non-sponsored investment products, is generally determined based on their published net asset values, and they are classified as Level 1.

Investment securities, available-for-sale are evaluated for other-than-temporary impairment on a quarterly basis when the cost of an investment exceeds its fair value. For equity securities, we consider many factors, including the severity and duration of the decline in the fair value below cost, our intent and ability to hold the security for a period of time sufficient for an anticipated recovery in fair value, and the financial condition and specific events related to the issuer. When an impairment of an equity security is determined to be other-than-temporary, the impairment is recognized in earnings. For debt securities, if we intend to sell or it is more likely than not that we will be required to sell a security before recovery of its amortized cost, the entire impairment is recognized in earnings. If we do not intend to sell or it is not more likely than not that we will be required to sell the security before anticipated recovery of its amortized cost, the impairment is separated into the amount of the total impairment related to the credit loss and the amount of the total impairment related to all other factors. The credit loss component is the difference between the security's amortized cost and the present value of the expected cash flows, and is recognized in earnings. Losses related to all other factors are recognized in accumulated other comprehensive income.

While we believe that we have accurately estimated the amount of other-than-temporary impairment in our investment portfolio, different assumptions could result in changes to the recorded amounts in our consolidated financial statements.

Investments of Consolidated SIPs consist of trading securities and other investments that are not generally traded in active markets. Changes in the fair value of the investments are recognized as gains and losses in earnings. The fair value of the trading securities is determined using quoted market prices, or independent third-party broker or dealer price quotes if quoted market prices are not available. These securities are primarily classified as Level 1 or Level 2. If events occur after the close of the primary market for any security, the quoted market prices may be adjusted for the observable price movements within country specific market proxies.

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The investments that are not generally traded in active markets primarily consist of equity and secured and unsecured debt securities of entities in emerging markets. The fair value of these securities is generally determined using significant unobservable inputs and they are classified as Level 3. In these instances, we employ a market-based approach, using purchase multiples observed for comparable third-party transactions, projected operating results of the investment, valuations of comparable companies, and subsequent financing transactions entered into by the investee entities. If the market-based approach is not available, we utilize an income-based approach, which considers the net present value of anticipated future cash flows of the investment. A discount may also be applied due to the nature or duration of any restrictions on the disposition of the investment. Investments that are not generally traded in active markets also include fund products for which the fair value is estimated using net asset value as a practical expedient and are classified as Level 3.

Investments and Debt of Consolidated VIEs consist of corporate debt securities held and debt issued by CLOs.  We elected the fair value option for all assets and liabilities of our consolidated CLOs. The fair values of the corporate debt securities and debt are primarily obtained from independent third-party broker or dealer price quotes and they are classified as Level 2. The CLOs may also hold securities and have issued debt that are classified as Level 3 because the fair value is determined using significant unobservable inputs. In these instances, we primarily employ the market-based approach described above for Level 3 securities held by consolidated SIPs.

While we believe the valuation methodologies described above are appropriate, the use of different methodologies or assumptions to determine fair value could result in a different estimate of fair value at the reporting date.

Goodwill and Other Intangible Assets

Goodwill represents the excess cost of a business acquisition over the fair value of the net assets acquired. Other intangible assets consist primarily of mutual fund management contracts and customer base assets resulting from business acquisitions. We amortize these intangible assets over their estimated useful lives, which range from three to 15 years, using the straight-line method, unless the asset is determined to have an indefinite useful life. Indefinite-lived intangible assets primarily represent contracts to manage mutual fund assets for which there is no foreseeable limit on the contract period.

We make significant estimates and assumptions when valuing goodwill and other intangible assets in connection with the initial purchase price allocation of an acquired entity, as well as when evaluating impairment of goodwill and other intangible assets on an ongoing basis.

Goodwill is tested for impairment annually and when an event occurs or circumstances change that more likely than not reduce the fair value of the related reporting unit below its carrying value.

The goodwill impairment test involves a two-step process. The first step compares the fair value of the reporting unit to its carrying value. If the carrying value is less than the fair value, no impairment exists and the second step is not performed. If the carrying value is higher than the fair value, there is an indication that impairment may exist and the second step is performed to compute the amount of the impairment. In the second step, impairment is computed by comparing the implied fair value of reporting unit goodwill with the carrying value of the goodwill. We have one reporting unit, investment management and related services, consistent with our single operating segment, to which all goodwill has been assigned.  Prior

Indefinite-lived intangible assets are tested for impairment annually and when events or changes in circumstances indicate the assets might be impaired. Impairment is indicated when the carrying value of the intangible asset exceeds its fair value.

In estimating the fair value of the reporting unit and indefinite-lived intangible assets, we use valuation techniques based on an income approach under which future cash flows are discounted. Our future cash flow estimates include assumptions about revenue and AUM growth rates, the pre-tax profit margin, the average effective fee rate, the effective tax rate, and the discount rate, which is based on our weighted average cost of capital. The most relevant of these assumptions to the determination of estimated fair value are the AUM growth rate and the discount rate.

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We performed our annual impairment tests for goodwill and indefinite-lived intangible assets as of August 1, 2012. We did not recognize any impairment because our estimates of the fair values of our reporting unit and our indefinite-lived intangible assets exceeded their respective carrying values. The fair value of the investment management and related services reporting unit and over 86% of the indefinite-lived intangible assets exceeded their carrying values by more than 100%.

The assumptions used in our annual impairment tests for goodwill and indefinite-lived intangible assets were developed taking into account the ongoing volatility in the capital and credit markets. As a result, the growth rate assumptions used as of August 1, 2012 were lower than the historical compounded growth rates. We estimated the discounted future cash flows using a 6.0% compounded annual AUM growth rate for goodwill and over 86% of our indefinite-lived intangible assets, and a discount rate of 12.7%.

We subsequently monitor the market conditions and their potential impact on the assumptions used in the annual calculations of fair value to determine whether circumstances have changed that would more likely than not reduce the fair value of our reporting unit below its carrying value, or indicate that our indefinite-lived intangible assets might be impaired. We consider, among other things, changes in our AUM and weighted-average cost of capital by assessing whether these changes would impact the reasonableness of the assumptions used in our impairment tests as of August 1, 2012. We also monitor fluctuations of our common stock per share price to evaluate our market capitalization relative to the reporting unit as a whole. Subsequent to August 1, 2012, there were no impairments to goodwill or indefinite-lived intangible assets as we determined no events occurred or circumstances changed that would more likely than not reduce the fair value of the reporting unit below its carrying value, or indicate that our indefinite-lived intangible assets might be impaired.

We test definite-lived intangible assets for impairment quarterly. Impairment is indicated when the carrying value of the asset is not recoverable and exceeds its fair value. In evaluating the recoverability of definite-lived intangible assets, we estimate the undiscounted future cash flows to be derived from these assets. Our future undiscounted cash flow projections include assumptions about revenue and AUM growth rates, effective fee rates, investor redemptions, the pre-tax profit margin, and expected useful lives. The most relevant of these assumptions to determine future cash flows is the change in the amount of AUM. The assumptions used in our impairment tests are developed taking into consideration the ongoing market conditions. If the carrying value of an asset is not recoverable through the related undiscounted cash flows, the impairment loss is measured based on the amount by which the carrying value of the asset exceeds its fair value. The fair value of the asset is determined by discounted cash flows or other methods as appropriate for the asset type.

As of September 30, 2012, the undiscounted future cash flow projections for $30.9 million, or 70%, of our definite-lived intangible assets exceeded their carrying values by at least 35%. We estimated the future undiscounted cash flows for these assets using AUM growth rates ranging from 5% to 6%. The assumptions used in the impairment tests for definite-lived intangible assets were developed taking into consideration current market conditions. As of September 30, 2012, a decline in AUM of approximately 27% could cause us to evaluate whether their fair value is below the carrying value. There was no impairment of definite-lived intangible assets for fiscal year 2012.

While we believe that our impairment tests and the assumptions used to estimate fair value are reasonable and appropriate, if the assumptions used in our estimates of fair value change in the future, we may be required to record impairment charges or otherwise accelerate amortization expense.

Revenues

Investment management, shareholder servicing and distribution fees are recognized as earned over the period in which services are rendered, except for performance-based investment management fees, which are recognized when earned. Sales commissions related to the sale of shares of SIPs are recognized on trade date. Investment management fees are generally determined based on a percentage of AUM, except for performance-based investment management fees, which are based on performance targets established in the related investment management contracts. Shareholder servicing fees are generally calculated based on the number and type of accounts serviced while distribution fees are generally based on a percentage of AUM.

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AUM of SIPs is calculated using fair value methods derived primarily from unadjusted quoted market prices, unadjusted independent third-party broker or dealer price quotes in active markets, or market prices or price quotes adjusted for observable price movements after the close of the primary market. The fair values of securities for which market prices are not readily available are internally valued using various methodologies which incorporate unobservable inputs as appropriate for each security type.

The pricing of the securities held by SIPs is governed by our global valuation and pricing policy, which defines valuation and pricing conventions for each security type, including practices for responding to unexpected or unusual market events. As of September 30, 2012, our total AUM by fair value hierarchy level was 50.5% Level 1, 48.3% Level 2 and 1.2% Level 3.

As substantially all of our AUM is valued based on observable market prices or inputs, market risk is the most significant risk underlying the valuation of our AUM. While recent economic conditions have resulted in ongoing market price volatility, the fair value of substantially all of the securities held by SIPs continues to be derived from observable market inputs.

Income Taxes

Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and the reported amounts in the consolidated financial statements using the statutory tax rates in effect for the year when the reported amount of the asset or liability is recovered or settled, respectively. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying values of deferred tax assets to the amount that is more likely than not to be realized. For each tax position taken or expected to be taken in a tax return, we determine whether it is more likely than not that the position will be sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to recognize. The tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. We recognize the accrual of interest on uncertain tax positions in interest expense and penalties in other operating expenses.

As a multi-national corporation, we operate in various locations outside the U.S. and generate earnings from our non-U.S. subsidiaries. We indefinitely reinvest the undistributed earnings of our non-U.S. subsidiaries, except for income previously taxed in the U.S., subject to regulatory or legal repatriation restrictions or requirements, and the excess net earnings reduced by cash needs for operational and regulatory capital requirements, capital management plans and capital expenditure plans of our Canadian and U.K. consolidated subsidiaries. As a result, we have not recognized a provision for U.S. income taxes and a deferred income tax liability on $5.6 billion of cumulative undistributed non-U.S. earnings that are indefinitely reinvested at September 30, 2012. Changes to our policy of reinvestment or repatriation of non-U.S. earnings may have a significant effect on our financial condition and results of operations.

Loss Contingencies

We are involved in various lawsuits and claims encountered in the normal course of business. When such a matter arises and periodically thereafter, we consult with our legal counsel and evaluate the merits of the claims based on the facts available at that time. In management’s opinion, an adequate accrual has been made as of September 30, 2012 to provide for probable losses that may arise from these matters for which we could reasonably estimate an amount. See also Note 15 – Commitments and Contingencies in the notes to consolidated financial statements in Item 8 of Part II of this Form 10-K.

New Accounting Guidance

See Note 2 – New Accounting Guidance in the notes to consolidated financial statements in Item 8 of Part II of this Form 10-K.

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Selected Quarterly Financial Data (Unaudited)

(in millions except per share data)
Quarter ended	December 31			March 31		June 30		September 30
Fiscal year 2012
Operating revenues	$	1,701.9		$	1,799.3	$	1,783.6	$	1,816.2
Operating income	632.4			617.1		643.0		622.7
Net income attributable to Franklin Resources, Inc.	480.8			503.2		455.3		492.1
Earnings per share
Basic	$	2.21		$	2.33	$	2.12	$	2.32
Diluted	$	2.20		$	2.32	$	2.12	$	2.31
Dividends per share	$	2.27	1	$	0.27	$	0.27	$	0.27
Common stock price per share
High	$	112.38		$	126.48	$	127.83	$	128.20
Low	$	87.71		$	94.38	$	100.91	$	105.98
AUM (in billions)
Ending	$	670.3		$	725.7	$	707.1	$	749.9
Average	675.0			706.9		710.7		726.7
Fiscal year 2011
Operating revenues	$	1,700.3		$	1,749.6	$	1,853.0	$	1,837.1
Operating income	659.2			629.5		682.7		688.4
Net income attributable to Franklin Resources, Inc.	501.2			503.1		503.3		416.0
Earnings per share
Basic	$	2.24		$	2.26	$	2.27	$	1.89
Diluted	$	2.23		$	2.25	$	2.26	$	1.88
Dividends per share	$	0.25		$	0.25	$	0.25	$	0.25
Common stock price per share
High	$	125.00		$	130.97	$	131.65	$	137.56
Low	$	106.04		$	108.33	$	120.50	$	93.58
AUM(in billions)
Ending	$	670.7		$	703.5	$	734.2	$	659.9
Average	655.6			687.2		726.7		714.4

____________

¹  Includes a special cash dividend of $2.00 per share.

Risk Factors

For a description of certain risk factors and other important factors that may affect us, our subsidiaries and our business, please see the description of the risk factors set forth under Item 1A of Part I of this Form 10-K, which is incorporated herein by reference.

Item  7A. Quantitative and Qualitative Disclosures About Market Risk.

In the normal course of business, our financial position is subject to market risk, including, but not limited to, potential loss due to changes in the value of financial instruments including those resulting from adverse changes in interest rates, foreign currency exchange rates and market valuation. Financial instruments include, but are not limited to, investment securities, loans, deposits and debt obligations. Management is responsible for managing market risk.

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Our Enterprise Risk Management Committee is responsible for providing a framework to assist management to identify, assess, and manage market and other risks.

Our market risk from assets and liabilities of consolidated VIEs and consolidated SIPs is limited to that of our direct investments in, and management fees earned from, these entities. Accordingly, the assets and liabilities of our consolidated VIEs and consolidated SIPs are excluded from the discussion below.

AUM Market Price Risk

We are exposed to market risk through our investment management and distribution fees, which are generally calculated as a percentage of the market value of AUM. Changes in equity market prices, interest rates, credit spreads, foreign exchange rates, or a combination of these factors could cause the value of AUM to decline, which would result in lower investment management and distribution fees. Our exposure to these risks is minimized as we sponsor a broad range of investment products in various global jurisdictions, which serves to mitigate the impact of changes in any particular market(s) or region(s).

Interest Rate Risk

We are exposed to changes in interest rates, primarily through our investments in debt securities, loans receivable, deposits and debt obligations. At September 30, 2012, we had exposure from $1,782.7 million of investments in debt securities and SIPs that invest in debt securities, $254.4 million of net loans receivable and $522.3 million of interest-bearing deposits. We minimize the impact of changes in interest rates related to investments in debt securities by managing the maturities of these securities, and through diversification, ensuring an appropriate mix of fixed rate and floating rate investments. Our exposure to the risks from investments in SIPs is also minimized by our broad range of products in various global jurisdictions, mitigating the impact of changes in any particular market(s) or region(s). We minimize the impact of changes in interest rates related to our debt obligations by entering into financing transactions that ensure an appropriate mix of debt at fixed and variable interest rates. At September 30, 2012, all of our outstanding debt was issued at fixed rates. In addition, we monitor the interest rates and average maturities of our loan and deposit portfolios.

As of September 30, 2012, we have considered the potential impact of a 100 basis point movement in market interest rates on our interest-earning cash and cash equivalents, portfolio of debt securities, loans receivable, deposits and debt obligations. Based on our analysis, we do not expect that such a change would have a material impact on our operating revenues or results of operations in the next twelve months, for any of these categories or in the aggregate.

Foreign Currency Exchange Risk

We are subject to foreign currency exchange risk through our international operations. While we operate primarily in the U.S., we also provide services and earn revenues in The Bahamas, Asia-Pacific, Europe, Canada, Latin America, the Middle East and Africa. Our exposure to foreign currency exchange risk is minimized in relation to our results of operations since a significant portion of these revenues is denominated in U.S. dollars. This situation may change in the future as our business continues to grow outside the U.S. and expenses incurred denominated in foreign currencies increase. The exposure to foreign currency exchange risk in our consolidated balance sheet mostly relates to cash and cash equivalents and investments that are denominated in foreign currencies, primarily in Euro, Indian Rupee, Pound Sterling, and Canadian Dollar. These assets accounted for approximately 10% of total cash and cash equivalents and investments at September 30, 2012. We also have exposure to foreign exchange revaluation of U.S. dollar balances held by certain non-U.S. subsidiaries for which their local currency is the functional currency. These assets accounted for approximately 6% of total cash and cash equivalents and investments at September 30, 2012. We generally do not use derivative financial instruments to manage foreign currency exchange risk exposure. As a result, both positive and negative currency fluctuations against the U.S. dollar may affect our results of operations and accumulated other comprehensive income.

Market Valuation Risk

We are exposed to market valuation risks related to securities we hold that are carried at fair value. To mitigate the risks we maintain a diversified investment portfolio and, from time to time, we may enter into derivative agreements.

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The following is a summary of the effect of a 10% increase or decrease in the carrying values of our financial instruments subject to market valuation risks at September 30, 2012.

(in millions)	Carrying Value		Carrying Value Assuming a 10% Increase		Carrying Value Assuming a 10% Decrease
Investment securities, trading	$	1,130.6	$	1,243.7	$	1,017.5
Investment securities, available-for-sale	870.0		957.0		783.0
Direct investments in consolidated VIEs and consolidated SIPs	405.5		446.1		365.0
Total	$	2,406.1	$	2,646.8	$	2,165.5

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Item 8. Financial Statements and Supplementary Data.

Index of Consolidated Financial Statements for the fiscal years ended September 30, 2012, 2011 and 2010.

CONTENTS	Page
Management’s Report on Internal Control Over Financial Reporting	62
Report of Independent Registered Public Accounting Firm	63
Consolidated Financial Statements of Franklin Resources, Inc. and its consolidated subsidiaries:
Consolidated Statements of Income for the fiscal years ended September 30, 2012, 2011 and 2010	64
Consolidated Balance Sheets as of September 30, 2012 and 2011	65
Consolidated Statements of Stockholders’ Equity, Redeemable Noncontrolling Interests and Comprehensive Income as of and for the fiscal years ended September 30, 2012, 2011 and 2010	67
Consolidated Statements of Cash Flows for the fiscal years ended September 30, 2012, 2011 and 2010	70
Notes to Consolidated Financial Statements	72

All schedules have been omitted as the information is provided in the financial statements or in related notes thereto or is not required to be filed, as the information is not applicable.

Certain required quarterly information is included in Item 7 of Part II of this Form 10-K report under the heading "Selected Quarterly Financial Data (Unaudited)" and incorporated herein by reference.

61

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Franklin Resources, Inc. and its consolidated subsidiaries (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2012, based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework. Based on that assessment, management concluded that, as of September 30, 2012, the Company’s internal control over financial reporting was effective.

The effectiveness of the Company’s internal control over financial reporting as of September 30, 2012 has been audited by PricewaterhouseCoopers LLP, the independent registered public accounting firm that audits the Company’s consolidated financial statements, as stated in their report immediately following this report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of September 30, 2012.

62

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

and Stockholders of Franklin Resources, Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of stockholders’ equity, redeemable noncontrolling interests and comprehensive income and of cash flows present fairly, in all material respects, the financial position of Franklin Resources, Inc. and its subsidiaries (the “Company”) at September 30, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2012 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

San Francisco, California

November 14, 2012

63

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share data)
for the fiscal years ended September 30,	2012			2011			2010
Operating Revenues
Investment management fees	$	4,458.7		$	4,531.4		$	3,574.6
Sales and distribution fees	2,259.3			2,263.5			1,947.1
Shareholder servicing fees	302.5			300.8			283.9
Other, net	80.5			44.3			47.4
Total operating revenues	7,101.0			7,140.0			5,853.0
Operating Expenses
Sales, distribution and marketing	2,739.7			2,712.8			2,282.9
Compensation and benefits	1,255.5			1,231.2			1,081.0
Information systems and technology	182.9			173.1			165.6
Occupancy	129.9			131.0			130.0
General, administrative and other	277.8			232.1			234.8
Total operating expenses	4,585.8			4,480.2			3,894.3
Operating Income	2,515.2			2,659.8			1,958.7
Other Income (Expenses)
Investment and other income, net	199.7			1.8			127.6
Interest expense	(36.7		)	(37.4		)	(16.5		)
Other income (expenses), net	163.0			(35.6		)	111.1
Income before taxes	2,678.2			2,624.2			2,069.8
Taxes on income	762.7			803.4			618.3
Net income	1,915.5			1,820.8			1,451.5
Less: Net income (loss) attributable to
Nonredeemable noncontrolling interests	(20.9		)	(101.6		)	0.7
Redeemable noncontrolling interests	5.0			(1.2		)	5.1
Net Income Attributable to Franklin Resources, Inc.	$	1,931.4		$	1,923.6		$	1,445.7
Earnings per Share
Basic	$	8.98		$	8.66		$	6.36
Diluted	$	8.95		$	8.62		$	6.33
Dividends per Share	$	3.08		$	1.00		$	3.88

See Notes to Consolidated Financial Statements.

64

CONSOLIDATED BALANCE SHEETS

(dollars in millions)
as of September 30,	2012		2011
Assets
Cash and cash equivalents	$	5,784.3	$	5,028.9
Receivables	850.2		773.2
Investments (including $2,000.6 and $1,865.1 at fair value at September 30, 2012 and 2011)	2,583.8		2,422.4
Loans receivable, net	254.4		401.9
Assets of consolidated sponsored investment products
Cash and cash equivalents	42.8		81.5
Investments	1,046.6		945.7
Assets of consolidated variable interest entities
Cash and cash equivalents	224.3		88.2
Investments, at fair value	984.1		822.6
Loans receivable, net	—		149.4
Deferred taxes	94.9		107.9
Property and equipment, net	582.7		589.7
Goodwill and other intangible assets, net	2,141.9		2,148.2
Other	161.5		216.2
Total Assets	$	14,751.5	$	13,775.8
Liabilities
Compensation and benefits	$	400.5	$	400.9
Accounts payable and accrued expenses	241.6		265.9
Commissions	383.9		369.5
Deposits	671.7		890.2
Income taxes	11.4		128.8
Debt	1,566.1		998.2
Debt of consolidated sponsored investment products	110.2		134.9
Liabilities of consolidated variable interest entities
Debt (including $1,100.9 and $871.2 at fair value at September 30, 2012 and 2011)	1,100.9		1,035.4
Other, at fair value	61.9		32.3
Deferred taxes	276.3		274.4
Other	139.8		122.8
Total liabilities	4,964.3		4,653.3
Commitments and Contingencies (Note 15)
Redeemable Noncontrolling Interests	26.7		18.6

[Table continued on next page]

See Notes to Consolidated Financial Statements.

65

CONSOLIDATED BALANCE SHEETS

[Table continued from previous page]

(dollars in millions, except per share data)
as of September 30,	2012		2011
Stockholders’ Equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; none issued	$	—	$	—
Common stock, $0.10 par value, 1,000,000,000 shares authorized; 212,208,957 and 217,693,435 shares issued and outstanding, at September 30, 2012 and 2011	21.2		21.8
Retained earnings	9,084.4		8,443.5
Appropriated retained earnings of consolidated variable interest entities	33.7		19.0
Accumulated other comprehensive income	62.0		40.4
Total Franklin Resources, Inc. stockholders’ equity	9,201.3		8,524.7
Nonredeemable noncontrolling interests	559.2		579.2
Total stockholders’ equity	9,760.5		9,103.9
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$	14,751.5	$	13,775.8

See Notes to Consolidated Financial Statements.

66

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY, REDEEMABLE NONCONTROLLING INTERESTS

AND COMPREHENSIVE INCOME

	Franklin Resources, Inc.																			Nonredeemable Noncontrolling Interests		Total Stockholders’ Equity			Redeemable Non- controlling Interests			Total Compre- hensive Income (Loss)
(in millions)	Common Stock					Capital in Excess of Par Value			Retained Earnings			Appropriated Retained Earnings of Consolidated Variable Interest Entities		Accumulated Other Compre- hensive Income (Loss)			Stockholders’ Equity
As of and for the fiscal years ended September 30, 2012, 2011 and 2010	Shares		Amount
Balance at October 1, 2009	229.3		$	22.9		$	—		$	7,505.9		$	—	$	103.4		$	7,632.2		$	2.2	$	7,634.4		$	65.1
Net income									1,445.7								1,445.7			0.7		1,446.4			5.1			$	1,451.5
Other comprehensive income (loss)
Net unrealized gains on investments, net of tax														48.8			48.8					48.8						48.8
Currency translation adjustments														22.1			22.1					22.1						22.1
Net unrealized losses on defined benefit plans, net of tax														(0.6		)	(0.6		)			(0.6		)				(0.6		)
Total comprehensive income																												1,521.8
Less: comprehensive income attributable to noncontrolling interests																												5.8
Total comprehensive income attributable to Franklin Resources, Inc.																												$	1,516.0
Cash dividends on common stock									(886.1		)						(886.1		)			(886.1		)
Repurchase of common stock	(6.6	)	(0.6		)	(140.0		)	(535.2		)						(675.8		)			(675.8		)
Issuance of common stock	1.3		0.1			110.4											110.5					110.5
Excess tax benefit from stock-based compensation						11.9											11.9					11.9
Stock-based compensation						17.7											17.7					17.7
Noncontrolling interests
Net subscriptions																				0.5		0.5			67.7
Net deconsolidations of certain sponsored investment products																				—		—			(118.4		)
Disproportional dividends on equity investment									0.6								0.6					0.6
Balance at September 30, 2010	224.0		$	22.4		$	—		$	7,530.9		$	—	$	173.7		$	7,727.0		$	3.4	$	7,730.4		$	19.5
Adjustment for adoption of new consolidation guidance									1.5			105.8		(0.7		)	106.6					106.6

[Table continued on next page]

See Notes to Consolidated Financial Statements.

67

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY, REDEEMABLE NONCONTROLLING INTERESTS

AND COMPREHENSIVE INCOME

[Table continued from previous page]

	Franklin Resources, Inc.														Nonredeemable Non- controlling Interests		Total Stockholders’ Equity		Redeemable Non- controlling Interests		Total Compre- hensive Income (Loss)
(in millions)	Common Stock				Capital in Excess of Par Value		Retained Earnings		Appropriated Retained Earnings of Consolidated Variable Interest Entities		Accumulated Other Compre- hensive Income (Loss)		Stockholders’ Equity
As of and for the fiscal years ended September 30, 2012, 2011 and 2010	Shares		Amount
Net income (loss)							1,923.6						1,923.6		(101.6	)	1,822.0		(1.2	)	1,820.8
Net loss reclassified to appropriated retained earnings									(86.8	)			(86.8	)	86.8
Other comprehensive income (loss)
Net unrealized losses on investments, net of tax											(78.6	)	(78.6	)			(78.6	)			(78.6	)
Currency translation adjustments											(53.7	)	(53.7	)			(53.7	)			(53.7	)
Net unrealized losses on defined benefit plans, net of tax											(0.3	)	(0.3	)			(0.3	)			(0.3	)
Total comprehensive income																					1,688.2
Less: comprehensive loss attributable to noncontrolling interests																					(102.8	)
Total comprehensive income attributable to Franklin Resources, Inc.																					1,791.0
Cash dividends on common stock							(221.5	)					(221.5	)			(221.5	)
Repurchase of common stock	(8.2	)	(0.8	)	(165.9	)	(787.5	)					(954.2	)			(954.2	)
Issuance of common stock	1.9		0.2		139.8								140.0				140.0
Excess tax benefit from stock-based compensation					16.3								16.3				16.3
Stock-based compensation					9.8								9.8				9.8
Noncontrolling interests
Net subscriptions															110.7		110.7		135.8
Net consolidations (deconsolidations) of certain sponsored investment products															479.1		479.1		(135.5	)
Purchase of noncontrolling equity interest							(3.5	)					(3.5	)	0.8		(2.7	)

[Table continued on next page]

See Notes to Consolidated Financial Statements.

68

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY, REDEEMABLE NONCONTROLLING INTERESTS

AND COMPREHENSIVE INCOME

[Table continued from previous page]

	Franklin Resources, Inc.																				Nonredeemable Non- controlling Interests			Total Stockholders’ Equity			Redeemable Non- controlling Interests			Total Compre- hensive Income (Loss)
(in millions)	Common Stock					Capital in Excess of Par Value			Retained Earnings			Appropriated Retained Earnings of Consolidated Variable Interest Entities			Accumulated Other Compre- hensive Income (Loss)			Stockholders’ Equity
As of and for the fiscal years ended September 30, 2012, 2011 and 2010	Shares		Amount
Balance at September 30, 2011	217.7		$	21.8		$	—		$	8,443.5		$	19.0		$	40.4		$	8,524.7		$	579.2		$	9,103.9		$	18.6
Net income (loss)									1,931.4									1,931.4			(20.9		)	1,910.5			5.0			1,915.5
Net income reclassified to appropriated retained earnings												20.0						20.0			(20.0		)	—
Other comprehensive income (loss)
Net unrealized gains on investments, net of tax															22.2			22.2						22.2						22.2
Currency translation adjustments															0.3			0.3						0.3						0.3
Net unrealized losses on defined benefit plans, net of tax															(0.9		)	(0.9		)				(0.9		)				(0.9		)
Total comprehensive income																														1,937.1
Less: comprehensive loss attributable to noncontrolling interests																														(15.9		)
Total comprehensive income attributable to Franklin Resources, Inc.																														$	1,953.0
Cash dividends on common stock									(666.7		)							(666.7		)				(666.7		)
Repurchase of common stock	(7.5	)	(0.7		)	(172.9		)	(623.8		)							(797.4		)				(797.4		)
Issuance of common stock	2.0		0.1			139.1												139.2						139.2
Excess tax benefit from stock-based compensation						22.0												22.0						22.0
Stock-based compensation						11.8												11.8						11.8
Noncontrolling interests
Net subscriptions																					138.3			138.3			73.8
Net deconsolidations of certain sponsored investment products																					(117.4		)	(117.4		)	(70.7		)
Consolidation of variable interest entity												(5.3		)				(5.3		)				(5.3		)
Balance at September 30, 2012	212.2		$	21.2		$	—		$	9,084.4		$	33.7		$	62.0		$	9,201.3		$	559.2		$	9,760.5		$	26.7

See Notes to Consolidated Financial Statements.

69

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)
for the fiscal years ended September 30,	2012			2011			2010
Net Income	$	1,915.5		$	1,820.8		$	1,451.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	212.0			243.6			267.4
Stock-based compensation	101.3			88.7			81.7
Excess tax benefit from stock-based compensation	(19.7		)	(14.7		)	(11.7		)
Gains on sale of assets	(34.6		)	(67.8		)	(17.5		)
Losses (income) from investments in equity method investees, net of tax	(68.6		)	1.1			(19.9		)
Other-than-temporary impairment of investments	10.1			13.6			1.5
Net losses on other investments of consolidated sponsored investment products	16.5			—			—
Net (gains) losses of consolidated variable interest entities	(23.9		)	86.8			—
Provision for loan losses	5.5			4.6			3.3
Deferred income taxes	16.3			(3.3		)	(12.1		)
Changes in operating assets and liabilities:
Increase in receivables, prepaid expenses and other	(222.8		)	(230.3		)	(282.3		)
Increase in trading securities, net	(577.8		)	(257.7		)	(72.9		)
Increase in trading securities of consolidated sponsored investment products, net	(203.0		)	(260.7		)	(70.1		)
Increase (decrease) in accrued compensation and benefits	(2.6		)	72.9			122.0
Increase in commissions payable	14.4			65.5			83.0
Increase (decrease) in income taxes payable	(74.9		)	32.5			93.9
Increase in other liabilities	2.5			26.2			33.2
Net cash provided by operating activities	1,066.2			1,621.8			1,651.0
Purchase of investments	(247.2		)	(499.5		)	(695.5		)
Liquidation of investments	831.9			690.7			784.4
Purchase of investments by consolidated sponsored investment products	(188.5		)	—			—
Liquidation of investments by consolidated sponsored investment products	55.9			—			—
Purchase of investments by consolidated variable interest entities	(417.5		)	(1,058.2		)	—
Liquidation of investments by consolidated variable interest entities	520.1			1,295.6			—
Decrease (increase) in loans receivable, net	26.0			(30.0		)	(64.2		)
Proceeds from sale of loans	141.8			—			—
Decrease in loans receivable held by consolidated variable interest entities, net	59.7			157.1			—
Additions of property and equipment, net	(78.4		)	(131.7		)	(57.4		)
Acquisitions of subsidiaries, net of cash acquired	—			(111.1		)	—

[Table continued on next page]

See Notes to Consolidated Financial Statements.

70

CONSOLIDATED STATEMENTS OF CASH FLOWS

[Table continued from previous page]

(in millions)
for the fiscal years ended September 30,	2012			2011			2010
Cash and cash equivalents recognized due to consolidation of variable interest entity	169.6			—			—
Cash and cash equivalents recognized due to adoption of new consolidation guidance	—			45.8			—
Cash and cash equivalents recognized due to consolidation adjustment for sponsored investment products	—			77.2			—
Net cash provided by (used in) investing activities	873.4			435.9			(32.7		)
Increase (decrease) in deposits	$	(218.5	)	$	234.5		$	(8.8	)
Issuance of common stock	49.1			49.6			41.8
Dividends paid on common stock	(663.0		)	(216.3		)	(883.5		)
Repurchase of common stock	(797.4		)	(954.2		)	(675.8		)
Excess tax benefit from stock-based compensation	19.7			14.7			11.7
Decrease in commercial paper, net	(30.0		)	(0.1		)	(34.5		)
Proceeds from issuance of debt	592.3			20.0			952.0
Payments on debt	—			(2.2		)	(66.0		)
Proceeds from issuance of debt by consolidated sponsored investment products	122.6			—			—
Payments on debt by consolidated sponsored investment products	(144.7		)	—			—
Payments on debt by consolidated variable interest entities	(227.1		)	(358.0		)	—
Noncontrolling interests	212.1			243.8			68.2
Net cash used in financing activities	(1,084.9		)	(968.2		)	(594.9		)
Effect of exchange rate changes on cash and cash equivalents	(1.9		)	(14.6		)	(4.2		)
Increase in cash and cash equivalents	852.8			1,074.9			1,019.2
Cash and cash equivalents, beginning of year	5,198.6			4,123.7			3,104.5
Cash and Cash Equivalents, End of Year	$	6,051.4		$	5,198.6		$	4,123.7
Supplemental Disclosure of Non-Cash Information
Increase (decrease) in noncontrolling interests due to net consolidation (deconsolidation) of certain sponsored investment products	$	(188.1	)	$	343.6		$	(118.4	)
Increase in assets (liabilities), net related to consolidation of variable interest entities	(174.9		)	60.8			—
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	$	819.8		$	761.9		$	533.3
Cash paid for interest	42.8			41.1			7.1
Cash paid for interest by consolidated sponsored investments products and consolidated variable interest entities	50.5			50.9			—

See Notes to Consolidated Financial Statements.

71

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Significant Accounting Policies

Business. Franklin Resources, Inc. (“Franklin”) is a holding company that, together with its various subsidiaries (collectively, the “Company”) is referred to as Franklin Templeton Investments. The Company provides investment management and related services to investors globally through products that include investment funds and institutional, high net-worth and separately-managed accounts (collectively, the “sponsored investment products” or “SIPs”). In addition to investment management, the Company's services include fund administration, sales, distribution, shareholder services, transfer agency, trustee, custodial, and other fiduciary services, as well as select private banking services.

Basis of Presentation. The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Management believes that the accounting estimates are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual amounts may differ from these estimates. Certain comparative amounts for prior fiscal years have been reclassified to conform to the financial statement presentation as of and for the fiscal year ended September 30, 2012 (“fiscal year 2012”).

Effective September 30, 2012, the Company changed the presentation of its consolidated balance sheets from a classified basis to an unclassified basis which does not distinguish balances as current or non-current. Management believes this presentation election is more useful to readers of its financial statements and provides improved disclosure of the Company's financial position because it aggregates assets and liabilities of the same nature. The previous classified presentation was not utilized to derive any metric by which the Company is measured. The new unclassified presentation is consistent with the manner in which management monitors its financial position, and reduces the presentation complexities resulting from the consolidation of SIPs and variable interest entities (“VIEs”). Amounts for the consolidated balance sheet as of September 30, 2011 have been reclassified to conform to the current year presentation.

Effective July 1, 2012, the Company has one operating segment, investment management and related services. Previously, the Company had a secondary operating segment, banking/finance, which offered select retail banking, private banking and consumer lending services. During fiscal year 2012, the Company significantly reduced these services and now only offers select private banking services to investment management clients. The Company's Chief Executive Officer, who is the chief operating decision maker, no longer reviews financial results from banking/finance activities, and now allocates resources and assesses performance at the consolidated level.

Consolidation. The consolidated financial statements include the accounts of Franklin and its subsidiaries and SIPs in which it has a controlling financial interest. The Company is generally considered to have a controlling financial interest when it owns a majority of the voting interest in an entity. The Company also consolidates VIEs for which it is considered the primary beneficiary and non-VIE limited partnerships and similar structures for which it is deemed to have control. All material intercompany accounts and transactions have been eliminated.

A VIE is an entity in which the equity investment holders have not contributed sufficient capital to finance its activities or the equity investment holders do not have defined rights and obligations normally associated with an equity investment.

The Company uses two models for determining whether it is the primary beneficiary of VIEs. For all investment entity VIEs with the exception of collateralized loan obligations (“CLOs”), the Company is considered to be the primary beneficiary if it has the majority of the risks or rewards of ownership. For all other VIEs, including CLOs, the Company is considered to be the primary beneficiary if it has the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses of or right to receive benefits from the VIE that could potentially be significant to the VIE.

The variable interests that the Company has in investment entity VIEs consist of its equity ownership interest in and/or investment management and related service fees earned from these VIEs. The Company uses expected cash flow scenarios to determine if its investment management and related service fees and/or equity ownership interests

72

provide it with a majority of the VIE's expected losses or residual returns. The Company's VIEs include CLOs and, prior to September 30, 2012, automobile loan securitization trusts. Under both models, the key estimates and assumptions used in the analyses may include the amount of assets under management (“AUM”), investment management and related service fee rates, the life of the investment product, prepayment rates, and the discount rate.

The Company is presumed to control non-VIE limited partnerships and similar structures for which it is the general partner or managing member unless the limited partners or other investors have the substantive ability to remove the Company as general partner or managing member, liquidate the entity or otherwise participate in the decision-making of the entity. The Company's risk of loss in these entities is limited to its investments in the entities as the general partner and managing member entities are structured as limited liability companies.

Earnings per Share. Basic earnings per share is computed by dividing net income available to the Company's common shareholders, which exclude participating securities, by the weighted average number of shares of common stock outstanding during the period. The Company's participating securities consist of its nonvested stock and stock unit awards that contain nonforfeitable rights to dividends or dividend equivalents. Diluted earnings per share is computed on the basis of the weighted-average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the two-class method.

Fair Value Measurements. The Company uses a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based on whether the inputs to those valuation techniques are observable or unobservable. The three levels of fair value hierarchy are set forth below. The Company's assessment of the hierarchy level of the assets or liabilities measured at fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Transfers between levels are recognized at the end of each quarter.

Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2	Observable inputs other than Level 1 quoted prices, such as non-binding quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable or corroborated by observable market data. Level 2 quoted prices are generally obtained from two independent third-party brokers or dealers, including prices derived from model-based valuation techniques for which the significant assumptions are observable in the market or corroborated by observable market data. Quoted prices are validated through price variance analysis, subsequent sales testing, stale price review, price comparison across pricing vendors and due diligence reviews of third-party vendors.
Level 3	Unobservable inputs that are supported by little or no market activity. These inputs require significant management judgment and reflect the Company’s estimation of assumptions that market participants would use in pricing the asset or liability. Level 3 valuations are derived primarily from model-based valuation techniques in which one or more significant inputs are unobservable in the market.

The fair values for Level 3 assets and liabilities are determined using various methodologies in accordance with the Company's global pricing policy which defines valuation and pricing conventions for each security type. When available, fair value is measured based on the reported net asset value of underlying investments or independent third-party broker or dealer price quotes. These inputs are evaluated for reasonableness through various procedures which include due diligence reviews of the third parties, price comparisons across pricing vendors, stale price reviews and subsequent sales testing. If these inputs are not available, the Company primarily employs a market-based method, using purchase multiples observed for comparable third-party transactions, valuations of comparable entities, projected operating results of the investee entity or subsequent financing transactions entered into by the investee entity. If the inputs for a market-based method are not available, the Company utilizes an income-based method, which considers the net present value of anticipated future cash flows of the investment. A discount may be applied due to the nature or duration of any restrictions on the disposition of the investment. The Company reviews and approves the market-based and income-based methods on a periodic basis for changes that would impact the unobservable inputs incorporated into the valuation process. The fair value measurements from these methods are further validated through price variance analysis, subsequent sales testing and market comparable sales.

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The Company records the majority of its investments at fair value or amounts that approximate fair value on a recurring basis. Certain assets may also be measured at fair value on a nonrecurring basis. These fair value measurements generally result from the application of lower of cost or fair value accounting or write-downs of individual assets. Fair values are estimated for disclosure purposes for financial instruments that are not measured at fair value.

Fair Value Option. The Company elected the fair value option for all assets and liabilities of its consolidated CLOs as this option better matches the changes in fair value of the assets and liabilities. The decision to elect the fair value option, which is irrevocable once elected, is determined on an instrument by instrument basis and applied to an entire instrument. The net gains or losses on assets and liabilities for which the fair value option has been elected include interest income and expense and are recognized in investment and other income, net in the consolidated statements of income.

Cash and Cash Equivalents include cash on hand, non-interest-bearing and interest-bearing deposits with financial institutions, time deposits, securities of U.S. government-sponsored enterprises and the U.S. Treasury, debt instruments with original maturities of three months or less at the purchase date, and other highly liquid investments, including money market funds, which are readily convertible into cash. Cash and cash equivalents are carried at cost. Due to the short-term nature and liquidity of these financial instruments, the carrying values of these assets approximate fair value and, for disclosure purposes, they are classified as Level 1.

Receivables consist primarily of fees receivable from SIPs and are carried at invoiced amounts. Due to the short-term nature and liquidity of the receivables, the carrying values of these assets approximate fair value.

Investments consist of investment securities, trading and available-for-sale, investments in equity method investees and other investments.

Investment Securities, Trading consist of non-consolidated SIPs, and are carried at fair value. Changes in the fair value of trading securities are recognized as gains and losses in earnings. The fair value of these securities is determined based on their published net asset values and they are classified as Level 1.

Investment Securities, Available-for-Sale consist primarily of non-consolidated SIPs, securities of U.S. states and political subdivisions, securities of the U.S. Treasury and federal agencies, corporate debt securities, mortgage-backed securities, and other equity securities. The securities are carried at fair value. Realized gains and losses are included in investment income using either the average cost method or specific identification method. Unrealized gains and losses are recorded net of tax as part of accumulated other comprehensive income until realized. The fair value of SIPs is determined based on their published net asset values and they are classified as Level 1. The fair value of debt securities is determined using quoted market prices, if available, or independent third-party broker or dealer price quotes, which are evaluated for reasonableness, and they are generally classified as Level 2, except for certain U.S. Treasury securities which are classified as Level 1.

The fair value of other equity securities, which consist primarily of non-sponsored investment products, is generally determined based on their published net asset values, and they are classified as Level 1.

Investments in Equity Method Investees consist of equity investments in entities, including SIPs, over which the Company is able to exercise significant influence, but not control. Significant influence is generally considered to exist when the Company's ownership interest in the voting stock of the investee is between 20% and 50%, although other factors, such as representation on the investee's board of directors and the impact of commercial arrangements, also are considered in determining whether the equity method of accounting is appropriate. Investments in limited partnerships and limited liability companies for which the Company is not deemed to have control are accounted for using the equity method of accounting when the Company's investment is considered to be more than minor. Under the equity method of accounting, the investments are initially carried at cost and subsequently adjusted by the Company's proportionate share of the entities' net income, which is recognized in earnings.

Other Investments consist of equity investments in entities over which the Company is unable to exercise significant influence and are not marketable, time deposits and life settlement contracts. The equity investments are accounted for under the cost method. For disclosure purposes, the fair value of these investments is generally estimated based on their net asset value and they are classified as Level 3. Time deposits that have maturities greater than three

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months but less than one year from the date of purchase are carried at cost. Due to the short-term nature and liquidity of these financial instruments, the carrying values of the time deposits approximate fair value, and they are classified as Level 2. Life settlement contracts are carried at fair value, which is determined based on discounted cash flows using significant unobservable inputs, and are classified as Level 3. Inputs used to determine the fair value include life expectancy assumptions and internal rates of return.

Impairment of Investments. Investments other than trading securities are evaluated for other-than-temporary impairment on a quarterly basis when the cost of an investment exceeds its fair value. For equity securities, the Company considers many factors, including the severity and duration of the decline in the fair value below cost, the Company's intent and ability to hold the security for a period of time sufficient for an anticipated recovery in fair value, and the financial condition and specific events related to the issuer. When an impairment of an equity security is determined to be other-than-temporary, the impairment is recognized in earnings. For debt securities, if the Company intends to sell or it is more likely than not that it will be required to sell a security before recovery of its amortized cost, the entire impairment is recognized in earnings. If the Company does not intend to sell or it is not more likely than not that it will be required to sell the security before anticipated recovery of its amortized cost, the impairment is separated into the amount of the total impairment related to the credit loss and the amount of the total impairment related to all other factors. The credit loss component is the difference between the security's amortized cost and the present value of the expected cash flows, and is recognized in earnings. Losses related to all other factors are recognized in accumulated other comprehensive income.

Loans Receivable, net consist primarily of private banking loans to investment management clients. Prior to September 30, 2012, loans receivable also included retail banking and consumer lending portfolios. Interest on the loans is accrued using the effective interest method. The majority of private banking loans carry variable interest rates, which are adjusted periodically. Loans receivable are carried at cost, net of an allowance for loan losses. For disclosure purposes, the fair value of loans receivable is estimated using discounted cash flow models with interest rates that consider the current credit and interest rate risks inherent in the loans and the current economic and lending conditions, and they are classified as Level 3. For certain loans with no significant credit concerns and frequent repricing, estimated fair values are generally based on the carrying value and they are classified as Level 2.

Allowance for Loan Losses. An allowance for losses on loans receivable is maintained at a level sufficient to absorb probable losses inherent in the loans. Probable losses are estimated based on contractual delinquency status and historical loss experience. The allowance is based on aggregated portfolio segment evaluations, generally by loan type, and reflects the Company's judgment of portfolio risk factors such as economic conditions, bankruptcy trends, product mix, geographic concentrations and other similar items. A loan is charged to the allowance for loan losses when it is deemed probable to be uncollectible, taking into consideration the value of the collateral, the financial condition of the borrower and other factors. Recoveries on loans previously charged-off as uncollectible are credited to the allowance for loan losses.

Loans past due 90 days or more are reviewed individually to determine whether they are collectible. If warranted, after considering collateral level and other factors, loans 90 days past due are placed on non-accrual status. Interest collections on non-accrual loans for which the ultimate collectibility of principal is uncertain are applied as principal reductions; otherwise, such collections are credited to income when received.

Cash and Cash Equivalents of Consolidated SIPs consist of cash on hand and deposits with financial institutions and are carried at cost. Due to the short-term nature and liquidity of these financial instruments, the carrying values of these assets approximate fair value and, for disclosure purposes, they are classified as Level 1.

Investments of Consolidated SIPs consist of trading securities and other investments that are not generally traded in active markets, and are carried at fair value. Changes in the fair value of the investments are recognized as gains and losses in earnings. The fair value of the trading securities is determined using quoted market prices, or independent third-party broker or dealer price quotes if quoted market prices are not available. These securities are primarily classified as Level 1 or Level 2. If events occur after the close of the primary market for any security, the quoted market prices may be adjusted for the observable price movements within country specific market proxies.

The investments that are not generally traded in active markets primarily consist of equity and secured and unsecured debt securities of entities in emerging markets. The fair value of these securities is generally determined

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using significant unobservable inputs and they are classified as Level 3. In these instances, the Company employs a market-based approach, using purchase multiples observed for comparable third-party transactions, projected operating results of the investment, valuations of comparable companies, and subsequent financing transactions entered into by the investee entities. If the market-based approach is not available, the Company utilizes an income-based approach, which considers the net present value of anticipated future cash flows of the investment. A discount may also be applied due to the nature or duration of any restrictions on the disposition of the investment. Investments that are not generally traded in active markets also include fund products for which the fair value is estimated using net asset value as a practical expedient and are classified as Level 3.

Cash and Cash Equivalentsof Consolidated VIEs consist primarily of highly liquid investments, primarily short-term money market instruments, which are not traded on an active market. The fair value of these instruments is based on market observable inputs and they are classified as Level 2.

Investments of Consolidated VIEs consist of corporate debt securities and are carried at fair value. The fair value is primarily obtained from independent third-party broker or dealer price quotes and they are classified as Level 2. If independent price quotes are not available the fair value is determined using significant unobservable inputs and the securities are classified as Level 3. In these instances, the Company primarily employs the market-based approach described above for Level 3 securities held by consolidated SIPs.

Loans Receivable of Consolidated VIEs, net consisted of automobile loans in securitization trusts which were carried at cost, net of an allowance for loan losses. For disclosure purposes, the fair value was estimated using discounted cash flow models with interest rates that considered the credit and interest rate risks inherent in the loans and the economic and lending conditions.

Property and Equipment, net are recorded at cost and are depreciated using the straight-line method over their estimated useful lives which range from three to 35 years. Expenditures for repairs and maintenance are charged to expense when incurred. Leasehold improvements are amortized using the straight-line method over their estimated useful lives or the lease term, whichever is shorter.

Internal and external costs incurred in connection with developing or obtaining software for internal use are capitalized and amortized over the estimated useful life of the software of three years beginning when the software project is complete and the application is put into production.

Property and equipment is tested for impairment when there is an indication that the carrying amount of an asset may not be recoverable. Carrying values are not recoverable when the undiscounted cash flows estimated to be generated by the assets are less than their carrying value. When an asset is determined to not be recoverable, the impairment loss is measured based on the excess, if any, of the carrying value of the asset over its respective fair value. Fair value is determined by discounted future cash flows models, appraisals or other applicable methods.

Goodwill and Other Intangible Assets, net. Goodwill represents the excess cost of a business acquisition over the fair value of the net assets acquired. Other intangible assets consist primarily of mutual fund management contracts and customer base assets resulting from business acquisitions. These intangible assets are amortized over their estimated useful lives, which range from three to 15 years, using the straight-line method, unless the asset is determined to have an indefinite useful life. Indefinite-lived intangible assets primarily represent contracts to manage mutual fund assets for which there is no foreseeable limit on the contract period.

Goodwill is tested for impairment annually and when an event occurs or circumstances change that more likely than not reduce the fair value of the related reporting unit below its carrying value.

The goodwill impairment test involves a two-step process. The first step compares the fair value of the reporting unit to its carrying value. If the carrying value is less than the fair value, no impairment exists and the second step is not performed. If the carrying value is higher than the fair value, there is an indication that impairment may exist and the second step is performed to compute the amount of any impairment. In the second step, impairment is computed by comparing the implied fair value of the reporting unit goodwill with the carrying value of the goodwill. The Company has one reporting unit, investment management and related services, consistent with its single operating segment, to

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which all goodwill has been assigned. Prior to July 1, 2012, the Company had a second reporting unit and operating segment, to which no goodwill had been assigned.

Indefinite-lived intangible assets are tested for impairment annually and when events or changes in circumstances indicate the assets might be impaired. Impairment is indicated when the carrying value of the intangible asset exceeds its fair value.

In estimating the fair value of the reporting unit and indefinite-lived intangible assets, the Company uses valuation techniques based on an income approach under which future cash flows are discounted. The future cash flow estimates include assumptions about revenue and AUM growth rates, the pre-tax profit margin, the average effective fee rate, the effective tax rate, and the discount rate, which is based on the Company's weighted average cost of capital.

Definite-lived intangible assets are tested for impairment quarterly. Impairment is indicated when the carrying value of the asset is not recoverable and exceeds its fair value. In evaluating the recoverability of definite-lived intangible assets, the Company estimates the undiscounted future cash flows to be derived from these assets. The future undiscounted cash flow projections include assumptions about revenue and AUM growth rates, effective fee rates, investor redemptions, the pre-tax profit margin, and expected useful lives. If the carrying value of the asset is not recoverable through the related undiscounted cash flows, the impairment loss is measured based on the amount by which the carrying value of the asset exceeds its fair value. The fair value of the asset is determined by discounted cash flows or other methods as appropriate for the asset type.

Deposits are carried at the aggregate amount of deposits held and include interest-bearing and non-interest-bearing demand deposits, savings and time deposits. The fair value of deposits with no stated maturities is considered to approximate their carrying value because they are payable on demand. For disclosure purposes, the fair value of deposits with stated maturities is estimated based on discounted cash flow models using interest rates offered by comparable institutions on deposits with similar remaining maturities. All of the deposits are classified as Level 2.

Debt consists of commercial paper, Federal Home Loan Bank ("FHLB") advances and senior notes.

Commercial Paper is carried at amortized cost. Due to the short-term nature and liquidity of these financial instruments, the carrying value approximates fair value and, for disclosure purposes, they are classified as Level 2.

FHLB Advances are carried at the aggregate amount of outstanding advances. For disclosure purposes, the fair value is estimated using discounted cash flow models using rates available to the Company for FHLB advances with similar terms and remaining maturities and they are classified as Level 2.

Senior Notes are carried at amortized cost. For disclosure purposes, the fair value is estimated using quoted market prices, independent third-party broker or dealer price quotes, or prices of publicly traded debt with similar maturities, credit risk and interest rates. The notes are classified as Level 2.

Debt of Consolidated SIPs is carried at amortized cost. For disclosure purposes, the fair value is estimated using a discounted cash flow model that considers current interest rate levels, the quality of the underlying collateral and current economic conditions. The debt is classified as Level 3.

Debt of Consolidated VIEs consists of debt of CLOs, and is carried at fair value. Prior to September 30, 2012, debt of consolidated VIEs also included debt of securitization trusts, which was carried at amortized cost. The fair value of the debt of CLOs is primarily obtained from independent third-party broker or dealer price quotes, in which case the debt is classified as Level 2. The CLOs also issued debt that is classified as Level 3 because its fair value is determined using significant unobservable inputs. In these instances, the Company employs a market-based approach, which uses prices of recent transactions, various market multiples, book values and other relevant information for the instrument or related or other comparable debt instruments to determine the fair value. If the market-based approach is not available, the Company utilizes an income-based approach, which considers the net present value of anticipated future cash flows of the instrument. A discount may also be applied due to the nature or duration of any restrictions on the disposition of the instrument. For disclosure purposes, the fair value of the debt of securitization trusts was determined using independent third-party broker or dealer price quotes.

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Other Liabilities of Consolidated VIEs consist primarily of investment trades pending settlement and are carried at fair value. The fair value of the liabilities is obtained from independent third-party broker or dealer quotes and they are classified as Level 2.

Noncontrolling Interests relate almost entirely to consolidated SIPs. Noncontrolling intereststhat are currently redeemable or convertible for cash or other assets at the option of the holder are classified as temporary equity. Nonredeemable noncontrolling interests are classified as a component of equity. Net income (loss) attributable to third-party investors is reflected as net income (loss) attributable to nonredeemable and redeemable noncontrolling interests in the consolidated statements of income. Sales and redemptions of shares of consolidated SIPs are a component of the change in noncontrolling interests included in financing activities in the consolidated statements of cash flows.

Appropriated Retained Earnings of Consolidated VIEs represents the difference between the fair values of consolidated CLOs' assets and liabilities. These amounts are recognized as appropriated retained earnings as the CLO debt holders, not the Company, will ultimately receive the benefits or absorb the losses associated with the CLOs' assets and liabilities. Net income (loss) attributable to third-party investors is reflected as net income (loss) attributable to nonredeemable noncontrolling interests in the consolidated statements of income.

Revenues. Fees from providing investment management and fund administration services (“investment management fees”), shareholder servicing fees and distribution fees are recognized as earned, over the period in which services are rendered, except for performance-based investment management fees, which are recognized when earned. Sales commissions related to the sale of shares of SIPs are recognized on trade date. Investment management fees are generally determined based on a percentage of AUM, except for performance-based investment management fees, which are based on performance targets established in the related investment management contracts. Shareholder servicing fees are generally calculated based on the number and type of accounts serviced while distribution fees are generally based on a percentage of AUM.

AUM of SIPs is calculated using fair value methods derived primarily from unadjusted quoted market prices, unadjusted independent third-party broker or dealer price quotes in active markets, or market prices or price quotes adjusted for observable price movements after the close of the primary market. The fair values of securities for which market prices are not readily available are internally valued using various methodologies which incorporate significant unobservable inputs as appropriate for each security type and represent an insignificant percentage of total AUM. Pricing of the securities held by SIPs is governed by the Company's global valuation and pricing policy, which defines valuation and pricing conventions for each security type, including practices for responding to unexpected or unusual market events.

Advertising and Promotion costs are expensed as incurred.

Stock-based Compensation. The fair value of share-based payment awards is estimated on the date of grant based on the market price of the underlying shares of the Company's common stock and is amortized to compensation expense on a straight-line basis over the related vesting period, which is generally three years. Expense relating to awards subject to performance conditions is recognized if it is probable that the performance goals will be achieved. The probability of achievement is assessed on a quarterly basis. The total number of awards expected to vest is adjusted for estimated forfeitures.

Postretirement Benefits. Defined contribution plan costs are expensed as incurred. Defined benefit plan costs are expensed as the benefits are earned.

Income Taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and the reported amounts in the consolidated financial statements using the statutory tax rates in effect for the year when the reported amount of the asset or liability is expected to be recovered or settled, respectively. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying values of deferred tax assets to the amount that is more likely than not to be realized. For each tax position taken or expected to be taken in a tax return, the Company determines whether it is more likely than not that the position will be sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to recognize.

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The tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. The Company recognizes the accrual of interest on uncertain tax positions in interest expense and penalties in other operating expenses.

As a multinational corporation, the Company operates in various locations outside the United States and generates earnings from its non-U.S. subsidiaries. The Company indefinitely reinvests the undistributed earnings of its non-U.S. subsidiaries, except for income previously taxed in the U.S., subject to regulatory or legal repatriation restrictions or requirements, and the excess net earnings reduced by cash needs for operational and regulatory capital requirements, capital management plans and capital expenditure plans of its Canadian and U.K. consolidated subsidiaries.

Foreign Currency Translation. Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where that local currency is the functional currency, are translated at current exchange rates as of the end of the accounting period. The related revenues and expenses are translated at average exchange rates in effect during the period. Net exchange gains and losses resulting from translation are excluded from income and are recorded as part of accumulated other comprehensive income. Foreign currency transaction gains and losses are reflected in investment and other income, net in the consolidated statements of income.

Business Combinations are accounted for using the acquisition method of accounting. Application of this method requires identification of the acquirer, determination of the acquisition date and measurement of the purchase consideration at fair value. The purchase consideration is allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date, with any excess recognized as goodwill.

Note 2 – New Accounting Guidance

Accounting Guidance Adopted During Fiscal Year 2012

On October 1, 2011, the Company adopted new Financial Accounting Standards Board (“FASB”) guidance that requires separate disclosures about purchases, sales, issuances and other settlements in the rollforward of activity in Level 3 fair value measurements.

On January 1, 2012, the Company adopted new FASB guidance that requires additional qualitative discussion for the sensitivity of recurring Level 3 fair value measurements to changes in the unobservable inputs, quantitative disclosure about the significant unobservable inputs used for all Level 3 measurements, and the categorization by level of the fair value hierarchy for financial instruments that are not measured at fair value.

See Note 7 – Fair Value Measurements and Note 13 – Variable Interest Entities and Consolidated Sponsored Investment Products for the expanded disclosures.

New Accounting Guidance Not Yet Adopted

In July 2012, the FASB issued an amendment to the existing impairment guidance for indefinite-lived intangible assets. The amendment permits a reporting entity to first assess qualitative factors to determine whether it is necessary to perform the annual quantitative impairment test for indefinite-lived intangible assets. The amendment is effective for the Company in the first quarter of the fiscal year ending September 30, 2013 (“fiscal year 2013”). The Company does not expect the adoption of the amendment to have a material impact on its consolidated financial statements.

In September 2011, the FASB issued an amendment to the existing impairment guidance for goodwill. The amendment permits a reporting entity to first assess qualitative factors to determine whether it is necessary to perform step one of the two-step annual goodwill impairment test. The amendment is effective for the Company in the first quarter of fiscal year 2013. The Company does not expect the adoption of the amendment to have a material impact on its consolidated financial statements.

In June 2011, the FASB issued an amendment to the existing requirements for the presentation of comprehensive income. The amendment requires the components of net income and other comprehensive income to be presented in one continuous statement or in two separate but consecutive statements. The adoption of the amendment in the first quarter of fiscal year 2013 will result in changes to the Company's presentation of total comprehensive income.

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Note 3 – Acquisitions

On January 18, 2011, the Company acquired all of the outstanding shares of Rensburg Fund Management Limited (“Rensburg”), a specialty U.K. equity manager, for a purchase consideration of $72.9 million in cash. The purchase price was allocated $10.2 million to tangible net assets, $52.6 million to indefinite-lived intangible assets, $14.0 million to deferred tax liabilities and $24.1 million to goodwill. The indefinite-lived intangible assets relate to management contracts. At the acquisition date, Rensburg had $1.5 billion in AUM relating to various U.K. unit trusts. Rensburg has been renamed Franklin Templeton Fund Management Limited.

On July 6, 2011, the Company acquired all of the outstanding shares of Balanced Equity Management Pty. Limited (“BEM”), a specialty Australian equity manager, for $53.7 million in cash and 85,000 shares of Franklin common stock with an aggregate value of $11.4 million at the acquisition date, for a total purchase consideration of $65.1 million. The purchase price was allocated $2.2 million to tangible net assets, $14.5 million to definite-lived intangible assets and $48.4 million to goodwill. The definite-lived intangible assets relate to management contracts and will be amortized over a period of 10 years. At acquisition date, BEM had $10.9 billion in AUM.

The Company has not presented pro forma combined results of operations for these acquisitions because the results of operations as reported in the accompanying consolidated statements of income would not have been materially different.

Note 4 – Earnings per Share

The components of basic and diluted earnings per share were as follows:

(in millions except per share data)
for the fiscal years ended September 30,	2012		2011		2010
Net Income Attributable to Franklin Resources, Inc.	$	1,931.4	$	1,923.6	$	1,445.7
Less: Allocation of earnings to participating nonvested stock and stock unit awards	11.7		8.6		7.6
Net Income Available to Common Stockholders	$	1,919.7	$	1,915.0	$	1,438.1
Weighted-average shares outstanding – basic	213.8		221.0		226.1
Effect of dilutive common stock options and non-participating nonvested stock unit awards	0.6		1.1		1.3
Weighted-Average Shares Outstanding – Diluted	214.4		222.1		227.4
Earnings per Share
Basic	$	8.98	$	8.66	$	6.36
Diluted	$	8.95	$	8.62	$	6.33

Non-participating nonvested stock unit awards excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive were 0.1 million for the fiscal year ended September 30, 2012, de minimus for the fiscal year ended September 30, 2011, and 0.4 million for the fiscal year ended September 30, 2010.

Note 5 – Cash and Cash Equivalents

The disclosures below include details of the Company’s cash and cash equivalents, excluding those of consolidated VIEs and consolidated SIPs. See Note 13 – Variable Interest Entities and Consolidated Sponsored Investment Products for information related to the cash and cash equivalents of these entities.

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Cash and cash equivalents consisted of the following:

(in millions)
as of September 30,	2012		2011
Cash on hand and non-interest-bearing deposits with financial institutions	$	74.7	$	58.0
Interest-bearing deposits with financial institutions	826.5		717.2
SIP money market funds	2,233.4		1,887.8
Securities of U.S. government-sponsored enterprises and the U.S. Treasury	1,560.0		1,173.5
Time deposits	1,019.8		1,113.9
Other	69.9		78.5
Total	$	5,784.3	$	5,028.9

Federal Reserve Board regulations require certain of the Company’s banking subsidiaries to maintain reserve balances on deposits with the Federal Reserve Banks. The required reserve balances were $13.3 million at September 30, 2012, and $7.8 million at September 30, 2011.

The Company maintains cash and cash equivalents with financial institutions in various countries, limits the amount of credit exposure with any given financial institution and conducts ongoing evaluations of the creditworthiness of the financial institutions with which it does business.

Note 6 – Investments

The disclosures below include details of the Company’s investments, excluding those of consolidated VIEs and consolidated SIPs. See Note 13 – Variable Interest Entities and Consolidated Sponsored Investment Products for information related to the investments held by these entities.

Investments consisted of the following:

(in millions)
as of September 30,	2012		2011
Investment securities, trading	$	1,130.6	$	528.6
Investment securities, available-for-sale
SIPs	587.2		925.7
Securities of U.S. states and political subdivisions	26.8		41.5
Securities of the U.S. Treasury and federal agencies	2.4		2.4
Corporate debt securities1	70.3		121.6
Mortgage-backed securities – agency residential2	169.3		221.6
Other equity securities	14.0		23.7
Total investment securities, available-for-sale	870.0		1,336.5
Investments in equity method investees	489.0		491.5
Other investments	94.2		65.8
Total	$	2,583.8	$	2,422.4

________________

¹  Corporate debt securities are insured by the Federal Deposit Insurance Corporation or non-U.S. government agencies.

²  Consists of U.S. government-sponsored enterprise obligations.

At September 30, 2012 and 2011, investment securities with aggregate carrying amounts of $120.4 million and $156.4 million were pledged as collateral for the ability to borrow from the Federal Reserve Bank, $45.2 million and $60.8 million were pledged as collateral for outstanding FHLB borrowings and amounts available in secured FHLB short-term borrowing capacity, and $7.3 million and $6.9 million were pledged as collateral for the ability to borrow from uncommitted short-term bank lines of credit (see Note 12 – Debt).

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A summary of the gross unrealized gains and losses relating to investment securities, available-for-sale is as follows:

(in millions)			Gross Unrealized
as of September 30, 2012	Cost Basis		Gains		Losses			Fair Value
SIPs	$	516.8	$	72.1	$	(1.7	)	$	587.2
Securities of U.S. states and political subdivisions	25.6		1.2		—			26.8
Securities of the U.S. Treasury and federal agencies	2.4		—		—			2.4
Corporate debt securities	70.0		0.3		—			70.3
Mortgage-backed securities – agency residential	164.8		4.5		—			169.3
Other equity securities	13.5		0.6		(0.1		)	14.0
Total	$	793.1	$	78.7	$	(1.8	)	$	870.0

(in millions)			Gross Unrealized
as of September 30, 2011	Cost Basis		Gains		Losses			Fair Value
SIPs	$	877.6	$	78.0	$	(29.9	)	$	925.7
Securities of U.S. states and political subdivisions	40.0		1.5		—			41.5
Securities of the U.S. Treasury and federal agencies	2.4		—		—			2.4
Corporate debt securities	120.0		1.6		—			121.6
Mortgage-backed securities – agency residential	216.7		4.9		—			221.6
Other equity securities	23.1		0.8		(0.2		)	23.7
Total	$	1,279.8	$	86.8	$	(30.1	)	$	1,336.5

The net unrealized holding gains (losses) on investment securities, available-for-sale included in accumulated other comprehensive income were $49.9 million, $(29.0) million and $70.4 million for fiscal years 2012, 2011 and 2010. The tax effects of the net unrealized holding gains (losses) included in accumulated other comprehensive income were $0.9 million, $8.4 million and $(6.8) million for fiscal years 2012, 2011 and 2010.

The following tables show the gross unrealized losses and fair values of investment securities, available-for-sale with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

(in millions)	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
as of September 30, 2012
SIPs	$	30.0	$	(0.7	)	$	21.7	$	(1.0	)	$	51.7	$	(1.7	)
Other equity securities	4.4		(0.1		)	—		—			4.4		(0.1		)
Total	$	34.4	$	(0.8	)	$	21.7	$	(1.0	)	$	56.1	$	(1.8	)

(in millions)	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
as of September 30, 2011
SIPs	$	228.9	$	(29.7	)	$	4.7	$	(0.2	)	$	233.6	$	(29.9	)
Other equity securities	—		—			4.1		(0.2		)	4.1		(0.2		)
Total	$	228.9	$	(29.7	)	$	8.8	$	(0.4	)	$	237.7	$	(30.1	)

82

The Company recognized other-than-temporary impairment of available-for-sale investments, primarily related to SIPs, in the amounts of $10.1 million, $7.3 million and $1.5 million during fiscal years 2012, 2011 and 2010. In fiscal year 2011, the Company also recognized $6.3 million of other-than-temporary impairment of investments in equity method investees and other. The Company did not recognize any other-than-temporary impairment of available-for-sale debt securities during fiscal years 2012, 2011 and 2010.

At September 30, 2012, contractual maturities of available-for-sale debt securities were as follows:

(in millions)	Cost Basis		Fair Value
Due in one year or less	$	72.9	$	73.2
Due after one year through five years	20.9		21.8
Due after five years through ten years	2.6		2.8
Due after ten years	1.6		1.7
Total	$	98.0	$	99.5

Mortgage-backed securities are not included in the table above as their actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.

Note 7 – Fair Value Measurements

The disclosures below include details of the Company’s fair value measurements, excluding those of consolidated VIEs and consolidated SIPs. See Note 13 – Variable Interest Entities and Consolidated Sponsored Investment Products for information related to fair value measurements of the assets and liabilities of these entities.

Assets measured at fair value on a recurring basis were as follows:

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2012
Assets
Investment securities, trading	$	1,058.6	$	69.3	$	2.7	$	1,130.6
Investment securities, available-for-sale
SIPs	587.2		—		—		587.2
Securities of U.S. states and political subdivisions	—		26.8		—		26.8
Securities of the U.S. Treasury and federal agencies	—		2.4		—		2.4
Corporate debt securities	—		70.3		—		70.3
Mortgage-backed securities – agency residential	—		169.3		—		169.3
Other equity securities	14.0		—		—		14.0
Life settlement contracts	—		—		12.1		12.1
Total Assets Measured at Fair Value	$	1,659.8	$	338.1	$	14.8	$	2,012.7

83

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2011
Assets
Investment securities, trading	$	454.0	$	74.6	$	—	$	528.6
Investment securities, available-for-sale
SIPs	925.7		—		—		925.7
Securities of U.S. states and political subdivisions	—		41.5		—		41.5
Securities of the U.S. Treasury and federal agencies	—		2.4		—		2.4
Corporate debt securities	—		121.6		—		121.6
Mortgage-backed securities – agency residential	—		221.6		—		221.6
Other equity securities	19.5		4.1		0.1		23.7
Life settlement contracts	—		—		10.8		10.8
Total Assets Measured at Fair Value	$	1,399.2	$	465.8	$	10.9	$	1,875.9

There were no transfers between Level 1 and Level 2 during fiscal year 2012, and there were no significant transfers between Level 1 and Level 2 during fiscal years 2011 and 2010. There were no transfers into or out of Level 3 during fiscal years 2012, 2011 and 2010.

The changes in Level 3 assets measured at fair value on a recurring basis were as follows:

(in millions)	2012			2011			2010
for the fiscal years ended September 30,
Balance at beginning of year	$	10.9		$	32.7		$	39.9
Adjustment for adoption of new consolidation guidance	—			(23.3		)	—
Total realized and unrealized gains (losses):
Included in investment and other income, net	3.3			2.9			6.2
Included in accumulated other comprehensive income	—			—			(0.4		)
Purchases, sales and settlements, net	0.6		1	(1.4		)	(13.0		)
Balance at end of year	$	14.8		$	10.9		$	32.7
Change in unrealized gains included in net income relating to assets held at September 30	$	1.3		$	1.2		$	4.9

_________________

¹     Consists of purchases of $3.9 million, net of settlements of $3.3 million.

The fair values of life settlement contracts were determined using a discounted cash flow valuation technique. Significant unobservable inputs used in the fair value measurements at September 30, 2012 included life expectancy, which ranged from 22 months to 171 months with a weighted-average of 82 months, and internal rate of return, which ranged from 1.5% to 22.3% with a weighted-average of 11.7%. A significant increase (decrease) in the life expectancy or the internal rate of return in isolation would result in a significantly lower (higher) fair value measurement.

84

Financial instruments that were not measured at fair value were as follows:

(in millions)	2012					2011
as of September 30,	Carrying Value		Estimated Fair Value		Fair Value Level	Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents	$	5,784.3	$	5,784.3	1	$	5,028.9	$	5,028.9
Other investments1	80.2		85.1		2 or 3	51.3		56.9
Loans receivable, net	254.4		258.7		2	401.9		403.1
Financial Liabilities
Deposits	$	671.7	$	672.4	2	$	890.2	$	892.7
Debt:
Commercial paper	—		—		N/A	30.0		30.0
FHLB advances	69.0		74.5		2	69.0		72.6
Senior notes	1,497.1		1,571.2		2	899.2		942.3

_________________

¹     Primarily consist of Level 3 assets.

Note 8 – Loans and Allowance for Loan Losses

The disclosures below include details of the Company’s loans and allowance for loan losses, excluding those of consolidated VIEs. See Note 13 – Variable Interest Entities and Consolidated Sponsored Investment Products for information related to the loans and allowance for loan losses of these entities.

Loans receivable by major category consisted of the following:

(in millions)
as of September 30,	2012			2011
Commercial loans	$	49.3		$	38.7
Real estate mortgage loans	64.6			77.3
Installment loans	138.8			286.3
Other	2.2			4.8
Total loans receivable	254.9			407.1
Less: allowance for loan losses	(0.5		)	(5.2		)
Loans Receivable, Net	$	254.4		$	401.9

At September 30, 2012, loans receivable, net primarily consisted of private banking loans to investment management clients. Loans receivable at September 30, 2011 also included retail banking and consumer lending portfolios, which were sold during fiscal year 2012. No loan loss allowance is provided on private banking loans because these loans generally are payable on demand and are fully secured by assets under the Company's control or subject to rights of offset. At September 30, 2012 and 2011, loans receivable with aggregate carrying values of $54.1 million and $47.7 million were pledged as collateral for the ability to obtain FHLB advances.

Interest income on loans receivable totaled $16.9 million, $19.7 million and $15.6 million, with average rates of 4.59%, 4.73% and 4.21%, for fiscal years 2012, 2011 and 2010.

85

Maturities of loans receivable at September 30, 2012 were as follows:

(in millions)	One Year or Less		After One Through  Five Years		After Five Years		Total
Commercial loans	$	47.4	$	1.9	$	—	$	49.3
Real estate mortgage loans	2.7		1.4		60.5		64.6
Installment loans	121.3		6.9		10.6		138.8
Other	1.6		0.1		0.5		2.2
Total	$	173.0	$	10.3	$	71.6	$	254.9

Contractual maturities of loans receivable due after one year by repricing characteristic at September 30, 2012 were as follows:

(in millions)	Carrying Value
Loans at fixed interest rates	$	64.1
Loans at floating or adjustable interest rates	17.8
Total	$	81.9

Changes in the allowance for loan losses were as follows:

(in millions)
for the fiscal years ended September 30,	2012			2011			2010
Balance at beginning of year	$	5.2		$	5.4		$	7.0
Provision for loan losses	5.3			4.2			3.3
Charge-offs	(4.3		)	(6.4		)	(6.7		)
Recoveries	2.4			2.0			1.8
Loans sold	(8.1		)	—			—
Balance at End of Year	$	0.5		$	5.2		$	5.4
Total loan charge-offs, net of recoveries, as a percentage of simple monthly average loans receivable	0.63		%	1.07		%	1.31		%
Allowance for loan losses as a percentage of loans receivable	0.20		%	1.28		%	1.43		%

Loans receivable by impairment methodology were as follows:

(in millions)	2012						2011						2010
as of September 30,	Collectively Evaluated			Individually Evaluated			Collectively Evaluated			Individually Evaluated			Collectively Evaluated			Individually Evaluated
Loans receivable	$	254.4		$	0.5		$	390.8		$	16.3		$	362.3		$	18.0
Less: allowance for loan losses	(0.4		)	(0.1		)	(3.6		)	(1.6		)	(3.5		)	(1.9		)
Total	$	254.0		$	0.4		$	387.2		$	14.7		$	358.8		$	16.1

86

Non-accrual, past due and restructured loans were as follows:

(in millions)
as of September 30,	2012		2011
Non-accrual loans	$	2.4	$	8.3
Loans delinquent for 90 days or more	—		—
Loans modified in troubled debt restructurings	—		9.3

Interest income recognized for loans modified in troubled debt restructurings was not significant in fiscal years 2012, 2011 and 2010.

Note 9 – Property and Equipment, Net

Property and equipment consisted of the following:

(in millions)							Useful Lives In Years
as of September 30,	2012			2011
Furniture, software and equipment	$	667.4		$	647.1		3 – 10
Premises and leasehold improvements	560.3			552.0			5 – 35
Land	75.0			75.2			N/A
Total cost	1,302.7			1,274.3
Less: Accumulated depreciation and amortization	(720.0		)	(684.6		)
Property and Equipment, Net	$	582.7		$	589.7

Depreciation and amortization expense related to property and equipment was $67.9 million, $71.5 million and $67.7 million in fiscal years 2012, 2011 and 2010. No impairment loss in value of property and equipment was recognized during fiscal years 2012, 2011 and 2010 as the Company determined there was no indicator of impairment.

Note 10 – Goodwill and Other Intangible Assets

Changes in the carrying value of goodwill were as follows:

(in millions)
for the fiscal years ended September 30,	2012		2011
Balance at beginning of year	$	1,536.2	$	1,444.3
Business combinations	—		104.6
Foreign exchange and other	4.6		(12.7		)
Balance at End of Year	$	1,540.8	$	1,536.2

87

Intangible assets were as follows:

	2012							2011
(in millions)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
as of September 30,
Definite-lived intangible assets
Customer base	$	166.6	$	(135.9	)	$	30.7	$	166.1	$	(126.8	)	$	39.3
Other	49.3		(36.0		)	13.3		47.7		(34.1		)	13.6
	215.9		(171.9		)	44.0		213.8		(160.9		)	52.9
Indefinite-lived intangible assets
Management contracts	557.1		—			557.1		559.1		—			559.1
Total	$	773.0	$	(171.9	)	$	601.1	$	772.9	$	(160.9	)	$	612.0

The Company's annual impairment tests of goodwill and indefinite-lived intangible assets as of August 1, 2012, 2011 and 2010 indicated that there was no impairment in the value of these assets.

Amortization expense related to definite-lived intangible assets was $10.6 million, $10.9 million and $10.4 million for fiscal years 2012, 2011 and 2010. No impairment loss in the value of the assets was recognized during these periods.

The estimated remaining amortization expense related to definite-lived intangible assets as of September 30, 2012 was as follows:

(in millions)
for the fiscal years ending September 30,	Amount
2013	$	10.5
2014	10.5
2015	10.3
2016	5.6
2017	1.4
Thereafter	5.7
Total	$	44.0

Note 11 – Deposits

Deposits, all of which are held in the Company’s U.S. offices, were as follows:

(in millions)
as of September 30,	2012		2011
Non-interest-bearing demand deposits	$	149.4	$	189.6
Interest-bearing deposits
Demand deposits	12.7		25.2
Savings deposits	461.2		575.9
Time deposits	48.4		99.5
Total interest-bearing deposits	522.3		700.6
Total	$	671.7	$	890.2

Interest expense on deposits totaled $2.9 million, $4.1 million and $4.7 million, with average rates of 0.42%, 0.74% and 0.83%, for fiscal years 2012, 2011 and 2010.

88

Maturities of time deposits in amounts of $100,000 or more were as follows:

(in millions)
as of September 30, 2012	Amount
3 months or less	$	11.8
Over 3 months through 6 months	0.2
Over 12 months	0.1
Total	$	12.1

Note 12 – Debt

The disclosures below include details of the Company’s debt, excluding that of consolidated VIEs and consolidated SIPs. See Note 13 – Variable Interest Entities and Consolidated Sponsored Investment Products for information related to the debt of these entities.

Debt consisted of the following:

(dollars in millions)	2012		Effective Interest Rate		2011		Effective Interest Rate
as of September 30,
Commercial paper	$	—	N/A		$	30.0	0.16	%
FHLB advances	69.0		3.30	%	69.0		3.30	%
Senior notes
$300 million 2.000% notes due May 2013	299.9		2.28	%	299.7		2.28	%
$250 million 3.125% notes due May 2015	249.9		3.32	%	249.8		3.32	%
$300 million 1.375% notes due September 2017	298.4		1.66	%	—		N/A
$350 million 4.625% notes due May 2020	349.7		4.74	%	349.7		4.75	%
$300 million 2.800% notes due September 2022	299.2		2.93	%	—		N/A
	1,497.1				899.2
Total Debt	$	1,566.1			$	998.2

In prior years, the Company secured advances from the FHLB to fund its banking services. The outstanding advances are subject to collateralization requirements.

In September 2012, the Company issued senior unsecured and unsubordinated notes with a total face value of $600.0 million due in September 2017 and 2022. Net proceeds from the issuance of the notes were used in October 2012 to redeem the $300 million 2.000% senior notes due in May 2013, and in November 2012 to finance the acquisition of a majority interest in K2 Advisors Holdings LLC (see Note 21 – Subsequent Events); the remaining net proceeds will be used for general corporate purposes. The notes have fixed interest rates with interest payable semi-annually. The notes were issued at a collective discount of $2.4 million that is being amortized over the term of the notes. The Company incurred approximately $5.3 million in debt issuance costs, which are included in other assets in the consolidated balance sheet and are being amortized over the term of the notes.

The senior notes contain an optional redemption feature that allows the Company to redeem each series of notes prior to maturity in whole or in part at any time, at a make-whole redemption price. The indentures governing the notes contain limitations on the Company’s ability and the ability of its subsidiaries to pledge voting stock or profit participating equity interests in its subsidiaries to secure other debt without similarly securing the notes equally and ratably. The indentures also include requirements that must be met if the Company consolidates or merges with, or sells all or substantially all of its assets to, another entity. As of September 30, 2012, the Company was in compliance with the covenants of the notes.

89

At September 30, 2012, contractual maturities for debt were as follows:

(in millions)
for the fiscal years ending September 30,
2013	$	318.4
2014	—
2015	260.4
2016	8.0
2017	298.4
Thereafter	680.9
Total	$	1,566.1

At September 30, 2012, the Company had $500.0 million of short-term commercial paper available for issuance under an uncommitted private placement program which has been inactive since April 2012, $270.0 million available in uncommitted short-term bank lines of credit under the Federal Reserve system, $117.8 million available through the secured Federal Reserve Bank short-term discount window, $15.3 million available in uncommitted short-term bank lines of credit and $12.3 million available in secured FHLB short-term borrowing capacity.

Note 13 – Variable Interest Entities and Consolidated Sponsored Investment Products

The Company sponsors and manages various types of investment products, which consist of both VIEs and non-VIEs. As described in Note 1 – Significant Accounting Policies, the Company consolidates the non-VIE products which it controls and the VIE products for which it is the primary beneficiary. The Company has no right to the consolidated products' assets, other than its direct equity investment in them, and management fees earned from them. The debt holders of these consolidated entities have no recourse to the Company's assets beyond the level of its direct investment, therefore the Company bears no risks associated with the entities' liabilities. Prior to September 30, 2012, the Company also consolidated certain automobile loan securitization trust VIEs, for which its risk of loss was limited in the same manner as for the consolidated investment products.

90

The balances of consolidated VIEs and consolidated SIPs included in the Company's consolidated balance sheets were as follows:

	2012						2011
(in millions)	Consolidated						Consolidated
as of September 30,	VIEs		SIPs		Total		VIEs		SIPs		Total
Assets
Cash and cash equivalents	$	224.3	$	42.8	$	267.1	$	88.2	$	81.5	$	169.7
Receivables	2.7		23.7		26.4		12.0		15.3		27.3
Investments	984.1		1,046.6		2,030.7		822.6		945.7		1,768.3
Loans receivable, net	—		—		—		149.4		—		149.4
Other assets	—		0.7		0.7		17.8		0.8		18.6
Total Assets	$	1,211.1	$	1,113.8	$	2,324.9	$	1,090.0	$	1,043.3	$	2,133.3
Liabilities
Accounts payable and accrued expenses	$	—	$	21.8	$	21.8	$	—	$	14.2	$	14.2
Debt, at fair value	1,100.9		—		1,100.9		871.2		—		871.2
Debt	—		110.2		110.2		164.2		134.9		299.1
Other liabilities	61.9		8.5		70.4		32.3		8.5		40.8
Total liabilities	1,162.8		140.5		1,303.3		1,067.7		157.6		1,225.3
Redeemable Noncontrolling Interests	—		26.7		26.7		—		18.6		18.6
Stockholders' Equity
Nonredeemable noncontrolling interests	—		556.8		556.8		—		575.1		575.1
Other equity	48.3		389.8		438.1		22.3		292.0		314.3
Total stockholders' equity	48.3		946.6		994.9		22.3		867.1		889.4
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	$	1,211.1	$	1,113.8	$	2,324.9	$	1,090.0	$	1,043.3	$	2,133.3

The consolidated VIEs and consolidated SIPs did not have a significant impact on net income attributable to the Company in fiscal years 2012, 2011 and 2010.

Consolidated VIEs - Collateralized Loan Obligations

The Company provides collateral management services to its sponsored CLOs, which are asset-backed financing entities collateralized by a pool of corporate debt securities, and are considered VIEs. The Company generally earns senior and subordinated management fees from the CLOs based on the par value of outstanding investments and, in certain instances, may also receive performance-based fees. In addition, the Company holds equity interests in certain of these entities. The debt holders of the CLOs have recourse only to the corresponding collateralized assets, which cannot be used by the Company for any other purpose. Scheduled debt payments are based on the performance of the CLOs collateral pool and may be prepaid prior to the contractual maturity dates. The Company is the primary beneficiary of the CLOs as it has the power to direct the activities that most significantly impact the CLOs' economic performance in its role as collateral manager and holds a variable interest for which the Company has the right to receive benefits that could potentially be significant to the CLOs.

91

The assets and liabilities of the CLOs are carried at fair value. Changes in the fair values were as follows:

(in millions)	2012			2011
for the fiscal years ended September 30,
Net gains from changes in fair value of assets	$	90.9		$	34.0
Net losses from changes in fair value of liabilities	(65.3		)	(114.0		)
Total net gains (losses)	$	25.6		$	(80.0	)

The following table presents the unpaid principal balance and fair values of investments, including investments 90 days or more past due, and debt of the CLOs:

(in millions)	Total  Investments			Investments 90 Days or More Past Due			Long-term Debt
as of September 30, 2012
Unpaid principal balance	$	996.1		$	7.2		$	1,186.5
Excess unpaid principal over fair value	(12.0		)	(6.7		)	(85.6		)
Fair value	$	984.1		$	0.5		$	1,100.9
as of September 30, 2011
Unpaid principal balance	$	887.8		$	21.6		$	1,044.9
Excess unpaid principal over fair value	(65.2		)	(10.2		)	(173.7		)
Fair value	$	822.6		$	11.4		$	871.2

Consolidated VIEs - Automobile Loan Securitization Trusts

In previous years, the Company entered into automobile loan securitization transactions with securitization trusts, which then issued asset-backed securities to private investors. The securitization transactions were comprised of prime, non-prime and sub-prime contracts for retail installment sales that were secured by new and used automobiles purchased from motor vehicle dealers. The Company retained the interest-only strips receivable and cash on deposit in the transactions, which represented the Company's contractual right to receive excess interest and cash from the securitization trusts.

The Company was the primary beneficiary of the securitization trusts as it also retained servicing responsibilities for the trusts and received annual servicing fees. The holders of the asset-backed securities had recourse only to the collateralized assets of the securitization trusts, which could not be used by the Company for any other purpose.

During fiscal year 2012, the Company exercised its repurchase rights with respect to the outstanding loans in two of the three remaining securitization trusts and sold these loans and the Company's residual interest in the surviving trust. As the Company also transferred its servicing responsibilities for the last trust and is no longer its primary beneficiary, it did not consolidate any securitization trusts as of September 30, 2012.

At September 30, 2011, the principal amount of loans serviced by the Company that were held by the securitization trusts was $155.1 million and of loans that were managed together with the trusts was $83.8 million. The total principal amount of loans 30 days or more past due was $5.4 million.

92

Changes in the allowance for loan losses for the securitization trusts were as follows:

(in millions)
for the fiscal years ended September 30,	2012			2011
Balance at beginning of year	$	5.7		$	—
Adjustment for adoption of new consolidation guidance	—			14.3
Provision for loan losses	0.2			0.4
Charge-offs	(5.7		)	(14.6		)
Recoveries	2.4			5.6
Deconsolidation of securitization trust	(2.6		)	—
Balance at End of Year	$	—		$	5.7
Total loan charge-offs, net of recoveries, as a percentage of simple monthly average loans receivable	3.73		%	3.93		%
Allowance for loan losses as a percentage of loans receivable	N/A			3.68		%

At September 30, 2011, the outstanding principal amount of non-accrual loans was $3.6 million and of loans modified in troubled debt restructurings was $2.7 million, and there were no loans delinquent for 90 days or more. Loans receivable other than those modified in troubled debt restructurings were collectively evaluated for impairment. Interest income recognized for loans modified in troubled debt restructurings was not significant in fiscal years 2012 and 2011.

Consolidated SIPs

Consolidated SIPs primarily consist of non-VIE limited partnerships and similar structures that the Company controls and other fund products in which the Company has a controlling financial interest.

Investments

Investments of consolidated VIEs and consolidated SIPs consisted of the following:

	2012						2011
(in millions)	Consolidated						Consolidated
as of September 30,	VIEs		SIPs		Total		VIEs		SIPs		Total
Investment securities, trading	$	—	$	194.4	$	194.4	$	—	$	361.1	$	361.1
Other debt securities	984.1		317.5		1,301.6		822.6		323.2		1,145.8
Other equity securities	—		534.7		534.7		—		261.4		261.4
Total Investments	$	984.1	$	1,046.6	$	2,030.7	$	822.6	$	945.7	$	1,768.3

Investments of consolidated VIEs consist of corporate debt securities. Other debt and equity securities of consolidated SIPs primarily consist of direct investments in equity and secured and unsecured debt securities of entities in emerging markets, which are generally not traded in active markets. Other equity securities also include investments in funds that are not traded in active markets.

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Debt

Debt of consolidated VIEs and consolidated SIPs consisted of the following:

(dollars in millions)	2012		Effective Interest Rate		2011		Effective Interest Rate
as of September 30,
Debt of consolidated VIEs:
Debt of CLOs, at fair value, due fiscal years 2016-2024	$	1,100.9	1.48	%	$	871.2	1.20	%
Debt of securitization trusts, due fiscal years 2013-2016	—		N/A		164.2		5.86	%
	1,100.9				1,035.4
Debt of consolidated SIPs due fiscal years 2013-2018	110.2		4.20	%	134.9		5.29	%
Total Debt	$	1,211.1			$	1,170.3

The debt of CLOs had floating interest rates ranging from 0.67% to 9.98% at September 30, 2012, and both fixed and floating interest rates ranging from 0.50% to 11.18% at September 30, 2011. The debt of securitization trusts had both fixed and floating interest rates ranging from 2.14% to 8.18% at September 30, 2011.

The debt of consolidated SIPs had both fixed and floating interest rates ranging from 1.98% to 7.03% at September 30, 2012, and from 2.69% to 6.85% at September 30, 2011. The repayment of amounts outstanding under certain debt agreements is secured by the assets of the consolidated SIPs and, in some cases, a pledge of the right to call capital.

At September 30, 2012, contractual maturities for debt of consolidated VIEs and consolidated SIPs were as follows:

(in millions)
for the fiscal years ending September 30,
2013	$	46.5
2014	1.9
2015	—
2016	22.0
2017	14.9
Thereafter	1,125.8
Total	$	1,211.1

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Fair Value Measurements

The tables below present the balances of assets and liabilities of consolidated VIEs and consolidated SIPs measured at fair value on a recurring basis.

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2012
Assets
Cash and cash equivalents of consolidated VIEs	$	—	$	224.3	$	—	$	224.3
Receivables of consolidated VIEs	—		2.7		—		2.7
Investments of consolidated VIEs	—		984.1		—		984.1
Investments of consolidated SIPs
Debt securities	6.3		49.3		317.5		373.1
Equity securities	145.9		0.6		527.0		673.5
Total Assets Measured at Fair Value	$	152.2	$	1,261.0	$	844.5	$	2,257.7
Liabilities
Debt of consolidated VIEs	$	—	$	1,033.0	$	67.9	$	1,100.9
Other liabilities of consolidated VIEs	—		61.9		—		61.9
Total Liabilities Measured at Fair Value	$	—	$	1,094.9	$	67.9	$	1,162.8

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2011
Assets
Cash and cash equivalents of consolidated VIEs	$	14.7	$	73.5	$	—	$	88.2
Receivables of consolidated VIEs	—		12.0		—		12.0
Investments of consolidated VIEs	—		820.7		1.9		822.6
Investments of consolidated SIPs
Debt securities	5.2		198.8		324.9		528.9
Equity securities	127.0		6.1		283.7		416.8
Total Assets Measured at Fair Value	$	146.9	$	1,111.1	$	610.5	$	1,868.5
Liabilities
Debt of consolidated VIEs	$	—	$	787.3	$	83.9	$	871.2
Other liabilities of consolidated VIEs	—		32.3		—		32.3
Total Liabilities Measured at Fair Value	$	—	$	819.6	$	83.9	$	903.5

Transfers into Level 1 from Level 2 were $26.8 million, and transfers into Level 2 from Level 1 were $1.0 million during fiscal year 2012. Securities were transferred into Level 1 when they were valued using unadjusted quoted market prices and no longer had adjustments for observable price movements due to decreased liquidity within country-specific market proxies. Securities were transferred into Level 2 when they were valued based on prices of comparable or similar securities because quoted market prices were not available as trading in the securities was temporarily halted. There were no significant transfers between Level 1 and Level 2 during fiscal years 2011 and 2010.

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The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for fiscal years 2012, 2011 and 2010 were as follows:

(in millions)	Investments of Consolidated VIEs			Investments of Consolidated SIPs						Total  Level 3 Assets			Debt of Consolidated VIEs
for the fiscal year ended September 30, 2012				Debt			Equity
Balance at October 1, 2011	$	1.9		$	324.9		$	283.7		$	610.5		$	(83.9	)
Realized and unrealized gains (losses) included in investment and other income, net	(1.2		)	(31.2		)	13.1			(19.3		)	(5.0		)
Purchases	—			63.0			312.0			375.0			—
Sales	(1.4		)	(33.1		)	(78.8		)	(113.3		)	—
Settlements	—			—			—			—			23.8
Consolidation of variable interest entity	—			—			—			—			(4.6		)
Transfers into Level 3	1.6			—			—			1.6			—
Transfers out of Level 3	(0.9		)	—			—			(0.9		)	—
Effect of exchange rate changes	—			(6.1		)	(3.0		)	(9.1		)	1.8
Balance at September 30, 2012	$	—		$	317.5		$	527.0		$	844.5		$	(67.9	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at September 30, 2012	$	—		$	2.9		$	3.8		$	6.7		$	(4.0	)

(in millions)	Investments of Consolidated VIEs		Investments of Consolidated SIPs			Total Level 3 Assets			Debt of Consolidated VIEs
for the fiscal year ended September 30, 2011
Balance at October 1, 2010	$	—	$	3.3		$	3.3		$	—
Adjustment for adoption of new consolidation guidance	1.8		—			1.8			(71.4		)
Realized and unrealized gains (losses) included in investment and other income, net	0.1		(1.3		)	(1.2		)	(45.6		)
Purchases, sales and settlements, net	—		14.1			14.1			36.7
Consolidation adjustment	—		593.1			593.1			—
Transfers out of Level 3, net	—		(0.6		)	(0.6		)	—
Effect of exchange rate changes	—		—			—			(3.6		)
Balance at September 30, 2011	$	1.9	$	608.6		$	610.5		$	(83.9	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at September 30, 2011	$	0.1	$	0.3		$	0.4		$	(45.6	)

(in millions)	Investments of Consolidated SIPs
for the fiscal year ended September 30, 2010
Balance at October 1, 2009	$	2.1
Realized and unrealized gains (losses) included in investment and other income, net	(1.1		)
Purchases, sales and settlements, net	2.8
Transfers out of Level 3, net	(0.5		)
Total Level 3 Assets at September 30, 2010	$	3.3
Change in unrealized gains included in net income relating to assets held at September 30, 2010	$	0.1

Investments of consolidated SIPs during fiscal years 2011 and 2010 consisted primarily of equity securities.

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The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets at September 30, 2012 were as follows:

(in millions)	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Debt securities	$	317.5	Discounted cash flow	Discount rate	4.9%–25.6% (11.8%)
				Risk premium	0.0%–7.3% (2.1%)
Equity securities	144.4		Market comparable companies	EBITDA multiple	5.5–8.6 (7.3)
				Discount for lack of marketability	15.0%–30.0% (22.1%)
	47.4		Discounted cash flow	Discount rate	12.0%–15.0% (14.8%)
				Discount for lack of marketability	0.0%–50.0% (27.8%)
	21.0		Market pricing	Price to book value ratio	1.7

At September 30, 2012, Level 3 debt securities held by consolidated SIPs consisted of mezzanine loans, convertible debentures and corporate loans and notes, and equity securities consisted primarily of common and preferred shares.

The fair values of certain Level 3 assets and liabilities that were determined based on third-party pricing information or reported net asset value are excluded from the above table. At September 30, 2012, the exclusions consisted of $67.9 million of debt of consolidated VIEs that was valued using third-party broker or dealer price quotes and $314.2 million of investments in various funds held by consolidated SIPs for which fair value was estimated using net asset value as a practical expedient. Approximately 55% of these investments consist of an investment in a global fixed-income fund which is periodically redeemable, with certain restrictions. The other investments are in real estate and private equity funds which generally invest directly in real estate and equity securities. The investments in these funds are nonredeemable and are expected to be returned through distributions as a result of liquidations of the funds' underlying assets over a weighted-average period of approximately 5.9 years. The SIPs' unfunded commitments to the funds totaled approximately $123.0 million at September 30, 2012, of which the Company was contractually obligated to fund $2.9 million based on its ownership percentage in the SIPs.

Following are descriptions of the sensitivity of the Level 3 recurring fair value measurements to changes in the significant unobservable inputs presented in the above table.

For securities utilizing the discounted cash flow valuation technique, a significant increase (decrease) in the discount rate, risk premium or discount for lack of marketability in isolation would result in a significantly lower (higher) fair value measurement. The discount for lack of marketability used to determine fair value may include other factors such as liquidity or credit risk. Generally, a change in the discount rate is accompanied by a directionally similar change in the risk premium and discount for lack of marketability.

For securities utilizing the market comparable companies valuation technique, a significant increase (decrease) in the EBITDA multiple in isolation would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the discount for lack of marketability in isolation would result in a significantly lower (higher) fair value measurement. The discount for lack of marketability used to determine fair value may include other factors such as liquidity or credit risk.

For securities utilizing a market pricing valuation technique, a significant increase (decrease) in the price to book value ratio would result in a significantly higher (lower) fair value measurement.

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Financial instruments of consolidated VIEs and consolidated SIPs that were not measured at fair value were as follows:

(in millions)	September 30, 2012					September 30, 2011
	Carrying Value		Estimated Fair Value		Fair Value Level	Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents of consolidated SIPs	$	42.8	$	42.8	1	$	81.5	$	81.5
Loans receivable of consolidated VIEs, net	—		$	—	N/A	$	149.4	$	153.2
Financial Liabilities
Debt of consolidated VIEs	$	—	$	—	N/A	$	164.2	$	167.9
Debt of consolidated SIPs	110.2		113.0		3	134.9		117.0

Non-consolidated VIEs

VIEs for which the Company is not the primary beneficiary consist of certain sponsored and other investment products from which the Company earns investment management and related services fees and/or has an equity ownership interest in the VIE.

The carrying values of the investment management and related service fees receivable from and the equity ownership interests in these VIEs included in the Company's consolidated balance sheets at September 30, 2012 and 2011 are set forth below. These amounts represent the Company's maximum exposure to loss from these VIEs.

(in millions)
as of September 30,	2012		2011
Receivables	$	43.8	$	42.2
Investments	199.7		176.7
Total	$	243.5	$	218.9

The Company's total AUM of non-consolidated VIEs was $35.3 billion at September 30, 2012 and $36.1 billion at September 30, 2011.

While the Company has no contractual obligation to do so, it routinely makes cash investments in the course of launching SIPs. The Company also may voluntarily elect to provide its SIPs with additional direct or indirect financial support based on its business objectives. The Company did not provide financial or other support to its SIPs during the fiscal years ended September 30, 2012 and 2011.

Note 14 – Taxes on Income

Taxes on income were as follows:

(in millions)
for the fiscal years ended September 30,	2012		2011		2010
Current expense
Federal	$	602.9	$	576.4	$	426.5
State	56.1		103.8		71.5
Non-U.S.	83.2		122.8		115.0
Deferred expense	20.5		0.4		5.3
Total	$	762.7	$	803.4	$	618.3

Included in income before taxes was $966.3 million, $1,028.2 million and $902.1 million of pre-tax non-U.S. income for fiscal years 2012, 2011 and 2010. The provision for U.S. income taxes in fiscal years 2012, 2011 and 2010

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included benefits of $0.5 million, $0.7 million and $2.5 million related to the utilization of net operating loss carry-forwards. In fiscal years 2012, 2011 and 2010, the Company’s income taxes payable for federal, state and non-U.S. purposes have been reduced by tax benefits of $22.6 million, $16.3 million and $11.9 million associated with its stock-based compensation plans. The benefits were recorded as an increase in capital in excess of par value.

The Company’s income in certain countries is subject to reduced tax rates due to tax rulings and tax holidays. The impact of the reduced rates on income tax expense was $80.0 million or $0.37 per diluted share for fiscal year 2012, $78.3 million or $0.37 per diluted share for fiscal year 2011, and $37.0 million or $0.16 per diluted share for fiscal year 2010. The tax rulings will expire in fiscal years 2020 and 2022.

The significant components of deferred tax assets and deferred tax liabilities were as follows:

(in millions)
as of September 30,	2012			2011
Deferred Tax Assets
State taxes	$	(0.9	)	$	19.7
Allowance for loan losses	1.0			4.3
Deferred compensation and employee benefits	62.8			53.7
Stock-based compensation	29.2			23.6
Net operating loss carry-forwards	27.9			24.4
Tax benefit for uncertain tax positions	29.6			29.9
Other	15.6			19.3
Total deferred tax assets	165.2			174.9
Valuation allowance for net operating loss carry-forwards	(17.4		)	(12.3		)
Deferred tax assets, net of valuation allowance	147.8			162.6
Deferred Tax Liabilities
Depreciation on fixed assets	18.6			18.2
Goodwill and other purchased intangibles	253.8			262.8
Deferred commissions	23.6			22.5
Unrealized gains on investments	17.5			2.8
Other	15.7			22.8
Total deferred tax liabilities	329.2			329.1
Net Deferred Tax Liability	$	181.4		$	166.5

Deferred income tax assets and liabilities that relate to the same tax jurisdiction are recorded net on the consolidated balance sheets. The components of the net deferred tax liability were classified in the consolidated balance sheets as follows:

(in millions)
as of September 30,	2012		2011
Deferred tax assets	$	94.9	$	107.9
Deferred tax liabilities	276.3		274.4
Net Deferred Tax Liability	$	181.4	$	166.5

At September 30, 2012, there were $84.1 million of non-U.S. net operating loss carry-forwards, $48.6 million of which expire between 2014 and 2023 with the remaining carry-forwards having an indefinite life. In addition, there were $182.4 million in state net operating loss carry-forwards that expire between 2013 and 2032. A partial valuation allowance has been provided to offset the related deferred tax assets due to the uncertainty of realizing the benefit of

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the net operating loss carry-forwards. The valuation allowance increased $5.1 million in fiscal year 2012 and decreased $1.6 million in the prior year.

The Company has made no provision for U.S. income taxes on $5.6 billion of cumulative undistributed non-U.S. earnings that are indefinitely reinvested at September 30, 2012. Determination of the potential amount of unrecognized deferred U.S. income tax liability related to such reinvested non-U.S. earnings is not practicable because of the numerous assumptions associated with this hypothetical calculation. However, foreign tax credits would be available to reduce some portion of this amount. Changes to the Company’s policy of reinvestment or repatriation of non-U.S. earnings may have a significant effect on its financial condition and results of operations.

The following reconciles the amount of tax expense at the federal statutory rate and taxes on income as reflected in the consolidated statements of income:

(dollar amounts in millions)
for the fiscal years ended September 30,	2012					2011					2010
Federal taxes at statutory rate	$	937.4		35.0	%	$	918.5		35.0	%	$	724.4		35.0	%
State taxes, net of federal tax effect	34.4			1.3	%	63.5			2.4	%	51.7			2.5	%
Effect of non-U.S. operations	(218.8		)	(8.2	)%	(222.0		)	(8.5	)%	(177.1		)	(8.6	)%
Effect of net loss (income) attributable to noncontrolling interests	4.7			0.2	%	36.0			1.4	%	(2.0		)	(0.1	)%
Change in valuation allowance	—			0.0	%	—			0.0	%	(5.2		)	(0.3	)%
Other	5.0			0.2	%	7.4			0.3	%	26.5			1.4	%
Tax Provision	$	762.7		28.5	%	$	803.4		30.6	%	$	618.3		29.9	%

A reconciliation of the beginning and ending balances of gross unrecognized tax benefits is as follows:

(in millions)
for the fiscal years ended September 30,	2012			2011			2010
Balance at beginning of year	$	99.7		$	93.3		$	76.0
Additions for tax positions of prior years	16.4			8.8			11.4
Reductions for tax positions of prior years	(6.3		)	(5.1		)	(0.9		)
Additions for tax positions related to the current year	10.0			10.8			12.2
Settlements with taxing authorities	(13.7		)	(4.2		)	(0.8		)
Expirations of statute of limitations	(4.8		)	(3.9		)	(4.6		)
Balance at End of Year	$	101.3		$	99.7		$	93.3

If recognized, substantially all of this amount, net of any deferred tax benefits, would favorably affect the Company’s effective income tax rate in future periods.

Accrued interest on uncertain tax positions at September 30, 2012 and 2011 was approximately $14.6 million and $20.3 million, and is not presented in the unrecognized tax benefits table above. Interest expense (benefit) of $(0.3) million, $3.2 million and $5.1 million was recognized in the consolidated statements of income during fiscal years 2012, 2011 and 2010. Accrued penalties at September 30, 2012 and 2011 were insignificant.

The Company files a consolidated U.S. federal income tax return, multiple U.S. state and local income tax returns, and income tax returns in multiple non-U.S. jurisdictions. The Company is subject to examination by the taxing authorities in these jurisdictions. The Company’s major tax jurisdictions and the tax years for which the statutes of limitations have not expired are as follows: India 1997 to 2012; Canada, Hong Kong and Singapore 2005 to 2012; U.S. federal 2006 to 2012; the State of California 2007 to 2012; New York City and the State of New Jersey 2008 to 2012; the States of Florida, Massachusetts, and New York 2009 to 2012; and Luxembourg and the U.K. 2010 to 2012.

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The Company has on-going examinations in various stages of completion in New York City, the State of Florida, Canada, Hong Kong, India, Singapore and the U.S. Examination outcomes and the timing of settlements are subject to significant uncertainty. Such settlements may involve some or all of the following: the payment of additional taxes, the adjustment of deferred taxes and/or the recognition of unrecognized tax benefits. The Company has recognized a tax benefit only for those positions that meet the more-likely-than-not recognition threshold. It is reasonably possible that the total unrecognized tax benefit as of September 30, 2012 could decrease by an estimated $4.1 million within the next twelve months as a result of the expiration of statutes of limitations in the U.S. federal and certain U.S. state and local and non-U.S. tax jurisdictions, and potential settlements with U.S. states and non-U.S. taxing authorities. The unrecognized tax benefits described above are contractual obligations; however, at this time, the Company cannot make a reliable estimate as to the timing of cash settlements beyond the next twelve months. The amounts of unrecognized tax benefits and related interest that are expected to be paid in the next twelve months are insignificant.

Note 15 – Commitments and Contingencies

Legal Proceedings

The Company is from time to time involved in litigation relating to claims arising in the normal course of business. Management is of the opinion that the ultimate resolution of such claims will not materially affect the Company's business, financial position, results of operations or liquidity. In management's opinion, an adequate accrual has been made as of September 30, 2012, to provide for any probable losses that may arise from such matters for which the Company could reasonably estimate an amount.

Other Commitments and Contingencies

The Company leases office space and equipment under operating leases expiring at various dates through fiscal year 2022. Lease expense was $58.7 million, $62.1 million and $66.6 million and sublease income totaled $2.0 million, $1.4 million and $1.7 million for fiscal years 2012, 2011 and 2010.

Future minimum lease payments under long-term non-cancelable operating leases were as follows as of September 30, 2012:

(in millions)
for the fiscal years ending September 30,	Amount
2013	$	46.8
2014	43.4
2015	35.6
2016	30.2
2017	13.1
Thereafter	29.3
Total Minimum Lease Payments	$	198.4

Future minimum rentals to be received under non-cancelable subleases totaled $9.3 million at September 30, 2012.

While the Company has no contractual obligation to do so, it routinely makes cash investments in the course of launching SIPs. At September 30, 2012, the Company had $68.8 million of committed capital contributions which primarily relate to discretionary commitments to invest in planned SIP launches. These unfunded commitments are not recorded in the Company's consolidated balance sheet.

The Company, in its role as agent or trustee, facilitates the settlement of investor share purchase, redemption, and other transactions with affiliated mutual funds. The Company is appointed by the affiliated mutual funds as agent or trustee to manage, on their behalf, bank deposit accounts that contain only (i) cash remitted by investors to the affiliated mutual funds for the direct purchase of fund shares, or (ii) cash remitted by the affiliated mutual funds for direct delivery to the investors for either the proceeds of fund shares liquidated at the investors’ direction, or dividends

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and capital gains earned on fund shares. At September 30, 2012 and 2011, the Company held cash of approximately $202.4 million and $124.5 million off-balance sheet in agency or trust for investors and the affiliated mutual funds.

In conjunction with an insurance recovery for prior years' losses, the Company agreed to indemnify its insurance provider and hold it harmless against future payments that it may be required to make to any insured who does not release his, her or its rights under the relevant policy or relating to claims under that policy up to available policy limits. The Company also agreed to indemnify those insured funds that agreed to release any rights under the relevant policy or relating to claims under that policy, to the same extent of the released rights. While management believes that the chance of the Company having to make any payments as a result of these indemnities is remote, policy limits for certain insureds could be up to $88.0 million in the aggregate.

Note 16 – Stock-Based Compensation

The Company’s stock-based compensation plans include the Amended and Restated Annual Incentive Compensation Plan (the “AIP”) and the 2002 Universal Stock Incentive Plan, as amended and restated (the “USIP”). Under the terms of the AIP, eligible employees may receive cash, equity awards and/or mutual fund unit awards generally based on the performance of the Company, its funds and the individual employee. The USIP provides for the issuance of the Company’s common stock for various stock-related awards to officers, directors and employees. In March 2011, the Company's stockholders approved an amendment and restatement of the USIP increasing the number of authorized shares available for issuance under the USIP by 10.0 million shares to a total of 40.0 million shares. At September 30, 2012, approximately 11.5 million shares were available for grant under the USIP. In addition to stock awards and stock unit awards, the Company may award options and other forms of stock-based compensation to officers, directors and employees under the USIP. The Compensation Committee of the Board of Directors determines the terms and conditions of awards under the AIP and USIP.

Stock and Stock Unit Awards

Stock awards generally entitle holders to the right to sell the underlying shares of the Company’s common stock once the awards vest. Stock unit awards generally entitle holders to receive the underlying shares of common stock once the awards vest. Certain performance-based long-term stock and stock unit awards have been granted which generally vest based on the achievement of predetermined Company financial performance goals. In the event a performance measure is not achieved at or above a specified threshold level, the portion of the award tied to such performance measure is forfeited.

Total unrecognized compensation cost related to nonvested stock and stock unit awards, net of estimated forfeitures, was $109.3 million at September 30, 2012. This cost is expected to be recognized over a remaining weighted-average vesting period of 1.7 years. The total fair value of stock awards and stock unit awards vested during fiscal years 2012, 2011 and 2010 was $91.7 million, $97.6 million and $64.8 million. The weighted-average grant-date fair values of stock awards and stock unit awards granted during fiscal years 2012, 2011 and 2010 were $106.76, $118.78 and $107.10 per share.

Nonvested stock and stock unit award activity was as follows:

(shares in thousands)	Shares		Weighted- Average Grant-Date Fair Value
Nonvested balance at September 30, 2011	1,085		$	114.57
Granted	1,099		106.76
Vested	(810	)	110.85
Forfeited/canceled	(47	)	110.91
Nonvested Balance at September 30, 2012	1,327		$	110.50

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Stock Options

Stock option activity was as follows:

(shares in thousands, aggregate intrinsic value in millions)	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at September 30, 2011	1,369		$	38.69
Granted	22		38.55
Exercised	(787	)	35.60
Expired/canceled	(4	)	36.08
Outstanding and Exercisable at September 30, 2012	600		$	41.33	0.8	$	50.2

Stock option awards generally were granted at prices that were either equal to or above the market value of the underlying shares of the Company’s common stock on the date of grant and expire no later than ten years after the grant date. No stock option awards have been granted since November 2004, except for approximately 22 thousand shares that were issued in conjunction with a special cash dividend in December 2011. All stock options granted through November 2004 were fully vested and all related compensation cost was recognized prior to fiscal year 2010. The total intrinsic values of share options exercised during fiscal years 2012, 2011 and 2010 were $61.2 million, $66.2 million and $40.4 million.

Cash received from stock option exercises during fiscal years 2012, 2011 and 2010 was $27.7 million, $28.3 million and $22.3 million. Income tax benefits from the stock option exercises were $16.7 million, $15.3 million and $10.9 million during the same periods.

Employee Stock Investment Plan

The amended and restated Franklin Resources, Inc. 1998 Employee Stock Investment Plan (the “ESIP”), allows eligible participants to buy shares of the Company’s common stock at a discount of its market value on defined dates. The Compensation Committee of the Board of Directors determines the terms and conditions of awards under the ESIP. A total of 0.2 million shares were issued under the ESIP during fiscal year 2012. At September 30, 2012, approximately 2.4 million shares were reserved for future issuance under this plan.

All Stock-Based Plan Arrangements

Total stock-based compensation costs of $101.3 million, $88.7 million and $81.7 million were recognized in the consolidated statements of income during fiscal years 2012, 2011 and 2010.

The Company generally does not repurchase shares upon share option exercise or vesting of stock and stock unit awards. However, in order to pay taxes due in connection with the vesting of employee and executive officer stock and stock unit awards, shares are repurchased using a net stock issuance method.

Note 17 – Employee Benefit Plans

Defined Benefit Plans

Franklin Templeton Global Investors Limited, a subsidiary of Franklin located in the U.K., sponsors a defined benefit pension plan. In addition, Fiduciary Trust Company International, a subsidiary of Franklin located in the U.S., sponsors a defined benefit healthcare plan that provides post-retirement medical benefits to full-time employees who have worked ten years and attained age 55 while in the service of Fiduciary Trust, or have met alternate eligibility criteria. The healthcare plan was closed to new entrants in 2003.

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Financial information for the plans was as follows:

(in millions)	Pension Benefits						Other Benefits
as of and for the fiscal years ended September 30,	2012			2011			2012			2011
Change in Benefit Obligation
Benefit obligation at beginning of year	$	42.8		$	42.1		$	6.1		$	7.4
Service cost	3.6			3.3			—			—
Interest cost	2.2			2.1			0.3			0.3
Participant contributions	1.4			1.0			—			—
Plan curtailments	0.5			—			—			—
Benefits paid	(2.4		)	(1.4		)	(0.4		)	(0.5		)
Actuarial (gains) losses	2.9			(3.9		)	0.8			(1.1		)
Foreign currency movements	1.7			(0.4		)	—			—
Benefit Obligation at End of Year	$	52.7		$	42.8		$	6.8		$	6.1
Change in Fair Value of Plan Assets
Fair value of plan assets at beginning of year	$	43.5		$	43.0		$	—		$	—
Actual return on assets	6.1			(1.9		)	—			—
Employer contributions	2.4			3.3			0.4			0.5
Participant contributions	1.4			1.0			—			—
Benefits paid	(2.4		)	(1.4		)	(0.4		)	(0.5		)
Foreign currency movements	1.8			(0.5		)	—			—
Fair Value of Plan Assets at End of Year	$	52.8		$	43.5		$	—		$	—
Funded Status	$	0.1		$	0.7		$	(6.8	)	$	(6.1	)

(in millions)	Pension Benefits						Other Benefits
as of and for the fiscal years ended September 30,	2012			2011			2012			2011
Amounts Recognized in the Consolidated Balance Sheets
Other assets	$	0.1		$	0.7		$	—		$	—
Compensation and benefits	—			—			(0.5		)	(0.4		)
Other liabilities	—			—			(6.3		)	(5.7		)
Net Asset (Liability)	$	0.1		$	0.7		$	(6.8	)	$	(6.1	)
Weighted-Average Assumptions
Discount rate	4.60		%	5.20		%	3.70		%	4.90		%
Expected long-term rate of return on plan assets1	6.41		%	6.76		%	N/A			N/A
Rate of compensation increase	N/A			4.20		%	2.50		%	4.50		%

___________________

¹  The expected long-term rate of return on plan assets is based on the weighted-average historic performance of each asset class and current market conditions.

104

The components of net periodic benefit cost for the plans were as follows.

(in millions)	Pension Benefits									Other Benefits
for the fiscal years ended September 30,	2012			2011			2010			2012		2011		2010
Service cost	$	3.6		$	3.3		$	2.9		$	—	$	—	$	—
Interest cost	2.2			2.1			2.0			0.3		0.3		0.4
Plan curtailments	0.5			—			—			—		—		—
Expected return on plan assets	(3.1		)	(3.2		)	(2.8		)	—		—		—
Amortization of net actuarial losses	—			—			—			—		0.2		—
Net Periodic Benefit Cost	$	3.2		$	2.2		$	2.1		$	0.3	$	0.5	$	0.4

As of September 30, 2012 and 2011, the Company’s defined benefit pension plan assets were invested in investment funds with holdings of $46.3 million and $37.1 million in equity securities, $3.7 million and $3.5 million in debt securities, and $2.8 million and $2.9 million in cash and cash equivalents. The fair value of the investment funds, which are classified as Level 1, is determined based on the published net asset value of the funds. There were no pension plan assets classified as Level 2 or 3 during fiscal years 2012 or 2011.

The Company has no target allocation set for the defined benefit pension plan as the plan members control all investment decisions. The plan was closed to new contributions in May 2012, and the Company does not expect to make contributions to the plan in fiscal year 2013. The defined benefit healthcare plan is an unfunded benefit plan. The Company expects to contribute $0.5 million to the plan in fiscal year 2013.

The plan benefits expected to be paid over the next ten years were as follows:

(in millions)	Pension Benefits		Other Benefits
for the fiscal years ending September 30,
2013	$	3.6	$	0.5
2014	0.3		0.5
2015	1.8		0.4
2016	0.2		0.4
2017	0.6		0.4
Thereafter in the succeeding five years	14.3		2.0

Defined Contribution Plans

The Company sponsors a 401(k) plan that covers substantially all U.S. employees who meet certain employment requirements. Participants may contribute up to 50% of pretax annual compensation and up to 100% of the cash portion of the participant's year-end bonus, as defined by the plan and subject to Internal Revenue Code limitations, each year to the plan. In addition, certain of the Company's non-U.S. subsidiaries sponsor defined contribution plans primarily for the purpose of providing deferred compensation incentives for its employees and to comply with local regulatory requirements. The total expenses recognized for defined contribution plans in the consolidated statements of income were $36.8 million, $34.3 million and $21.0 million for fiscal years 2012, 2011 and 2010.

Note 18 – Segment Information

Effective July 1, 2012, the Company has one operating segment, investment management and related services, from which it derives all of its operating revenues and income. Previously, the Company had a second operating segment, banking/finance, which offered select retail banking, private banking and consumer lending services. See Note 1 – Significant Accounting Policies, Basis of Presentation.

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Geographical information was as follows:

(in millions)
for the fiscal years ended September 30,	2012		2011		2010
Operating Revenues
United States	$	4,791.9	$	4,589.4	$	3,920.0
The Bahamas	904.2		1,041.9		753.7
Asia-Pacific	627.7		688.9		571.1
Europe, the Middle East and Africa	458.6		435.3		279.6
Canada	309.0		344.6		303.0
Latin America	9.6		39.9		25.6
Total	$	7,101.0	$	7,140.0	$	5,853.0
Property and Equipment, Net
United States	$	447.9	$	441.9	$	415.2
The Bahamas	16.5		17.2		17.9
Asia-Pacific	94.3		103.3		85.1
Europe, the Middle East and Africa	13.0		15.0		15.6
Canada	10.4		11.5		14.0
Latin America	0.6		0.8		1.2
Total	$	582.7	$	589.7	$	549.0

Operating revenues are generally allocated to geographic areas based on the location of the office providing services.

106

Note 19 – Other Income (Expenses)

Other income (expenses) consisted of the following:

(in millions)
for the fiscal years ended September 30,	2012			2011			2010
Investment and Other Income, Net
Dividend income	$	22.5		$	35.7		$	38.6
Interest income	12.5			11.0			12.9
Gains (losses) on trading investment securities, net	34.7			(1.3		)	30.3
Realized gains on sale of investment securities, available-for-sale	41.0			65.5			17.9
Realized losses on sale of investment securities, available-for-sale	(2.2		)	(0.3		)	(1.6		)
Income (losses) from investments in equity method investees, net of tax	68.6			(1.1		)	19.9
Other-than-temporary impairment of investment securities, available-for-sale	(10.1		)	(7.3		)	(1.5		)
Other-than-temporary impairment of investments in equity method investees and other	—			(6.3		)	—
Gains (losses) on investments of consolidated SIPs, net	(15.9		)	(36.1		)	8.5
Gains (losses) on assets and liabilities of consolidated VIEs, net	25.6			(80.0		)	—
Foreign currency exchange gains (losses), net	7.1			3.3			(4.7		)
Other, net	15.9			18.7			7.3
Total	199.7			1.8			127.6
Interest Expense	(36.7		)	(37.4		)	(16.5		)
Other Income (Expenses), Net	$	163.0		$	(35.6	)	$	111.1

Substantially all of the Company’s dividend income and realized gains and losses on sale of investment securities, available-for-sale were generated by investments in its SIPs. Interest income was primarily generated by cash equivalents and debt securities of U.S. states and political subdivisions, and included $3.2 million of non-investment related interest in fiscal year 2012. Proceeds from the sale of investment securities, available-for-sale were $578.1 million, $477.5 million and $247.1 million for fiscal years 2012, 2011 and 2010.

Net gains (losses) on trading investment securities that were held at September 30, 2012, 2011 and 2010 were $24.0 million, $(9.1) million and $17.8 million. Net gains (losses) on trading investment securities of consolidated SIPs that were held at September 30, 2012, 2011 and 2010 were $22.9 million, $(39.0) million and $(2.3) million.

Note 20 – Banking Regulatory Ratios

Franklin is a bank holding company and a financial holding company subject to various regulatory capital requirements administered by federal banking agencies, including the Federal Reserve Board. Failure to meet minimum capital requirements can result in certain mandatory, and possibly additional, discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. The Company must meet specific capital adequacy guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

107

Quantitative measures established by regulations to ensure capital adequacy require the Company to maintain a minimum Tier 1 capital and Tier 1 leverage ratio (as defined in the regulations), as well as minimum Tier 1 and Total risk-based capital ratios (as defined in the regulations). The Company's calculation methodology follows the most conservative risk-weighting assumptions within the Federal Reserve Board guidelines. Based on the Company's calculations as of September 30, 2012 and 2011, it exceeded the applicable capital adequacy requirements as listed below.

(dollar amounts in millions)							Capital Adequacy Minimum
as of September 30,	2012			2011
Tier 1 capital	$	6,788.8		$	6,141.4		N/A
Total risk-based capital	6,799.6			6,152.2			N/A
Tier 1 leverage ratio	59		%	55		%	5%
Tier 1 risk-based capital ratio	54		%	53		%	4%
Total risk-based capital ratio	54		%	53		%	8%

Note 21 – Subsequent Events

On October 24, 2012, the Company redeemed its outstanding 2.000% senior notes due in May 2013 at a make-whole redemption price of $305.4 million.

On November 1, 2012, the Company acquired an ownership interest of approximately 69% in K2 Advisors Holdings LLC ("K2") for a purchase consideration of $182.9 million in cash. The Company has agreed to acquire the remaining ownership interest in K2 over a multi-year period beginning in fiscal year 2017. K2 is a fund of hedge funds solutions provider with approximately $9.0 billion in assets under management as of September 30, 2012.

108

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicable.

Item  9A. Controls and Procedures.

The Company’s management evaluated, with the participation of the Company’s principal executive and principal financial officers, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of September 30, 2012. Based on their evaluation, the Company’s principal executive and principal financial officers concluded that the Company's disclosure controls and procedures as of September 30, 2012 were designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by the Company in reports filed under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and (ii) accumulated and communicated to management, including the principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

There has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company’s fiscal quarter ended September 30, 2012, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting and the Report of Independent Registered Public Accounting Firm set forth in Item 8 of Part II of this Form 10-K are incorporated herein by reference.

Item 9B. Other Information.

None.

109

PART III

Item  10. Directors, Executive Officers and Corporate Governance.

The information required by this Item 10 with respect to executive officers of the Company is contained at the end of Part I of this Form 10-K under the heading “Executive Officers of the Registrant.”

Code of Ethics. The Company has adopted a Code of Ethics and Business Conduct (the “Code of Ethics”) that applies to the Company's principal executive officer, principal financial officer, principal accounting officer, controller, and any persons performing similar functions, as well as all directors, officers and employees of the Company and its subsidiaries and affiliates. The Code of Ethics is posted on the Company’s website at www.franklinresources.com under “Corporate Governance.” A copy of the Code of Ethics is available in print free of charge to any stockholder who requests a copy. Interested parties may address a written request for a printed copy of the Code of Ethics to: Secretary, Franklin Resources, Inc., One Franklin Parkway, San Mateo, California 94403-1906. The Company intends to satisfy the disclosure requirement regarding any amendment to, or a waiver from, a provision of the Code of Ethics for the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by posting such information on its website.

The other information required by this Item 10 is incorporated by reference from the information provided under the sections entitled “Proposal No.1 Election of Directors–Nominees,” “Proposal No. 1 Election of Directors–Information about the Board and its Committees–The Audit Committees” and “Proposal No. 1 Election of Directors–Section 16(a) Beneficial Ownership Reporting Compliance” from the Company’s definitive proxy statement for its annual meeting of stockholders (“2013 Proxy Statement”) to be filed with the SEC within 120 days after September 30, 2012.

Item  11. Executive Compensation.

The information required by this Item 11 is incorporated by reference from the information provided under the sections entitled “Proposal No. 1 Election of Directors–Director Fees” and “Proposal No. 1 Election of Directors–Executive Compensation” of the Company’s 2013 Proxy Statement.

Item  12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this Item 12 with respect to security ownership of certain beneficial owners and management is incorporated by reference from the information provided under the sections entitled “Proposal No. 1 Election of Directors-Security Ownership of Principal Stockholders” and “Proposal No. 1 Election of Directors-Security Ownership of Management” of the Company’s 2013 Proxy Statement.

110

Equity Compensation Plan Information.

The following table sets forth certain information as of September 30, 2012 with respect to the shares of the Company’s common stock that may be issued under the Company’s existing compensation plans that have been approved by stockholders and plans that have not been approved by stockholders.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by stockholders1	1,226,894	2	$	41.33	3	13,874,284	4
Equity compensation plans not approved by stockholders	—		—			—
Total	1,226,894		$	41.33		13,874,284

________________

¹  Consists of the 2002 Universal Stock Incentive Plan, as amended and restated (the “USIP”) and the amended and restated Franklin Resources, Inc. 1998 Employee Stock Investment Plan (the “ESIP”). Equity securities granted under the USIP may include awards in connection with the Amended and Restated Annual Incentive Compensation Plan and the 2004 Key Executive Incentive Compensation Plan, as amended and restated.

²  Includes restricted stock unit awards under the USIP that may be settled in shares of the Company's common stock, but excludes options to purchase shares of the Company’s common stock accruing under the Company’s ESIP. Under the ESIP, each eligible employee is granted a separate option to purchase up to 2,000 shares of common stock each semi-annual accrual period on January 31 and July 31 at a purchase price per share equal to 85% of the fair market value of the common stock on the enrollment date or the exercise date, whichever is lower.

³  Does not take into account restricted stock unit awards under the USIP.

⁴  As of September 30, 2012, 2,358,931 shares of common stock were available for future issuance under the ESIP and 11,515,353 shares of common stock were available for future issuance under the USIP.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this Item 13 is incorporated by reference from the information provided under the sections entitled “Proposal No. 1 Election of Directors-General,” “Proposal No.1 Election of Directors–Corporate Governance–Director Independence Standards” and “Proposal No. 1 Election of Directors–Certain Relationships and Related Transactions” of the Company’s 2013 Proxy Statement.

Item  14. Principal Accounting Fees and Services.

The information required by this Item 14 is incorporated by reference from the information provided under the section entitled “Proposal No. 1 Election of Directors–Fees Paid to Independent Registered Public Accounting Firm” of the Company’s 2013 Proxy Statement.

111

PART IV

Item  15. Exhibits, Financial Statement Schedules.

(a)(1)	The financial statements filed as part of this report are listed in Item 8 of this Form 10-K.
(a)(2)	No financial statement schedules are required to be filed as part of this report because all such schedules have been omitted. Such omission has been made on the basis that information is provided in the financial statements, or in the related notes thereto, in Item 8 of this Form 10-K or is not required to be filed as the information is not applicable.
(a)(3)	Exhibits.

Exhibit No.	Description
3(i)(a)	Registrant’s Certificate of Incorporation, as filed November 28, 1969, incorporated by reference to Exhibit (3)(i) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 1994 (File No. 001-09318) (the “1994 Annual Report”)
3(i)(b)	Registrant’s Certificate of Amendment of Certificate of Incorporation, as filed March 1, 1985, incorporated by reference to Exhibit 3(ii) to the 1994 Annual Report
3(i)(c)	Registrant’s Certificate of Amendment of Certificate of Incorporation, as filed April 1, 1987, incorporated by reference to Exhibit 3(iii) to the 1994 Annual Report
3(i)(d)	Registrant’s Certificate of Amendment of Certificate of Incorporation, as filed February 2, 1994, incorporated by reference to Exhibit 3(iv) to the 1994 Annual Report
3(i)(e)	Registrant’s Certificate of Amendment of Certificate of Incorporation, as filed on February 4, 2005, incorporated by reference to Exhibit (3)(i)(e) to the Registrant’s Quarterly Report on Form 10-Q for the period ended December 31, 2004 (File No. 001-09318)
3(ii)	Registrant’s Amended and Restated Bylaws (as adopted and effective March 14, 2012), incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed with the SEC on March 14, 2012 (File No. 001-09318)
4.1	Indenture between the Registrant and The Bank of New York Mellon Trust Company, N.A. (as successor to Chemical Bank), as trustee, dated as of May 19, 1994, incorporated by reference to Exhibit 4 to the Registrant’s Registration Statement on Form S-3 filed with the SEC on April 14, 1994 (File No. 033-53147)
4.2	Form of First Supplemental Indenture, dated October 9, 1996, between the Registrant and The Bank of New York Mellon Trust Company, N.A. (as successor to The Chase Manhattan Bank), as trustee, incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-3 filed with the SEC on October 4, 1996 (File No. 333-12101)
4.3	Form of Second Supplemental Indenture, dated May 20, 2010, between the Registrant and The Bank of New York Mellon Trust Company, N.A., as trustee, incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed with the SEC on May 20, 2010 (File No. 001-09318)
4.4	Form of Third Supplemental Indenture, dated September 24, 2012, between the Registrant and The Bank of New York Mellon Trust Company, N.A., as trustee, incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed with the SEC on September 24, 2012 (File No. 001-09318)
10.1	Representative Form of Investment Management Agreement between Franklin Advisers, Inc. and certain funds, incorporated by reference to Exhibit 10.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2009 (File No. 001-09318) (the “2009 Annual Report”)
10.2	Representative Form of Subadvisory Agreement between Franklin Advisers, Inc. and Templeton Investment Counsel, LLC, incorporated by reference to Exhibit 10.2 to the 2009 Annual Report
10.3	Representative Form of Distribution Agreement between Franklin/Templeton Distributors, Inc. and certain funds, incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the period ended December 31, 2010 (File No. 001-09318)
10.4	Representative 12b-1 Form of Amended and Restated Class A Distribution Plan between Franklin/Templeton Distributors, Inc. and certain Franklin, Templeton and Mutual Series retail funds, incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the period ended March 31, 2009 (File No. 001-09318) (the “March 2009 Quarterly Report”)

112

Exhibit No.	Description
10.5	Representative 12b-1 Form of Amended and Restated Class B Distribution Plan between Franklin/Templeton Distributors, Inc. and certain Franklin, Templeton and Mutual Series retail funds, incorporated by reference to Exhibit 10.5 to the 2009 Annual Report
10.6	Representative 12b-1 Form of Amended and Restated Class C Distribution Plan between Franklin/Templeton Distributors, Inc. and certain Franklin, Templeton and Mutual Series retail funds, incorporated by reference to Exhibit 10.6 to the 2009 Annual Report
10.7	Representative 12b-1 Form of Amended and Restated Class R Distribution Plan between Franklin/Templeton Distributors, Inc. and certain Franklin, Templeton and Mutual Series retail funds, incorporated by reference to Exhibit 10.7 to the 2009 Annual Report
10.8	Representative 12b-1 Form of Amended and Restated Class 2, 3 and 4 Distribution Plan between Franklin Templeton Variable Insurance Products Trust and Franklin/Templeton Distributors, Inc., incorporated by reference to Exhibit 10.8 to the 2009 Annual Report
10.9	Representative Form of Amended and Restated Transfer Agent and Shareholder Services Agreement between Franklin Templeton Investor Services, LLC and certain funds (filed herewith)
10.10	Representative Form of Fund Administration Agreement between Franklin Templeton Services, LLC and certain funds, incorporated by reference to Exhibit 10.10 to the 2009 Annual Report
10.11	Representative Form of Multiple Class Plan on behalf of certain funds, incorporated by reference to Exhibit 10.11 to the 2009 Annual Report
10.12	Representative Form of Investment Management Agreement for Separate Account Clients (filed herewith)
10.13	Representative Form of Investment Management with Custody Agreement for High Net-Worth Clients (filed herewith)
10.14	Representative Form of Custody-Only Agreement for High Net-Worth Clients, incorporated by reference to Exhibit 10.14 to the Registrant's Annual Report on Form 10-K for the fiscal year ended September 30, 2011 (File No. 001-09318) (the “2011 Annual Report”)
10.15	Representative Form of Participation Agreement between Franklin Templeton Variable Insurance Products Trust, Franklin/Templeton Distributors, Inc. and certain other parties (filed herewith)
10.16	Representative Form of Participation Agreement Addendum between Franklin Templeton Variable Insurance Products Trust and certain other parties (filed herewith)
10.17	Representative Form of Form of Fund of Funds Subscription Agreement between Franklin Templeton Variable Insurance Products Trust and certain funds, incorporated by reference to Exhibit 10.17 to the 2009 Annual Report
10.18	Representative Form of Administrative Services Agreement between Franklin Templeton Services, LLC and certain insurance companies, incorporated by reference to Exhibit 10.18 to the 2009 Annual Report
10.19	Representative Form of Stock Option Agreement and Notice of Stock Option Grant under the Registrant’s 2002 Universal Stock Incentive Plan, incorporated by reference to Exhibit 10.75 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 12, 2004 (File No. 001-09318)*
10.20	Representative Form of Notice of Restricted Stock Award and Restricted Stock Award Agreement (RSA) under the Registrant’s 2002 Universal Stock Incentive Plan for certain executive officers of the Registrant (filed herewith)*
10.21	Representative Form of Notice of Restricted Stock Unit Award and Restricted Stock Unit Award Agreement (RSU) under the Registrant’s 2002 Universal Stock Incentive Plan for long-term performance awards for certain executive officers of the Registrant (filed herewith)*
10.22	Representative Form of Amended and Restated Indemnification Agreement, incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the period ended March 31, 2006 (File No. 001-09318)*
10.23	2006 Directors Deferred Compensation Plan, as amended and restated effective December 12, 2008, incorporated by reference to Exhibit 10.4 to the March 2009 Quarterly Report*
10.24	1998 Employee Stock Investment Plan (as amended and restated February 1, 2012), incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the period ended December 31, 2011 (File No. 001-09318)*

113

Exhibit No.	Description
10.25	2002 Universal Stock Incentive Plan (as amended and restated effective October 22, 2012) (filed herewith)*
10.26	Amended and Restated Annual Incentive Compensation Plan (as amended and restated effective October 22, 2012) (filed herewith)*
10.27	2004 Key Executive Incentive Compensation Plan (as amended and restated effective October 15, 2007), incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 5, 2008 (File No. 001-09318)*
10.28	Independent Director Compensation as of September 30, 2011, incorporated by reference to Exhibit 10.28 to the 2011 Annual Report*
10.29	Named Executive Officer Compensation as of January 1, 2010, incorporated by reference to Exhibit 10.29 to the Registrant's Annual Report on Form 10-K for the fiscal year ended September 30, 2010 (File No. 001-09318)*
12	Computation of Ratios of Earnings to Fixed Charges (filed herewith)
21	List of Subsidiaries (filed herewith)
23	Consent of Independent Registered Public Accounting Firm (filed herewith)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101	The following materials from the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2012, formatted in Extensible Business Reporting Language (XBRL), include: (i) the Consolidated Statements of Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Stockholders’ Equity, Redeemable Noncontrolling Interests and Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, and (v) related notes

___________

*         Management/Employment Contract or Compensatory Plan or Arrangement

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		FRANKLIN RESOURCES, INC.
Date:	November 14, 2012	By:	/s/ Kenneth A. Lewis
			Kenneth A. Lewis, Executive Vice President and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Date:	November 14, 2012	By:	/s/ Samuel H. Armacost
			Samuel H. Armacost, Director
Date:	November 14, 2012	By:	/s/ Charles Crocker
			Charles Crocker, Director
Date:	November 14, 2012	By:	/s/ Joseph R. Hardiman
			Joseph R. Hardiman, Director
Date:	November 14, 2012	By:	/s/ Charles B. Johnson
			Charles B. Johnson, Chairman and Director
Date:	November 14, 2012	By:	/s/ Gregory E. Johnson
			Gregory E. Johnson, Director, President and Chief Executive Officer (Principal Executive Officer)
Date:	November 14, 2012	By:	/s/ Rupert H. Johnson, Jr.
			Rupert H. Johnson, Jr., Vice Chairman and Director
Date:	November 14, 2012	By:	/s/ Kenneth A. Lewis
			Kenneth A. Lewis, Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
Date:	November 14, 2012	By:	/s/ Mark C. Pigott
			Mark. C. Pigott, Director
Date:	November 14, 2012	By:	/s/ Chutta Ratnathicam
			Chutta Ratnathicam, Director
Date:	November 14, 2012	By:	/s/ Laura Stein
			Laura Stein, Director
Date:	November 14, 2012	By:	/s/ Anne M. Tatlock
			Anne M. Tatlock, Director
Date:	November 14, 2012	By:	/s/ Geoffrey Y. Yang
			Geoffrey Y. Yang, Director

115

EXHIBIT INDEX

Exhibit No.	Description
3(i)(a)	Registrant’s Certificate of Incorporation, as filed November 28, 1969, incorporated by reference to Exhibit (3)(i) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 1994 (File No. 001-09318) (the “1994 Annual Report”)
3(i)(b)	Registrant’s Certificate of Amendment of Certificate of Incorporation, as filed March 1, 1985, incorporated by reference to Exhibit 3(ii) to the 1994 Annual Report
3(i)(c)	Registrant’s Certificate of Amendment of Certificate of Incorporation, as filed April 1, 1987, incorporated by reference to Exhibit 3(iii) to the 1994 Annual Report
3(i)(d)	Registrant’s Certificate of Amendment of Certificate of Incorporation, as filed February 2, 1994, incorporated by reference to Exhibit 3(iv) to the 1994 Annual Report
3(i)(e)	Registrant’s Certificate of Amendment of Certificate of Incorporation, as filed on February 4, 2005, incorporated by reference to Exhibit (3)(i)(e) to the Registrant’s Quarterly Report on Form 10-Q for the period ended December 31, 2004 (File No. 001-09318)
3(ii)	Registrant’s Amended and Restated Bylaws (as adopted and effective March 14, 2012), incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed with the SEC on March 14, 2012 (File No. 001-09318)
4.1	Indenture between the Registrant and The Bank of New York Mellon Trust Company, N.A. (as successor to Chemical Bank), as trustee, dated as of May 19, 1994, incorporated by reference to Exhibit 4 to the Registrant’s Registration Statement on Form S-3 filed with the SEC on April 14, 1994 (File No. 033-53147)
4.2	Form of First Supplemental Indenture, dated October 9, 1996, between the Registrant and The Bank of New York Mellon Trust Company, N.A. (as successor to The Chase Manhattan Bank), as trustee, incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-3 filed with the SEC on October 4, 1996 (File No. 333-12101)
4.3	Form of Second Supplemental Indenture, dated May 20, 2010, between the Registrant and The Bank of New York Mellon Trust Company, N.A., as trustee, incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed with the SEC on May 20, 2010 (File No. 001-09318)
4.4	Form of Third Supplemental Indenture, dated September 24, 2012, between the Registrant and The Bank of New York Mellon Trust Company, N.A., as trustee, incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed with the SEC on September 24, 2012 (File No. 001-09318)
10.1	Representative Form of Investment Management Agreement between Franklin Advisers, Inc. and certain funds, incorporated by reference to Exhibit 10.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2009 (File No. 001-09318) (the “2009 Annual Report”)
10.2	Representative Form of Subadvisory Agreement between Franklin Advisers, Inc. and Templeton Investment Counsel, LLC, incorporated by reference to Exhibit 10.2 to the 2009 Annual Report
10.3	Representative Form of Distribution Agreement between Franklin/Templeton Distributors, Inc. and certain funds, incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the period ended December 31, 2010 (File No. 001-09318)
10.4	Representative 12b-1 Form of Amended and Restated Class A Distribution Plan between Franklin/Templeton Distributors, Inc. and certain Franklin, Templeton and Mutual Series retail funds, incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the period ended March 31, 2009 (File No. 001-09318) (the “March 2009 Quarterly Report”)
10.5	Representative 12b-1 Form of Amended and Restated Class B Distribution Plan between Franklin/Templeton Distributors, Inc. and certain Franklin, Templeton and Mutual Series retail funds, incorporated by reference to Exhibit 10.5 to the 2009 Annual Report
10.6	Representative 12b-1 Form of Amended and Restated Class C Distribution Plan between Franklin/Templeton Distributors, Inc. and certain Franklin, Templeton and Mutual Series retail funds, incorporated by reference to Exhibit 10.6 to the 2009 Annual Report
10.7	Representative 12b-1 Form of Amended and Restated Class R Distribution Plan between Franklin/Templeton Distributors, Inc. and certain Franklin, Templeton and Mutual Series retail funds, incorporated by reference to Exhibit 10.7 to the 2009 Annual Report

116

Exhibit No.	Description
10.8	Representative 12b-1 Form of Amended and Restated Class 2, 3 and 4 Distribution Plan between Franklin Templeton Variable Insurance Products Trust and Franklin/Templeton Distributors, Inc., incorporated by reference to Exhibit 10.8 to the 2009 Annual Report
10.9	Representative Form of Amended and Restated Transfer Agent and Shareholder Services Agreement between Franklin Templeton Investor Services, LLC and certain funds (filed herewith)
10.10	Representative Form of Fund Administration Agreement between Franklin Templeton Services, LLC and certain funds, incorporated by reference to Exhibit 10.10 to the 2009 Annual Report
10.11	Representative Form of Multiple Class Plan on behalf of certain funds, incorporated by reference to Exhibit 10.11 to the 2009 Annual Report
10.12	Representative Form of Investment Management Agreement for Separate Account Clients (filed herewith)
10.13	Representative Form of Investment Management with Custody Agreement for High Net-Worth Clients (filed herewith)
10.14	Representative Form of Custody-Only Agreement for High Net-Worth Clients, incorporated by reference to Exhibit 10.14 to the Registrant's Annual Report on Form 10-K for the fiscal year ended September 30, 2011 (File No. 001-09318) (the “2011 Annual Report”)
10.15	Representative Form of Participation Agreement between Franklin Templeton Variable Insurance Products Trust, Franklin/Templeton Distributors, Inc. and certain other parties (filed herewith)
10.16	Representative Form of Participation Agreement Addendum between Franklin Templeton Variable Insurance Products Trust and certain other parties (filed herewith)
10.17	Representative Form of Form of Fund of Funds Subscription Agreement between Franklin Templeton Variable Insurance Products Trust and certain funds, incorporated by reference to Exhibit 10.17 to the 2009 Annual Report
10.18	Representative Form of Administrative Services Agreement between Franklin Templeton Services, LLC and certain insurance companies, incorporated by reference to Exhibit 10.18 to the 2009 Annual Report
10.19	Representative Form of Stock Option Agreement and Notice of Stock Option Grant under the Registrant’s 2002 Universal Stock Incentive Plan, incorporated by reference to Exhibit 10.75 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 12, 2004 (File No. 001-09318)*
10.20	Representative Form of Notice of Restricted Stock Award and Restricted Stock Award Agreement (RSA) under the Registrant’s 2002 Universal Stock Incentive Plan for certain executive officers of the Registrant (filed herewith)*
10.21	Representative Form of Notice of Restricted Stock Unit Award and Restricted Stock Unit Award Agreement (RSU) under the Registrant’s 2002 Universal Stock Incentive Plan for long-term performance awards for certain executive officers of the Registrant (filed herewith)*
10.22	Representative Form of Amended and Restated Indemnification Agreement, incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the period ended March 31, 2006 (File No. 001-09318)*
10.23	2006 Directors Deferred Compensation Plan, as amended and restated effective December 12, 2008, incorporated by reference to Exhibit 10.4 to the March 2009 Quarterly Report*
10.24	1998 Employee Stock Investment Plan (as amended and restated February 1, 2012), incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the period ended December 31, 2011 (File No. 001-09318)*
10.25	2002 Universal Stock Incentive Plan (as amended and restated effective October 22, 2012) (filed herewith)*
10.26	Amended and Restated Annual Incentive Compensation Plan (as amended and restated effective October 22, 2012) (filed herewith)*
10.27	2004 Key Executive Incentive Compensation Plan (as amended and restated effective October 15, 2007), incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 5, 2008 (File No. 001-09318)*
10.28	Independent Director Compensation as of September 30, 2011, incorporated by reference to Exhibit 10.28 to the 2011 Annual Report*

117

Exhibit No.	Description
10.29	Named Executive Officer Compensation as of January 1, 2010, incorporated by reference to Exhibit 10.29 to the Registrant's Annual Report on Form 10-K for the fiscal year ended September 30, 2010 (File No. 001-09318)*
12	Computation of Ratios of Earnings to Fixed Charges (filed herewith)
21	List of Subsidiaries (filed herewith)
23	Consent of Independent Registered Public Accounting Firm (filed herewith)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101	The following materials from the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2012, formatted in Extensible Business Reporting Language (XBRL), include: (i) the Consolidated Statements of Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Stockholders’ Equity, Redeemable Noncontrolling Interests and Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, and (v) related notes

__________

*        Management/Employment Contract or Compensatory Plan or Arrangement

118

EX-10.9

Exhibit 10.9

FRANKLIN TEMPLETON INVESTOR SERVICES, LLC

FORM OF AMENDED AND RESTATED

TRANSFER AGENT AND SHAREHOLDER SERVICES AGREEMENT

Investment Company:        [NAME OF FUND/TRUST]

Date:                January 1, 2011

The parties to this Agreement are the Investment Company named above (“Investment Company”), an open-end investment company registered as such under the Investment Company Act of 1940 (“1940 Act”), on behalf of each class of shares of each series of the Investment Company which now exists or may hereafter be created (individually, a “Fund” and collectively, the “Funds”) and FRANKLIN TEMPLETON INVESTOR SERVICES, LLC (“FTIS”), a registered transfer agent formerly known as Franklin Administrative Services, Inc. This Agreement supersedes prior Shareholder Services Agreements between the parties, as stated below in section 16(d).

WITNESSETH:

That, for and in consideration of the mutual promises hereinafter set forth, the Investment Company and FTIS agree as follows:

1.    Definitions. Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings:

(a)    “Articles” shall mean the Articles of Incorporation, Declaration of Trust or Agreement of Limited Partnership, as appropriate, of the Investment Company as the same may be amended from time to time;

(b)    “Authorized Person” shall be deemed to include any person, whether or not such person is an officer or employee of the Investment Company, duly authorized to give Oral Instructions or Written Instructions on behalf of the Investment Company, as indicated in a resolution of the Investment Company's Board which was valid at the time of this Agreement, or as indicated in a certificate furnished to FTIS pursuant to Section 4(c) hereof;

(c)    “Board” shall mean the Investment Company's Board of Directors, Board of Trustees or Managing General Partners, as appropriate;

(d)    “Custodian” shall mean a custodian and any sub-custodian of securities and other property which the Investment Company may from time to time deposit, or cause to be deposited or held under the name or account of such custodian pursuant to the Custody Agreement;

(e)    “Oral Instructions” shall mean instructions (including without limitation instructions received by telephone, facsimile, electronic mail or other electronic mail), other than written instructions, actually received by FTIS from a person reasonably believed by FTIS to be an Authorized Person;

(f)    “Shares” shall mean shares of each class of capital stock, beneficial interest or limited partnership interest, as appropriate, of each series of the Investment Company; and

(g)    “Written Instructions” shall mean a written communication signed by a person reasonably believed by FTIS to be an Authorized Person and actually received by FTIS.

2.    Appointment of FTIS.The Investment Company hereby appoints FTIS as transfer agent for Shares of the Investment Company, as service agent in connection with dividend and distribution functions, and as shareholder servicing agent for the Investment Company, and FTIS accepts such appointment and agrees to perform the following duties.

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3.    Compensation.

(a)    Payment to FTIS:

(i)    Compensation forServicing: The Investment Company will compensate FTIS for the performance of its services in accordance with the fees set forth in the written schedule of fees annexed hereto as Schedule A and incorporated herein. FTIS will bill the Investment Company as soon as practicable after the end of each calendar month, in accordance with Schedule A. The Investment Company will promptly pay to FTIS the amount of such billing.

(ii)    Reimbursement for Out-of-Pocket Expenses: The Investment Company will reimburse FTIS for out-of-pocket disbursements paid to third parties by FTIS in the performance of its obligations hereunder including, but not limited to, the items specified in the written schedule of out-of-pocket expenses paid to third parties annexed hereto as Schedule B and incorporated herein. Unspecified out-of-pocket expenses shall be limited to those out-of-pocket expenses reasonably incurred by FTIS in the performance of its obligations hereunder, subject to approval by the Board. Reimbursement by the Investment Company for out-of-pocket disbursements paid by FTIS in any month shall be made as soon as practicable after the receipt of an itemized bill from FTIS.

(b)    Beneficial Owner Servicing Fees to Third Parties: Subject to the limitation set forth in paragraph (d) below, the Investment Company will reimburse FTIS for servicing fee payments (“Beneficial Owner Servicing Fees”) made by FTIS on the Investment Company's behalf to institutions that purchase and hold the Investment Company's shares in the institution's name, or in the name of an affiliate, nominee or other designated entity, through a master fund level account (“Omnibus Account”) on behalf of numerous “Beneficial Owners”. For purposes of this Agreement, (i) “Beneficial Owner” means each person with an indirect interest in fund shares issued and recorded in an Omnibus Account; and (ii) a person will be deemed to have an “indirect interest” in a fund's shares if the value of the person's interest changes directly in relation to changes in the net asset value of the fund's shares.

(c)    Networked Account Servicing Fees to Third Parties: Subject to the limitation set forth in paragraph (d) below, the Investment Company will reimburse FTIS for servicing fee payments (“Networked Account Servicing Fees”) made by FTIS on the Investment Company's behalf to an institution for each Fund account (a “Networked Account”) maintained by FTIS in which servicing is shared with that institution by the exchange of account data through the National Securities Clearing Corporation (NSCC) networking system.

(d)    Maximum Reimbursement Amount for Beneficial Owner Servicing Fees and Networked Account Servicing Fees. The Investment Company authorizes FTIS to negotiate Beneficial Owner Servicing Fees and Networked Account Servicing Fees on the Investment Company's behalf and shall reimburse FTIS for those fees negotiated and paid up to the “Maximum Reimbursement Amount”. The Maximum Reimbursement Amount for each fiscal year of the Investment Company, calculated on the basis of all Omnibus Accounts, Participant Directed Plans and all Networked Accounts open during that fiscal year, shall equal the total amount (including out-of-pocket expenses) that would otherwise have been payable by the Investment Company to FTIS under the terms of this Agreement if (i) all Beneficial Owners for which Beneficial Owner Servicing fees were paid had been Full Service Accounts (as defined in Schedule A); and (ii) all Networked Accounts for which Networked Account Servicing Fees were paid had been Full Service Accounts.

(e)    Compensation Adjustments. Any compensation agreed to hereunder may be adjusted from time to time by mutual agreement by attaching revised Schedules A or B to this Agreement.

4.    Documents. In connection with the appointment of FTIS, the Investment Company shall, within a reasonable period of time for FTIS to prepare to perform its duties hereunder, deliver to FTIS the following documents:

(a)    If applicable, specimens of the certificates for the Shares;

(b)    All account application forms and other documents relating to Shareholder accounts or to any plan, program or service offered by the Investment Company;

(c)    A certificate identifying the Authorized Persons and specimen signatures of Authorized Persons who will sign Written Instructions; and

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(d)    All documents and papers necessary under the laws of the Investment Company's state of domicile, under the Investment Company's Articles, and as may be required for the due performance of FTIS's duties under this Agreement or for the due performance of additional duties as may from time to time be agreed upon between the Investment Company and FTIS.

5.    Duties of FTIS. FTIS shall be responsible for administering and/or performing transfer agent functions; for acting as service agent in connection with dividend and distribution functions; and for performing shareholder account and administrative agent functions in connection with the issuance, transfer, exchange, redemption or repurchase (including coordination with the Custodian) of Shares. FTIS shall be bound to follow its usual and customary operating standards and procedures, as they may be amended from time to time, and each current prospectus and Statement of Additional Information (hereafter, collectively, the “prospectus”) of the Investment Company. Without limiting the generality of the foregoing, FTIS agrees to perform the specific duties listed on Schedule C.

The duties to be performed by FTIS shall not include the engagement, supervision or compensation of any service providers, or any registrations or fees of any kind, which are required by the laws of any foreign country in which the Fund may choose to invest portfolio assets or sell Shares.

6.    (a)    Distributions Payable in Shares. In the event that the Board of the Investment Company shall declare a distribution payable in Shares, the Investment Company shall deliver to FTIS written notice of such declaration signed on behalf of the Investment Company by an officer thereof, upon which FTIS shall be entitled to rely for all purposes, certifying (i) the number of Shares involved, and (ii) that all appropriate action has been taken to effect such distribution.

(b)    Distributions Payable in Cash; Redemption Payments. In the event that the Board of the Investment Company shall declare a distribution payable in cash, the Investment Company shall deliver to FTIS written notice of such declaration signed on behalf of the Investment Company by an officer thereof, upon which FTIS shall be entitled to rely for all purposes, certifying (i) the amount per share to be distributed, (ii) the record and payment dates for the distribution, and (iii) that all appropriate action has been taken to effect such distribution. Once the amount and validity of any dividend or redemption payments to shareholders have been determined, the Investment Company shall transfer the payment amounts from the Investment Company's accounts to an account or accounts held in the name of FTIS, as paying agent for the shareholders, in accordance with any applicable laws or regulations, and FTIS shall promptly cause payments to be made to the shareholders.

7.    Recordkeeping and Other Information. FTIS shall create, maintain and preserve all necessary records in accordance with all applicable laws, rules and regulations. Such records are the property of the Investment Company, and FTIS will promptly surrender them to the Investment Company upon request or upon termination of this Agreement. In the event of such a request or termination, FTIS shall be entitled to make and retain copies of all records surrendered, and to be reimbursed by the Investment Company for reasonable expenses actually incurred in making such copies. FTIS will take reasonable actions to maintain the confidentiality of the Investment Company's records, which may nevertheless be disclosed to the extent required by law or by this Agreement, or to the extent permitted by the Investment Company.

8.    Other Duties. In addition, FTIS shall perform such other duties and functions, and shall be paid such amounts therefor, as may from time to time be agreed upon in writing between the Investment Company and FTIS. Such other duties and functions shall be reflected in a written amendment to Schedule C, and the compensation for such other duties and functions shall be reflected in a written amendment to Schedule A.

9.    Reliance by FTIS; Instructions.

(a)    FTIS will be protected in acting upon Written or Oral Instructions reasonably believed to have been executed or orally communicated by an Authorized Person and will not be held to have any notice of any change of authority of any person until receipt of a Written Instruction thereof from an officer of the Investment Company. FTIS will also be protected in processing Share certificates which it reasonably believes to bear the proper manual or facsimile signatures of the officers of the Investment Company and the proper countersignature of FTIS.

(b)    At any time FTIS may apply to any Authorized Person of the Investment Company for Written Instructions, or may seek advice at the Investment Company's expense from legal counsel for the Investment Company, with respect to any matter arising in connection with this Agreement. FTIS shall not be liable for any action taken or not taken or suffered by it in good faith in accordance with such Written Instructions or in accordance with the opinion of counsel for the

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Investment Company. Written Instructions requested by FTIS will be provided by the Investment Company within a reasonable period of time.

10.    Acts of God, etc. FTIS will not be liable or responsible for delays or errors by reason of circumstances beyond its control, including acts of civil or military authority, national emergencies, labor difficulties, fire, mechanical breakdown beyond its control, earthquake, flood or catastrophe, acts of God, insurrection, war, riots or failure beyond its control of transportation, communication or power supply.

11.    Duty of Care and Indemnification. FTIS will indemnify the Investment Company against and hold it harmless from any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses) resulting from any claim, demand, action or suit resulting from willful misfeasance, bad faith or gross negligence on the part of FTIS, and arising out of, or in connection with, its duties hereunder. However, FTIS shall have no liability for or obligation to indemnify the Investment Company against any losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses) incurred by the Investment Company as a result of: (i) any action taken in accordance with Written or Oral Instructions; (ii) any action taken in accordance with written or oral advice reasonably believed by FTIS to have been given by counsel for the Investment Company; (iii) any action taken as a result of any error or omission in any record (including but not limited to magnetic tapes, computer printouts, hard copies and microfilm copies) delivered, or caused to be delivered, by the Investment Company to FTIS in connection with this Agreement; or (iv) any action taken in accordance with shareholder instructions which meet the standards described in the Investment Company's current prospectus, including without limitation oral instructions which meet the standards described in the section of the prospectus dealing with telephone transactions, so long as FTIS believes such instructions to be genuine. The obligations of the parties hereto under this Section shall survive the termination of this Agreement.

12.    Term and Termination.

(a)    This Agreement shall be effective as of the date first written above, shall continue through December 31, 2011, and thereafter shall continue automatically for successive annual periods ending on December 31 of each year, provided such continuance is specifically approved at least annually by the Investment Company's Board.

(b)    Either party hereto may terminate this Agreement by giving to the other party a notice in writing specifying the date of such termination, which shall be not less than 60 days after the date of receipt of such notice. Upon such termination, FTIS will (i) deliver to such successor a certified list of shareholders of the Investment Company (with names and addresses) and an historical record of the account of each Shareholder and the status thereof; (ii) surrender all other relevant records in accordance with section 7 of this Agreement, above, and (iii) cooperate in the transfer of such duties and responsibilities, including provisions for assistance from FTIS's personnel in the establishment of books, records and other data by such successor or successors. FTIS shall be entitled to charge the Investment Company a reasonable fee for services rendered and expenses actually incurred in performing its duties under this paragraph.

13.    Amendment. This Agreement may not be amended or modified in any manner except by a written agreement executed by both parties.

14.    Subcontracting. The Investment Company agrees that FTIS may, in its discretion, subcontract for all or any portion of the services described under this Agreement or the Schedules hereto; provided that the appointment of any such agent shall not relieve FTIS of its responsibilities hereunder.

15.    Data Processing System, Program and Information.

(a)    The Investment Company shall not, solely by virtue of this Agreement, obtain any rights, title and interest in and to the computer systems and programs, including all related documentation, employed by FTIS in connection with rendering services hereunder; provided however, that the records prepared, maintained and preserved by FTIS pursuant to this Agreement shall be the property of the Investment Company.

(b)    Any modifications, changes and improvements in the automatic data processing system (the “System”) or in the manner in which the services are rendered shall be made or provided as follows, and provided further that modifications for which the Investment Company will be required to bear any expenses shall be made only as set forth herein.

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(i)    FTIS shall, at no expense to the Investment Company, make any revisions in the System necessary to (1) perform the services which it has contracted to perform and (2) create and maintain the records which it has contracted to create and maintain hereunder or (3) enhance or update the System to the extent and in the manner necessary to maintain said System. However, if specific reprogramming, coding or other changes are necessary in the records of the Investment Company or in its shareholder accounts in order to complete a system revision, the costs for completing work specific to the Investment Company shall be subject to a subsequent agreement between the parties. The System is at all times to be competitive with that which is generally available to the mutual fund industry from transfer agents.

(ii)    To the extent that the System is modified to comply with changes in the accounting or record-keeping rules applicable to mutual funds, the Investment Company agrees to pay a reasonable pro rata portion of the costs of the design, revision and programming of the System; provided, however, that if the Investment Company's pro rata portion exceeds $1,000 per 12 month period, the Investment Company's obligation to pay a reasonable pro rata portion shall be conditioned upon FTIS's having obtained prior Written Instructions from the Investment Company for any charge. The determination that such modifications or revisions are necessary, and that the System as so modified produces records which comply with the record-keeping requirements, as amended, shall be by mutual agreement; provided, however, that upon written request by the Investment Company, FTIS will provide the Investment Company with a written opinion of counsel to FTIS to the effect that the modifications were required by changes in the applicable laws or regulations and that the System, as modified, complies with the laws or regulations as amended. Upon completion of the changes FTIS shall render a statement to the Investment Company, in reasonably detailed form, identifying the nature of the revisions, the services, expenses and costs, and the basis for determining the Investment Company's reasonable pro rata portion. Any determination by FTIS of the Investment Company's pro rata portion based upon the ratio of the number of shareholder accounts of the Investment Company to the total number of shareholder accounts of all clients for which FTIS provides comparable services shall conclusively be presumed to be reasonable unless the nature of the change to the System relates to certain types of shareholder accounts, in which case the pro rata portion will be determined on a mutually agreeable basis.

(iii)    If system improvements are requested by the Investment Company and are not otherwise required under this subsection 15(b), FTIS shall be entitled to request a reasonable fee before agreeing to make the improvements and shall be entitled to refuse to make any requested improvements which FTIS reasonably believes to be incompatible with its systems providing services to other funds.

16.    Miscellaneous.

(a)    Any notice or other instrument authorized or required by this Agreement to be given in writing to the Investment Company or FTIS shall be sufficiently given if addressed to that party and received by it at its office at the place described in the Investment Company's most recent registration statement or at such other place as it may from time to time designate in writing.

(b)    This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by either party without the written consent of the other party.

(c)    This Agreement shall be construed in accordance with the laws of the State of California applicable to contracts between California residents which are to be performed primarily within California.

(d)    This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original; but such counterparts shall, together, constitute only one instrument. This Agreement supersedes all prior Shareholder Services Agreements between the parties, and supersedes all prior agreements between the parties relating to the subject matters of this Agreement to the extent they are inconsistent with this Agreement.

(e)    The captions of this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect.

(f)    It is understood and expressly stipulated that neither the holders of Shares of the Investment Company nor any member of the Board, officer, agent or employee of the Investment Company shall be personally liable hereunder, nor shall any resort be had to other private property for the satisfaction of any claim or obligation hereunder, but the Investment Company only shall be liable.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective corporate officers thereunder duly authorized as of the day and year first above written.

	[NAME OF FUND/TRUST]	Franklin Templeton Investor Services LLC
BY:	__________________________	________________________
NAME: TITLE:

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SCHEDULE A

ANNUAL BASE SERVICING FEE FOR EACH FULL SERVICE ACCOUNT. A “Full Service Account” is (i) an account maintained by FTIS for a Fund shareholder of record, other than a Networked Account (as defined in Section 3(c) of this Agreement) or an account on which Beneficial Owner Servicing Fees (as defined in Section 3(b) of this Agreement) are paid; or (ii) a Fund account registered to a 529 Portfolio for which FTIS provides 529 Plan investor level record keeping at the 529 Portfolio level and for which the Fund is allocated its pro-rata portion of the Fund's annual base servicing fee for each 529 Plan investor, which fee is based on the 529 Portfolio's holding of all Franklin Templeton Funds.

EQUITY FUND            $_____ per annum

FIXED INCOME FUND        $_____ per annum

MONEY FUND            $_____ per annum

CLOSED ACCOUNT        $ ______ per annum (pro-rated beginning with the calendar month in which the account is closed and continuing through the month of the following calendar year in which the account is purged from the operative record system)

ANNUAL BASE SERVICING FEE FOR EACH NETWORKED ACCOUNT (as defined in Section 3(c) of this Agreement):

EQUITY FUND            $_____ per annum

FIXED INCOME FUND        $_____ per annum

MONEY FUND            $_____ per annum

CLOSED ACCOUNT        $ _____ per annum (pro-rated beginning with the calendar month in which the account is closed and continuing through the month of the following calendar year in which the account is purged from the operative record system)

ANNUAL BASE SERVICING FEE FOR EACH BENEFICIAL OWNER (as defined in Section 3(b) of this Agreement):

OPEN ACCOUNT            $_____ per annum

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SCHEDULE B

OUT-OF-POCKET EXPENSES

In addition to Beneficial Owner Servicing Fees and Networked Account Servicing Fees paid in accordance with Section 3 of this Agreement, the Investment Company shall reimburse FTIS monthly for the following out-of-pocket expenses paid to third parties in connection with the servicing of Accounts as required under the terms of this Agreement:

o Expenses in connection with the preparation and physical or electronic delivery of shareholder communications required under the terms of this Agreement, such as prospectuses, shareholder reports, tax information, proxy statements, and shareholder statements. Such amounts paid to third parties include, but are not limited to, costs of printing, mailing, stationary, forms, postage, and electronic delivery. In the case of out-of-pocket expenses incurred by FTIS or an affiliate associated with the printing of new account confirming prospectuses (which prospectuses the Investment Company is obligated to deliver under its Underwriting Agreement and that FTIS agrees to deliver, on behalf of the Fund, in connection with the confirmation process), FTIS and the Investment Company each will pay one-half (50%) of the costs of printing the new account confirming prospectus (including, but not limited to, print on demand prospectuses used for that purpose);

o telephone costs associated with servicing shareholders in accordance with this agreement;

o ACH, Federal Reserve and bank charges for check clearance, electronic funds transfers and wire transfers;

o Data Storage: Retention of electronic and paper account records; costs associated with data storage of account records and transactions records via magnetic tape, microfilm and microfiche, and digital images;

o insurance against loss of Share certificates when in transit;

o terminals, transmitting lines and any expenses incurred in connection with such terminals and lines established and/or maintained by FTIS to perform its obligations under this agreement;

o Amounts paid to independent accounting firms to perform independent audits of FTIS and the issuance of reports such as a SAS 70;

o Amounts paid in connection with use of national data bases to comply with requirements for locating lost shareholders;

o Proxy solicitation and tabulation expenses;

o NSCC Networking/Commission Settlement Expenses. Costs to utilize NSCC system to send commissions to brokerage firms; NSCC Fee, NSCC Year End Fee;

o all other miscellaneous expenses reasonably incurred by FTIS in the performance of its obligations under the Agreement.

This Schedule B may be amended by FTIS upon not less than 30 days' written notice to the Investment Company, subject to approval by the Board.

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SCHEDULE C

AS TRANSFER AGENT FOR THE INVESTMENT COMPANY, FTIS WILL:

o Upon receipt of proper authorization, record the transfer of Fund shares (“Shares”) in its transfer records in the name(s) of the appropriate legal shareholder(s) of record;

o Upon receipt of proper authorization, redeem Shares, debit shareholder accounts and provide for payment to Shareholders; and

o If the Fund issues certificated Shares, upon receipt of proper authorization, countersign as transfer agent and deliver certificates upon issuance, countersign certificates to reflect ownership transfers, and cancel certificates when redeemed.

AS SHAREHOLDER SERVICE AGENT FOR THE INVESTMENT COMPANY, FTIS WILL:

o Receive from the Investment Company, from the Investment Company's Principal Underwriter or from a Fund shareholder, in a manner acceptable to FTIS, information necessary to record Share sales and redemptions and to generate sale and/or redemption confirmations;

o Mail, or electronically transmit, sale and/or redemption confirmations;

o Coordinate the delivery of an account opening prospectus with delivery of initial purchase confirmations

o Accept and process payments from investors and their broker-dealers or other agents, for the purchase of Shares;

o Support the use of automated systems for payment and other share transactions, such as NSCC Fund/Serv and Networking and other systems which may be reasonably requested by FTIS customers;

o Keep records as necessary to implement any deferred sales charges, exchange restrictions or other policies of the Investment Company affecting Share transactions, including without limitation any restrictions or policies applicable to certain classes of shares, as stated in the applicable prospectus;

o Requisition Shares in accordance with instructions of the Principal Underwriter;

o Open, maintain and close shareholder accounts;

o Establish registration of ownership of Shares in accordance with generally accepted form;

o Maintain records of (i) issued Shares and (ii) number of Shareholders and their aggregate Shareholdings classified according to their residence in each State of the United States or foreign country;

o Accept and process telephone exchanges and redemptions for Shares in accordance with a Fund's Telephone Exchange and Redemption Privileges as described in the Fund's current prospectus.

o Maintain and safeguard records for each Shareholder showing name(s), address, number of any certificates issued, and number of Shares registered in such name(s), together with continuous proof of the outstanding Shares, and dealer identification, and reflecting all current changes. On request, provide information as to an investor's qualification for Cumulative Quantity Discount. Provide all accounts with, at minimum, quarterly and year-end historical statements;

o Provide on request a duplicate set of records for file maintenance in the Investment Company's office;

o Provide for the proper allocation of proceeds of share sales to the Investment Company and to the Principal Underwriter, in accordance with the applicable prospectus;

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o Redeem Shares and provide for the preparation and delivery of liquidation proceeds;

o Provide for the processing of redemption checks, and maintain checking account records;

o Exercise reasonable and good-faith business judgment in the registration of Share transfers, pledges and releases from pledges in accordance with the California Uniform Commercial Code - - Investment Securities;

o From time to time make transfers of certificates for such Shares as may be surrendered for transfer properly endorsed, and countersign new certificates issued in lieu thereof;

o Upon receipt of proper documentation, place stop transfers, obtain necessary insurance forms, and reissue replacement certificates against lost, stolen or destroyed Share certificates;

o Check surrendered certificates for stop transfer restrictions. Although FTIS cannot insure the genuineness of certificates surrendered for cancellation, it will employ all due reasonable care in deciding the genuineness of such certificates and the guarantor of the signature(s) thereon;

o Cancel surrendered certificates and record and countersign new certificates;

o Certify outstanding Shares to auditors;

o In connection with any meeting of Shareholders, upon receiving appropriate detailed instructions and written materials prepared by the Investment Company and proxy proofs checked by the Investment Company, provide for: (a) the printing of proxy cards, (b) the delivery to Shareholders of all reports, prospectuses, proxy cards and related proxy materials of suitable design for enclosing, (c) the receipt and tabulation of executed proxies, (d) solicitation of Shareholders for their votes and (e) delivery of a list of Shareholders for the meeting;

o Answer routine written correspondence, email, and telephone inquiries about individual accounts. Prepare monthly reports for correspondence volume and correspondence data necessary for the Investment Company's Semi-Annual Report on Form N-SAR;

o Provide for the preparation and delivery of dealer commission statements and checks;

o Maintain and furnish the Investment Company and its Shareholders with such information as the Investment Company may reasonably request for the purpose of compliance by the Investment Company with the applicable tax and securities laws of applicable jurisdictions;

o Mail confirmations of transactions to investors and dealers in a timely fashion;

o Provide for the payment or reinvestment of income dividends and/or capital gains distributions to Shareholders of record, in accordance with the Investment Company's and/or Shareholder's instructions, provided that:

(a) The Investment Company shall notify FTIS in writing promptly upon declaration of any such dividend and/or distribution, and in any event at least forty-eight (48) hours before the record date;

(b) Such notification shall include the declaration date, the record date, the payable date, the rate, and, if applicable, the reinvestment date and the reinvestment price to be used; and

(c) Prior to the payable date, the Investment Company shall furnish FTIS with sufficient fully and finally collected funds to make such distribution;

o Prepare and file annual U.S. information returns of dividends and capital gain distributions, gross redemption proceeds, foreign person's U.S. source income, and other U.S. federal and state information returns as required, and mail payee copies to shareholders, report and pay U.S. backup withholding on all reportable payments; report and pay U.S. federal income taxes withheld from distributions and other payments made to nonresidents of the U.S.; prepare and mail to shareholders any notice required by the Internal Revenue Code as to taxable

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dividends, tax-exempt interest dividends, realized net capital gains distributed and/or retained, foreign taxes paid and foreign source income distributed or deemed distributed, U.S. source income and any tax-withheld on such income, dividends received deduction information, or other applicable tax information appropriate for dissemination to shareholders of the Trust.

o Comply with all U.S. federal income tax requirements regarding the collection of tax identification numbers and other required shareholder certifications and information pertaining to shareholder accounts; respond to all notifications from the U.S. Internal Revenue Service regarding the application of the U.S. backup withholding requirements including tax identification number solicitation requirements;

o    Prepare transfer journals;

o Set up wire order Share transactions on file;

o Provide for receipt of payment for Share transactions, and update the transaction file;

o Produce delinquency and other trade file reports;

o Provide dealer commission statements and provide for payments thereof for the Principal Underwriter;

o Sort and print shareholder information by state, social code, price break, etc.; and

o Mail promptly the Statement of Additional Information of the Investment Company to each Shareholder upon request

In connection with the Investment Company's Systematic Withdrawal Plan, FTIS will:

o Make payment of amounts withdrawn periodically by the Shareholder pursuant to the Program by redeeming Shares, and confirm such redemptions to the Shareholder; and

o Provide confirmations of all redemptions, reinvestment of dividends and distributions, and any additional investments in the Program, including a summary confirmation at the year-end

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EX-10.12

Exhibit 10.12

FORM OF INVESTMENT MANAGEMENT AGREEMENT

FOR SEPARATE ACCOUNT CLIENTS

This Agreement is made this ____ day of ______________, 201[ ] (the “Agreement”), by and between[Name of Adviser] (the “Manager”), a [ ] company, and ____________________________ (“Client”).

1.    Appointment. Client hereby appoints the Manager as an investment manager to manage such of Client's assets as Client shall from time to time assign to it, the proceeds from the sale of such assets, and the income attributable to such assets (the “Account”). Client shall promptly notify the Manager in writing of any increase or reduction in the amount of the Account's assets subject to the Manager's investment direction.

2.    Authority of Manager. The Manager is authorized to supervise and direct the investment and reinvestment of the assets in the Account, subject to such limitations as are contained in the Guidelines described in Section 3 of this Agreement, as they may be from time to time amended, and subject to Client's right to direct the investment of the Account by means of Instructions as described in Section 3 of this Agreement. The Manager, as Client's agent and attorney-in-fact with respect to the Account, when it deems appropriate and without prior consultation with Client, may: (a) buy, sell, exchange, convert and otherwise invest or trade in any stocks, bonds, options, units and other securities, including money market instruments, whether the issuer is organized in the United States or outside the United States, at such times and in such manner as Manager determines; (b) place orders for the execution of such securities transactions with or through such brokers, dealers or issuers as the Manager may select, which brokers or dealers are entitled to receive compensation out of the Account for their services; (c) execute any documentation as the Account's agent and attorney-in-fact as Manager may deem necessary to facilitate any such investment or reinvestment; and (d) purchase, sell, exchange or convert foreign currency in the spot or forward markets in connection with portfolio trades as agent, at the market rate, as determined by the Manager in its sole discretion. [Conversion of currencies into and out of the base currency of the Account in restricted markets and generally income repatriation will be the responsibility of the Account's Custodian (defined below). To the extent that the Custodian performs such transactions, the Manager shall not have the ability to control such transactions and will be limited in its ability to assess the quality of such transactions.  In addition, whether a market is considered to be restricted will depend on a number of factors, including, but not limited to, country specific statutory documentation requirements, country specific structural risks, operational constraints, and convertibility issues. In addition, Client understands that the Manager's list of restricted and unrestricted markets may change over time and that the Manager's lists may also differ depending on the type of transaction. Accordingly, the Manager shall be entitled to consult with third parties, including, but not limited to, broker-dealers and custodians, and rely upon such information in making a good faith determination on whether a market is considered restricted.]¹[Manager, as Client's agent and attorney-in-fact with respect to the Account, when it deems appropriate and without prior consultation with Client, may engage external legal counsel to review trade-related documentation for bank loans and other over-the-counter instruments, and charge the Account for such costs.]² Manager may give a copy of this Agreement to any broker, dealer or other party to a transaction, as evidence of its authority to act on the Account's behalf.

The Manager is not authorized to accept delivery of cash or securities for the Account or to establish or maintain custodial arrangements for the Account. Client shall choose a custodian (the “Custodian”) to hold physical custody of the Account. Client shall direct the Custodian to segregate the assets in the Account and to invest and reinvest them in accordance with the directions transmitted by the Manager and received by the Custodian. Such directions shall be given in writing, or given orally and confirmed in writing promptly thereafter. Client shall not change the Custodian without giving Manager reasonable advance written notice of its intention to do so, together with the name and other relevant information with respect to the new Custodian. Manager shall not be liable for any act or omission of the Custodian.

^{____________________} 

¹    Consult with PM to determine the applicable language to include.

²    To be discussed internally and with the client.

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3.    Guidelines and Instructions. Attached hereto as Exhibit A is a statement of the investment objectives of Client, together with a statement of any and all specific investment restrictions applicable to the investment of the Account (the “Guidelines”). Client shall have the right at all times to modify the Guidelines or to give the Manager instructions (“Instructions”) to buy, sell or retain any investment, but no modification of the Guidelines and no Instructions or modifications of Instructions shall be binding upon the Manager unless the Manager has received written notice of them from an Authorized Person (as defined in Section 5(d)). Manager shall have a reasonable period to bring the Account into compliance with any changes to the Guidelines. Manager shall be under no duty to make any investigation or inquiry as to any statement contained in any written Guidelines or Instruction given and, unless and until specifically advised otherwise, Manager may accept the same as conclusive evidence of the truth and accuracy of the statements contained therein. The Guidelines and all Instructions, unless they expressly provide otherwise, shall continue to be effective until duly canceled by subsequent modifications duly communicated to the Manager in writing.

4.    Fees. As full compensation for its services under this Agreement, the Manager shall be paid quarterly a fee equal to one-fourth of the annual rates specified in Exhibit B, based on the asset value of the Account as of the last day of each calendar quarter on which the New York Stock Exchange is open for trading (the “Valuation Date”). The initial billing period will begin when this Agreement is signed by Client and accepted by Manager, and initial funding has been received by the Custodian (the “Inception Date”). The initial fee will be pro-rated to cover the period from the Inception Date through the Valuation Date for that calendar quarter and will be based on the valuation as of that Valuation Date. Future quarterly fees will be calculated similarly in arrears. If the Manager shall serve for less than the whole of any quarter, its compensation shall be determined as provided above on the basis of the value of the assets in the Account as of the end of the date of termination and shall be payable on a pro rata basis for the period of the quarter for which it served as Manager hereunder. Client shall direct the Custodian automatically to charge to the Account and pay directly to Manager all of Manager's fees upon the Custodian's receipt of an invoice from Manager.

5.    Representations and Warranties. Client hereby acknowledges, represents and warrants to, and agrees with Manager, as follows:

(a)Client Assets. Client is the sole owner of all assets in the Account and (i) there are no restrictions on the transfer, sale or public distribution of any such assets and (ii) no option, lien, charge, security or encumbrance exists over such assets, except as disclosed to Manager in writing.

(b)Authority. The Client has full authority and power to engage Manager under the terms and conditions of this Agreement, and such engagement does not violate Client's constituent documents, any other material agreement, order or judgment of any court or governmental authority, or any law applicable to Client. Client further represents that all investments permitted herein are within its power to enter into and have been duly authorized.

(c)Form ADV. Client acknowledges receipt of Part 2 of Manager's Form ADV.

(d)Authorized Persons. Any individual whose signature is affixed to this Agreement on Client's behalf has full authority and power to execute this Agreement on Client's behalf. Client represents that the officer specified on the attached Certification of Authorized Persons (Exhibit C) is authorized to act for Client and to certify to Manager from time to time, by listing on, and delivering to Manager Exhibit C or a substantially similar form, those other persons who also are so authorized to act on Client's behalf (“Authorized Persons”). The Client shall promptly notify Manager in writing of any event that could reasonably be anticipated to affect any such individual's authority under this Agreement.

(e)Qualified Institutional Buyer. That it is a Qualified Institutional Buyer (“QIB”) as that term is defined under Rule 144A of the Securities Act of 1933.³ 

^{____________________} 

³    This section should be deleted if the client is not a QIB

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(f)Notice of Certain Events. Client will promptly notify Manager in writing of any occurrence that results, or threatens to result, in any representations by Client contained in this Agreement becoming inaccurate, false, misleading or incomplete.    

6.    Non-Exclusive Agreement. Nothing in this Agreement shall be deemed to limit or restrict the Manager's right, or the right of any of its officers, directors or employees, to engage in any other business or to devote time and attention to the management or other aspects of any business, whether of a similar or dissimilar nature, or to render investment advisory services or services of any kind to any other corporation, firm, association or individual. Client understands that the Manager provides investment advisory services to numerous other clients and accounts. Client also understands that the Manager may give advice and take action with respect to any of its other clients or for its own account which may differ from the timing or nature of action taken by the Manager with respect to the Account.

Nothing in this Agreement shall impose upon the Manager any obligation to purchase or sell or to recommend for purchase or sale, with respect to the Account, any security (including long and short positions) which the Manager, or its affiliates, or its or their shareholders, directors, officers or employees may purchase or sell for its or their own account(s) or for the account of any other client. Client acknowledges that Manager's ability and that of its affiliates to effect or recommend transactions may be restricted by applicable regulatory requirements in the United States and elsewhere or its or their internal policies designed to comply with such requirements. Consequently, there may be periods when Manager may not initiate or recommend certain types of transactions in certain investments when Manager or its affiliates are performing services or when aggregated position limits have been reached, and Client will not be advised of that fact.

7.    Liability of the Manager. Except as may otherwise be provided by law, Client specifically agrees that the Manager shall not be liable for: (a) any loss that Client may suffer by reason of any investment decision made or other action taken or omitted in good faith and with that degree of care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity would use in the conduct of an enterprise of a like character and with like aims; (b) any loss, expense or other liability (including but not limited to attorneys' fees) incurred by Client or Manager arising from or in connection with Manager's compliance with the Guidelines or Instructions believed by Manager to be accurate; (c) any act or failure to act by any broker or other person with whom the Manager or Client may deal in connection with the subject matter of this Agreement; or (d) any loss or failure or delay in performance of any obligation under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond Manager's reasonable control, including, without limitation, acts of God, earthquakes, fires, floods, wars, terrorism, civil or military disturbances, sabotage, epidemics, riots, interruptions, loss or malfunctions of utility, computer software or hardware, transportation or communication service, accidents, labor disputes, acts of civil or military authority, governmental actions and inability to obtain labor, material, equipment or transportation; or (e) any special, consequential or punitive damages.

8.    Brokerage. Where the Manager places orders, or directs the placement of orders, for the purchase or sale of portfolio securities for the Account, in selecting brokers or dealers to execute such orders, the Manager is expressly authorized to consider, among other factors, the fact that a broker or dealer has furnished statistical, research or other information or services which enhance the Manager's investment research and portfolio management capability generally. It is further understood in accordance with Section 28(e) of the Securities Exchange Act of 1934, as amended, that the Manager may negotiate with and assign to a broker a commission which may exceed the commission which another broker would have charged for effecting the transaction if the Manager determines in good faith that the amount of commission charged was reasonable in relation to the value of brokerage and research services (as defined in Section 28(e)) provided by such broker, viewed in terms either of the Account or the Manager's overall responsibilities to the Manager's discretionary accounts.

Nothing herein shall preclude the aggregation or “bunching” of orders for the sale or purchase of portfolio securities in the Account with other accounts managed by Manager. With respect to the allocation of trades, Manager shall not favor any account over any other and purchase or sale orders executed contemporaneously shall be allocated in a manner it deems equitable among the accounts involved. In some cases, prevailing trading activity may cause Manager to receive various execution prices on the entire volume of any security sold for the accounts of its clients. In such cases, Manager may, but shall not be obligated to, average the various prices and charge or credit the Account with the average price, even though the effect of this aggregation of price may sometimes work to the disadvantage of the Account. Client understands and acknowledges that Manager or its affiliates may, based upon such factors as the Manager deems to be important, such as Manager's or its affiliates' respective trading strategies or their respective accounts' relative sizes or investment objectives or investment restrictions, restrict to certain accounts purchases and sales of securities acquired in initial public offerings, including those that trade or are expected to trade at a premium in the secondary market.

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In no event shall Manager be obligated to effect or place an order for any transaction for Client which Manager believes would violate any applicable state or federal law, rule, or regulation, or of the regulations of any regulatory or self-regulatory body to which Manager or any of its affiliates is subject to at the time of the proposed transaction.

9.    Confidential Relationship. Each party agrees that all non-public confidential information concerning the other party which may become available to such party in connection with services, transactions or relationships contemplated in this Agreement shall at all times be treated in strictest confidence and shall not be disclosed to third persons except as (a) may be required by law or regulatory authority, including but not limited to any subpoena, administrative, regulatory or judicial demand or court order, or as lawfully required by the bylaws or equivalent governing documents of any issuer in which the Account is invested, (b) as otherwise set forth in this Agreement, or (c) upon the prior written approval of the other party to this Agreement. Client authorizes Manager (i) to include Client's name in a representative or sample client list prepared by Manager, provided the Manager shall not disclose Client contact information or any information about Client's holdings, and (ii) to use the Manager's investment experience with respect to the Account, or the Account's performance, in composite performance presentations, marketing materials, attribution analyses, statistical compilations, or other similar compilations or presentations, provided such use does not disclose Client's identity except to the extent permitted by Client.

10.    Reports. The Manager shall send to Client a written report of the Account as of the Valuation Date of each calendar quarter. Such reports shall be submitted within a reasonable period following such Valuation Date. For the purposes of all reports made by the Manager to Client, foreign securities denominated in foreign currencies will be valued in United States dollars, unless otherwise agreed by Manager and Client. Client shall examine promptly each such report and any other report provided by Manager. To the extent permissible under applicablelaw, upon the expiration of the sixty (60) day period immediately following the date of such report, or the termination of this Agreement as provided herein, if earlier, Manager shall be forever released and discharged from all liability and accountability to anyone with respect to each such report, including, without limitation, all acts and omissions of Manager shown or reflected in each such report, except with respect to any acts or omissions as to which Client shall have filed written objections with Manager within such sixty (60) day period. Nothing herein shall impair the right of Manager to a judicial settlement of any report rendered by it.

11.    Valuation. In computing the asset value of the Account, if market quotations are readily available for securities listed on a securities exchange or on the NASDAQ National Market or NASDAQ Small Cap Market, the Manager shall value those securities at the last quoted sales price or the official closing price, respectively, on the Valuation Date, or, if there is no reported sale, within the range of the most recently quoted bid and ask prices. The Manager shall value over-the-counter securities within the range of the most recent bid and ask prices. If securities trade both in the over-the-counter market and on a stock exchange, the Manager shall value them according to the broadest and most representative market as determined by the Manager. Any security for which a current market quotation cannot be established or a market event occurs that calls into question the reliability of current market quotations, or any other security or asset, shall be valued in a manner determined in good faith by the Manager to reflect its fair market value.

12.     Proxies, Corporate Actions and Legal Notices. Decisions on proxy voting will be made by the Manager unless such decisions are expressly reserved by Client. Manager shall vote proxies related to securities held in the Account in accordance with Manager's proxy voting policies and procedures, as amended from time to time, which are available on request. Manager is authorized to exercise corporate actions for the Account in Manager's discretion.  Client acknowledges that Manager may not exercise a corporate action due to various factors, including, but not limited to, the Account's ineligibility to participate in such corporate action, Manager's inability to provide documentation within the period of time required for participation, or if Manager otherwise determines that participation is not in the best interests of the Account. Manager shall not be expected or required to take any action with respect to legal proceedings (including, without limitation, class action lawsuits, governmental or regulatory victim funds, and bankruptcy proceedings) involving securities presently or formerly held in the Account, or the issuers of such securities or related parties.

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13.    Acknowledgment of Investment Risk. Notwithstanding any provision herein to the contrary, Client understands that the value of investments made for the Account may go down as well as up and is not guaranteed. Client agrees that Manager has not made and is not making any guarantees, including without limitation a guarantee as to any specific level of performance of the Account. Client further understands and acknowledges that investment decisions made on behalf of the Account by Manager are subject to various market, currency, economic, and business risks as well as the risk that those investment decision will not always be profitable. Client acknowledges that past performance results achieved by accounts supervised or managed by Manager are not indicative of the future performance of the Account. Client understands that securities, mutual funds and other non-deposit investments are not deposits or other obligations of, or guaranteed by, the Manager or any affiliate, are not insured by the Federal Deposit Insurance Corporation (“FDIC”) or any other government agency, and are subject to investment risk, including possible loss of principal amounts invested.

Client recognizes and acknowledges that this account is designed for investors who may be seeking international diversification, and is not intended as a complete investment program. Client recognizes and acknowledges that investing in securities of companies in foreign countries involves certain special considerations which are not typically associated with investing in securities of U.S. companies. Such risk considerations include, but are not limited to, foreign currency considerations, investment and repatriation restrictions and economic and political risks. Client is cognizant of and hereby accepts the possibility that countries in which the Manager invests may expropriate or nationalize properties of foreigners or impose confiscatory taxation or exchange controls (which may include suspension of the ability to transfer currency from a given country.) Moreover, the countries in which the Account may invest also may be subject to political or social instability or diplomatic developments that could affect investments in securities of issuers in those countries.

14.    Termination; Survival. This Agreement may be terminated by either party upon thirty (30) days' written notice to the other party. Such termination will not, however, affect the liabilities or obligations of the parties under this Agreement arising from transactions initiated prior to such termination. Sections 4, 7, 9, 10, 17, and 18 shall survive the termination of this Agreement. Upon any termination of this Agreement, the Manager shall have no further obligations hereunder, provided that: (a) any liability under this Agreement of one party to the other shall survive and remain in full force and effect, notwithstanding such termination, with respect to any claim or matter on which either of the parties has given the other written notice prior to such termination (except that the Manager may render to Client a statement of fees due the Manager through the date of termination after such date), until such liability has been finally settled; (b) Manager retains the right to complete any transactions open as of the termination date and to retain amounts in the Account sufficient to effect such completion; and (c) Manager shall be entitled to its fees and expenses, pro rated to the date of termination. Upon termination, it shall be Client's exclusive responsibility to issue instructions in writing regarding any assets in the Account.

15.    Assignment. This Agreement may not be assigned (within the meaning of the Investment Advisers Act of 1940, as amended), in whole or in part, by the Manager without the prior written consent of Client. Subject to the preceding sentence, Manager may delegate all or part of its duties under this Agreement to any affiliate.

16.    Communications. All reports and other communications required hereunder to be in writing shall be delivered in person or sent by first-class mail postage prepaid, overnight courier, or confirmed facsimile with original to follow or email with original to follow.

If to Client:

Attention:    _______________________________

If to Manager:

[Insert Name of Manager]

c/o Franklin Templeton Institutional

Global Client Service Support

One Franklin Parkway, 960/3

San Mateo, CA 94403

Fax: 650.312.4000

Email:

With a Copy to:

[ __________________]

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Either party to this Agreement may, by written notice given at any time, designate a different address for the receipt of reports and other communications due hereunder.

17.    Governing Law; Venue. This Agreement shall be governed by and construed and enforced in accordance with the laws of the United States and with the laws of the State of [California] [New York] without giving effect to the choice of law or conflict of law provisions thereof. The parties hereby consent to jurisdiction and venue in the federal and state courts located in [the State of California] [New York County of the State of New York].

18. Entire Agreement; Modification. This Agreement: (a) sets forth the entire understanding of the parties with respect to the subject matter hereof; (b) supercedes any and all previous agreements, understandings and communications, oral or written, regarding this subject matter; and (c) may not be modified, amended, or waived except by a specific written instrument duly executed by the party against whom such modification, amendment, or waiver is sought to be enforced. In the event of any conflict or inconsistency with this Agreement and any instructions or investment guidelines that are not made part of this Agreement or any investment policy statement, this Agreement will control.

19.    Headings. The headings of the sections of this Agreement are for convenience of reference only and will not affect the meaning or operation of this Agreement. As used herein, references in the singular shall, as and if appropriate, include the plural.

20.    Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

21.    Severability. In the event that any provision of this Agreement is deemed to be void, voidable, illegal, or invalid for any reason, such provision will be of no force and effect only to the extent that it is so declared void, voidable, illegal, or invalid. All of the provisions of this Agreement not specifically found to be so deficient shall remain in full force and effect.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized officers to be effective as of the date first written above.

[NAME OF CLIENT]
By:
	(Name of authorized officer and title)
[NAME OF ADVISER]
By:
Name:
Title:

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EXHIBIT A

Statement of Investment Objectives

[To be provided by Client]

Statement of Client Account Restrictions

[To be provided by Client]

Exhibit A

EXHIBIT B

FEE SCHEDULE

Manager Name:

Strategy:

Investment Management Fee: As compensation for managing the Account, Manager shall be paid as follows:

     % of the first $      million assets

     % of the next $      million assets

     % of the balance of the assets

Exhibit B

EXHIBIT C

CERTIFICATION OF AUTHORIZED PERSONS

I certify, as the ______________________________________________________ (specify title; e.g., general partner [of a partnership]; president, secretary [of a corporation]) that the following persons are "Authorized Persons" under the Agreement:
NAME	TITLE	SPECIMEN SIGNATURE

Name of Legal Entity (Please Print)
By:
	Signature
Name and Title (Please Print)
Date:

Exhibit C

EX-10.13

Exhibit 10.13

To: Fiduciary Trust Company International

FORM OF INVESTMENT MANAGEMENT WITH CUSTODY AGREEMENT

FOR ACCOUNT ENTITLED

“________________________________________________________________”

1. Investment Management Account. We appoint you to be the agent for the undersigned entity (referred to as “we” or “us”) to act as investment manager of an Investment Management with Custody Account (“Account”) in the name specified above to manage all assets and cash, including but not limited to the proceeds from the sale of such assets, and the income attributable to such assets, that are delivered to you for the Account (“Account Assets”). We will deliver to you only assets owned solely by us, and will advise you of the cost, date and manner of acquisition of any additional assets contributed to the Account. We will promptly notify you in writing of any reduction in the amount of the Account Assets subject to your investment management direction.

2. Investment of Account Assets. Subject to our right to give instructions with respect to the Account as described in Section 4 of this Investment Management with Custody Agreement (the “Agreement”), we authorize you, in your discretion, to:

(a) invest, reinvest and/or hold cash un-invested, at the Account's risk, at such times and in such manner as you determine. You may buy, sell, exchange, convert and otherwise invest or trade in any stocks, bonds, units and other instruments, whether the issuer is organized in or outside the United States, including but not limited to:

(1) deposit accounts, including your own or those of any of your Affiliated or Subsidiary Companies, as defined in Section 12;

(2) shares of any mutual fund (including any money market mutual fund), including, without limiting the generality of this discretion, any mutual fund for which you and/or any of your Affiliated or Subsidiary Companies, acts as sponsor, distributor, administrator, adviser, or in any other capacity, or receives investment advisory or other fees (collectively, “Affiliated Funds”); provided, however, that if you invest in any Affiliated Fund, to the extent required by any applicable law, rule or regulation, this Agreement or any other governing document, you will exclude the value of any Account Assets so invested, from the calculation of your fee under Section 11of this Investment Management Agreement; and

(3) securities acquired pursuant to any public, private and direct placement, including, without limiting the generality of this discretion, any fund not registered under the Investment Company Act of 1940, as amended (a “Non-Registered Fund”), for which you and/or any of your Affiliated or Subsidiary Companies acts sponsor, distributor, administrator, adviser, or in any other capacity, or receives investment advisory or other fees; provided, however, that if you invest in any Non-Registered Fund, to the extent required by any applicable law, rule or regulation, this Agreement or any other governing document, you will exclude the value of any Account Assets so invested, from the calculation of your fee under Section 11 of this Investment Management Agreement.

(b) execute any documentation as the Account's agent and attorney-in-fact as you may deem necessary to facilitate any such investment or reinvestment, including but not limited to signing the Account's or our name (1) on any securities registered in the Account's or our name in order to sell them or enable them to be deposited as authorized above, (2) on any documents necessary to establish your security interest under Section 8, and (3) on all necessary certificates of ownership or other instruments required by an issuer, depository or governmental authority under applicable law or regulation, and authorize your sub-custodians to do likewise;

(c) place Account trades with any issuers or with any brokers or dealers, as you may select, including any of your Affiliated or Subsidiary Companies, which brokers or dealers are entitled to receive compensation out of the Account Assets for their services; and

(d) purchase, sell, exchange, convert and otherwise execute non-US currency transactions in the spot or forward market as agent or as principal, at the market rate, as determined by you at your discretion.

3. Custody of Account Assets. Subject to Sections 4 and 5(a), we authorize you, in your discretion:

(a) to hold cash and hold any issue of securities in the Account with securities of the same issue of your other clients, and deposit Account Assets (whether in “book entry” or physical form) with any domestic or non-US bank, broker or dealer, or securities depository, as your sub-custodian, in nominee name or otherwise;

(b) with respect to trades reported on the Account's behalf through Depository Trust Company (“DTC”), to accept instructions from DTC (whether in a DTC report or otherwise) as though they were given by us; and

(c) in those cases in which securities that have been purchased at varying prices are being sold or transferred, to use the “specific identification method” for allocating tax lots to a particular sale or transfer of securities for U.S. federal income tax purposes, unless we specifically request you to use another method of tax lot selection on or before the settlement date relating to that sale or transfer. This delegation of authority includes, without limitation, the discretion to select tax lots using a lot selection method other than “FIFO” (first-in, first-out).

4. Special Instructions. We authorize you to record telephone conversations related to the Account, and to rely on our oral or written instructions or notices when you receive them from any of our Authorized Persons, as defined in Section 6(k). We agree to confirm in writing any oral instruction given to you as soon thereafter as possible. You shall be under no duty to make any investigation or inquiry as to any statement contained in any oral or written instruction given and, unless and until specifically advised otherwise, you may accept the same as conclusive evidence of the truth and accuracy of the statements contained therein. You agree to comply with the following special instructions:

_________________________________________________________________________________________________

_________________________________________________________________________________________________

Notwithstanding the foregoing, we agree that these special instructions shall continue to be effective until canceled or modified by us in a subsequent writing delivered to you.

5. Administrative Provisions.

(a) Income. Please remit income as follows: ______________________________________________________

(b) Statements. You agree to send us statements of principal and income transactions and appraisals of Account Assets at least quarterly, in written form or in any other form that you choose to make available, and provide an annual statement of income classified for federal income tax purposes, and a schedule of security transactions for the calendar year showing gains and losses, if the income tax costs and dates of acquisition are available. For purposes of all reports made by you, any non-US securities denominated in non-US currencies will be valued in the Account's base currency, which will be in United States dollars unless we agree otherwise. We agree to accept any form of communication transmitting such information.

(c) Preparation of Income Tax Returns. You are oare not o authorized to prepare our income tax returns. If we have requested this service, you are authorized to charge the Account based on the amount of work involved.

(d) Shareholder Disclosure. You may disclose the Account's or our name, address and security position when requested to do so by any issuer of securities held in the Account, unless we indicate that you may not (unless required by law) by checking the box o.

6. Representations and Warranties. We hereby acknowledge, represent and warrant to, and agree with you, as follows:

(a) Client Assets. We are the sole owner of all Account Assets and (1) there are no restrictions on the transfer, sale or public distribution of any such Account Assets and (2) no option, lien, charge, security or encumbrance exists over such Account Assets, except as described to you in writing.

(b) Authority. All authority given to you under this Agreement will remain in effect until changed or terminated by us in writing. You may give a copy of this Agreement to any broker, dealer or other party to a transaction, as evidence of your authority to act on the Account's behalf.

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(c) Understanding of Terms. We have reviewed, either alone or with our independent agent, and understand the matters set forth in this Agreement. We have received all information that we deem necessary or desirable in connection with our decision to enter into this Agreement.

(d) Compliance with Anti-Money Laundering Laws. To comply with United States anti-money laundering laws and regulations, we represent as follows:

(1) The Account Assets were not, and are not, directly or indirectly derived from activities that may contravene United States federal, state or international anti-money laundering laws or regulations to the extent that any such laws or regulations may be applicable to us.

(2) If we are acting as agent or nominee for the beneficial owners of the Account Assets, we have adopted anti-money laundering policies and procedures with which we are in compliance.

(3) If we are a non-US bank, we are not operating under an offshore banking license, which as a condition of our license, prohibits us from conducting banking activities with the citizens of, or in the local currency of, the jurisdiction that issued such license.

(4) We have not been formed by, or for the benefit of, any individual described below; and none of the Authorized Persons identified to you from time to time in accordance herewith, is an individual described below:

(A) a current or former senior official in the executive, legislative, administrative, military, or judicial branches of a non-US government (whether elected or not), or

(B) a senior official of a major non-US political party, or

(C) a senior executive of a non-US government-owned commercial enterprise, or

(D) an immediate family member of any of the individuals described in subsections (A) through (C) above, or a person known to maintain a close personal or professional relationship with any such individuals.

For purposes of this representation, “senior official or executive” means an individual with substantial authority over policy, operations, or the use of government-owned resources; “immediatefamily”includes a spouse, parents, siblings, children, and a spouse's parents or siblings.

(5) We acknowledge that Federal law requires that you obtain, verify and record information and documents to identify the persons opening new accounts. For natural persons, this may include, without limitation, name, address, date of birth, and social security numbers, as well as government-issued photo identification, and for clients, other than natural persons, tax identification numbers and documents evidencing formation (e.g., Articles of Incorporation). We further acknowledge that you may also screen such names against various databases to verify identity.

(6) We agree to provide you with information and documentation relating to our organizational structure, beneficial ownership, source of funds and Authorized Persons, including any changes relating thereto, whenever such changes occur, or if there are no such changes, upon request by you.

(e) Changes to Account or Representations in Agreement. We will promptly notify you in writing of: (1) any change to the Account of which you would not otherwise have knowledge; and/or (2) any occurrence that results, or threatens to result, in any representations by us contained in this Agreement becoming false, misleading or incomplete.

(f) Past Performance Not Indicative of Future Results. We acknowledge that past performance results achieved by accounts supervised and/or managed by you may not be indicative of the future performance of the Account.

(g) Notice of Certain Events. We or our successor or legal representative, as the case may be, shall promptly notify you in writing of our dissolution, termination, merger, bankruptcy and/or the occurrence of any other event that might affect the validity of this Agreement or your authority under this Agreement. All directions given and actions taken or omitted by you prior to the time that such notice is given to you and which would otherwise be appropriate under the terms of this Agreement shall be binding upon us and any successor or legal representative thereto. Neither we nor any successor or legal representative thereto shall hold you liable for any loss, damage or liability arising out of or based upon any action taken or omitted by you in accordance with this Section 6(g).

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(h) Authority to Enter Into Agreement and of Signatory. We have full authority and power to engage you under the terms and conditions of this Agreement, and to execute, deliver and perform this Agreement without the need for any governmental or other authorizations, approvals or consents. Any individual whose signature is affixed to this Agreement on our behalf has full authority and power to execute this Agreement on our behalf. Any such individual and/or we shall promptly notify you in writing of any event that could reasonably be anticipated to affect any such individual's authority under this Agreement.

(i) Binding Obligations. We represent that your engagement by us pursuant to the terms of this Agreement constitutes our legal, valid and binding obligation and does not violate our constituent documents, any other material agreement, order or judgment of any court or governmental authority, or any law applicable to us. We further represent that all investments permitted herein are within our power to enter into and have been duly authorized, and that when you enter into such investments on the Account's behalf and they are binding against a counterparty, they will constitute our legal, valid, and binding obligations.

(j) Organizational Documents. We represent that you have been furnished a true and complete copy of such documentation, as amended to date, that establishes and evidences our organization as a legal entity and our authority to retain you. We will furnish promptly to you any amendments to such documentation, and we agree that, if any amendment affects your rights or obligations, such amendment will be binding on you only when you agree in writing. If the Account contains only part of our investment assets, we understand that you will have no responsibility for the diversification or concentration of all of our investments, and that you will have no duty, responsibility or liability for assets that are not in the Account.

(k) Corporations, Partnerships and Other Entities. We represent that the individual(s) specified below in subsections (1) and (2) of this Section 6(k) are authorized to certify to you from time to time those persons who are duly authorized to act for us under this Agreement (“Authorized Persons”) and those persons or entities who are our shareholders, partners or members. We agree to notify you promptly in writing of any changes in the information specified below or on the Exhibits referred to below and attached hereto. We further represent as follows:

(1) Corporations. If we are a Corporation:

(A) Our President, Secretary or Chief Financial Officer listed on the attached Certification of Authorized Persons (Exhibit A) is authorized to act for us as an Authorized Person and to certify to you from time to time, by listing on, and delivering to you, Exhibit A or a substantially similar form, those other persons who also are so authorized to act on our behalf.

(B) We have not issued bearer shares.

(C) If we have five or fewer shareholders, we have accurately and completely listed on the attached Certification of Ownership (Exhibit B) all of the applicable information requested.

(D) Check as applicable:

o we are incorporated under the laws of            as a for-profit corporation; or

o we are incorporated under the laws of            as a not-for-profit corporation.

(2) Partnerships and Other Entities.

(A) If we are a partnership, an Authorized Person is any one of the general partners named on the attached Certification of Authorized Persons (Exhibit A).

(B) If we are an entity other than a corporation or partnership, the officer specified on the attached Certification of Authorized Persons (Exhibit A) is authorized to act for us as an Authorized Person and to certify to you from time to time, by listing on, and delivering to you, Exhibit A or a substantially similar form, those other persons who also are so authorized to act on our behalf.

(C) If we are a partnership or entity other than a corporation, and have five or fewer partners or members, we have accurately and completely listed on the attached Certification of Ownership (Exhibit B) all of the applicable information requested.

(D) If we are a partnership or other entity, other than a corporation, we were formed under the laws of           .

(3) Our taxable (or fiscal year) ends           .

(4) We are not required to be registered under the United States Investment Company Act of 1940, as amended.

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(l) Non-US Entities. If we are a non-US entity including but not limited to a corporation or partnership formed under the laws of a country other than the United States, we further represent as follows:

(1) We have checked here o if we meet any of the criteria under Test I on Exhibit C hereto; and we have checked here o if we meet any of the criteria under Test II on such Exhibit C.

(2) We are not a dealer in stocks or securities and we do not have our principal office in the United States, nor are we otherwise engaged in trade or business in the United States.

We agree to notify you promptly in writing of any changes in the information specified above.

7. Repayment of Debts; Payment of Interest. We agree to repay you whether or not demand is made (a) the amount of any overdraft or other amounts (including but not limited to fees) owed by us, or charges or liabilities advanced or incurred by you, a sub-custodian, or nominee in connection with the Account (including but not limited to attorneys' fees) or any other account that we maintain with you, and (b) interest thereon at the rate then charged by you to your investment management clients on demand notes, as that rate may change from time to time (collectively “Debts”). You may charge the Account, or any other account that we may then have with you, for any Debts.

8. Grant of Security Interest. To collateralize our obligations to repay any Debts, by signing this Agreement we grant you a continuing security interest in the Account Assets and the assets in any other account (including, but not limited to cash, certificated and uncertificated securities and other financial assets) that we maintain with you in the same legal capacity at any time that any Debts are outstanding ("Collateral"). You may apply any cash, or sell any other Collateral and apply the proceeds to repayment of the Debts and related expenses. We agree that you will have all the rights of a secured creditor that are provided by New York law and that you may assign any such rights.

9. Your Responsibilities. Your responsibilities are solely as stated in this Agreement. Specifically, we agree that, except as may otherwise be provided by law, you shall not be liable for:

(a) any loss that the Account may suffer by reason of any investment decision made or other action taken or omitted in good faith and with that degree of care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity would use in the conduct of an enterprise of a like character and with like aims;

(b) any loss, expense or other liability (including but not limited to attorneys' fees) arising or incurred as a result of your compliance with our instructions, reasonably and in good faith believed by you to be genuine;

(c) any act or failure to act by any broker or other person with whom you or the Account may deal in connection with the subject matter of this Agreement; or

(d) any failure or delay in performance of any obligation under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond your reasonable control, including without limitation, acts of God; earthquakes; fires; floods; wars; terrorism; civil or military disturbances; sabotages; epidemics; riots; interruptions, loss or malfunctions of utility, transportation or communication service; accidents; labor disputes; acts of civil or military authority; governmental actions and inability to obtain labor, material, equipment or transportation.

We understand that the value of investments made for the Account may go down as well as up, and may be subject to various market, economic and/or business risks (and if the Account is invested in international markets, currency and political risks, including but not limited to the risks of nationalization, confiscatory taxation and exchange restrictions), as well as the risk that the investment decisions made may not always be profitable or prove to have been wise. We also understand that there is no guarantee as to the value of our investments or the specific performance level of the Account.

We understand that securities, mutual funds and other non-deposit investments are not deposits or other obligations of, or guaranteed by you or any other bank, are not insured by the Federal Deposit Insurance Corporation (“FDIC”) or any other government agency, and are subject to investment risk, including possible loss of principal amounts invested.

10. General Indemnification. We agree to indemnify you to the fullest extent permitted by law for any expense or liability (including, without limitation, attorneys' fees and related charges and expenses) incurred by you with respect to the Account

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when acting in accordance with this Agreement or to enforce this Agreement or any part thereof, including, without limitation, this Section 10.

11. Compensation. For your services under this Agreement, we authorize you to charge the fees and charges as set forth in Schedule 1 attached to this Agreement, as that schedule may be amended from time to time. You may charge ___% against income and ___% against principal; or to the extent that the income is insufficient to cover the percentage of fees and charges indicated, then the balance thereof is to be charged against principal.

12. Conflicts. Nothing in this Agreement shall be deemed to limit or restrict your right, or the right of any of your officers, directors or employees, to engage in any other business or to render investment management services or services of any kind to any other client. We understand that you provide investment management services to numerous other accounts. We understand that you may give advice and take action with respect to any of your other clients and their accounts that may differ from the timing or nature of action taken by you with respect to the Account. Nothing in this Agreement shall impose upon you any obligation to purchase or sell or to recommend for purchase or sale, with respect to the Account, any security (including long and short positions) that you, or your Affiliated or Subsidiary Companies, or your or their directors, officers, employees or family members of any of them may purchase or sell for its or their own account(s) or for the account of any other client. For purposes of this Agreement, “Affiliated or Subsidiary Companies” are those operating companies and investment entities, directly or indirectly controlled by, or under common control with, you or your parent company, Franklin Resources, Inc., and whether using the name Fiduciary, Templeton, Franklin, FTI or any other name.

We acknowledge that your ability and that of your Affiliated and Subsidiary Companies to effect and/or recommend transactions may be restricted by applicable regulatory requirements in the United States and elsewhere and/or your or their internal policies designed to comply with such requirements. Consequently, there may be periods when you may not initiate or recommend certain types of transactions in certain investments when you or your Affiliated or Subsidiary Companies are performing services or when aggregated position limits have been reached, and we will not be advised of that fact.

We acknowledge that you or your Affiliated or Subsidiary Companies may obtain and keep profits, commissions and fees in connection with activities for other clients and from their own accounts. We also acknowledge that you may receive compensation from distributors of mutual funds, including money market funds, for performing shareholder servicing functions that such distributors would otherwise have to perform themselves. If any Account Assets are invested in such funds, you are authorized to receive this compensation.

13. Proxies and Other Legal Notices. Decisions on proxy voting will be made by you unless such decisions are expressly reserved by us. You shall not be expected or required to take any action other than the rendering of investment-related advice with respect to lawsuits involving securities presently or formerly held in the Account, or the issuers thereof. However, you will use commercially reasonable efforts to file proofs of claim on behalf of the Account in class-action suits and, in that connection, you may, without prior permission or consent, include information about the Account. We acknowledge that by filing a proof of claim on our behalf, you may waive our right to pursue separate litigation against the issuer with respect to the subject matter of the lawsuit. Should you determine to undertake litigation against an issuer on behalf of one or more clients, you shall obtain our prior written consent to undertake such litigation before we are included in any such litigation. If we consent to such litigation, we agree to pay the portion of any reasonable legal fees associated with our claim or we will forfeit any claim to any assets that you may recover on behalf of the Account, up to the amount of such legal fees owed by us to you. If we do not consent to such litigation, we agree to hold you harmless for excluding the Account from such action and agree to indemnify you against any claims the Account may have against you resulting from the Account exclusion.

14. Brokerage. In selecting brokers or dealers to execute trades, you are expressly authorized to consider the fact that a broker or dealer has furnished statistical, research or other information or services which enhance your investment research and portfolio management capability, generally, even if the commission exceeds the commission which another broker would have charged for effecting the transaction; provided that you determine in good faith that the amount of commission charged was reasonable in relation to the value of brokerage and/or research services provided by such broker, either in respect of the Account or your overall responsibilities to your discretionary accounts.

Nothing herein shall preclude the “bunching” of orders for the sale or purchase of portfolio securities in the Account with other accounts managed by you. In some cases, prevailing trading activity may cause you to receive various execution prices on the entire volume of any security sold for the accounts of your clients. When this happens you may average the various prices and charge or credit the Account with the average price, even though the effect of this aggregation of price may sometimes work to the disadvantage of the Account. We also understand and acknowledge that you or your Affiliated

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or Subsidiary Companies may, based upon factors that you deem to be important, such as the relative size, investment objectives and/or investment restrictions of client accounts, restrict to certain accounts purchases and sales of securities acquired in initial public offerings, including those that trade or are expected to trade at a premium in the secondary market.

15. Confidential Relationships. All information and recommendations furnished by either party to the other shall at all times be treated in strictest confidence and shall not be disclosed to third persons, except as may be permitted by law or regulation, or except upon the prior written approval of the other party to this Agreement.

16. Communications. All Account documents and other instructions or notices, as applicable, required to be in writing shall be deemed duly given when delivered in person or sent by first-class mail, postage prepaid, overnight courier, or confirmed facsimile, with original to follow, to us at our address below, or to you addressed as follows:

Fiduciary Trust Company International

600 Fifth Avenue

New York, New York 10020

Either party may, by written notice given at any time, designate a different address for the receipt of Account documents, instructions or notices due under this Agreement.

17. Use of Affiliated or Subsidiary Companies. You may delegate all or part of your duties under this Agreement to any Affiliated or Subsidiary Company.

18. Governing Law. This Agreement will be governed by the laws of the State of New York without regard to any laws that might otherwise apply under principles of choice of law or conflicts of law.

19. Entire Agreement; Amendment; Termination. This Agreement sets forth and restates the entire understanding of the parties with respect to the Account, and replaces all previous agreements, understandings and communications, oral or written. It can only be amended by both parties in writing, except that, if you send us notice of an amendment, it will become effective thirty days later unless we object in writing within that time. We may terminate this Agreement at any time by written notice to you. You may terminate it on thirty days' written notice to us. Sections 6, 7, 8, 9, 10, 11, 15, 16, 18 and 19 shall survive the termination of this Agreement. Upon termination you will have no further obligations hereunder, provided that any liability under this Agreement of either party to the other shall survive and remain in full force and effect with respect to transactions that have been initiated, but not completed, and with respect to any other claim or matter of which either of the parties has given the other written notice prior to such termination, until such liability has been finally settled (except that you will be entitled to your fees, prorated to the date of termination). If liquidation of any part of the Account is necessary or desired by us, you will do so in an orderly manner and, after settlement of all amounts outstanding from the Account, you will transfer such liquidated assets and any other remaining Account Assets to us or in accordance with our instructions.

20. Severability. The provisions of this Agreement are severable. If any provision, or part thereof, is determined to be void, voidable, illegal or invalid, the remaining provisions of this Agreement, including parts thereof, if applicable, shall continue to be valid and enforceable.

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21. FDIC Insurance Disclosure. We acknowledge thatsecurities, mutual funds and other non-deposit investments in the Account are subject to the following:

NOT FDIC-INSURED

May lose value

No bank guarantee.

We understand that any cash balances placed on deposit in the Account are insured by the Federal Deposit Insurance Corporation (“FDIC”) to the maximum extent allowed under the FDIC's general deposit insurance rules; and that through December 31, 2012, deposits placed in non-interest-bearing transaction accounts, including demand deposits and checking accounts, are fully insured without monetary limit.

AGREED:
		Name of Legal Entity
FIDUCIARY TRUST COMPANY INTERNATIONAL		By:
			Signature
By:
	Signature	Name and Title (Please Print)
	Name and Title (Please Print)	Address
Date:
		City State Zip Code
Telephone

8

_{Fiduciary Trust Company International} 

EXHIBIT A

CERTIFICATION OF AUTHORIZED PERSONS

UNDER THE INVESTMENT MANAGEMENT WITH CUSTODY AGREEMENT

FOR ACCOUNT ENTITLED

“____________________________________________________________”

I certify, as the ____________________________ (specify title; e.g., general partner [of a partnership]; president, secretary [of a corporation]; managing member [of an LLC]), that the following persons are “Authorized Persons” under the Agreement. If box is checked o, complete shaded fields.

NAME TITLE TAX ID NO. SPECIMEN SIGNATURE

Name of Legal Entity (Please Print)
By:
	Signature
	Name and Title (Please Print)
Date:

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_{Fiduciary Trust Company International} 

EXHIBIT B

CERTIFICATION OF OWNERSHIP

of _______________________ (the “Company”)*

*Insert Name of Company above signature line below

Part A.

The undersigned hereby certifies on behalf of the Company:

1. As of the ___________ day of ___________________, 20___, the Company's books and records reflect that those listed below are the sole holders and beneficial owners of the Company's issued and outstanding shares or ownership interests:

Name of Holder of Ownership Interests  (“Owner”)* (e.g., Shareholder / Partner / Member) Residential Address

* Complete Part B for each Owner that is a “Fiduciary Account” (e.g., Trust, Estate, Uniform Transfers to Minors Act Account, etc.)

2. For any Fiduciary Account specified above, the funder, each beneficiary to whom income or principal is currently distributable, and each acting trustee, executor, custodian (under the Uniform Transfers to Minors Act), and other fiduciary, together with the legal capacity and residence of each, are listed in Part B.

Part B.

Name of Person Legal Capacity Legal Residence (City and State)

Insert name of Company
By:
	Signature
Name:
	Please print
Title:

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_{Fiduciary Trust Company International} 

(APPLICABLE TO NON-US ENTITIES ONLY)

EXHIBIT C

TO THE INVESTMENT MANAGEMENT WITH CUSTODY AGREEMENT

FOR ACCOUNT ENTITLED

“___________________________________________________________________”

U.S. federal law places certain restrictions on non-US ownership of any interest in oil and gas leases on federal (U.S.) land and on non-US control of United States shipping and communications companies. In connection with such securities that are or may be held in a client's account, Fiduciary must certify to issuers or to domestic depositories where the securities may be held (e.g., Depository Trust Company (“DTC”)) whether the client meets any of the criteria set forth in either Test I or Test II.

TEST I

For purposes of shipping and communications companies, do you meet any of the following criteria?

(a) Any individual person who is not a United States citizen;

(b) Any non-US government;

(c) Any corporation, the president, chief executive officer, chairman of the board of directors or other executive officer of which is not a United States citizen, or of which more than a minority of its directors necessary to constitute a quorum or more than a minority of its directors are not United States citizens;

(d) Any corporation organized under the laws of any non-US government;

(e) Any corporation of which more than one-fourth of its stock is owned beneficially or of record, or may be voted, by persons who are not United States citizens, or which by any other means whatsoever is controlled by or in which control is permitted to be exercised by persons who are not United States citizens;

(f) Any partnership or association which is controlled by persons who are not United States citizens; or

(g) Any person (including any individual, partnership, corporation or association) who acts as representative of, or fiduciary for, any person described in clauses (a) through (f) above.

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_{Fiduciary Trust Company International} 

(APPLICABLE TO NON-US ENTITIES ONLY)

EXHIBIT C (cont'd)

TO THE INVESTMENT MANAGEMENT WITH CUSTODY AGREEMENT

FOR ACCOUNT ENTITLED

“____________________________________________________________________”

TEST II

For purposes of ownership interests in oil and gas leases on federal (U.S.) land, do you meet any of the following criteria?

(a) Any individual person who is not a citizen of the United States;

(b) Any association (including a partnership, joint tenancy and tenancy in common) organized or existing under the laws of any government outside the United States or any state or territory thereof, or of which any members are not citizens of the United States;

(c) Any corporation organized under the laws of any government outside the United States or any state or territory thereof, or of which corporation, to the best of its knowledge, more than 5% of the voting stock, or if all of the voting stock, is owned or controlled by citizens of countries that deny to United States citizens privileges to own stock in corporations holding oil and gas leases similar to the privileges of non-United States citizens to own stock in corporations holding oil and gas leases on federal lands; or

(d) Any person otherwise not qualified to hold an interest in oil and gas leases on federal lands, including offshore areas, under federal laws and regulations in effect from time to time.

12

_{Fiduciary Trust Company International} 

SCHEDULE 1

FEE SCHEDULE

INVESTMENT MANAGEMENT WITH CUSTODY AGREEMENT

FOR ACCOUNT ENTITLED

“”

As compensation for managing and maintaining custody of my Account, you shall be paid an Investment Management Fee (the “Fee”) in accordance with the schedule set forth below based on the aggregate amount of assets under management in the “Relationship Accounts.” The Fee shall be allocated among, and charged pro rata to, each of the Relationship Accounts in proportion to the amount that each Relationship Account bears to the aggregate amount of all Relationship Accounts.

Investment Management Fee:

     % of the first       million assets

     % of the next       million assets

     % of the balance of the assets

The minimum annual Fee for the Relationship Accounts (in the aggregate) shall be _________.

From time to time, assets in an account may be invested in one or more of Fiduciary Trust's affiliated mutual funds. The value of these affiliated mutual funds will be excluded from our calculation of the Portfolio Management Account Services fee at the account level, but will be subject to an administrative fee of ___%, where permitted by law.

You shall be paid the Fee quarterly in arrears, based on the aggregate value of the assets in the Relationship Accounts valued as of the last Business Day of the previous calendar quarter, equal to one-fourth of the annual rates specified above. For purposes of this Schedule, “Business Day” shall mean any day on which banking institutions in New York State are required to be open for business.

13

Fiduciary

Trust

International

PERMISSION TO USE YOUR NAME ON A REPRESENTATIVE CLIENT LIST

We frequently receive requests from prospective clients for a sample or representative list of clients invested in one of our investment styles or strategies. We would greatly appreciate your taking a moment to consider being included on such a list.

We wish to honor your preference with respect to releasing the name of your organization to any third-party entity. For this reason, we wish to obtain your permission prior to including your name on a representative client list. Please note that inclusion of your name on such a list does not constitute an endorsement by you of Fiduciary Trust Company International. In addition, in the event a prospective client asks us for additional contact information with respect to your organization, we will obtain your permission to do so prior to releasing any such information.

Please review and indicate your preference in the appropriate space below in the "Permission to Use Name" box. Should your preference change at a later date, simply let your Portfolio Manager know, and we will make the necessary changes.

Thank you for your time and consideration.

Permission to Use Name
	You may use the name of our organization (but no contact or address information) in a representative or sample client list.
	We prefer that the name of our organization not be used in any representative or sample client list.
[INSERT NAME OF CLIENT]
By:
Name:		Date
Title:

14

15

16

EX-10.15

Exhibit 10.15

Form of Agreement

Form of Participation Agreement

as of __________, 20__

Franklin Templeton Variable Insurance Products Trust

Franklin/Templeton Distributors, Inc.

[Company]

[Company Distributor]

CONTENTS

SectionSubject Matter

1.    Parties and Purpose

2.    Representations and Warranties

3.    Purchase and Redemption of Trust Portfolio Shares

4.    Fees, Expenses, Prospectuses, Proxy Materials and Reports

5.    Voting

6.    Sales Material, Information and Trademarks

7.    Indemnification

8.    Notices

9.    Termination

10.    Miscellaneous

Schedules to this Agreement

A.    The Company and its Distributor

B.    Accounts of the Company

C.    Available Portfolios and Classes of Shares of the Trust

D.    Contracts of the Company

E.    [this schedule is not used]

F.    Rule 12b-1 Plans of the Trust

G.    Addresses for Notices

H.    Shared Funding Order

1.Parties and Purpose

This agreement (the “Agreement”) is entered by and between certain portfolios and classes thereof, specified below and in Schedule C, of Franklin Templeton Variable Insurance Products Trust, an open-end management investment company organized as a statutory trust under Delaware law (the “Trust”), Franklin/Templeton Distributors, Inc., a California corporation which is the principal underwriter for the Trust (the “Underwriter,” and together with the Trust, “we” or “us”), the insurance company identified on Schedule A (together “you”) and your distributor, on your own behalf and on behalf of each segregated asset account maintained by you that is listed on Schedule B, as that schedule may be amended from time to time (“Account” or “Accounts”).

The purpose of this Agreement is to entitle you, directly on behalf of the Accounts, to purchase the shares, and classes of shares, of portfolios of the Trust (“Portfolios”) that are identified on Schedule C, consistent with the terms of the prospectuses of the Portfolios, solely for the purpose of funding benefits of your variable life insurance policies or variable annuity contracts (“Contracts”) that are identified on Schedule D. This Agreement does not authorize any other purchases or redemptions of shares of the Trust.

Form of Agreement

2.Representations and Warranties

2.1Representations and Warranties by You

You represent and warrant that:

2.1.1    You are an insurance company duly organized and in good standing under the laws of your state of incorporation.

2.1.2    All of your directors, officers, employees, and other individuals or entities dealing with the money and/or securities of the Trust are and shall be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Trust, in an amount not less than $5 million. Such bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. You agree to make all reasonable efforts to see that this bond or another bond containing such provisions is always in effect, and you agree to notify us in the event that such coverage no longer applies.

2.1.3    Each Account is a duly organized, validly existing segregated asset account under applicable insurance law and interests in each Account are offered exclusively through the purchase of or transfer into a "variable contract" within the meaning of such terms under Section 817 of the Internal Revenue Code of 1986, as amended (“Code”) and the regulations thereunder. You will use your best efforts to continue to meet such definitional requirements, and will notify us immediately upon having a reasonable basis for believing that such requirements have ceased to be met or that they might not be met in the future.

2.1.4    Each Account either: (i) has been registered or, prior to any issuance or sale of the Contracts, will be registered as a unit investment trust under the Investment Company Act of 1940 (“1940 Act”); or (ii) has not been so registered in proper reliance upon an exemption from registration under Section 3(c) of the 1940 Act; if the Account is exempt from registration as an investment company under Section 3(c) of the 1940 Act, you will use your best efforts to maintain such exemption and will notify us immediately upon having a reasonable basis for believing that such exemption no longer applies or might not apply in the future.

2.1.5    The Contracts or interests in the Accounts: (i) are or, prior to any issuance or sale will be, registered as securities under the Securities Act of 1933, as amended (the “1933 Act”); or (ii) are not registered because they are properly exempt from registration under Section 3(a)(2) of the 1933 Act or will be offered exclusively in transactions that are properly exempt from registration under Section 4(2) or Regulation D of the 1933 Act, in which case you will make every effort to maintain such exemption and will notify us immediately upon having a reasonable basis for believing that such exemption no longer applies or might not apply in the future.

2.1.6    The Contracts: (i) will be sold by broker-dealers, or their registered representatives, who are registered with the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended (the “1934 Act”) and who are members in good standing of the Financial Industry Regulatory Authority (“FINRA”); (ii) will be issued and sold in compliance in all material respects with all applicable federal and state laws; and (iii) will be sold in compliance in all material respects with state insurance suitability requirements and FINRA suitability guidelines. Without limiting the foregoing, you agree that in recommending to a Contract owner the purchase, sale or exchange of any subaccount units under the Contracts, you shall have reasonable grounds for believing that the recommendation is suitable for such Contract owner and, to the extent such recommendations are made by broker-dealers not affiliated with you, you shall require in written agreements with such broker-dealers that they have reasonable grounds for believing that such recommendation is suitable for such Contract owner.

2.1.7    The Contracts currently are and will be treated as annuity contracts or life insurance contracts under applicable provisions of the Code and you will use your best efforts to maintain such treatment; you will notify us immediately upon having a reasonable basis for believing that any of the Contracts have ceased to be so treated or that they might not be so treated in the future.

2.1.8    The fees and charges deducted under each Contract, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by you.

2.1.9    You will use shares of the Trust only for the purpose of funding benefits of the Contracts through the Accounts.

2

Form of Agreement

2.1.10    Contracts will not be sold outside of the United States.

2.1.11    With respect to any Accounts which are exempt from registration under the 1940 Act in reliance on Section 3(c)(1) or Section 3(c)(7) thereof:

2.1.11.1 the principal underwriter for each such Account and any subaccounts thereof is a registered broker-dealer with the SEC under the 1934 Act;

2.1.11.2 the shares of the Portfolios of the Trust are and will continue to be the only investment securities held by the corresponding subaccounts; and

2.1.11.3 with regard to each Portfolio, you, on behalf of the corresponding subaccount, will:

(a) vote such shares held by it in the same proportion as the vote of all other holders of such shares; and

(b) refrain from substituting shares of another security for such shares unless the SEC has approved such substitution in the manner provided in Section 26 of the 1940 Act.

2.2Representations and Warranties by the Trust

The Trust represents and warrants that:

2.2.1    It is duly organized and in good standing under the laws of the State of Delaware.

2.2.2    All of its directors, officers, employees and others dealing with the money and/or securities of a Portfolio are and shall be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Trust in an amount not less than the minimum coverage required by Rule 17g-1 or other regulations under the 1940 Act. Such bond shall include coverage for larceny and embezzlement and be issued by a reputable bonding company.

2.2.3    It is registered as an open-end management investment company under the 1940 Act.

2.2.4    Each class of shares of the Portfolios of the Trust is registered under the 1933 Act.

2.2.5    It will amend its registration statement under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares.

2.2.6    It will comply, in all material respects, with the 1933 and 1940 Acts and the rules and regulations thereunder.

2.2.7    It is currently qualified as a “regulated investment company” under Subchapter M of the Code, it will make every effort to maintain such qualification, and will notify you immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future.

2.2.8    The Trust will use its best efforts to comply with the diversification requirements for variable annuity, endowment or life insurance contracts set forth in Section 817(h) of the Code, and the rules and regulations thereunder, including without limitation Treasury Regulation 1.817-5. Upon having a reasonable basis for believing any Portfolio has ceased to comply and will not be able to comply within the grace period afforded by Regulation 1.817‑5, the Trust will notify you immediately and will take all reasonable steps to adequately diversify the Portfolio to achieve compliance.

2.2.9    It currently intends for one or more classes of shares (each, a “Class”) to make payments to finance its distribution expenses, including service fees, pursuant to a plan (“Plan”) adopted under rule 12b-1 under the 1940 Act (“Rule 12b-1”), although it may determine to discontinue such practice in the future. To the extent that any Class of the Trust finances its distribution expenses pursuant to a Plan adopted under rule 12b-1, the Trust undertakes to comply with any then current SEC interpretations concerning rule 12b-1 or any successor provisions.

3

Form of Agreement

2.3Representations and Warranties by the Underwriter

The Underwriter represents and warrants that:

2.3.1    It is registered as a broker dealer with the SEC under the 1934 Act, and is a member in good standing of FINRA.

2.3.2    Each investment adviser (each, an “Adviser”) of a Portfolio, as indicated in the current prospectus of the Portfolio, is duly registered as an investment adviser under the Investment Advisers Act of 1940, as amended or exempt from such registration.

2.4Warranty and Agreement by Both You and Us

We received an order from the SEC dated November 16, 1993 (file no. 812‑8546), which was amended by a notice and an order we received on September 17, 1999 and October 13, 1999, respectively (file no. 812‑11698) (collectively, the “Shared Funding Order,” attached to this Agreement as Schedule H). The Shared Funding Order grants exemptions from certain provisions of the 1940 Act and the regulations thereunder to the extent necessary to permit shares of the Trust to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies and qualified pension and retirement plans outside the separate account context.

2.4.1You and we both warrant and agree that both you and we will comply with the “Applicants' Conditions” prescribed in the Shared Funding Order as though such conditions were set forth verbatim in this Agreement, including, without limitation, the provisions regarding potential conflicts of interest between the separate accounts which invest in the Trust and regarding contract owner voting privileges. In order for the Trust's Board of Trustees to perform its duty to monitor for conflicts of interest, you agree to inform us of the occurrence of any of the events specified in condition 2 of the Shared Funding Order to the extent that such event may or does result in a material conflict of interest as defined in that order.

2.4.2As covered financial institutions we, only with respect to Portfolio shareholders, and you each undertake and agree to comply, and to take full responsibility in complying with any and all applicable laws, regulations, protocols and other requirements relating to money laundering including, without limitation, the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001 (Title III of the USA PATRIOT Act).

3.Purchase and Redemption of Trust Portfolio Shares

3.1Availability of Trust Portfolio Shares

3.1.1We will make shares of the Portfolios available to the Accounts for the benefit of the Contracts. The shares will be available for purchase by the Accounts at the net asset value per share next computed after we (or our agent, or you as our designee) receive a purchase order, as established in accordance with the provisions of the then current prospectus of the Trust. All such orders are subject to acceptance by us and by the Portfolio or its transfer agent, and become effective only upon confirmation by us. Notwithstanding the foregoing, the Trust's Board of Trustees (“Trustees”) may refuse to sell shares of any Portfolio to any person, or may suspend or terminate the offering of shares of any Portfolio if such action is required by law or by regulatory authorities having jurisdiction or if, in the sole discretion of the Trustees, they deem such action to be in the best interests of the shareholders of such Portfolio.

3.1.2Without limiting the other provisions of this Section 3.1, among other delegations by the Trustees, the Trustees have determined that there is a significant risk that the Trust and its shareholders may be adversely affected by investors with short term trading activity and/or whose purchase and redemption activity follows a market timing pattern as defined in the prospectus for the Trust, and have authorized the Trust, the Underwriter and the Trust's transfer agent to adopt procedures and take other action (including, without limitation, rejecting specific purchase orders in whole or in part) as they deem necessary to reduce, discourage, restrict or eliminate such trading and/or market timing activity. You agree that your purchases and redemptions of Portfolio shares are subject to, and that you will assist us in implementing, the Market Timing Trading Policy and Additional Policies (as described in the Trust's prospectus) and the Trust's restrictions on excessive and/or short term trading activity and/or purchase and redemption activity that follows a market timing pattern. You further agree to cooperate fully in the implementation and fulfillment of the Trust's obligations pursuant to Rule 22c-2 under the 1940 Act.

4

Form of Agreement

3.1.3We agree that shares of the Trust will be sold only to: (i) life insurance companies which have entered into fund participation agreements with the Trust (“Participating Insurance Companies”) and their separate accounts or to qualified pension and retirement plans in accordance with the terms of the Shared Funding Order; and (ii) investment companies in the form of funds of funds. No shares of any Portfolio will be sold to the general public.

3.2Manual or Automated Portfolio Share Transactions

3.2.1Section 3.3 of this Agreement shall govern and Section 3.4 shall not be operative, unless we receive from you at the address provided in the next sentence, written notice that you wish to communicate, process and settle purchase and redemptions for shares (collectively, “share transactions”) via the Fund/SERV and Networking systems of the National Securities Clearing Corporation (“NSCC”). The address for you to send such written notice shall be: Retirement Services, Franklin Templeton Investments, 910 Park Place, 1^st Floor, San Mateo, California 94403-1906. After giving ten (10) days' advance written notice at the address provided in the previous sentence of your desire to use NSCC processing, Section 3.4 of this Agreement shall govern and Section 3.3 shall not be operative.

3.2.2At any time when, pursuant to the preceding paragraph, Section 3.4 of this Agreement governs, any party to this Agreement may send written notice to the other parties that it chooses to end the use of the NSCC Fund/SERV and Networking systems and return to manual handling of share transactions. Such written notice shall be sent: (i) if from you to us, to the address provided in the preceding paragraph; (ii) if from us to you, to your address in Schedule G of this Agreement. After giving ten (10) days' advance written notice at the address as provided in the previous sentence, Section 3.3 of this Agreement shall govern and Section 3.4 shall not be operative.

3.3Manual Purchase and Redemption

3.3.1You are hereby appointed as our designee for the sole purpose of receiving from Contract owners purchase and exchange orders and requests for redemption resulting from investment in and payments under the Contracts that pertain to subaccounts that invest in Portfolios (“Instructions”).  “Business Day” shall mean any day on which the New York Stock Exchange is open for trading and on which the Trust calculates its net asset value pursuant to the rules of the SEC and its current prospectus.  “Close of Trading” shall mean the close of trading on the New York Stock Exchange, generally 4:00 p.m. Eastern Time.  You represent and warrant that all Instructions transmitted to us for processing on or as of a given Business Day (“Day 1”) shall have been received in proper form and time stamped by you prior to the Close of Trading on Day 1. Such Instructions shall receive the share price next calculated following the Close of Trading on Day 1, provided that we receive such Instructions from you before 9:00 a.m. Eastern Time on the next Business Day (“Day 2”). You represent and warrant that Instructions received in proper form and time stamped by you after the Close of Trading on Day 1 shall be treated by you and transmitted to us as if received on Day 2. Such Instructions shall receive the share price next calculated following the Close of Trading on Day 2. You represent and warrant that you have, maintain and periodically test, procedures and systems in place reasonably designed to prevent Instructions received after the Close of Trading on Day 1 from being executed with Instructions received before the Close of Trading on Day 1. All Instructions we receive from you after 9:00 a.m. Eastern Time on Day 2 shall be processed by us on the following Business Day and shall receive the share price next calculated following the Close of Trading on Day 2.

3.3.2We shall calculate the net asset value per share of each Portfolio on each Business Day, and shall communicate these net asset values to you or your designated agent on a daily basis as soon as reasonably practical after the calculation is completed (normally by 6:30 p.m. Eastern Time).

3.3.3You shall submit payment for the purchase of shares of a Portfolio on behalf of an Account in federal funds transmitted by wire to the Trust or to its designated custodian, which must receive such wires no later than the close of the Reserve Bank, which is currently 6:00 p.m. Eastern Time, on the same Business Day on which such purchase orders are transmitted to us for processing on that Business Day in conformance with section 3.3.1.

3.3.4We will redeem any full or fractional shares of any Portfolio, when requested by you on behalf of an Account, at the net asset value next computed after receipt by us (or our agent or you as our designee) of the request for redemption, as established in accordance with the provisions of the then current prospectus of the Trust. We shall make payment for such shares in the manner we establish from time to time, but in no event shall payment be delayed for a greater period than is permitted by the 1940 Act.

5

Form of Agreement

3.3.5Issuance and transfer of the Portfolio shares will be by book entry only. Stock certificates will not be issued to you or the Accounts. Portfolio shares purchased from the Trust will be recorded in the appropriate title for each Account or the appropriate subaccount of each Account.

3.3.6We shall furnish, on or before the ex-dividend date, notice to you of any income dividends or capital gain distributions payable to the Accounts on the shares of any Portfolio. You hereby elect to receive all such income dividends and capital gain distributions as are payable on shares of a Portfolio in additional shares of that Portfolio, and you reserve the right to change this election in the future. We will notify you of the number of shares so issued as payment of such dividends and distributions.

3.3.7Each party to this Agreement agrees that, in the event of a material error resulting from incorrect information or confirmations, the parties will seek to comply in all material respects with the provisions of applicable federal securities laws.

3.4Automated Purchase and Redemption

3.4.1“Fund/SERV” shall mean NSCC's Mutual Fund Settlement, Entry and Registration Verification System, a system for automated, centralized processing of mutual fund purchase and redemption orders, settlement, and account registration; “Networking” shall mean NSCC's system that allows mutual funds and life insurance companies to exchange account level information electronically; and “Settling Bank” shall mean the entity appointed by the Trust or you, as applicable, to perform such settlement services on behalf of the Trust and you, as applicable, which entity agrees to abide by NSCC's then current rules and procedures insofar as they relate to same day funds settlement. In all cases, processing and settlement of share transactions shall be done in a manner consistent with applicable law.

3.4.2You are hereby appointed as our designee for the sole purpose of receiving from Contract owners purchase and exchange orders and requests for redemption resulting from investment in and payments under the Contracts that pertain to subaccounts that invest in Portfolios ("Instructions"). "Business Day" shall mean any day on which the New York Stock Exchange is open for trading and on which the Trust calculates its net asset value pursuant to the rules of the SEC and its current prospectus. "Close of Trading" shall mean the close of trading on the New York Stock Exchange, generally 4:00 p.m. Eastern Time. Upon receipt of Instructions, and upon your determination that there are good funds with respect to Instructions involving the purchase of shares, you will calculate the net purchase or redemption order for each Portfolio.

3.4.3On each Business Day, you shall aggregate all purchase and redemption orders for shares of a Portfolio that you received prior to the Close of Trading. You represent and warrant that all orders for net purchases or net redemptions derived from Instructions received by you and transmitted to Fund/SERV for processing on or as of a given Business Day (“Day 1”) shall have been received in proper form and time stamped by you prior to the Close of Trading on Day 1. Such orders shall receive the share price next calculated following the Close of Trading on Day 1, provided that we receive Instructions from Fund/SERV by 6:30 a.m. Eastern Time on the next Business Day (“Day 2”). You represent and warrant that orders received in good order and time stamped by you after the Close of Trading on Day 1 shall be treated by you and transmitted to Fund/SERV as if received on Day 2. Such orders shall receive the share price next calculated following the Close of Trading on Day 2. All Instructions we receive from Fund/SERV after 6:30 a.m. Eastern Time on Day 2 shall be processed by us on the following Business Day and shall receive the share price next calculated following the close of trading on Day 2. You represent and warrant that you have, maintain and periodically test, procedures and systems in place reasonably designed to prevent orders received after the Close of Trading on Day 1 from being executed with orders received before the Close of Trading on Day 1, and periodically monitor the systems to determine their effectiveness. Subject to your compliance with the foregoing, you will be considered the designee of the Underwriter and the Portfolios, and the Business Day on which Instructions are received by you in proper form prior to the Close of Trading will be the date as of which shares of the Portfolios are deemed purchased, exchanged or redeemed pursuant to such Instructions. Dividends and capital gain distributions will be automatically reinvested at net asset value in accordance with the Portfolio's then current prospectus.

3.4.4We shall calculate the net asset value per share of each Portfolio on each Business Day, and shall furnish to you through NSCC's Networking or Mutual Fund Profile System: (i) the most current net asset value information for each Portfolio; and (ii) in the case of fixed income funds that declare daily dividends, the daily accrual or the interest rate factor. All such information shall be furnished to you by 6:30 p.m. Eastern Time on each Business Day or at such other time as that information becomes available.

6

Form of Agreement

3.4.5You will wire payment for net purchase orders by the Trust's NSCC Firm Number, in immediately available funds, to an NSCC settling bank account designated by you in accordance with NSCC rules and procedures on the same Business Day such purchase orders are communicated to NSCC. For purchases of shares of daily dividend accrual funds, those shares will not begin to accrue dividends until the day the payment for those shares is received.

3.4.6We will redeem any full or fractional shares of any Portfolio, when requested by you on behalf of an Account, at the net asset value next computed after receipt by us (or our agent or you as our designee) of the request for redemption, as established in accordance with the provisions of the then current prospectus of the Trust. NSCC will wire payment for net redemption orders by the Trust, in immediately available funds, to an NSCC settling bank account designated by you in accordance with NSCC rules and procedures on the Business Day such redemption orders are communicated to NSCC, except as provided in the Trust's prospectus and statement of additional information.

3.4.7Issuance and transfer of the Portfolio shares will be by book entry only. Stock certificates will not be issued to you or the Accounts. Portfolio shares purchased from the Trust will be recorded in the appropriate title for each Account or the appropriate subaccount of each Account.

3.4.8We shall furnish through NSCC's Networking or Mutual Fund Profile System on or before the ex-dividend date, notice to you of any income dividends or capital gain distributions payable to the Accounts on the shares of any Portfolio. You hereby elect to receive all such income dividends and capital gain distributions as are payable on shares of a Portfolio in additional shares of that Portfolio, and you reserve the right to change this election in the future. We will notify you of the number of shares so issued as payment of such dividends and distributions.

3.4.9All orders are subject to acceptance by Underwriter and become effective only upon confirmation by Underwriter. Underwriter reserves the right: (i) not to accept any specific order or part of any order for the purchase or exchange of shares through Fund/SERV; and (ii) to require any redemption order or any part of any redemption order to be settled outside of Fund/SERV, in which case the order or portion thereof shall not be “confirmed” by Underwriter, but rather shall be accepted for redemption in accordance with Section 3.4.11 below.

3.4.10All trades placed through Fund/SERV and confirmed by Underwriter via Fund/SERV shall settle in accordance with Underwriter's profile within Fund/SERV applicable to you. Underwriter agrees to provide you with account positions and activity data relating to share transactions via Networking.

3.4.11If on any specific day you or Underwriter are unable to meet the NSCC deadline for the transmission of purchase or redemption orders for that day, a party may at its option transmit such orders and make such payments for purchases and redemptions directly to you or us, as applicable, as is otherwise provided in the Agreement; provided, however, that we must receive written notification from you by 9:00 a.m. Eastern Time on any day that you wish to transmit such orders and/or make such payments directly to us.

3.4.12In the event that you or we are unable to or prohibited from electronically communicating, processing or settling share transactions via Fund/SERV, you or we shall notify the other, including providing the notification provided above in Section 3.4.11. After all parties have been notified, you and we shall submit orders using manual transmissions as are otherwise provided in the Agreement.

3.4.13These procedures are subject to any additional terms in each Portfolio's prospectus and the requirements of applicable law. The Trust reserves the right, at its discretion and without notice, to suspend the sale of shares or withdraw the sale of shares of any Portfolio.

3.4.14Each party to the Agreement agrees that, in the event of a material error resulting from incorrect information or confirmations, the parties will seek to comply in all material respects with the provisions of applicable federal securities laws.

3.4.15You and Underwriter represent and warrant that each: (a) has entered into an agreement with NSCC; (b) has met and will continue to meet all of the requirements to participate in Fund/SERV and Networking; (c) intends to remain at all times in compliance with the then current rules and procedures of NSCC, all to the extent necessary or appropriate to facilitate such communications, processing, and settlement of share transactions; and (d) will notify the other parties to this Agreement if there is a change in or a pending failure with respect to its agreement with NSCC.

7

Form of Agreement

4.Fees, Expenses, Prospectuses, Proxy Materials and Reports

4.1    We shall pay no fee or other compensation to you under this Agreement except as provided on Schedule F, if attached.

4.2    We shall prepare and be responsible for filing with the SEC, and any state regulators requiring such filing, all shareholder reports, notices, proxy materials (or similar materials such as voting instruction solicitation materials), prospectuses and statements of additional information of the Trust. We shall bear the costs of preparation and filing of the documents listed in the preceding sentence, registration and qualification of the Trust's shares of the Portfolios.

4.3    We shall use reasonable efforts to provide you, on a timely basis, with such information about the Trust, the Portfolios and each Adviser, in such form as you may reasonably require, as you shall reasonably request in connection with the preparation of disclosure documents and annual and semi-annual reports pertaining to the Contracts.

4.4    At your option, we shall provide you, at our expense, with either: (i) for each Contract owner who is invested through the Account in a subaccount corresponding to a Portfolio (“designated subaccount”), one copy of each of the following documents on each occasion that such document is required by law or regulation to be delivered to such Contract owner who is invested in a designated subaccount: the Trust's current prospectus, including any profile or summary prospectus (if, at the sole discretion of the Trust, it chooses to create or authorize creation of such short profile or summary prospectus), annual report, semi-annual report and other shareholder communications, including any amendments or supplements to any of the foregoing, pertaining specifically to the Portfolios (“Designated Portfolio Documents”); (ii) a camera ready copy of such Designated Portfolio Documents in a form suitable for printing and from which information relating to series of the Trust other than the Portfolios has been deleted to the extent practicable; or (iii) a .pdf format file of such Designated Portfolio Documents for posting on your website or using in other electronic format. In connection with clause (ii) of this paragraph, we will pay for proportional printing costs for such Designated Portfolio Documents in order to provide one copy for each Contract owner who is invested in a designated subaccount on each occasion that such document is required by law or regulation to be delivered to such Contract owner, and provided the appropriate documentation is provided and approved by us. We shall provide you with a copy of the Trust's current statement of additional information, including any amendments or supplements, in a form suitable for you to duplicate or, upon your request, in a .pdf format file. The expenses of furnishing, including mailing or posting on your website, to Contract owners the documents referred to in this paragraph in typeset or electronic format shall be borne by you. For each of the documents provided to you in accordance with clause (i) of this paragraph 4.4, we shall provide you, upon your request and at your expense, additional copies. In no event shall we be responsible for the costs of printing or delivery of Designated Portfolio Documents to potential or new Contract owners or the delivery of Designated Portfolio Documents to existing contract owners.

4.5    We shall provide you, at our expense, with copies of any Trust-sponsored proxy materials in such quantity as you shall reasonably require for distribution to Contract owners who are invested in a designated subaccount. You shall bear the costs of distributing proxy materials (or similar materials such as voting solicitation instructions) to Contract owners.

4.6    You assume sole responsibility for ensuring that the Trust's Designated Portfolio Documents and proxy materials are delivered to Contract owners in accordance with applicable federal and state securities laws. For Designated Portfolio Documents and other Trust materials provided by you on your website or by other electronic means, you assume sole responsibility for ensuring that such delivery is in compliance with applicable state and federal requirements pertaining to electronic delivery, including consent, access, searchability by users, notice and evidence of delivery.

5.Voting

5.1    All Participating Insurance Companies shall have the obligations and responsibilities regarding pass-through voting and conflicts of interest corresponding to those contained in the Shared Funding Order.

5.2    If and to the extent required by law, you shall: (i) solicit voting instructions from Contract owners; (ii) vote the Trust shares in accordance with the instructions received from Contract owners; and (iii) vote Trust shares owned by subaccounts for which no instructions have been received from Contract owners in the same proportion as Trust shares of such Portfolio for which instructions have been received from Contract owners; so long as and to the extent that the SEC continues

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to interpret the 1940 Act to require pass-through voting privileges for variable contract owners. You reserve the right to vote Trust shares held in any Account in your own right, to the extent permitted by law.

5.3    So long as, and to the extent that, the SEC interprets the 1940 Act to require pass-through voting privileges for Contract owners, you shall provide pass-through voting privileges to Contract owners whose Contract values are invested, through the Accounts, in shares of one or more Portfolios of the Trust. We shall require all Participating Insurance Companies to calculate voting privileges in the same manner and you shall be responsible for assuring that the Accounts calculate voting privileges in the manner established by us. With respect to each Account, you will vote shares of each Portfolio of the Trust held by an Account and for which no timely voting instructions from Contract owners are received in the same proportion as those shares held by that Account for which voting instructions are received. You and your agents will in no way recommend or oppose or interfere with the solicitation of proxies for Portfolio shares held to fund the Contracts without our prior written consent, which consent may be withheld in our sole discretion.

6.Sales Material, Information and Trademarks

6.1    For purposes of this Section 6, “Sales Literature/ Promotional Material” includes, but is not limited to, portions of the following that use any logo or other trademark related to the Trust, or Underwriter or its affiliates, or refer to the Trust: advertisements (such as material published or designed for use in a newspaper, magazine or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, web-sites and other electronic communications or other public media), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts or any other advertisement, sales literature or published article or electronic communication), educational or training materials or other communications distributed or made generally available to some or all agents or employees in any media, and disclosure documents, shareholder reports and proxy materials.

6.2    You may use the name of the Trust and trademarks and the logo of the Underwriter in Sales Literature/Promotional Material as reasonably necessary to carry out your performance and obligations under this Agreement provided that you comply with the provisions of this Agreement. You agree to abide by any reasonable use guidelines regarding use of such trademarks and logos that we may give from time to time. You shall, as we may request from time to time, promptly furnish, or cause to be furnished to us or our designee, at least one complete copy of each registration statement, prospectus, statement of additional information, private placement memorandum, retirement plan disclosure information or other disclosure documents or similar information, as applicable (collectively “Disclosure Documents”), as well as any report, solicitation for voting instructions, Sales Literature/ Promotional Material created and approved by you, and all amendments to any of the above that relate to the Contracts, the Accounts, the Trust, or Underwriter or its affiliates.

6.3    You and your agents shall not give any information or make any representations or statements on behalf of the Trust or concerning the Trust, the Underwriter or an Adviser, other than information or representations contained in and accurately derived from the registration statement or prospectus for the Trust shares (as such registration statement and prospectus may be amended or supplemented from time to time), annual and semi-annual reports of the Trust, Trust-sponsored proxy statements, or in Sales Literature/Promotional Material created by us for the Trust and provided by the Trust or its designee to you, except as required by legal process or regulatory authorities or with the written permission of the Trust or its designee.     

6.4    You agree, represent and warrant that you are solely responsible for any Sales Literature/ Promotional Material prepared by you and that such material will: (a) conform to all requirements of any applicable laws or regulations of any government or authorized agency having jurisdiction over the offering or sale of shares of the Portfolios or Contracts; (b) be solely based upon and not contrary to or inconsistent with the information or materials provided to you by us or a Portfolio; and (c) be made available promptly to us upon our request. You agree to file any Sales Literature/Promotional Material prepared by you with FINRA, or other applicable legal or regulatory authority, within the timeframes that may be required from time to time by FINRA or such other legal or regulatory authority. Unless otherwise expressly agreed to in writing, it is understood that we will neither review nor approve for use any materials prepared by you and will not be materially involved in the preparation of, or have any responsibility for, any such materials prepared by you. You are not authorized to modify or translate any materials we have provided to you.

6.5    You shall promptly notify us of any written customer complaint or notice of any regulatory investigation or proceeding received by you relating to any Disclosure Documents or Sales Literature/Promotional Material.

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6.6    We shall not give any information or make any representations or statements on behalf of you or concerning you, the Accounts or the Contracts other than information or representations, including naming you as a Trust shareholder, contained in and accurately derived from Disclosure Documents for the Contracts (as such Disclosure Documents may be amended or supplemented from time to time), or in materials approved by you for distribution, including Sales Literature/ Promotional Material, except as required by legal process or regulatory authorities or with your written permission.

6.7    Except as provided in Section 6.2, you shall not use any designation comprised in whole or part of the names or marks “Franklin” or “Templeton” or any logo or other trademark relating to the Trust or the Underwriter without prior written consent, and upon termination of this Agreement for any reason, you shall cease all use of any such name or mark as soon as reasonably practicable.

6.8    You shall furnish to us ten (10) Business Days prior to its first submission to the SEC or its staff, any request or filing for no-action assurance or exemptive relief naming, pertaining to, or affecting, the Trust, the Underwriter or any of the Portfolios.

6.9    You agree that any posting of Designated Portfolio Documents on your website or use of Designated Portfolio Documents in any other electronic format will result in the Designated Portfolio Documents: (i) appearing identical to the hard copy printed version or .pdf format file provided to you by us (except that you may reformat .pdf format prospectus files in order to delete blank pages and to insert .pdf format prospectus supplement files provided by us to you); (ii) being clearly associated with the particular Contracts in which they are available and posted in close proximity to the applicable Contract prospectuses; (iii) having no less prominence than prospectuses of any other underlying funds available under the Contracts; (iv) in compliance with any statutory prospectus delivery requirements and (v) being used in an authorized manner. Notwithstanding the above, you understand and agree that you are responsible for ensuring that participation in the Portfolios, and any website posting, or other use, of the Designated Portfolio Documents is in compliance with this Agreement and applicable state and federal securities and insurance laws and regulations, including as they relate to paper or electronic delivery or use of fund prospectuses. We reserve the right to inspect and review your website if any Designated Portfolio Documents and/or other Trust documents are posted on your website and you shall, upon our reasonable request, provide us timely access to your website materials to perform such inspection and review.

In addition, you agree to be solely responsible for maintaining and updating the Designated Portfolio Documents' .pdf files and removing and/or replacing promptly any outdated prospectuses and other documents, as necessary, ensuring that any accompanying instructions by us, for using or stopping use, are followed. You agree to designate and make available to us a person to act as a single point of communication contact for these purposes. We are not responsible for any additional costs or additional liabilities that may be incurred as a result of your election to place the Designated Portfolio Documents on your website. We reserve the right to revoke this authorization, at any time and for any reason, although we may instead make our authorization subject to new procedures.

6.10    Each of your and your distributor's registered representatives, agents, independent contractors and employees, as applicable, will have access to our websites at franklintempleton.com, and such other URLs through which we may permit you to conduct business concerning the Portfolios from time to time (referred to collectively as the “Site”) as provided herein: (i) upon registration by such individual on a Site, (ii) if you cause a Site Access Request Form (an “Access Form”) to be signed by your authorized supervisory personnel and submitted to us, as a Schedule to, and legally a part of, this Agreement, or (iii) if you provide such individual with the necessary access codes or other information necessary to access the Site through any generic or firm-wide authorization we may grant you from time to time. Upon receipt by us of a completed registration submitted by an individual through the Site or a signed Access Form referencing such individual, we shall be entitled to rely upon the representations contained therein as if you had made them directly hereunder and we will issue a user identification, express number and/or password (collectively, “Access Code”). Any person to whom we issue an Access Code or to whom you provide the necessary Access Codes or other information necessary to access the Site through any generic or firm-wide authorization we may grant you from time to time shall be an “Authorized User.”

We shall be entitled to assume that such person validly represents you and that all instructions received from such person are authorized, in which case such person will have access to the Site, including all services and information to which you are authorized to access on the Site. All inquiries and actions initiated by you (including your Authorized Users) are your responsibility, are at your risk and are subject to our review and approval (which could cause a delay in processing). You agree that we do not have a duty to question information or instructions you (including Authorized Users) give to us under this Agreement, and that we are entitled to treat as authorized, and act upon, any such instructions and information you submit to us. You agree to take all reasonable measures to prevent any individual other than an Authorized User from obtaining access

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to the Site. You agree to inform us if you wish to restrict or revoke the access of any individual Access Code. If you become aware of any loss or theft or unauthorized use of any Access Code, you agree to contact us immediately. You also agree to monitor your (including Authorized Users') use of the Site to ensure the terms of this Agreement are followed. You also agree that you will comply with all policies and agreements concerning Site usage, including without limitation the Terms of Use Agreement(s) posted on the Site (“Site Terms”), as may be revised and reposted on the Site from time to time, and those Site Terms (as in effect from time to time) are a part of this Agreement. Your duties under this section are considered “services” required under the terms of this Agreement. You acknowledge that the Site is transmitted over the Internet on a reasonable efforts basis and we do not warrant or guarantee their accuracy, timeliness, completeness, reliability or non-infringement. Moreover, you acknowledge that the Site is provided for informational purposes only, and is not intended to comply with any requirements established by any regulatory or governmental agency.

7.Indemnification

7.1Indemnification By You

7.1.1    You agree to indemnify and hold harmless the Underwriter, the Trust and each of its Trustees, officers, employees and agents and each person, if any, who controls the Trust within the meaning of Section 15 of the 1933 Act (collectively, the “Indemnified Parties” and individually the “Indemnified Party” for purposes of this Section 7) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with your written consent, which consent shall not be unreasonably withheld) or expenses (including the reasonable costs of investigating or defending any alleged loss, claim, damage, liability or expense and reasonable legal counsel fees incurred in connection therewith) (collectively, “Losses”), to which the Indemnified Parties may become subject under any statute or regulation, or at common law or otherwise, insofar as such Losses are related to the sale or acquisition of shares of the Trust or the Contracts and

7.1.1.1 arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in a Disclosure Document for the Contracts or in the Contracts themselves or in sales literature generated or approved by you on behalf of the Contracts or Accounts (or any amendment or supplement to any of the foregoing) (collectively, “Company Documents” for the purposes of this Section 7), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this indemnity shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and was accurately derived from written information furnished to you by or on behalf of the Trust for use in Company Documents or otherwise for use in connection with the sale of the Contracts or Trust shares; or

7.1.1.2    arise out of or result from statements or representations (other than statements or representations contained in and accurately derived from Trust Documents as defined below in Section 7.2) or wrongful conduct of you or persons under your control, with respect to the sale or acquisition of the Contracts or Trust shares; or

7.1.1.3    arise out of or result from any untrue statement or alleged untrue statement of a material fact contained in Trust Documents as defined below in Section 7.2 or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such statement or omission was made in reliance upon and accurately derived from written information furnished to the Trust by or on behalf of you; or

7.1.1.4    arise out of or result from any failure by you to provide the services or furnish the materials required under the terms of this Agreement;

7.1.1.5    arise out of or result from any material breach of any representation and/or warranty made by you in this Agreement or arise out of or result from any other material breach of this Agreement by you;

7.1.1.6    arise out of or result from a Contract failing to be considered a life insurance policy or an annuity Contract, whichever is appropriate, under applicable provisions of the Code thereby depriving the Trust of its compliance with Section 817(h) of the Code; or

7.1.1.7 arise out of or result from any failure by you to satisfy requirements, including but not limited to compliance with all applicable laws, relating to your electronic delivery of Designated Portfolio Documents or your making such documents available on-line.

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7.1.2    You shall not be liable under this indemnification provision with respect to any Losses to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to the Trust or Underwriter, whichever is applicable. You shall also not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified you in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify you of any such claim shall not relieve you from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, you shall be entitled to participate, at your own expense, in the defense of such action. Unless the Indemnified Party releases you from any further obligations under this Section 7.1, you also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from you to such party of your election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and you will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation.

7.1.3    The Indemnified Parties will promptly notify you of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Trust shares or the Contracts or the operation of the Trust.

7.2Indemnification By The Underwriter

7.2.1    The Underwriter agrees to indemnify and hold harmless you, and each of your directors and officers and each person, if any, who controls you within the meaning of Section 15 of the 1933 Act (collectively, the “Indemnified Parties” and individually an “Indemnified Party” for purposes of this Section 7.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Underwriter, which consent shall not be unreasonably withheld) or expenses (including the reasonable costs of investigating or defending any alleged loss, claim, damage, liability or expense and reasonable legal counsel fees incurred in connection therewith) (collectively, “Losses”) to which the Indemnified Parties may become subject under any statute, at common law or otherwise, insofar as such Losses are related to the sale or acquisition by the Accounts of the shares of the Trust or the Contracts and:

7.2.1.1    arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the Registration Statement, prospectus or sales literature of the Trust (or any amendment or supplement to any of the foregoing) (collectively, the “Trust Documents”) or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission of such alleged statement or omission was made in reliance upon and in conformity with information furnished to us by or on behalf of you for use in the Registration Statement or prospectus for the Trust or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Trust shares; or

7.2.1.2    arise out of or as a result of statements or representations (other than statements or representations contained in the Disclosure Documents or sales literature for the Contracts not supplied by the Underwriter or persons under its control) or wrongful conduct of the Trust, Adviser or Underwriter or persons under their control, with respect to the sale or distribution of the Contracts or Trust shares to the Accounts; or

7.2.1.3    arise out of any untrue statement or alleged untrue statement of a material fact contained in a Disclosure Document or sales literature covering the Contracts, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement or statements therein not misleading, if such statement or omission was made in reliance upon information furnished to you by or on behalf of the Trust; or

7.2.1.4    arise as a result of any failure by us to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the qualification representation specified above in Section 2.2.7 and the diversification requirements specified above in Section 2.2.8); or

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7.2.1.5    arise out of or result from any material breach of any representation and/or warranty made by the Underwriter in this Agreement or arise out of or result from any other material breach of this Agreement by the Underwriter; as limited by and in accordance with the provisions of Sections 7.2.2 and 7.2.3 hereof.

7.2.2    The Underwriter shall not be liable under this indemnification provision with respect to any Losses to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to you or the Accounts, whichever is applicable.

7.2.3    The Underwriter shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Underwriter in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Underwriter of any such claim shall not relieve the Underwriter from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Underwriter will be entitled to participate, at its own expense, in the defense thereof. Unless the Indemnified Party releases the Underwriter from any further obligations under this Section 7.2, the Underwriter also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Underwriter to such party of the Underwriter's election to assume the defense thereof, the Indemnified Party shall bear the expenses of any additional counsel retained by it, and the Underwriter will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation.

7.2.4    You agree promptly to notify the Underwriter of the commencement of any litigation or proceedings against you or the Indemnified Parties in connection with the issuance or sale of the Contracts or the operation of each Account.

7.3Indemnification By The Trust

7.3.1    The Trust agrees to indemnify and hold harmless you, and each of your directors and officers and each person, if any, who controls you within the meaning of Section 15 of the 1933 Act (collectively, the “Indemnified Parties” for purposes of this Section 7.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Trust, which consent shall not be unreasonably withheld) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements result from the gross negligence, bad faith or willful misconduct of the Board or any member thereof, are related to the operations of the Trust, and arise out of or result from any material breach of any representation and/or warranty made by the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Trust; as limited by and in accordance with the provisions of Sections 7.3.2 and 7.3.3 hereof. It is understood and expressly stipulated that neither the holders of shares of the Trust nor any Trustee, officer, agent or employee of the Trust shall be personally liable hereunder, nor shall any resort be had to other private property for the satisfaction of any claim or obligation hereunder, but the Trust only shall be liable.

7.3.2    The Trust shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against any Indemnified Party as such may arise from such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to you, the Trust, the Underwriter or each Account, whichever is applicable.

7.3.3    The Trust shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Trust in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claims shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Trust of any such claim shall not relieve the Trust from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Trust will be entitled to participate, at its own expense, in the defense thereof. Unless the Indemnified Party releases the Trust from any further obligations under this Section 7.3, the Trust also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Trust to such party of the Trust's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional

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counsel retained by it, and the Trust will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation.

7.3.4    You agree promptly to notify the Trust of the commencement of any litigation or proceedings against you or the Indemnified Parties in connection with this Agreement, the issuance or sale of the Contracts, with respect to the operation of the Account, or the sale or acquisition of shares of the Trust.

8.Notices

Any notice, except for those provided in Sections 3.2.1 and 3.2.2 of the Agreement, shall be sufficiently given when sent by registered or certified mail, or by nationally recognized overnight courier services, to the other party at the address of such party set forth in Schedule G below or at such other address as such party may from time to time specify in writing to the other party.

9.Termination

9.1    This Agreement may be terminated by mutual agreement at any time. If this Agreement is so terminated, we shall, at your option, continue to make available additional shares of any Portfolio and redeem shares of any Portfolio for any or all Contracts or Accounts existing on the effective date of termination of this Agreement, pursuant to the terms and conditions of this Agreement.

9.2    This Agreement may be terminated by any party in its entirety or with respect to one, some or all Portfolios for any reason by sixty (60) days' advance written notice delivered to the other parties. If this Agreement is so terminated, we may, at our option, continue to make available additional shares of any Portfolio and redeem shares of any Portfolio for any or all Contracts or Accounts existing on the effective date of termination of this Agreement, pursuant to the terms and conditions of this Agreement; alternatively, we may, at our option, redeem the Portfolio shares held by the Accounts, provided that such redemption shall not occur prior to six (6) months following written notice of termination, during which time we will cooperate with you in effecting a transfer of Portfolio assets to another underlying fund pursuant to any legal and appropriate means. If termination by you occurs in connection with the substitution of securities, as provided for in Section 26(c) of the 1940 Act, advance written notice to us shall be no later than the date of the filing of the application for approval of the proposed substitution of securities.

9.3    This Agreement may be terminated immediately by us upon written notice to you if you materially breach any of the representations and warranties made in this Agreement or you are materially in default in the performance of any of your duties or obligations under the Agreement, receive a written notice thereof and fail to remedy such default or breach to our reasonable satisfaction within 30 days after such notice. If this Agreement so terminates, the parties shall cooperate to effect an orderly windup of the business which may include, at our option, a redemption of the Portfolio shares held by the Accounts, provided that such redemption shall not occur prior to a period of up to six (6) months following written notice of termination, during which time we will cooperate reasonably with you in effecting a transfer of Portfolio assets to another underlying fund pursuant to any legal and appropriate means.

9.4    This Agreement may be terminated immediately by us upon written notice to you if, with respect to the representations and warranties made in sections 2.1.3, 2.1.5, 2.1.7 and 2.4.2 of this Agreement: (i) you materially breach any of such representations and warranties; or (ii) you inform us that any of such representations and warranties may no longer be true or might not be true in the future; or (iii) any of such representations and warranties were not true on the effective date of this Agreement, are at any time no longer true, or have not been true during any time since the effective date of this Agreement. If this Agreement is so terminated, the Trust may redeem, at its option in kind or for cash, the Portfolio shares held by the Accounts on the effective date of termination of this Agreement.

9.5    This Agreement may be terminated by the Board of Trustees of the Trust, in the exercise of its fiduciary duties, either upon its determination that such termination is a necessary and appropriate remedy for a material breach of this Agreement which includes a violation of laws, or upon its determination to completely liquidate a Portfolio. Pursuant to such termination, the Trust may redeem, at its option in kind or for cash, the Portfolio shares held by the Accounts on the effective date of termination of this Agreement.

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9.6    This Agreement shall terminate immediately in the event of its assignment by any party without the prior written approval of the other parties, or as otherwise required by law. If this Agreement is so terminated, the Trust may redeem, at its option in kind or for cash, the Portfolio shares held by the Accounts on the effective date of termination of this Agreement.

9.7    This Agreement shall be terminated as required by the Shared Funding Order, and its provisions shall govern.

9.8    The provisions of Sections 2 (Representations and Warranties) and 7 (Indemnification) shall survive the termination of this Agreement. All other applicable provisions of this Agreement shall survive the termination of this Agreement, as long as shares of the Trust are held on behalf of Contract owners, except that we shall have no further obligation to sell Trust shares with respect to Contracts issued after termination.

9.9    You shall not redeem Trust shares attributable to the Contracts (as opposed to Trust shares attributable to your assets held in the Account) except: (i) as necessary to implement Contract owner initiated or approved transactions; (ii) as required by state and/or federal laws or regulations or judicial or other legal precedent of general application (hereinafter referred to as a “Legally Required Redemption”); or (iii) as permitted by an order of the SEC pursuant to Section 26(c) of the 1940 Act. Upon request, you shall promptly furnish to us the opinion of your counsel (which counsel shall be reasonably satisfactory to us) to the effect that any redemption pursuant to clause (ii) of this Section 9.9 is a Legally Required Redemption. Furthermore, you shall not prevent Contract owners from allocating payments to any Portfolio that has been available under a Contract without first giving us ninety (90) days advance written notice of your intention to do so.

10.Miscellaneous

10.1    The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions of this Agreement or otherwise affect their construction or effect.

10.2    This Agreement may be executed simultaneously in two or more counterparts, all of which taken together shall constitute one and the same instrument.

10.3    If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby.

10.4    This Agreement shall be construed and its provisions interpreted under and in accordance with the laws of the State of California. It shall also be subject to the provisions of the federal securities laws and the rules and regulations thereunder, to any orders of the SEC on behalf of the Trust granting it exemptive relief, and to the conditions of such orders. We shall promptly forward copies of any such orders to you.

10.5    The parties to this Agreement acknowledge and agree that all liabilities of the Trust arising, directly or indirectly, under this Agreement, of any and every nature whatsoever, shall be satisfied solely out of the assets of the Trust and that no Trustee, officer, agent or holder of shares of beneficial interest of the Trust shall be personally liable for any such liabilities.

10.6    The parties to this Agreement agree that the assets and liabilities of each Portfolio of the Trust are separate and distinct from the assets and liabilities of each other Portfolio. No Portfolio shall be liable or shall be charged for any debt, obligation or liability of any other Portfolio.

10.7    Each party to this Agreement shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, FINRA, and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby.

10.8    Each party shall treat as confidential all information of the other party which the parties agree in writing is confidential (“Confidential Information”). Except as permitted by this Agreement or as required by appropriate governmental authority (including, without limitation, the SEC, FINRA, or state securities and insurance regulators) the receiving party shall not disclose or use Confidential Information of the other party before it enters the public domain, without the express written consent of the party providing the Confidential Information.

15

Form of Agreement

10.9    The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties to this Agreement are entitled to under state and federal laws.

10.10    The parties to this Agreement acknowledge and agree that this Agreement shall not be exclusive in any respect.

10.11    Neither this Agreement nor any rights or obligations created by it may be assigned by any party without the prior written approval of the other parties.

10.12    No provisions of this Agreement may be amended or modified in any manner except by a written agreement properly authorized and executed by both parties. Notwithstanding the foregoing: (i) the Site Terms may be separately amended as provided therein and, as so amended and in effect from time to time, shall be a part of this Agreement; and (ii) Schedule C may be separately amended as provided therein and, as so amended shall be a part of this Agreement.

10.13    Each party to the Agreement agrees to limit the disclosure of nonpublic personal information of Contract owners and customers consistent with its policies on privacy with respect to such information and Regulation S-P of the SEC. Each party hereby agrees that it will comply with all applicable requirements under the regulations implementing Title V of the Gramm-Leach-Bliley Act and any other applicable federal and state consumer privacy acts, rules and regulations. Each party further represents that it has in place, and agrees that it will maintain, information security policies and procedures for protecting nonpublic personal customer information adequate to conform to applicable legal requirements.

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16

Form of Agreement

IN WITNESS WHEREOF, each of the parties has caused their duly authorized officers to execute this Agreement.

The Trust:		Franklin Templeton Variable Insurance Products Trust
	Only on behalf of each Portfolio listed on Schedule C hereof.
		By: __________________________________________
		Name:
		Title:
The Underwriter:		Franklin/Templeton Distributors, Inc.
		By: __________________________________________
		Name:
		Title:
The Company:		______________________________________________
		By: __________________________________________
		Name:
		Title:
Distributor for the Company:		______________________________________________
		By: __________________________________________
		Name:
		Title:

17

Form of Agreement

Schedule A

The Company and its Distributor

THE COMPANY

[name]

[address]

An insurance company organized under the laws of the State of __________.

THE DISTRIBUTOR

[name of Distributor]

[address of Distributor]

A corporation organized under the laws of the State of _________.

A

Form of Agreement

Schedule B

Accounts of the Company

Name of Account	SEC Registration Yes/No
Smith VA Account	Yes
Smith VLI Account	No

B

Form of Agreement

Schedule C

Available Portfolios and Classes of Shares of the Trust

[funds and classes currently listed in schedule, if any]

In addition to portfolios and classes of shares listed above, any additional Portfolios and classes of shares other than Class 3 shares are included in this Schedule C listing provided that:

(1) the General Counsel of Franklin Templeton Investments receives from a person authorized by you a written notice in the form attached (which may be electronic mail or sent by electronic mail) (“Notice”) identifying this Agreement as provided in the Notice and specifying: (i) the names and classes of shares of additional Portfolios that you propose to offer as investment options of the Separate Accounts under the Contracts; and (ii) the date that you propose to begin offering Separate Account interests investing in the additional Portfolios under the Contracts; and

(2) we do not within ten (10) Business Days following receipt of the Notice send you a writing (which may be electronic mail) objecting to your offering such Separate Accounts investing in the additional Portfolios and classes of shares under the Contracts.

Provided that we do not object as provided above, your Notice shall amend, supplement and become a part of this Schedule C and the Agreement.

C

Form of Agreement

FORM OF NOTICE PURSUANT TO SCHEDULE C OF PARTICIPATION AGREEMENT

To:     General Counsel c/o

[__________________]

Fax: [______________]

Franklin Templeton Investments

1 Franklin Parkway,

Bldg. 920, 2^nd Floor

San Mateo, CA 94402

With respect to the following agreement(s) (altogether, the “Agreement”)

(please reproduce and complete table for multiple agreements):

Date of Participation Agreement:

Insurance Company(ies):

Insurance Company Distributor(s):

As provided by Schedule C of the Agreement, this Notice proposes to Franklin Templeton Variable Insurance Products Trust, and Franklin/Templeton Distributors, Inc. the addition as of the offering date(s) listed below of the following Portfolios as additional investment options listed on Schedule C:

Names and Classes of Shares of Additional Portfolios Listing of current classes for your reference:            Class 1 (no 12b-1 fee);            Class 2 (12b-1 fee of 25 bps); or            Class 4 (12b-1 fee of 35 bps). Offering Date(s)

Name and title of authorized person of insurance company:

Contact Information:

C

Form of Agreement

Schedule D

Contracts of the Company

All variable life and variable annuity contracts issued by separate accounts listed on Schedule B of this Agreement.

D

Form of Agreement

Schedule E

This schedule is not used

E

Form of Agreement

Schedule F

Rule 12b-1 Plans of the Trust

Compensation

Each Class 2 or Class 4 Portfolio named or referenced on Schedule C of this Agreement may make payments at a rate stated in its prospectus pursuant to the terms and conditions of its Rule 12b-1 distribution plan.

Agreement Provisions

If the Company, on behalf of any Account, purchases Trust Portfolio shares (“Eligible Shares”) that are subject to a Rule 12b-1 plan adopted under the 1940 Act (the “Plan”), the Company, on behalf of its distributor, may participate in the Plan.

To the extent the Company or its affiliates, agents or designees (collectively “you”) provide any activity or service that is primarily intended to assist in the promotion, distribution or account servicing of Eligible Shares (“Rule 12b-1 Services”) or variable contracts offering Eligible Shares, the Underwriter, the Trust or their affiliates (collectively, “we”) may pay you a Rule 12b-1 fee. “Rule 12b-1 Services” may include, but are not limited to, printing of prospectuses and reports used for sales purposes, preparing and distributing sales literature and related expenses, advertisements, education of dealers and their representatives, and similar distribution-related expenses, furnishing personal services to owners of Contracts which may invest in Eligible Shares (“Contract Owners”), education of Contract Owners, answering routine inquiries regarding a Portfolio, coordinating responses to Contract Owner inquiries regarding the Portfolios, maintaining such accounts or providing such other enhanced services as a Trust Portfolio or Contract may require, or providing other services eligible for service fees as defined under FINRA rules.

Your acceptance of such compensation is your acknowledgment that eligible services have been rendered. All Rule 12b-1 fees shall be based on the value of Eligible Shares owned by the Company on behalf of its Accounts, and shall be calculated on the basis and at the rates set forth in the compensation provision stated above. The aggregate annual fees paid pursuant to each Plan shall not exceed the amounts stated as the “annual maximums” in the Portfolio's prospectus, unless an increase is approved by shareholders as provided in the Plan. These maximums shall be a specified percent of the value of a Portfolio's net assets attributable to Eligible Shares owned by the Company on behalf of its Accounts (determined in the same manner as the Portfolio uses to compute its net assets as set forth in its effective Prospectus). The Rule 12b‑1 fee will be paid to you within thirty (30) days after the end of the three-month periods ending in January, April, July and October.

You shall furnish us with such information as shall reasonably be requested by the Trust's Boards of Trustees (“Trustees”) with respect to the Rule 12b-1 fees paid to you pursuant to the Plans. We shall furnish to the Trustees, for their review on a quarterly basis, a written report of the amounts expended under the Plans and the purposes for which such expenditures were made.

The Plans and provisions of any agreement relating to such Plans must be approved annually by a vote of the Trustees, including the Trustees who are not interested persons of the Trust and who have no financial interest in the Plans or any related agreement (“Disinterested Trustees”). Each Plan may be terminated at any time by the vote of a majority of the Disinterested Trustees, or by a vote of a majority of the outstanding shares as provided in the Plan, on sixty (60) days' written notice, without payment of any penalty, or as provided in the Plan. Continuation of the Plans is also conditioned on Disinterested Trustees being ultimately responsible for selecting and nominating any new Disinterested Trustees. Under Rule 12b-1, the Trustees have a duty to request and evaluate, and persons who are party to any agreement related to a Plan have a duty to furnish, such information as may reasonably be necessary to an informed determination of whether the Plan or any agreement should be implemented or continued. Under Rule 12b-1, the Trust is permitted to implement or continue Plans or the provisions of any agreement relating to such Plans from year-to-year only if, based on certain legal considerations, the Trustees are able to conclude that the Plans will benefit each affected Trust Portfolio and class. Absent such yearly determination, the Plans must be terminated as set forth above. In the event of the termination of the Plans for any reason, the provisions of this Schedule F relating to the Plans will also terminate. You agree that your selling agreements with persons or entities through whom you intend to distribute Contracts will provide that compensation paid to such persons or entities may be reduced if a Portfolio's Plan is no longer effective or is no longer applicable to such Portfolio or class of shares available under the Contracts.

F-1

Form of Agreement

Any obligation assumed by the Trust pursuant to this Agreement shall be limited in all cases to the assets of the Trust and no person shall seek satisfaction thereof from shareholders of the Trust. You agree to waive payment of any amounts payable to you by Underwriter under a Plan until such time as the Underwriter has received such fee from the Trust.

The provisions of the Plans shall control over the provisions of the Participation Agreement, including this Schedule F, in the event of any inconsistency. You agree to provide complete disclosure as required by all applicable statutes, rules and regulations of all rule 12b-1 fees received from us in the prospectus of the Contracts.

F-2

Form of Agreement

Schedule G

Addresses for Notices

To the Company:            [ ] Insurance Company

[address]

[address]

Attention: [name, title]

To the Distributor:        ______________

Address

__________

Attention:

To the Trust: Franklin Templeton Variable Insurance Products Trust

One Franklin Parkway, Bldg. 920 2^nd Floor

San Mateo, California 94403

Attention: [_______________]

To the Underwriter:        Franklin/Templeton Distributors, Inc.

100 Fountain Parkway, Bldg. 140 7^th Floor

St. Petersburg, FL 33716

Attention: [_______________]

If to the Trust or Underwriter

with a copy to:             Franklin Templeton Investments

One Franklin Parkway, Bldg. 920 2^nd Floor

San Mateo, California 94403

Attention: General Counsel

G

Form of Agreement

Schedule H

Shared Funding Order

Templeton Variable Products Series Fund, et al.

File No. 812-11698

SECURITIES AND EXCHANGE COMMISSION

Release No. IC-24018

1999 SEC LEXIS 1887

September 17, 1999

ACTION: Notice of application for an amended order of exemption pursuant to Section 6(c) of the Investment Company Act of 1940 (the "1940 Act") from the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder.

TEXT: Summary of Application: Templeton Variable Products Series Fund (the "Templeton Trust"), Franklin Templeton Variable Insurance Products Trust (formerly Franklin Valuemark Funds) (the "VIP Trust," and together with the Templeton Trust, the "Funds"), Templeton Funds Annuity Company ("TFAC") or any successor to TFAC, and any future open-end investment company for which TFAC or any affiliate is the administrator, sub-administrator, investment manager, adviser, principal underwriter, or sponsor ("Future Funds") seek an amended order of the Commission to (1) add as parties to that order the VIP Trust and any Future Funds and (2) permit shares of the Funds and Future Funds to be issued to and held by qualified pension and retirement plans outside the separate account context.

Applicants: Templeton Variable Products Series Fund, Franklin Templeton Variable Insurance Products Trust, Templeton Funds Annuity Company or any successor to TFAC, and any future open-end investment company for which TFAC or any affiliate is the administrator, sub-administrator, investment manager, adviser, principal underwriter, or sponsor (collectively, the "Applicants").

Filing Date: The application was filed on July 14, 1999, and amended and restated on September 17, 1999.

Hearing or Notification of Hearing: An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Secretary of the Commission and serving Applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m., on October 12, 1999, and should be accompanied by proof of service on the Applicants in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Secretary of the Commission.

Addresses: Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, D.C. 20549-0609.

Applicants: Templeton Variable Products Series Fund and Franklin Templeton Variable Insurance Products Trust, 777 Mariners Island Boulevard, San Mateo, California 94404, Attn: Karen L. Skidmore, Esq.

For Further Information Contact: Kevin P. McEnery, Senior Counsel, or Susan M. Olson, Branch Chief, Office of Insurance Products, Division of Investment Management, at (202) 942-0670.

Supplementary Information: The following is a summary of the application. The complete application is available for a fee from the SEC's Public Reference Branch, 450 Fifth Street, N.W., Washington, D.C. 20549-0102 (tel. (202) 942‑8090).

H-1

Form of Agreement

Applicants' Representations:

1. Each of the Funds is registered under the 1940 Act as an open-end management investment company and was organized as a Massachusetts business trust. The Templeton Trust currently consists of eight separate series, and the VIP Trust consists of twenty-five separate series. Each Fund's Declaration of Trust permits the Trustees to create additional series of shares at any time. The Funds currently serve as the underlying investment medium for variable annuity contracts and variable life insurance policies issued by various insurance companies. The Funds have entered into investment management agreements with certain investment managers ("Investment Managers") directly or indirectly owned by Franklin Resources, Inc. ("Resources"), a publicly owned company engaged in the financial services industry through its subsidiaries.

2. TFAC is an indirect, wholly owned subsidiary of Resources. TFAC is the sole insurance company in the Franklin Templeton organization, and specializes in the writing of variable annuity contracts. The Templeton Trust has entered into a Fund Administration Agreement with Franklin Templeton Services, Inc. ("FT Services"), which replaced TFAC in 1998 as administrator, and FT Services subcontracts certain services to TFAC. FT Services also serves as administrator to all series of the VIP Trust. TFAC and FT Services provide certain administrative facilities and services for the VIP and Templeton Trusts.

3. On November 16, 1993, the Commission issued an order granting exemptive relief to permit shares of the Templeton Trust to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies (Investment Company Act Release No. 19879, File No. 812-8546) (the "Original Order"). Applicants incorporate by reference into the application the Application for the Original Order and each amendment thereto, the Notice of Application for the Original Order, and the Original Order, to the extent necessary, to supplement the representations made in the application in support of the requested relief. Applicants represent that all of the facts asserted in the Application for the Original Order and any amendments thereto remain true and accurate in all material respects to the extent that such facts are relevant to any relief on which Applicants continue to rely. The Original Order allows the Templeton Trust to offer its shares to insurance companies as the investment vehicle for their separate accounts supporting variable annuity contracts and variable life insurance contracts (collectively, the "Variable Contracts"). Applicants state that the Original Order does not (i) include the VIP Trust or Future Funds as parties, nor (ii) expressly address the sale of shares of the Funds or any Future Funds to qualified pension and retirement plans outside the separate account context including, without limitation, those trusts, plans, accounts, contracts or annuities described in Sections 401(a), 403(a), 403(b), 408(b), 408(k), 414(d), 457(b), 501(c)(18) of the Internal Revenue Code of 1986, as amended (the "Code"), and any other trust, plan, contract, account or annuity that is determined to be within the scope of Treasury Regulation 1.817.5(f)(3)(iii) ("Qualified Plans").

4. Separate accounts owning shares of the Funds and their insurance company depositors are referred to in the application as "Participating Separate Accounts" and "Participating Insurance Companies," respectively. The use of a common management investment company as the underlying investment medium for both variable annuity and variable life insurance separate accounts of a single insurance company (or of two or more affiliated insurance companies) is referred to as "mixed funding." The use of a common management investment company as the underlying investment medium for variable annuity and/or variable life insurance separate accounts of unaffiliated insurance companies is referred to as "shared funding."

Applicants' Legal Analysis:

1. Applicants request that the Commission issue an amended order pursuant to Section 6(c) of the 1940 Act, adding the VIP Trust and Future Funds to the Original Order and exempting scheduled premium variable life insurance separate accounts and flexible premium variable life insurance separate accounts of Participating Insurance Companies (and, to the extent necessary, any principal underwriter and depositor of such an account) and the Applicants from Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) (and any comparable rule) thereunder, respectively, to the extent necessary to permit shares of the Funds and any Future Funds to be sold to and held by Qualified Plans. Applicants submit that the exemptions requested are appropriate in the public interest, consistent with the protection of investors, and consistent with the purposes fairly intended by the policy and provisions of the 1940 Act.

2. The Original Order does not include the VIP Trust or Future Funds as parties nor expressly address the sale of shares of the Funds or any Future Funds to Qualified Plans. Applicants propose that the VIP Trust and Future Funds be added as parties to the Original Order and the Funds and any Future Funds be permitted to offer and sell their shares to Qualified Plans.

H-2

Form of Agreement

3. Section 6(c) of the 1940 Act provides, in part, that the Commission, by order upon application, may conditionally or unconditionally exempt any person, security or transaction, or any class or classes of persons, securities or transactions from any provisions of the 1940 Act or the rules or regulations thereunder, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act.

4. In connection with the funding of scheduled premium variable life insurance contracts issued through a separate account registered under the 1940 Act as a unit investment trust ("UIT"), Rule 6e-2(b)(15) provides partial exemptions from various provisions of the 1940 Act, including the following: (1) Section 9(a), which makes it unlawful for certain individuals to act in the capacity of employee, officer, or director for a UIT, by limiting the application of the eligibility restrictions in Section 9(a) to affiliated persons directly participating in the management of a registered management investment company; and (2) Sections 13(a), 15(a) and 15(b) of the 1940 Act to the extent that those sections might be deemed to require "pass-through" voting with respect to an underlying fund's shares, by allowing an insurance company to disregard the voting instructions of contractowners in certain circumstances.

5. These exemptions are available, however, only where the management investment company underlying the separate account (the "underlying fund") offers its shares "exclusively to variable life insurance separate accounts of the life insurer, or of any affiliated life insurance company." Therefore, Rule 6e-2 does not permit either mixed funding or shared funding because the relief granted by Rule 6e-2(b)(15) is not available with respect to a scheduled premium variable life insurance separate account that owns shares of an underlying fund that also offers its shares to a variable annuity or a flexible premium variable life insurance separate account of the same company or of any affiliated life insurance company. Rule 6e-2(b)(15) also does not permit the sale of shares of the underlying fund to Qualified Plans.

6. In connection with flexible premium variable life insurance contracts issued through a separate account registered under the 1940 Act as a UIT, Rule 6e-3(T)(b)(15) also provides partial exemptions from Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act. These exemptions, however, are available only where the separate account's underlying fund offers its shares "exclusively to separate accounts of the life insurer, or of any affiliated life insurance company, offering either scheduled contracts or flexible contracts, or both; or which also offer their shares to variable annuity separate accounts of the life insurer or of an affiliated life insurance company." Therefore, Rule 6e-3(T) permits mixed funding but does not permit shared funding and also does not permit the sale of shares of the underlying fund to Qualified Plans. As noted above, the Original Order granted the Templeton Trust exemptive relief to permit mixed and shared funding, but did not expressly address the sale of its shares to Qualified Plans.

7. Applicants note that if the Funds were to sell their shares only to Qualified Plans, exemptive relief under Rule 6e-2 and Rule 6e-3(T) would not be necessary. Applicants state that the relief provided for under Rule 6e-2(b)(15) and Rule 6e-3(T)(b)(15) does not relate to qualified pension and retirement plans or to a registered investment company's ability to sell its shares to such plans.

8. Applicants state that changes in the federal tax law have created the opportunity for each of the Funds to increase its asset base through the sale of its shares to Qualified Plans. Applicants state that Section 817(h) of the Internal Revenue Code of 1986, as amended (the "Code"), imposes certain diversification standards on the assets underlying Variable Contracts. Treasury Regulations generally require that, to meet the diversification requirements, all of the beneficial interests in the underlying investment company must be held by the segregated asset accounts of one or more life insurance companies. Notwithstanding this, Applicants note that the Treasury Regulations also contain an exception to this requirement that permits trustees of a Qualified Plan to hold shares of an investment company, the shares of which are also held by insurance company segregated asset accounts, without adversely affecting the status of the investment company as an adequately diversified underlying investment of Variable Contracts issued through such segregated asset accounts (Treas. Reg. 1.817-5(f)(3)(iii)).

9. Applicants state that the promulgation of Rules 6e-2(b)(15) and 6e-3(T)(b)(15) under the 1940 Act preceded the issuance of these Treasury Regulations. Thus, Applicants assert that the sale of shares of the same investment company to both separate accounts and Qualified Plans was not contemplated at the time of the adoption of Rules 6e-2(b)(15) and 6e-3(T)(b)(15).

10. Section 9(a) provides that it is unlawful for any company to serve as investment adviser or principal underwriter of any registered open-end investment company if an affiliated person of that company is subject to a disqualification enumerated in Section 9(a)(1) or (2). Rules 6e-2(b)(15) and 6e-3(T)(b)(15) provide exemptions from Section 9(a) under certain circumstances,

H-3

Form of Agreement

subject to the limitations on mixed and shared funding. These exemptions limit the application of the eligibility restrictions to affiliated individuals or companies that directly participate in the management of the underlying portfolio investment company.

11. Applicants state that the relief granted in Rule 6e-2(b)(15) and 6e-3(T)(b)(15) from the requirements of Section 9 limits, in effect, the amount of monitoring of an insurer's personnel that would otherwise be necessary to ensure compliance with Section 9 to that which is appropriate in light of the policy and purposes of Section 9. Applicants submit that those Rules recognize that it is not necessary for the protection of investors or the purposes fairly intended by the policy and provisions of the 1940 Act to apply the provisions of Section 9(a) to the many individuals involved in an insurance company complex, most of whom typically will have no involvement in matters pertaining to investment companies funding the separate accounts.

12. Applicants to the Original Order previously requested and received relief from Section 9(a) and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) to the extent necessary to permit mixed and shared funding. Applicants maintain that the relief previously granted from Section 9(a) will in no way be affected by the proposed sale of shares of the Funds to Qualified Plans. Those individuals who participate in the management or administration of the Funds will remain the same regardless of which Qualified Plans use such Funds. Applicants maintain that more broadly applying the requirements of Section 9(a) because of investment by Qualified Plans would not serve any regulatory purpose. Moreover, Qualified Plans, unlike separate accounts, are not themselves investment companies and therefore are not subject to Section 9 of the 1940 Act.

13. Applicants state that Rules 6e-2(b)(15)(iii) and 6e-3(T)(b)(15)(iii) provide exemptions from the pass-through voting requirement with respect to several significant matters, assuming the limitations on mixed and shared funding are observed. Rules 6e-2(b)(15)(iii)(A) and 6e-3(T)(b)(15)(iii)(A) provide that the insurance company may disregard the voting instructions of its contractowners with respect to the investments of an underlying fund or any contract between a fund and its investment adviser, when required to do so by an insurance regulatory authority (subject to the provisions of paragraphs (b)(5)(i) and (b)(7)(ii)(A) of the Rules). Rules 6e-2(b)(15)(iii)(B) and 6e-3(T)(b)(15)(iii)(A)(2) provide that the insurance company may disregard contractowners' voting instructions if the contractowners initiate any change in such company's investment policies, principal underwriter, or any investment adviser (provided that disregarding such voting instructions is reasonable and subject to the other provisions of paragraphs (b)(5)(ii) and (b)(7)(ii)(B) and (C) of the Rules).

14. Applicants assert that Qualified Plans, which are not registered as investment companies under the 1940 Act, have no requirement to pass-through the voting rights to plan participants. Applicants state that applicable law expressly reserves voting rights to certain specified persons. Under Section 403(a) of the Employment Retirement Income Security Act ("ERISA"), shares of a fund sold to a Qualified Plan must be held by the trustees of the Qualified Plan. Section 403(a) also provides that the trustee(s) must have exclusive authority and discretion to manage and control the Qualified Plan with two exceptions: (1) when the Qualified Plan expressly provides that the trustee(s) are subject to the direction of a named fiduciary who is not a trustee, in which case the trustees are subject to proper directions made in accordance with the terms of the Qualified Plan and not contrary to ERISA; and (2) when the authority to manage, acquire or dispose of assets of the Qualified Plan is delegated to one or more investment managers pursuant to Section 402(c)(3) of ERISA. Unless one of the two above exceptions stated in Section 403(a) applies, Qualified Plan trustees have the exclusive authority and responsibility for voting proxies. Where a named fiduciary to a Qualified Plan appoints an investment manager, the investment manager has the responsibility to vote the shares held unless the right to vote such shares is reserved to the trustees or the named fiduciary. Where a Qualified Plan does not provide participants with the right to give voting instructions, Applicants do not see any potential for material irreconcilable conflicts of interest between or among variable contract holders and Qualified Plan investors with respect to voting of the respective Fund's shares. Accordingly, Applicants state that, unlike the case with insurance company separate accounts, the issue of the resolution of material irreconcilable conflicts with respect to voting is not present with respect to such Qualified Plans since the Qualified Plans are not entitled to pass-through voting privileges.

15. Even if a Qualified Plan were to hold a controlling interest in one of the Funds, Applicants believe that such control would not disadvantage other investors in such Fund to any greater extent than is the case when any institutional shareholder holds a majority of the voting securities of any open-end management investment company. In this regard, Applicants submit that investment in a Fund by a Qualified Plan will not create any of the voting complications occasioned by mixed funding or shared funding. Unlike mixed or shared funding, Qualified Plan investor voting rights cannot be frustrated by veto rights of insurers or state regulators.

16. Applicants state that some of the Qualified Plans, however, may provide for the trustee(s), an investment adviser (or advisers), or another named fiduciary to exercise voting rights in accordance with instructions from participants. Where a

H-4

Form of Agreement

Qualified Plan provides participants with the right to give voting instructions, Applicants see no reason to believe that participants in Qualified Plans generally or those in a particular Qualified Plan, either as a single group or in combination with participants in other Qualified Plans, would vote in a manner that would disadvantage Variable Contract holders. In sum, Applicants maintain that the purchase of shares of the Funds by Qualified Plans that provide voting rights does not present any complications not otherwise occasioned by mixed or shared funding.

17. Applicants do not believe that the sale of the shares of the Funds to Qualified Plans will increase the potential for material irreconcilable conflicts of interest between or among different types of investors. In particular, Applicants see very little potential for such conflicts beyond that which would otherwise exist between variable annuity and variable life insurance contractowners.

18. As noted above, Section 817(h) of the Code imposes certain diversification standards on the underlying assets of variable contracts held in an underlying mutual fund. The Code provides that a variable contract shall not be treated as an annuity contract or life insurance, as applicable, for any period (and any subsequent period) for which the investments are not, in accordance with regulations prescribed by the Treasury Department, adequately diversified.

19. Treasury Department Regulations issued under Section 817(h) provide that, in order to meet the statutory diversification requirements, all of the beneficial interests in the investment company must be held by the segregated asset accounts of one or more insurance companies. However, the Regulations contain certain exceptions to this requirement, one of which allows shares in an underlying mutual fund to be held by the trustees of a qualified pension or retirement plan without adversely affecting the ability of shares in the underlying fund also to be held by separate accounts of insurance companies in connection with their variable contracts (Treas. Reg. 1.817-5(f)(3)(iii)). Thus, Applicants believe that the Treasury Regulations specifically permit "qualified pension or retirement plans" and separate accounts to invest in the same underlying fund. For this reason, Applicants have concluded that neither the Code nor the Treasury Regulations or revenue rulings thereunder presents any inherent conflict of interest.

20. Applicants note that while there are differences in the manner in which distributions from Variable Contracts and Qualified Plans are taxed, these differences will have no impact on the Funds. When distributions are to be made, and a Separate Account or Qualified Plan is unable to net purchase payments to make the distributions, the Separate Account and Qualified Plan will redeem shares of the Funds at their respective net asset value in conformity with Rule 22c-1 under the 1940 Act (without the imposition of any sales charge) to provide proceeds to meet distribution needs. A Qualified Plan will make distributions in accordance with the terms of the Qualified Plan.

21. Applicants maintain that it is possible to provide an equitable means of giving voting rights to Participating Separate Account contractowners and to Qualified Plans. In connection with any meeting of shareholders, the Funds will inform each shareholder, including each Participating Insurance Company and Qualified Plan, of information necessary for the meeting, including their respective share of ownership in the relevant Fund. Each Participating Insurance Company will then solicit voting instructions in accordance with Rules 6e-2 and 6e-3(T), as applicable, and its participation agreement with the relevant Fund. Shares held by Qualified Plans will be voted in accordance with applicable law. The voting rights provided to Qualified Plans with respect to shares of the Funds would be no different from the voting rights that are provided to Qualified Plans with respect to shares of funds sold to the general public.

22. Applicants have concluded that even if there should arise issues with respect to a state insurance commissioner's veto powers over investment objectives where the interests of contractowners and the interests of Qualified Plans are in conflict, the issues can be almost immediately resolved since the trustees of (or participants in) the Qualified Plans can, on their own, redeem the shares out of the Funds. Applicants note that state insurance commissioners have been given the veto power in recognition of the fact that insurance companies usually cannot simply redeem their separate accounts out of one fund and invest in another. Generally, time-consuming, complex transactions must be undertaken to accomplish such redemptions and transfers. Conversely, the trustees of Qualified Plans or the participants in participant-directed Qualified Plans can make the decision quickly and redeem their interest in the Funds and reinvest in another funding vehicle without the same regulatory impediments faced by separate accounts or, as is the case with most Qualified Plans, even hold cash pending suitable investment.

23. Applicants also state that they do not see any greater potential for material irreconcilable conflicts arising between the interests of participants under Qualified Plans and contractowners of Participating Separate Accounts from possible future changes in the federal tax laws than that which already exist between variable annuity contractowners and variable life insurance contractowners.

H-5

Form of Agreement

24. Applicants state that the sale of shares of the Funds to Qualified Plans in addition to separate accounts of Participating Insurance Companies will result in an increased amount of assets available for investment by the Funds. This may benefit variable contractowners by promoting economies of scale, by permitting increased safety of investments through greater diversification, and by making the addition of new portfolios more feasible.

25. Applicants assert that, regardless of the type of shareholders in each Fund, each Fund's Investment Manager is or would be contractually and otherwise obligated to manage the Fund solely and exclusively in accordance with that Fund's investment objectives, policies and restrictions as well as any guidelines established by the Board of Trustees of such Fund (the "Board"). The Investment Manager works with a pool of money and (except in a few instances where this may be required in order to comply with state insurance laws) does not take into account the identity of the shareholders. Thus, each Fund will be managed in the same manner as any other mutual fund. Applicants therefore see no significant legal impediment to permitting the sale of shares of the Funds to Qualified Plans.

26. Applicants state that the Commission has permitted the amendment of a substantially similar original order for the purpose of adding a party to the original order and has permitted open-end management investment companies to offer their shares directly to Qualified Plan in addition to separate accounts of affiliated or unaffiliated insurance companies which issue either or both variable annuity contracts or variable life insurance contracts. Applicants state that the amended order sought in the application is identical to precedent with respect to the conditions Applicants propose should be imposed on Qualified Plans in connection with investment in the Funds.

Applicants' Conditions:

If the requested amended order is granted, Applicants consent to the following conditions:

1. A majority of the Board of each Fund shall consist of persons who are not "interested persons" thereof, as defined by Section 2(a)(19) of the 1940 Act, and the rules thereunder and as modified by any applicable orders of the Commission, except that if this condition is not met by reason of the death, disqualification or bona fide resignation of any Board Member or Members, then the operation of this condition shall be suspended: (a) for a period of 45 days if the vacancy or vacancies may be filled by the remaining Board Members; (b) for a period of 60 days if a vote of shareholders is required to fill the vacancy or vacancies; or (c) for such longer period as the Commission may prescribe by order upon application.

2. The Board will monitor their respective Fund for the existence of any material irreconcilable conflict among the interests of the Variable Contract owners of all Separate Accounts investing in the Funds and of the Qualified Plan participants investing in the Funds. The Board will determine what action, if any, shall be taken in response to such conflicts. A material irreconcilable conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretive letter, or any similar action by insurance, tax or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of the Funds are being managed; (e) a difference in voting instructions given by variable annuity contract owners, variable life insurance contract owners, and trustees of Qualified Plans; (f) a decision by an insurer to disregard the voting instructions of Variable Contract owners; or (g) if applicable, a decision by a Qualified Plan to disregard the voting instructions of Qualified Plan participants.

3. Participating Insurance Companies, the Investment Managers, and any Qualified Plan that executes a fund participation agreement upon becoming an owner of 10 percent or more of the assets of an Fund (a "Participating Qualified Plan"), will report any potential or existing conflicts of which it becomes aware to the Board of any relevant Fund. Participating Insurance Companies, the Investment Managers and the Participating Qualified Plans will be responsible for assisting the Board in carrying out its responsibilities under these conditions by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This responsibility includes, but is not limited to, an obligation by each Participating Insurance Company to inform the Board whenever voting instructions of Contract owners are disregarded and, if pass-through voting is applicable, an obligation by each Participating Qualified Plan to inform the Board whenever it has determined to disregard Qualified Plan participant voting instructions. The responsibility to report such information and conflicts, and to assist the Board, will be contractual obligations of all Participating Insurance Companies investing in the Funds under their agreements governing participation in the Funds, and such agreements shall provide that these responsibilities will be carried out with a view only to the interests of the Variable Contract owners. The responsibility to report such information and conflicts, and to assist the Board,

H-6

Form of Agreement

will be contractual obligations of all Participating Qualified Plans under their agreements governing participation in the Funds, and such agreements will provide that their responsibilities will be carried out with a view only to the interests of Qualified Plan participants.

4. If it is determined by a majority of the Board of a Fund, or by a majority of the disinterested Board Members, that a material irreconcilable conflict exists, the relevant Participating Insurance Companies and Participating Qualified Plans will, at their own expense and to the extent reasonably practicable as determined by a majority of the disinterested Board Members, take whatever steps are necessary to remedy or eliminate the material irreconcilable conflict, which steps could include: (a) in the case of Participating Insurance Companies, withdrawing the assets allocable to some or all of the Separate Account s from the Fund or any portfolio thereof and reinvesting such assets in a different investment medium, including another portfolio of an Fund or another Fund, or submitting the question as to whether such segregation should be implemented to a vote of all affected Variable Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., variable annuity contract owners or variable life insurance contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected Variable Contract owners the option of making such a change; (b) in the case of Participating Qualified Plans, withdrawing the assets allocable to some or all of the Qualified Plans from the Fund and reinvesting such assets in a different investment medium; and (c) establishing a new registered management investment company or managed Separate Account. If a material irreconcilable conflict arises because of a decision by a Participating Insurance Company to disregard Variable Contract owner voting instructions, and that decision represents a minority position or would preclude a majority vote, then the insurer may be required, at the Fund's election, to withdraw the insurer's Separate Account investment in such Fund, and no charge or penalty will be imposed as a result of such withdrawal. If a material irreconcilable conflict arises because of a Participating Qualified Plan's decision to disregard Qualified Plan participant voting instructions, if applicable, and that decision represents minority position or would preclude a majority vote, the Participating Qualified Plan may be required, at the Fund's election, to withdraw its investment in such Fund, and no charge or penalty will be imposed as a result of such withdrawal. The responsibility to take remedial action in the event of a determination by a Board of a material irreconcilable conflict and to bear the cost of such remedial action will be a contractual obligation of all Participating Insurance Companies and Participating Qualified Plans under their agreements governing participation in the Funds, and these responsibilities will be carried out with a view only to the interest of Variable Contract owners and Qualified Plan participants.

5. For purposes of Condition 4, a majority of the disinterested Board Members of the applicable Board will determine whether or not any proposed action adequately remedies any material irreconcilable conflict, but in no event will the relevant Fund or the Investment Managers be required to establish a new funding medium for any Contract. No Participating Insurance Company shall be required by Condition 4 to establish a new funding medium for any Variable Contract if any offer to do so has been declined by vote of a majority of the Variable Contract owners materially and adversely affected by the material irreconcilable conflict. Further, no Participating Qualified Plan shall be required by Condition 4 to establish a new funding medium for any Participating Qualified Plan if (a) a majority of Qualified Plan participants materially and adversely affected by the irreconcilable material conflict vote to decline such offer, or (b) pursuant to governing Qualified Plan documents and applicable law, the Participating Qualified Plan makes such decision without a Qualified Plan participant vote.

6. The determination of the Board of the existence of a material irreconcilable conflict and its implications will be made known in writing promptly to all Participating Insurance Companies and Participating Qualified Plans.

7. Participating Insurance Companies will provide pass-through voting privileges to Variable Contract owners who invest in registered Separate Accounts so long as and to the extent that the Commission continues to interpret the 1940 Act as requiring pass-through voting privileges for Variable Contract owners. As to Variable Contracts issued by unregistered Separate Accounts, pass-through voting privileges will be extended to participants to the extent granted by issuing insurance companies. Each Participating Insurance Company will also vote shares of the Funds held in its Separate Accounts for which no voting instructions from Contract owners are timely received, as well as shares of the Funds which the Participating Insurance Company itself owns, in the same proportion as those shares of the Funds for which voting instructions from contract owners are timely received. Participating Insurance Companies will be responsible for assuring that each of their registered Separate Accounts participating in the Funds calculates voting privileges in a manner consistent with other Participating Insurance Companies. The obligation to calculate voting privileges in a manner consistent with all other registered Separate Accounts investing in the Funds will be a contractual obligation of all Participating Insurance Companies under their agreements governing their participation in the Funds. Each Participating Qualified Plan will vote as required by applicable law and governing Qualified Plan documents.

H-7

Form of Agreement

8. All reports of potential or existing conflicts received by the Board of a Fund and all action by such Board with regard to determining the existence of a conflict, notifying Participating Insurance Companies and Participating Qualified Plans of a conflict, and determining whether any proposed action adequately remedies a conflict, will be properly recorded in the minutes of the meetings of such Board or other appropriate records, and such minutes or other records shall be made available to the Commission upon request.

9. Each Fund will notify all Participating Insurance Companies that separate disclosure in their respective Separate Account prospectuses may be appropriate to advise accounts regarding the potential risks of mixed and shared funding. Each Fund shall disclose in its prospectus that (a) the Fund is intended to be a funding vehicle for variable annuity and variable life insurance contracts offered by various insurance companies and for qualified pension and retirement plans; (b) due to differences of tax treatment and other considerations, the interests of various Contract owners participating in the Fund and/or the interests of Qualified Plans investing in the Fund may at some time be in conflict; and (c) the Board of such Fund will monitor events in order to identify the existence of any material irreconcilable conflicts and to determine what action, if any, should be taken in response to any such conflict.

10. Each Fund will comply with all provisions of the 1940 Act requiring voting by shareholders (which, for these purposes, will be the persons having a voting interest in the shares of the Funds), and, in particular, the Funds will either provide for annual shareholder meetings (except insofar as the Commission may interpret Section 16 of the 1940 Act not to require such meetings) or comply with Section 16(c) of the 1940 Act, although the Funds are not the type of trust described in Section 16(c) of the 1940 Act, as well as with Section 16(a) of the 1940 Act and, if and when applicable, Section 16(b) of the 1940 Act. Further, each Fund will act in accordance with the Commission's interpretation of the requirements of Section 16(a) with respect to periodic elections of Board Members and with whatever rules the Commission may promulgate with respect thereto.

11. If and to the extent Rules 6e-2 or 6e-3(T) under the 1940 Act is amended, or proposed Rule 6e-3 under the 1940 Act is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules promulgated thereunder, with respect to mixed or shared funding on terms and conditions materially different from any exemptions granted in the order requested in the application, then the Funds and/or Participating Insurance Companies and Participating Qualified Plans, as appropriate, shall take such steps as may be necessary to comply with such Rules 6e-2 and 6e-3(T), as amended, or proposed Rule 6e-3, as adopted, to the extent that such Rules are applicable.

12. The Participating Insurance Companies and Participating Qualified Plans and/or the Investment Managers, at least annually, will submit to the Board such reports, materials or data as the Board may reasonably request so that the Board may fully carry out obligations imposed upon it by the conditions contained in the application. Such reports, materials and data will be submitted more frequently if deemed appropriate by the Board. The obligations of the Participating Insurance Companies and Participating Qualified Plans to provide these reports, materials and data to the Board, when the Board so reasonably requests, shall be a contractual obligation of all Participating Insurance Companies and Participating Qualified Plans under their agreements governing participation in the Funds.

13. If a Qualified Plan should ever become a holder of ten percent or more of the assets of a Fund, such Qualified Plan will execute a participation agreement with the Fund that includes the conditions set forth herein to the extent applicable. A Qualified Plan will execute an application containing an acknowledgment of this condition upon such Qualified Plan's initial purchase of the shares of any Fund.

Conclusion:

Applicants assert that, for the reasons summarized above, the requested exemptions are appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act.

For the Commission, by the Division of Investment Management, pursuant to delegated authority.

H-8

Form of Agreement

Templeton Variable Products Series Fund, et al.

File No. 812-11698

SECURITIES AND EXCHANGE COMMISSION

Release No. IC-24079

1999 SEC LEXIS 2177

October 13, 1999

ACTION: Order Granting Exemptions

TEXT: Templeton Variable Products Series Fund ("Templeton Trust"), Franklin Templeton Variable Insurance Products Trust ("VIP Trust"), Templeton Funds Annuity Company ("TFAC") or any successor to TFAC, and any future open-end investment company for which TFAC or any affiliate is the administrator, sub-administrator, investment manager, adviser, principal underwriter, or sponsor ("Future Funds") filed an application on July 14, 1999, and an amendment on September 17, 1999 seeking an amended order of the Commission pursuant to Section 6(c) of the Investment Company Act of 1940 ("1940 Act") exempting them from the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act and Rules 6e-2(b)(15) and 6e-3(T)(b)(15). The prior order (Rel. No. IC-19879) granted exemptive relief to permit shares of the Templeton Trust to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies. The proposed relief would amend the prior order to add as parties to that order the VIP Trust and any Future Funds and to permit shares of the Templeton Trust, the VIP Trust, and Future Funds to be issued to and held by qualified pension and retirement plans outside the separate account context.

A notice of the filing of the application was issued on September 17, 1999 (Rel. No. IC-24018). The notice gave interested persons an opportunity to request a hearing and stated that an order granting the application would be issued unless a hearing should be ordered. No request for a hearing has been filed, and the Commission has not ordered a hearing.

The matter has been considered, and it is found that granting the requested exemptions is appropriate in the public interest and consistent with the protection of investors and the purposes intended by the policy and provisions of the 1940 Act.

Accordingly,

IT IS ORDERED, pursuant to Section 6(c) of the 1940 Act, that the requested exemptions from Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, be, and hereby are, granted, effective forthwith.

For the Commission, by the Division of Investment Management, pursuant to delegated authority.

H-9

EX-10.16

Exhibit 10.16

Representative Form of

Participation Agreement Addendum

Franklin Templeton Variable Insurance Products Trust

Franklin/Templeton Distributors, Inc.

«Insurance_Company»

«Distributor»

Franklin Templeton Variable Insurance Products Trust (the “Trust”), Franklin/Templeton Distributors, Inc. (the “Underwriter,” and together with the Trust, “we,” “our,” or “us”), «Insurance_Company», and «Distributor», your distributor (collectively, the “Company” “you” or “your”), on your behalf and on behalf of certain Accounts, (individually a “Party”, collectively, the “Parties”) have previously entered into a Participation Agreement dated «Date», as amended (the “Agreement”).

WHEREAS, the Parties now desire to amend the Agreement by this Participation Agreement Addendum (“the Addendum”) to facilitate the summary prospectus delivery options pursuant to Rule 498 of the Securities Act of 1933 as amended, (“Rule 498”).

NOW, THEREFORE, in consideration of the mutual covenants herein contained, which consideration is full and complete, the Parties agree as follows:

1. New paragraphs 4.7.1 through 4.7.3, as set forth in Attachment A of this Addendum, are added at the end of the existing paragraphs of Section 4 of the Agreement. This Addendum constitutes the new procedures referred to in Section 6 of the Agreement, and provides additional requirements in connection with the authorized use of the summary prospectus under Rule 498.

2. Unless otherwise indicated, the terms defined in the Agreement shall have the same meaning in this Addendum. All other terms and provisions of the Agreement not amended herein, including, but not limited to the indemnification provisions, shall remain in full force and effect and will apply to the terms of this Addendum as applicable.

3. This Addendum will terminate automatically upon the termination of the Agreement. It may also be terminated by mutual written agreement of the Parties to this Addendum at any time, and by any Party to this Addendum upon no less than 30 days' advance written notice to the other Parties to this Addendum.

(this area intentionally left blank)

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IN WITNESS WHEREOF, each of the Parties has caused their duly authorized officers to execute this Addendum effective as of _______, 20__.

The Trust:         Only on behalf of         each Portfolio listed         on Schedule C of         the Agreement.	FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST By: ______________________________________________ Name: Title:
The Underwriter:	FRANKLIN/TEMPLETON DISTRIBUTORS, INC. By: ______________________________________________ Name: Title:
The Company:	«INSURANCE_COMPANY» By: ______________________________________________ Name: Title:
The Distributor:	«DISTRIBUTOR» By: ______________________________________________ Name: Title:

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Attachment A to Participation Agreement Addendum

4.7.1    For purposes of this Addendum, the terms Summary Prospectus and Statutory Prospectus shall have the same meaning as set forth in Rule 498.

4.7.2    We agree that the hosting of such Trust current Summary Prospectuses and other most recent documents required by Rule 498(e)(1) (“Trust Documents”), at the url website address we indicate on each Summary Prospectus (“Trust Documents Site”), is designed to lead Contract owners directly to the Trust Documents Site and comply with all applicable requirements of Rule 498(e) and (f)(3). We also agree that we will be responsible for compliance with the provisions of Rule 498(f)(1) involving Contract owner requests for additional Trust Documents made directly to us. While we are not required to provide the Summary Prospectus delivery option for any Portfolio (or any Portfolio class of shares), should we decide to discontinue such option(s), the Underwriter agrees to give you no less than sixty (60) days' advance written notice and continue the hosting of the Trust Documents Site required by Rule 498(e)(1).

4.7.3    The Parties agree that you are not required to use the Summary Prospectus delivery option. If you elect to use the Trust's Summary Prospectuses to satisfy your Trust prospectus delivery requirement, you agree to do so in compliance with the Agreement and Rule 498, and to give us no less than sixty (60) days' advance written notice of such intended use. You also agree that any binding together of Summary Prospectuses, Statutory Prospectuses, and other materials will be done in compliance with Rule 498(c). You further agree that you will be responsible for compliance with the provisions of Rule 498(f)(1) involving Contract owner requests for additional Trust Documents made directly to you, or one of your affiliates or third-party providers. In connection with your distribution of any Portfolio Summary Prospectus, you agree to be solely responsible for the maintenance of website links to the Trust Documents Site. You acknowledge that the Trust Documents Site is transmitted over the Internet on a reasonable efforts basis, and we do not warrant or guarantee its reliability. You agree that you will comply with any policies concerning Trust Documents Site usage that we provide to you, including any posted website Terms of Use.

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EX-10.20

Exhibit 10.20

FRANKLIN RESOURCES, INC.

2002 UNIVERSAL STOCK INCENTIVE PLAN

NOTICE OF RESTRICTED STOCK AWARD

Name:

Address:

In accordance with the Franklin Resources, Inc. 2002 Universal Stock Incentive Plan (the “2002 Plan”), as an incentive for increased efforts and successful achievements, Franklin Resources, Inc. (the “Company”), has awarded Participant shares of common stock of the Company subject to the terms and conditions of the accompanying Restricted Stock Award Agreement (the “Award Agreement”), this Notice of Restricted Stock Award (the “Notice of Award” and together with the Award Agreement, the “Award”) and the 2002 Plan, as follows:

Award Number

Award Date

Total Number of Shares (the “Shares”) Awarded

Subject to Participant's Continuous Status as an Employee (as defined in the 2002 Plan) of the Company or any of its Subsidiaries (as defined in the 2002 Plan) and other limitations set forth in the Award and the 2002 Plan, the Shares shall vest in accordance with the following schedule:

Vesting ScheduleNumber of Shares

[Vesting schedule terms subject to approval of the Compensation Committee of the Board of Directors of the Company.]

Participant acknowledges and agrees that the Shares subject to this Award shall vest only by Participant's Continuous Status as an Employee and that such status is at the will of the Company or the applicable Subsidiary (not through the act of being hired, being granted this Award or acquiring Shares hereunder). Participant further acknowledges and agrees that nothing in this Award nor in the 2002 Plan, which is incorporated herein by this reference, affects the Company's, or a Subsidiary's, right to terminate, or to change the terms of, Participant's employment at any time, with or without cause.

Participant acknowledges that, from time to time, the Company may be in a “Blackout Period” and/or subject to applicable securities laws that could subject Participant to liability for engaging in any transaction involving the sale of the Company's shares. Participant further acknowledges and agrees that, prior to the sale of any Shares acquired under this Award, it is Participant's responsibility to determine whether or not such sale of Shares will subject Participant to liability under insider trading rules or other applicable securities laws.

Participant hereby: (i) consents to access the 2002 Plan prospectus in connection with the Form S-8 registration statement for the 2002 Plan, any updates thereto, the 2002 Plan, the Award Agreement and this Notice of Award (collectively, the “2002 Plan Documents”) in electronic form either through Connected on the Company's Intranet or another form of electronic communication (e.g. e-mail); (ii) represents that Participant has access to the Company's Intranet and the Internet; (iii) acknowledges receipt of electronic copies, or that Participant is already in possession of paper copies, of the 2002 Plan Documents and the Company's most recent annual report to stockholders; and (iv) acknowledges that Participant is familiar with and has accepted the Award subject to the terms and provisions of the 2002 Plan Documents.

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Participant may receive, without charge, upon written or oral request, paper copies of any or all of the 2002 Plan Documents, documents incorporated by reference in the Form S-8 registration statement for the 2002 Plan, and the Company's most recent annual report to stockholders by requesting them from Stock Administration at the Company, One Franklin Parkway, San Mateo, CA 94403-1906. Telephone (650) 312-2000. Participant may also withdraw Participant's consent to receive any or all documents electronically by notifying Stock Administration at the above address in writing.

By accepting the Award, whether in electronic form or otherwise, Participant agrees that the Award is granted under and governed by the terms and conditions of the 2002 Plan, this Notice of Award and the Award Agreement.

2

FRANKLIN RESOURCES, INC.

2002 UNIVERSAL STOCK INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

This Restricted Stock Award Agreement, together with any Appendix(es) attached hereto (hereinafter, collectively, the “Agreement”), is made as of the Award Date set forth in the Notice of Restricted Stock Award (the “Notice of Award”) between Franklin Resources, Inc. (the “Company”) and the Participant named therein (“Participant”).

WITNESSETH:

WHEREAS, the Board of Directors and stockholders of the Company have adopted the Franklin Resources, Inc. 2002 Universal Stock Incentive Plan (the “2002 Plan”), authorizing the grant of common stock of the Company (“Stock”) to eligible individuals as an incentive in connection with the performance of services for the Company and its Subsidiaries, as defined in the 2002 Plan, which is incorporated herein by this reference (capitalized terms used but not defined in this Agreement have the same meaning as set forth in the 2002 Plan or the Notice of Award, as applicable); and

WHEREAS, the Company recognizes the efforts of Participant on behalf of the Company and its Subsidiaries and desires to motivate Participant in Participant's work and provide an inducement to remain in the service of the Company and its Subsidiaries; and

WHEREAS, the Company has determined that it would be to the advantage and in the interest of the Company and its stockholders to award the Stock provided for in this Agreement and the Notice of Award to Participant, subject to certain restrictions, as an incentive for increased efforts and successful achievements;

NOW, THEREFORE, in consideration of the foregoing premises and of the mutual covenants herein contained, the parties hereto hereby agree as follows:

1.    Restricted Stock Award. The Company is issuing to Participant shares of Stock as set forth in the Notice of Award, subject to the rights of and limitations on Participant as owner thereof as set forth in this Agreement. Such shares are being issued in book entry form and maintained on the books of Computershare, the Company's transfer agent, or any successor thereto. All shares of Stock issued hereunder shall be deemed issued to Participant as fully paid and non-assessable shares, and, subject to the restrictions set forth in the 2002 Plan and this Agreement, Participant shall have all rights of a stockholder with respect thereto, including the right to vote, to receive dividends (including stock dividends), to participate in stock splits or other recapitalizations, and to exchange such shares in a tender offer, merger, consolidation or other reorganization. The Company shall pay any applicable stock transfer taxes. Participant hereby acknowledges that Participant is acquiring the Stock issued hereunder for investment and not with a view to the distribution thereof, and that Participant does not intend to subdivide Participant's interest in the Stock with any other person.

2.    Transfer Restriction.

(a)    No Stock issued to Participant hereunder shall be sold, transferred by gift, pledged, hypothecated, or otherwise transferred or disposed of by Participant prior to the date on which it becomes vested under paragraph 3, except by will or the laws of descent and distribution. This paragraph shall not preclude Participant from exchanging the Stock awarded hereunder pursuant to a cash or stock tender offer, merger, reorganization or consolidation. Notwithstanding the foregoing, any securities (including stock dividends and stock splits) received with respect to shares of Stock which are not yet vested under paragraph 3 shall be subject to the provisions of this Agreement in the same manner and shall become fully vested at the same time as the Stock with respect to which such additional securities were issued.

(b)    Participant acknowledges that, from time to time, the Company may be in a “Blackout Period” and/or subject to applicable securities laws that could subject Participant to liability for engaging in any transaction involving the sale of Stock. Participant further acknowledges and agrees that, prior to the sale of any Stock acquired under this Award, it is Participant's responsibility to determine whether or not such sale of Stock will subject Participant to liability under insider trading rules or other applicable securities laws.

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3.    Vesting.

(a)    Participant's interest in the Stock awarded under paragraph 1 shall become vested and nonforfeitable in accordance with the Vesting Schedule in the Notice of Award so long as Participant maintains a Continuous Status as an Employee. Upon vesting, the Company shall, within thirty (30) days of such vesting, deliver to Participant the certificates evidencing the nonforfeitable shares (free of restrictive legends on such stock certificates), provided the withholding requirements of paragraph 4 have been satisfied. Alternatively, provided the withholding requirements of paragraph 4 have been satisfied, the Committee may permit or require that such nonforfeitable shares of Stock (free of the restrictive notations on shares of Stock issued in book-entry form) be deposited directly with a brokerage firm or transfer agent determined acceptable to the Company for such purpose or to a designated agent of the Company, and the Committee may utilize electronic or automated methods of share transfer.

(b)    If Participant ceases to maintain a Continuous Status as an Employee for any reason other than death or disability (as described in subparagraph (c)), all shares of Stock to the extent not yet vested under subparagraph (a) on the date Participant ceases to maintain a Continuous Status as an Employee shall be forfeited by Participant without payment of any consideration to Participant therefor. Any shares of Stock so forfeited shall be canceled and returned to the status of authorized but unissued shares, to be held for future distributions under the Company's 2002 Plan.

(c)    If Participant dies or in the event of termination of Participant's Continuous Status as an Employee as a result of disability (as determined by an executive officer of the Company in accordance with the policies of the Company) while an employee of the Company or any of its Subsidiaries, Participant's interest in all shares of Stock awarded hereunder shall become fully vested and nonforfeitable as of the date of death or termination of employment on account of such disability.  Unless changed by the Board, “disability” means that Participant ceases to be an employee on account of disability as a result of which Participant is determined to be disabled by the determining authority under the long-term or total permanent disability policy, or government social security or other similar benefit program, of the country or location in which Participant is employed and in the absence of such determining authority, as determined by the Board in accordance with the policies of the Company.

4.    Withholding of Taxes.

(a)General. Participant is ultimately liable and responsible for all taxes owed by Participant in connection with the Stock awarded, regardless of any action the Company or any of its Subsidiaries takes with respect to any tax withholding obligations that arise in connection with the Stock awarded. Neither the Company nor any of its Subsidiaries makes any representation or undertaking regarding the treatment of any tax withholding in connection with the grant or vesting of the Stock awarded or the subsequent sale of any of the Stock. The Company and its Subsidiaries do not commit and are under no obligation to structure the Award to reduce or eliminate Participant's tax liability.

(b)Payment of Withholding Taxes. Prior to any event in connection with the Stock awarded (e.g., vesting) that the Company determines may result in any tax withholding obligation, whether United States federal, state or local taxes or any applicable foreign taxes and including any employment tax obligation (the “Tax Withholding Obligation”), Participant must agree to the satisfaction of such Tax Withholding Obligation in a manner acceptable to the Company, including by means of one of the following methods:

(i)By Share Withholding. Unless the Company permits Participant to satisfy the Tax Withholding Obligation by some other means in accordance with clause (iii) below, Participant authorizes the Company (in the exercise of its sole discretion) to withhold from those unrestricted shares of Stock to be delivered to Participant upon vesting under paragraph 3 above the whole number of shares sufficient to satisfy the Tax Withholding Obligation, provided that the Company shall withhold only the amount of shares necessary to satisfy the minimum applicable Tax Withholding Obligation. Share withholding will result in the delivery of a lower number of unrestricted shares of Stock to Participant. Share withholding will generally be used to satisfy the tax liability of individuals subject to the short-swing profit restrictions of Section 16(b) of the Securities Exchange Act of 1934, as amended.

(ii)By Sale of Shares. Unless the Company permits Participant to satisfy the Tax Withholding Obligation by some other means in accordance with clause (iii) below, and provided that the terms of this clause (ii) do not violate Section 13(k) of the Securities Exchange Act of 1934, as amended, Participant's acceptance of the Stock awarded constitutes Participant's instruction and authorization to the Company and any brokerage firm determined acceptable to the Company for such purpose to sell on Participant's behalf a whole number of shares from those unrestricted shares of Stock to be delivered to Participant upon vesting under paragraph 3 above as the Company determines to be appropriate to generate cash proceeds sufficient to

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satisfy the applicable Tax Withholding Obligation. Such shares will be sold on the day such Tax Withholding Obligation arises (e.g., a vesting date) or as soon thereafter as practicable. Participant will be responsible for all brokers' fees and other costs of sale, and Participant agrees to indemnify and hold the Company harmless from any losses, costs, damages, or expenses relating to any such sale. To the extent the proceeds of such sale exceed the Tax Withholding Obligation, the Company agrees to pay such excess in cash to Participant. Participant acknowledges that the Company or its designee is under no obligation to arrange for such sale at any particular price, and that the proceeds of any such sale may not be sufficient to satisfy the Tax Withholding Obligation. Accordingly, Participant agrees to pay to the Company or any of its Subsidiaries as soon as practicable, including through additional payroll withholding, any amount of the Tax Withholding Obligation that is not satisfied by the sale of shares described above.

(iii)By Check, Wire Transfer or Other Means. At any time not less than five (5) business days (or such fewer number of days as determined by the Committee or its designee) before any Tax Withholding Obligation arises (e.g., a vesting date), Participant may request permission to satisfy the Tax Withholding Obligation by check, wire transfer or other means, by submitting such request, in writing, to the Company. Alternatively, the Company may require that Participant satisfy any Tax Withholding Obligation in any such manner. If the Company approves Participant's request, or so requires, within five (5) business days of the vesting date (or such fewer number of days as determined by the Committee or its designee) Participant must deliver to the Company the amount that the Company determines is sufficient to satisfy the Tax Withholding Obligation by (x) wire transfer to such account as the Company may direct, (y) delivery of a certified check payable to the Company, or (z) such other means as specified from time to time by the Committee or its designee.

5.    Successors. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns. Nothing contained in the 2002 Plan, the Notice of Award or this Agreement shall be interpreted as imposing any liability on the Company or the Committee in favor of Participant or any purchaser or other transferee of Stock with respect to any loss, cost or expense which such Participant, purchaser or other transferee may incur in connection with, or arising out of any transaction involving, any Stock subject to the 2002 Plan, the Notice of Award or this Agreement.

6.    Integration. The terms of the 2002 Plan, the Notice of Award and this Agreement are intended by the Company and Participant to be the final expression of their agreement with respect to the shares of Stock and may not be contradicted by evidence of any prior or contemporaneous agreement. The Company and Participant further intend that the 2002 Plan, the Notice of Award and this Agreement shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any arbitration, judicial, administrative or other legal proceeding involving the 2002 Plan, the Notice of Award or this Agreement. Accordingly, the 2002 Plan, the Notice of Award and this Agreement contain the entire understanding between the parties and supersede all prior oral, written and implied agreements, understandings, commitments and practices among the parties.

7.    Waivers. Any failure to enforce any terms or conditions of the 2002 Plan, the Notice of Award or this Agreement by the Company or by Participant shall not be deemed a waiver of that term or condition, nor shall any waiver or relinquishment of any right or power for all or any other times.

8.    Severability of Provisions. If any provision of the 2002 Plan, the Notice of Award or this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision thereof; and the 2002 Plan, the Notice of Award and this Agreement shall be construed and enforced as if none of them included such provision.

9.    Committee Decisions Conclusive. All decisions of the Committee arising under the 2002 Plan, the Notice of Award or this Agreement shall be conclusive.

10.    Mandatory Arbitration. To the extent permitted by law, any dispute arising out of or relating to the 2002 Plan, the Notice of Award and this Agreement, including the meaning or interpretation thereof, shall be resolved solely by arbitration before an arbitrator selected in accordance with the Employment Arbitration Rules and Mediation Procedures of the American Arbitration Association. The location for the arbitration shall be in the county or comparable jurisdiction of Participant's employment. Judgment on the award rendered may be entered in any court having jurisdiction. Each party shall pay an equal share of the arbitrator's fees, unless applicable law requires the Company to pay all or a greater share of the fees and costs. All statutes of limitation which would otherwise be applicable shall apply to any arbitration proceeding under this paragraph. Neither Participant nor the Company will have the right to participate in a class, representative or collective action, as a class representative, class member or an opt-in party, act as a private attorney general, or join or consolidate claims with claims of any other person or entity, with respect to any dispute arising out of or relating to the 2002 Plan, the Notice of Award and this Agreement. The

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provisions of this paragraph are intended by Participant and the Company to be exclusive for all purposes and applicable to any and all disputes arising out of or relating to the 2002 Plan, the Notice of Award and this Agreement. The arbitrator who hears and decides any dispute shall have jurisdiction and authority only to award compensatory damages to make whole a person or entity sustaining foreseeable economic damages, and shall not have jurisdiction and authority to make any other award of any type, including, without limitation, punitive damages, unforeseeable economic damage, damages for pain, suffering or emotional distress, or any other kind or form of damages, unless such other award is available as a matter of law. The remedy, if any, awarded by the arbitrator shall be the sole and exclusive remedy for any dispute which is subject to arbitration under this paragraph.

11.    Delaware Law. The 2002 Plan, the Notice of Award and this Agreement shall be construed and enforced according to the laws of the State of Delaware, without regard to its conflict of law provisions, to the extent not preempted by the federal laws of the United States of America.

12.    Country Appendices. If Participant relocates to a country outside the United States: (i) any special terms and conditions that may apply to Restricted Stock Awards granted to Participants in such country under Appendices to this Agreement will apply to Participant; or (ii) if Restricted Stock Awards have not been granted to Employees in such country under this Agreement, any other special terms and conditions will apply to Participant, in each case to the extent the Company determines that the application of such terms and conditions is necessary or advisable to comply with local law or facilitate the administration of the 2002 Plan, and provided the imposition of the term or condition will not result in any adverse accounting expense with respect to the Restricted Stock Award (unless the Company specifically determines to incur such expense).

13.    Forfeiture.

(a)    Forfeiture Pursuant to Restatement of Financial Results. Notwithstanding anything in the Award to the contrary, in the event that (i) the Company issues a restatement of financial results to correct a material error, (ii) the Committee determines, in good faith, that fraud or willful misconduct by the Participant was a significant contributing factor to the need to issue such restatement, and (iii) some or all of the shares of Stock that were granted and/or earned prior to such restatement by the Participant would not have been granted and/or earned, as applicable, based upon the restated financial results, the Participant shall immediately return to the Company those shares of Stock, including any pre-tax income derived from ownership and any gross proceeds from disposition of such shares of Stock, that would not have been granted and/or earned based upon the restated financial results (the “Repayment Obligation”). The Company shall be able to enforce the Repayment Obligation by all legal means available, including, without limitation, by withholding such amount from other sums and property owed by the Company to the Participant.

(b)    Other Repayment/Forfeiture. Any benefits Participant may receive hereunder shall be subject to repayment or forfeiture as may be required to comply with (i) any applicable listing standards of a national securities exchange adopted in accordance with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recovery of erroneously awarded compensation) and any implementing rules and regulations of the U.S. Securities and Exchange Commission adopted thereunder, (ii) similar rules under the laws of any other jurisdiction and (iii) any policies adopted by the Company to implement such requirements, all to the extent determined by the Company in its discretion to be applicable to Participant.

END OF AGREEMENT

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EX-10.21

Exhibit 10.21

FRANKLIN RESOURCES, INC.

2002 UNIVERSAL STOCK INCENTIVE PLAN

NOTICE OF RESTRICTED STOCK UNIT AWARD

Name:

Address:

In accordance with the Franklin Resources, Inc. 2002 Universal Stock Incentive Plan (the “2002 Plan”), as an incentive for increased efforts and successful achievements, Franklin Resources, Inc. (the “Company”) has awarded Participant Restricted Stock Units (“Units”) (as defined in the 2002 Plan) over common stock of the Company subject to the terms and conditions of the accompanying Restricted Stock Unit Award Agreement (the “Award Agreement”), this Notice of Restricted Stock Unit Award (the “Notice of Award” and together with the Award Agreement, the “Award”) and the 2002 Plan, as follows:

Award Number

Award Date

Total Number of Units Awarded

Vesting Schedule

[Vesting schedule performance terms subject to approval of the Compensation Committee of the Board of Directors of the Company.]

For purposes of this Notice of Award and the Award Agreement, the term “vest” shall mean, with respect to any Units, that such Units are no longer subject to forfeiture to the Company (other than pursuant to Section 16 of the Award Agreement).

Participant acknowledges and agrees that nothing in this Award nor in the 2002 Plan, which is incorporated herein by this reference, affects the Company's, or a Subsidiary's, right to terminate, or to change the terms of, Participant's employment at any time, with or without cause.

Participant acknowledges that, from time to time, the Company may be in a “Blackout Period” and/or subject to applicable securities laws that could subject Participant to liability for engaging in any transaction involving the sale of the Company's shares. Participant further acknowledges and agrees that, prior to the sale of any shares acquired under this Award, it is Participant's responsibility to determine whether or not such sale of shares will subject Participant to liability under insider trading rules or other applicable securities laws.

Participant hereby: (i) consents to access the 2002 Plan prospectus in connection with the Form S-8 registration statement for the 2002 Plan, any updates thereto, the 2002 Plan, the Award Agreement and this Notice of Award (collectively, the “2002 Plan Documents”) in electronic form either through Connected on the Company's Intranet or another form of electronic communication (e.g. e-mail); (ii) represents that Participant has access to the Company's Intranet and the Internet; (iii) acknowledges receipt of electronic copies, or that Participant is already in possession of paper copies, of the 2002 Plan Documents and the Company's most recent annual report to stockholders; and (iv) acknowledges that Participant is familiar with and has accepted the Award subject to the terms and provisions of the 2002 Plan Documents.

Participant may receive, without charge, upon written or oral request, paper copies of any or all of the 2002 Plan Documents, documents incorporated by reference in the Form S-8 registration statement for the 2002 Plan, and the Company's most recent annual report to stockholders by requesting them from Stock Administration at the Company, One Franklin Parkway, San Mateo, CA 94403-1906. Telephone (650) 312-2000. Participant may also withdraw Participant's consent to receive any or all documents electronically by notifying Stock Administration at the above address in writing.

By accepting the Award, whether in electronic form or otherwise, Participant agrees that the Award is granted under and governed by the terms and conditions of the 2002 Plan, this Notice of Award and the Award Agreement.

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FRANKLIN RESOURCES, INC.

2002 UNIVERSAL STOCK INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

This Restricted Stock Unit Award Agreement, together with any Appendix(es) attached hereto (hereinafter, collectively, the “Agreement”), is made as of the Award Date set forth in the Notice of Restricted Stock Unit Award (the “Notice of Award”) between Franklin Resources, Inc. (the “Company”) and the Participant named therein (“Participant”).

WITNESSETH:

WHEREAS, the Board of Directors and stockholders of the Company have adopted the Franklin Resources, Inc. 2002 Universal Stock Incentive Plan (the “2002 Plan”), authorizing the grant of Restricted Stock Units (as defined in the 2002 Plan) (“Units”) to eligible individuals as an incentive in connection with the performance of services for the Company and its Subsidiaries, as defined in the 2002 Plan, which is incorporated herein by this reference (capitalized terms used but not defined in this Agreement have the same meaning as set forth in the 2002 Plan or the Notice of Award, as applicable); and

WHEREAS, the Company recognizes the efforts of Participant on behalf of the Company and its Subsidiaries and desires to motivate Participant in Participant's work and provide an inducement to remain in the service of the Company and its Subsidiaries; and

WHEREAS, the Company has determined that it would be to the advantage and in the interest of the Company and its stockholders to award Units provided for in this Agreement and the Notice of Award to Participant, subject to certain restrictions, as an incentive for increased efforts and successful achievements;

NOW, THEREFORE, in consideration of the foregoing premises and of the mutual covenants herein contained, the parties hereto hereby agree as follows:

1.    Restricted Stock Unit Award. The Company is awarding to Participant Units as set forth in the Notice of Award, subject to the rights of and limitations on Participant as owner thereof as set forth in this Agreement.

2.    Transfer Restriction.

(a)    Units may not be transferred by Participant in any manner other than by will or by the laws of descent and distribution. Notwithstanding the foregoing, Participant may designate a beneficiary of Units in the event of Participant's death on the beneficiary designation form provided by the Company. Pursuant to paragraph 7 of this Agreement, the terms of this Agreement shall be binding upon the executors, administrators, heirs, successors and transferees of Participant.

(b)    Participant acknowledges that, from time to time, the Company may be in a “Blackout Period” and/or subject to applicable securities laws that could subject Participant to liability for engaging in any transaction involving the sale of the Company's shares. Participant further acknowledges and agrees that, prior to the sale of any shares acquired under this Award, it is Participant's responsibility to determine whether or not such sale of shares will subject Participant to liability under insider trading rules or other applicable securities laws.

3.    Vesting.

(a)    Units shall become vested in accordance with the Vesting Schedule in the Notice of Award so long as Participant maintains a Continuous Status as an Employee.

(b)    If Participant ceases to maintain a Continuous Status as an Employee for any reason other than death or disability (as described in subparagraph (c)), all Units to the extent not yet vested under subparagraph (a) on the date Participant ceases to maintain a Continuous Status as an Employee shall be forfeited by Participant without payment of any consideration to Participant therefor. Any Units so forfeited shall be canceled and any shares considered issuable pursuant to such Units, if applicable, shall be returned to the status of authorized but unissued shares, to be held for future distributions under the Company's 2002 Plan.

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(c)    If Participant dies or in the event of termination of Participant's continuous status as an employee as a result of disability (as determined by an executive officer of the Company in accordance with the policies of the Company) while an employee of the Company or any of its subsidiaries, the Units awarded hereunder shall become fully vested as of the date of death or termination of employment on account of such disability.  Unless changed by the Board of Directors of the Company, “disability” means that Participant ceases to be an employee on account of disability as a result of which Participant is determined to be disabled by the determining authority under the long-term or total permanent disability policy, or government social security or other similar benefit program, of the country or location in which Participant is employed and in the absence of such determining authority by the Board in accordance with the policies of the Company.

4.    Vesting of Units and Issuance of Shares. Upon each vesting date, (i) one share of common stock of the Company (“Stock”) and (ii) an amount in cash equal to the cash dividends, if any, paid with respect to such share between the Award Date and the vesting date shall be issuable for each Unit that vests on such date, subject to the terms and provisions of the 2002 Plan, the Notice of Award and this Agreement. Upon satisfaction of any required tax or other withholding obligations as set forth in paragraph 6 of this Agreement, the shares of Stock and cash amount (if any) will be issued to Participant (as evidenced by the appropriate entry in the books of the Company or a duly authorized transfer agent of the Company) as soon as practicable after the vesting date, but in any event, within the period ending on the later to occur of the date that is two and a half (2½) months from the end of (i) Participant's tax year that includes the applicable vesting date, or (ii) the Company's tax year that includes the applicable vesting date. Any fractional Unit remaining after all Units under this Award are fully vested shall be discarded and neither a fractional share of Stock nor any dividends issued with respect to such fractional share shall be issued at vesting of the fractional Unit. Notwithstanding the above, the Company may, in its discretion, pay to Participant all or a portion of any vested Units in cash in an amount equal to the Fair Market Value of the relevant number of shares of Stock on the applicable vesting date, or on such other date or dates which the Company may at its absolute discretion prescribe, less any tax or other withholding obligations set forth in paragraph 6 of this Agreement.

5.    Right to Shares. Except as otherwise determined by the Committee, in its discretion, and as provided in Section 4, Participant shall not have any right in, to or with respect to any of the shares of Stock (including any voting rights or rights with respect to dividends paid on the shares of Stock, including rights to dividend equivalent payments) issuable for a Unit under the Award until the Award is settled by the issuance of such shares of Stock to Participant.

6.    Withholding of Taxes.

(a)General. Participant is ultimately liable and responsible for all taxes owed by Participant in connection with the 2002 Plan including, without limitation, the award of Units, vesting of units, issue and sale of shares regardless of any action the Company or any of its Subsidiaries takes with respect to any tax withholding obligations that arise in connection with the 2002 Plan. Neither the Company nor any of its Subsidiaries makes any representation or undertaking regarding the treatment of any tax withholding in connection with the grant or vesting of Units awarded or the subsequent sale of any of the shares of Stock. The Company and its Subsidiaries do not commit and are under no obligation to structure the Award to reduce or eliminate Participant's tax liability.

(b)Payment of Withholding Taxes. Prior to any event in connection with Units awarded (e.g., vesting) that the Company determines may result in any tax withholding obligation, whether United States federal, state or local taxes or applicable foreign taxes and including any employment tax obligation (the “Tax Withholding Obligation”), Participant must agree to the satisfaction of such Tax Withholding Obligation in a manner acceptable to the Company, including by means of one of the following methods:

(i)By Share Withholding. Unless the Company permits Participant to satisfy the Tax Withholding Obligation by some other means in accordance with clause (iii) below, Participant authorizes the Company (in the exercise of its sole discretion) to withhold from those shares of Stock issuable to Participant the whole number of shares sufficient to satisfy the Tax Withholding Obligation, provided that the Company shall withhold only the amount of shares necessary to satisfy the minimum applicable Tax Withholding Obligation. Share withholding will generally be used to satisfy the tax liability of individuals subject to the short-swing profit restrictions of Section 16(b) of the Securities Exchange Act of 1934, as amended.

(ii)By Sale of Shares. Unless the Company permits Participant to satisfy the Tax Withholding Obligation by some other means in accordance with clause (iii) below, and provided that the terms of this clause (ii) do not violate Section 13(k) of the Securities Exchange Act of 1934, as amended, Participant's acceptance of the Award constitutes Participant's instruction and authorization to the Company and any brokerage firm determined acceptable to the Company for such purpose to sell on

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Participant's behalf a whole number of shares from those shares of Stock issuable to Participant as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy the applicable Tax Withholding Obligation. Such shares will be sold on the day such Tax Withholding Obligation arises (e.g., a vesting date) or as soon thereafter as practicable. Participant will be responsible for all brokers' fees and other costs of sale, and Participant agrees to indemnify and hold the Company harmless from any losses, costs, damages, or expenses relating to any such sale. To the extent the proceeds of such sale exceed the Tax Withholding Obligation the Company agrees to pay such excess in cash to Participant. Participant acknowledges that the Company or its designee is under no obligation to arrange for such sale at any particular price, and that the proceeds of any such sale may not be sufficient to satisfy the Tax Withholding Obligation. Accordingly, Participant agrees to pay to the Company or any of its Subsidiaries as soon as practicable, including through additional payroll withholding, any amount of the Tax Withholding Obligation that is not satisfied by the sale of shares of Stock described above.

(iii)By Check, Wire Transfer or Other Means. At any time not less than five (5) business days (or such fewer number of days as determined by the Committee or its designee) before any Tax Withholding Obligation arises (e.g., a vesting date), Participant may request permission to satisfy the Tax Withholding Obligation by check, wire transfer or other means, by submitting such request, in writing, to the Company. Alternatively, the Company may require that Participant satisfy any Tax Withholding Obligation in any such manner. If the Company approves Participant's request, or so requires, within five (5) business days of the vesting date (or such fewer number of days as determined by the Committee or its designee) Participant must deliver to the Company the amount that the Company determines is sufficient to satisfy the Tax Withholding Obligation by (x) wire transfer to such account as the Company may direct, (y) delivery of a certified check payable to the Company, or (z) such other means as specified from time to time by the Committee or its designee.

7.    Successors. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns. Nothing contained in the 2002 Plan, the Notice of Award or this Agreement shall be interpreted as imposing any liability on the Company or the Committee in favor of Participant or any purchaser or other transferee of Units or shares of Stock with respect to any loss, cost or expense which such Participant, purchaser or other transferee may incur in connection with, or arising out of any transaction involving, any Units or shares of Stock subject to the 2002 Plan, the Notice of Award or this Agreement.

8.    No Compensation Deferrals. None of the 2002 Plan, the Notice of Award and this Agreement are intended to provide for an elective deferral of compensation that would be subject to Section 409A (“Section 409A”) of the United States Internal Revenue Code of 1986, as amended. The Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the 2002 Plan, the Notice of Award and/or this Agreement to ensure that no awards (including, without limitation, the Units) become subject to the requirements of Section 409A, provided, however, that the Company makes no representation that the Units are not subject to Section 409A nor makes any undertaking to preclude Section 409A from applying to the Units.

9.    Integration. The terms of the 2002 Plan, the Notice of Award and this Agreement are intended by the Company and Participant to be the final expression of their agreement with respect to Units and may not be contradicted by evidence of any prior or contemporaneous agreement. The Company and Participant further intend that the 2002 Plan, the Notice of Award and this Agreement shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any arbitration, judicial, administrative or other legal proceeding involving the 2002 Plan, the Notice of Award or this Agreement. Accordingly, the 2002 Plan, the Notice of Award and this Agreement contain the entire understanding between the parties and supersede all prior oral, written and implied agreements, understandings, commitments and practices among the parties.

10.    Waivers. Any failure to enforce any terms or conditions of the 2002 Plan, the Notice of Award or this Agreement by the Company or by Participant shall not be deemed a waiver of that term or condition, nor shall any waiver or relinquishment of any right or power for all or any other times.

11.    Severability of Provisions. If any provision of the 2002 Plan, the Notice of Award or this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision thereof; and the 2002 Plan, the Notice of Award and this Agreement shall be construed and enforced as if none of them included such provision.

12.    Committee Decisions Conclusive. All decisions of the Committee arising under the 2002 Plan, the Notice of Award or this Agreement shall be conclusive.

13.    Mandatory Arbitration. To the extent permitted by law, any dispute arising out of or relating to the 2002 Plan,

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the Notice of Award and this Agreement, including the meaning or interpretation thereof, shall be resolved solely by arbitration before an arbitrator selected in accordance with the Employment Arbitration Rules and Mediation Procedures of the American Arbitration Association. The location for the arbitration shall be in the county or comparable jurisdiction of Participant's employment. Judgment on the award rendered may be entered in any court having jurisdiction. Each party shall pay an equal share of the arbitrator's fees, unless applicable law requires the Company to pay all or a greater share of the fees and costs. All statutes of limitation which would otherwise be applicable shall apply to any arbitration proceeding under this paragraph. Neither Participant nor the Company will have the right to participate in a class, representative or collective action, as a class representative, class member or an opt-in party, act as a private attorney general, or join or consolidate claims with claims of any other person or entity, with respect to any dispute arising out of or relating to the 2002 Plan, the Notice of Award and this Agreement. The provisions of this paragraph are intended by Participant and the Company to be exclusive for all purposes and applicable to any and all disputes arising out of or relating to the 2002 Plan, the Notice of Award and this Agreement. The arbitrator who hears and decides any dispute shall have jurisdiction and authority only to award compensatory damages to make whole a person or entity sustaining foreseeable economic damages, and shall not have jurisdiction and authority to make any other award of any type, including, without limitation, punitive damages, unforeseeable economic damage, damages for pain, suffering or emotional distress, or any other kind or form of damages, unless such other award is available as a matter of law. The remedy, if any, awarded by the arbitrator shall be the sole and exclusive remedy for any dispute which is subject to arbitration under this paragraph.

14.    Delaware Law. The 2002 Plan, the Notice of Award and this Agreement shall be construed and enforced according to the laws of the State of Delaware, without regard to its conflict of law provisions, to the extent not preempted by the federal laws of the United States of America.

15.    Country Appendices. If Participant relocates to a country outside the United States: (i) any special terms and conditions that may apply to Units granted to Participants in such country under Appendices to this Agreement will apply to Participant; or (ii) if Units have not been granted to Employees in such country under this Agreement, any other special terms and conditions, will apply to Participant, in each case to the extent the Company determines that the application of such terms and conditions is necessary or advisable to comply with local law or facilitate the administration of the 2002 Plan, and provided the imposition of the term or condition will not result in any adverse accounting expense with respect to the Units (unless the Company specifically determines to incur such expense).

16.    Forfeiture.

(a)    Forfeiture Pursuant to Restatement of Financial Results. Notwithstanding anything in the Award to the contrary, in the event that (i) the Company issues a restatement of financial results to correct a material error, (ii) the Committee determines, in good faith, that fraud or willful misconduct by the Participant was a significant contributing factor to the need to issue such restatement, and (iii) some or all of the Units that were granted and/or shares of Stock and/or other property earned prior to such restatement by the Participant would not have been granted and/or earned, as applicable, based upon the restated financial results, the Participant shall immediately return to the Company all shares of Stock and other property received with respect to those Units, including any cash dividends paid with respect to the Units or such shares of Stock, any pre-tax income derived from ownership and any gross proceeds from disposition of such Stock and property, that would not have been granted and/or earned based upon the restated financial results (the “Repayment Obligation”), and all such Units shall immediately be forfeited. The Company shall be able to enforce the Repayment Obligation by all legal means available, including, without limitation, by withholding such amount from other sums and property owed by the Company to the Participant.

(b)    Other Repayment/Forfeiture. Any benefits Participant may receive hereunder shall be subject to repayment or forfeiture as may be required to comply with (i) any applicable listing standards of a national securities exchange adopted in accordance with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recovery of erroneously awarded compensation) and any implementing rules and regulations of the U.S. Securities and Exchange Commission adopted thereunder, (ii) similar rules under the laws of any other jurisdiction and (iii) any policies adopted by the Company to implement such requirements, all to the extent determined by the Company in its discretion to be applicable to Participant.

END OF AGREEMENT

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EX-10.25

Exhibit 10.25

FRANKLIN RESOURCES, INC.

2002 UNIVERSAL STOCK INCENTIVE PLAN

(as amended and restated effective October 22, 2012)

1. GENERAL

1.1    Purpose. The Franklin Resources, Inc. 2002 Universal Stock Incentive Plan (the "2002 Stock Plan") has been established by Franklin Resources, Inc., a Delaware corporation (the "Company") to (i) attract and retain persons eligible to participate in the 2002 Stock Plan; (ii) motivate employees, by means of appropriate incentives, to achieve long-range performance goals; (iii) provide incentive compensation opportunities that are competitive with those of other similar companies; and (iv) further identify employees' interests with those of the Company's other stockholders through compensation that is based on the Company's common stock; and thereby promote the long-term financial interest of the Company and the Subsidiaries.

1.2    Participation. Subject to the terms and conditions of the 2002 Stock Plan, a Committee shall determine and designate, from time to time, from among the Participants, those persons who will be granted one or more Awards under the 2002 Stock Plan. In the discretion of a Committee, a Participant may be granted any Award permitted under the provisions of the 2002 Stock Plan, and more than one Award may be granted to a Participant. Awards may be granted as alternatives to or replacement of awards outstanding under the 2002 Stock Plan, or any other plan or arrangement of the Company or a Subsidiary (including a plan or arrangement of a business or entity, all or a portion of which is acquired by the Company or a Subsidiary).

1.3    Operation, Administration, and Definitions. The operation and administration of the 2002 Stock Plan, including the Awards made under the 2002 Stock Plan, shall be subject to the provisions of Section 4 (relating to operation and administration). Capitalized terms in the 2002 Stock Plan shall be defined as set forth in the 2002 Stock Plan (including the definition provisions of Section 8 of the 2002 Stock Plan).

1.4    Stock Subject to 2002 Stock Plan; Share Counting. Subject to the provisions of this Section 1.4 and Section 6.1 of the 2002 Stock Plan, the maximum aggregate number of shares which may be delivered pursuant to Awards, including without limitation, Options and SAR's granted under the 2002 Stock Plan, is 40,000,000. The shares may be authorized, but unissued, or reacquired Common Stock.

(a)    To the extent any Shares covered by an Award are not delivered to a Participant or beneficiary because the Award is forfeited or canceled, or the Shares are not delivered because the Award is settled in cash, such Shares shall not be deemed to have been delivered for purposes of determining the maximum number of Shares available for delivery pursuant to Awards granted under the 2002 Stock Plan. Notwithstanding the foregoing or anything to the contrary herein, all Shares covered by the portion of a SAR that is exercised (whether or not Shares are actually issued to the Participant upon exercise of the SAR) shall be considered issued pursuant to the 2002 Stock Plan.

(b)    If the exercise price of any Option granted under the 2002 Stock Plan is satisfied by tendering Shares to the Company (by either actual delivery or by attestation), only the number of Shares issued net of the Shares tendered shall be deemed delivered for purposes of determining the maximum number of Shares available for delivery pursuant to Awards (other than Options) granted under the 2002 Stock Plan.

(c)    Subject to adjustment under Section 6.1, (i) the maximum number of shares that may be granted to any one individual pursuant to Section 2 (relating to Options and SARs) shall be 400,000 Shares during any one-calendar-year period and (ii) the maximum number of Shares that may be granted to any one individual subject to Section 3 (relating to Stock Unit Awards, Restricted Stock Awards, Restricted Stock Unit Awards and Performance Share Awards) shall be 1,000,000 Shares during any one-calendar-year period (regardless of when such Shares are deliverable).

2. OPTIONS AND SARS

2.1    Options.

(a)    An Option is a grant of rights to purchase Shares at an exercise price established by the Compensation Committee, subject to Section 2.3. Options granted under this Section 2 may be either Incentive Stock Options ("ISO") or Nonstatutory Stock Options ("NSO"), as determined in the discretion of the Compensation Committee.

(b)    Each Option shall be designated in the written option agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designations, to the extent that the aggregate Fair Market Value of the Shares with respect to which Options designated as Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options shall be automatically treated as Nonstatutory Stock Options. For purposes of this paragraph 2.1(b), Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the original date the Option with respect to such Shares is granted. In the event that the Code or the regulations promulgated thereunder are amended after the date the 2002 Stock Plan becomes effective to provide for a different limit on the Fair Market Value of Shares permitted to be subject to Incentive Stock Options, then such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.

(c)    The term of each Option shall be the term stated in the Option Agreement; provided, however, that in the case of any Incentive Stock Option, the term shall be no more than ten (10) years from the date of grant thereof or such shorter term as may be provided in the Option Agreement. However, in the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Option Agreement.

(d)    The date of grant of an Option shall, for all purposes, be the date on which the Compensation Committee makes the determination granting such Option, or such other date as is determined by the Compensation Committee. Notice of the determination shall be given to each Participant to whom an Option is so granted within a reasonable time after the date of such grant.

2.2    Stock Appreciation Rights. A "Stock Appreciation Right" ("SAR") is a grant of rights to receive, in cash or Stock (as determined by the Compensation Committee), value equal to (or otherwise based on) the excess of: (a) the Fair Market Value of a specified number of Shares at the time of exercise; over (b) a base appreciation amount established by the Compensation Committee, subject to Section 2.3.

2.3    Exercise Price. The exercise price or base appreciation amount (as applicable) of each Option and SAR shall be established by the Compensation Committee or shall be determined by a method established by the Compensation Committee at the time the Option or SAR is granted; provided that:

(a)    In the case of an ISO,

(i)    granted to an employee who, at the time of the grant of such Incentive Stock Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant;

(ii)    granted to any other employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

(b)    In the case of a NSO, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

(c)    In the case of a SAR, the base appreciation amount shall be no less than 100% of the Fair Market Value per Share on the date of grant.

2.4    Time and Manner of Exercise. Options and SARs shall be exercisable in accordance with such terms and conditions and during such periods as may be established by a Committee; subject to the following terms regarding Options:

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(a)    Termination of Employment. In the event of termination of an Optionee's Continuous Status as an employee with the Company or one of its Subsidiaries, such Optionee may, but only within ninety (90) days after the date of such termination (or such other period as is set out by a Committee in the Option Agreement, but in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), exercise the Option to the extent that Optionee was entitled to exercise it at the date of such termination. To the extent that Optionee was not entitled to exercise the Option at the date of such termination, or if Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate.

(b)    Disability of Optionee. Notwithstanding the provisions of paragraph 2.4(a) above, in the event of termination of an Optionee's Continuous Status as an employee as a result of disability (as determined by a Committee in accordance with the policies of the Company), Optionee may, but only within six (6) months from the date of such termination (or such other period as is set out by a Committee in the Option Agreement, but in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), exercise the Option to the extent otherwise entitled to exercise it at the date of such termination. To the extent that Optionee was not entitled to exercise the Option at the date of termination, or if Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate.

(c)    Death of Optionee. In the event of the death of an Optionee, the Option may be exercised, at any time within twelve (12) months following the date of death (or such other period as is set out by a Committee in the Option Agreement, but in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), by the Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent the Optionee was entitled to exercise the Option at the date of death. To the extent that Optionee was not entitled to exercise the Option at the date of termination, or if Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate.

2.5    Payment of Exercise Price. Payment of the exercise price of an Option shall be subject to the following:

(a)    The full exercise price for Shares purchased upon the exercise of any Option shall be paid at the time of such exercise (except that, in the case of an exercise arrangement approved by a Committee and described in paragraph 2.5(b), payment may be made as soon as practicable after the exercise).

(b)    The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by a Committee (and, in the case of an Incentive Stock Option, shall be determined at the time of grant) and may, in the discretion of a Committee, consist entirely of (i) cash, (ii) check, (iii) delivery of authorization for the Company to retain from the total number of Shares as to which the Option is exercised that number of Shares having a Fair Market Value on the date of exercise equal to the exercise price for the total number of Shares as to which the Option is exercised, (iv) delivery of a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company the amount of sale or loan proceeds required to pay the exercise price, (v) irrevocably authorizing a third party to sell Shares (or a sufficient portion of the shares) acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire exercise price and any tax withholding resulting from such exercise, (vi) any combination of the foregoing methods of payment, or (vii) such other consideration and method of payment for the issuance of Shares to the extent permitted under Applicable Laws.

2.6    Settlement of Award. Shares delivered pursuant to the exercise of an Option or SAR shall be subject to such conditions, restrictions and contingencies as a Committee may establish in the applicable Award Agreement at the time of grant. Settlement of SARs may be made in Shares (valued at their Fair Market Value at the time of exercise), in cash, or in a combination thereof, as determined in the discretion of a Committee. A Committee, in its discretion, may impose such conditions, restrictions and contingencies with respect to Shares acquired pursuant to the exercise of an Option or an SAR as such Committee determines to be desirable.

3. OTHER STOCK AWARDS

3.1    Definitions.

(a)    A "Stock Unit" Award is the grant of a right to receive Shares in the future.

(b)    A "Performance Share" Award is a grant of a right to receive Shares or Stock Units which is contingent on the achievement of performance or other objectives during a specified period.

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(c)    A "Restricted Stock" Award is a grant of Shares, and a "Restricted Stock Unit" Award is the grant of a right to receive Shares in the future, with such Shares or right to future delivery of such Shares subject to a risk of forfeiture or other restrictions that will lapse upon the achievement of one or more goals relating to completion of service by the Participant, or achievement of performance or other objectives, as determined by a Committee.

3.2    Restrictions on Stock Awards. Each Stock Unit Award, Restricted Stock Award, Restricted Stock Unit Award and Performance Share Award shall be subject to the following:

(a)    Any such Awards shall be subject to such conditions, restrictions and contingencies as a Committee shall determine.

(b)    A Committee may designate whether any such Awards being granted to any Participant are intended to be "performance-based compensation" as that term is used in Section 162(m) of the Code. Any such Awards designated as intended to be "performance-based compensation" shall be conditioned on the achievement of one or more Performance Measures. The Performance Measures that may be used by a Committee for such Awards shall be based on any one or more of the criteria attached hereto on Attachment I, as selected and further defined by the Compensation Committee. The Performance Measures may be applicable to the Company and/or any of its individual business units and may differ from Participant to Participant. For Awards intended to be "performance-based compensation," the grant of the Awards and the establishment of the Performance Measures shall be made during the period required under Section 162(m) of the Code and shall be subject to the individual share limit set out in Section 1.4(c) above.

4. OPERATION AND ADMINISTRATION

4.1    Effective Date. The 2002 Stock Plan became effective as of October 10, 2002. The 2002 Stock Plan shall be unlimited in duration and, in the event of the 2002 Stock Plan termination, shall remain in effect as long as any Awards under it are outstanding; provided, however, that, to the extent required by the Code, no ISO may be granted under the 2002 Stock Plan after March 15, 2021.

4.2    Term of Awards. Subject to the limitations of Section 2.1(c), the term of each Award under the 2002 Stock Plan shall be the term stated in the applicable Award Agreement, provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. Notwithstanding the foregoing, the specified term of any Award shall not include any period for which the Participant has elected to defer the receipt of the Shares or cash issuable pursuant to the Award.

4.3    General Restrictions. Delivery of Shares or other amounts under the 2002 Stock Plan shall be subject to the following:

(a)    Notwithstanding any other provision of the 2002 Stock Plan, the Company shall have no liability to deliver any Shares under the 2002 Stock Plan or make any other distribution of benefits under the 2002 Stock Plan unless such delivery or distribution would comply with all Applicable Laws (including, without limitation, the requirements of the Securities Act of 1933), and the applicable requirements of any securities exchange or similar entity.

(b)    Shares issued under the 2002 Stock Plan may be certificated or, to the extent not prohibited by Applicable Law or the applicable rules of any stock exchange, non-certificated.

4.4    Tax Withholding. All distributions under the 2002 Stock Plan are subject to withholding of all applicable taxes, and a Committee may condition the delivery of any Shares or other benefits under the 2002 Stock Plan on satisfaction of the applicable withholding obligations. A Committee, in its discretion, and subject to such requirements as such Committee may impose prior to the occurrence of such withholding, may permit such withholding obligations to be satisfied through cash payment by the Participant, through the surrender of Shares which the Participant already owns, or through the surrender of Shares to which the Participant is otherwise entitled under the 2002 Stock Plan, provided; however, that in either case only the number of Shares sufficient to satisfy the Company's minimum required tax withholding obligations may be surrendered to the Company.

4.5    Use of Shares. Subject to the overall limitation on the number of Shares that may be delivered under the 2002 Stock Plan, a Committee may use available Shares as the form of payment for compensation, grants or rights earned or due under any other compensation plans or arrangements of the Company or a Subsidiary, including the plans and arrangements of the Company or a Subsidiary assumed in business combinations.

4.6    Dividends and Dividend Equivalents. An Award (including without limitation an Option or SAR Award) may provide the Participant with the right to receive dividend payments or dividend equivalent payments with respect to Stock subject

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to the Award (both before and after the Stock subject to the Award is earned, vested, or acquired), which payments may be either made currently or credited to an account for the Participant, and may be settled in cash or Stock as determined by a Committee. Any such settlements, and any such crediting of dividends or dividend equivalents or reinvestment in Shares, may be subject to such conditions, restrictions and contingencies as a Committee shall establish, including the reinvestment of such credited amounts in Stock equivalents.

4.7    Payments. Awards may be settled through cash payments, the delivery of Shares, the granting of replacement Awards, or combination thereof as a Committee shall determine. Any Award settlement, including payment deferrals, may be subject to such conditions, restrictions and contingencies as a Committee shall determine. A Committee may permit or require the deferral of any Award payment, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest, or dividend equivalents, including converting such credits into deferred Stock equivalents. Each Subsidiary shall be liable for payment of cash due under the 2002 Stock Plan with respect to any Participant to the extent that such benefits are attributable to the services rendered for that Subsidiary by the Participant. Any disputes relating to liability of a Subsidiary for cash payments shall be resolved by a Committee.

4.8    Non-alienation of Awards. Unless specifically provided by a Committee in the Award Agreement, Awards under the 2002 Stock Plan may not be sold, assigned, conveyed, hypothecated, encumbered, anticipated, or otherwise disposed of, and are nontransferable except as designated by the Participant by will or by the laws of descent and distribution; provided, however, that an Award Agreement shall not provide that an Award is transferable during the lifetime of the Participant, except to the extent that such Award Agreement permits transfers made to family members, to family trusts, to family controlled entities, to charitable organizations, and/or pursuant to domestic relations orders or agreements, in all cases without payment for such transfers to the Participant. Any attempt to sell, assign, convey, hypothecate, encumber, anticipate, transfer, or otherwise dispose of any Award under the 2002 Stock Plan in violation of this Section 4.8 shall be void, and no Shares or cash subject to any Award shall, prior to receipt thereof by a Participant, be in any manner subject to the debts, contracts, liabilities, engagements, or torts of such Participant.

4.9    Form and Time of Elections. Unless otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the 2002 Stock Plan, and any permitted modification, or revocation thereof, shall be in writing filed with a Committee at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the 2002 Stock Plan, as such Committee shall require.

4.10    Agreement With Company. An Award under the 2002 Stock Plan shall be subject to such terms and conditions, not inconsistent with the 2002 Stock Plan, as a Committee shall, in its sole discretion, prescribe. The terms and conditions of any Award to any Participant shall be reflected in such form of written document as is determined by a Committee. A copy of such document shall be provided to the Participant, and a Committee may, but need not require that the Participant shall sign a copy of such document. Such document is referred to in the 2002 Stock Plan as an "Award Agreement" regardless of whether any Participant signature is required.

4.11    Action by Company or Subsidiary. Any action required or permitted to be taken by the Company or any Parent or Subsidiary shall be by resolution of: (i) in the case of a corporation, its board of directors, or by action of one or more members of the board (including a committee of the board) who are duly authorized to act for the board, or (except to the extent prohibited by Applicable Law or applicable rules of any stock exchange) by a duly authorized officer of the Company, (ii) in the case of a limited liability company, its member(s), and (iii) in the case of a partnership, its general partner.

4.12    Gender and Number. Where the context admits, words in any gender shall include any other gender, words in the singular shall include the plural and the plural shall include the singular.

4.13    Limitation of Implied Rights.

(a)    Neither a Participant nor any other person shall, by reason of participation in the 2002 Stock Plan, acquire any right in or title to any assets, funds or property of the Company or any Parent or Subsidiary whatsoever, including, without limitation, any specific funds, assets, or other property which the Company or any Parent or Subsidiary, in their sole discretion, may set aside in anticipation of a liability under the 2002 Stock Plan. A Participant shall have only a contractual right to the Stock or amounts, if any, payable under the 2002 Stock Plan, unsecured by any assets of the Company or any Parent or Subsidiary, and nothing contained in the 2002 Stock Plan shall constitute a guarantee that the assets of the Company or any Parent or Subsidiary shall be sufficient to pay any benefits to any person.

(b)    The 2002 Stock Plan does not constitute a contract of employment, and selection as a Participant will not give any Participant the right to be retained in the employ of the Company or any Subsidiary, nor any right or claim to any

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benefit under the 2002 Stock Plan, unless such right or claim has specifically accrued under the terms of the 2002 Stock Plan. Except as otherwise provided in the 2002 Stock Plan, no Award under the 2002 Stock Plan shall confer upon the holder thereof any rights as a stockholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights.

5. COMMITTEES

5.1    Committees. The authority to control and manage the operation and administration of the 2002 Stock Plan shall be vested in a committee or committees established by the Board with such powers and authority as shall be determined by the Board in its discretion (each such committee, a “Committee”). In addition to any other Committee established by the Board, the Compensation Committee of the Board (the “Compensation Committee”) shall be considered a Committee hereunder and shall be comprised, unless otherwise determined by the Board, solely of not less than two members of the Board who shall be "outside" directors within the meaning of Treasury Regulation Section 1.162-27(e)(3) under Section 162(m) of the Code. If a Committee does not exist, or for any other reason determined by the Board, the Board may take any action under the 2002 Stock Plan that would otherwise be the responsibility of a Committee.

5.2    Powers of Committee. Each Committee's administration of the 2002 Stock Plan shall be subject to the authority granted to such Committee by the Board and the following:

(a)    Subject to the provisions of the 2002 Stock Plan, a Committee will have the authority and discretion to select from among the Participants those persons who shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares covered by the Awards, to establish the terms, conditions, performance criteria (provided that, for purposes of Section 162(m) of the Code, performance measures shall be based on one or more of the criteria set out on Attachment I hereto), restrictions, and other provisions of such Awards, and (subject to Section 7) to cancel or suspend Awards.

(b)    To the extent that a Committee determines that the restrictions imposed by the 2002 Stock Plan preclude the achievement of the material purposes of the Awards in jurisdictions outside the United States, such Committee will have the authority and discretion to modify those restrictions as such Committee determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside of the United States.

(c)    A Committee may grant Awards to Participants who are subject to the tax laws of nations other than the United States, which Awards may have terms and conditions as determined by the Committee as necessary to comply with applicable foreign laws. A Committee may take any action which it deems advisable to obtain approval of such Awards by the appropriate foreign government entity; provided however that no such Awards may be granted under this 2002 Stock Plan and no action may be taken which would result in a violation of the Exchange Act, the Code or any other Applicable Law.

(d)    In controlling and managing the operation and administration of the 2002 Stock Plan, a Committee shall take action in a manner that conforms to the articles and by-laws of the Company, and Applicable Law.

(e)    Notwithstanding anything in the 2002 Stock Plan to the contrary, (i) the reduction of the exercise price of any Option awarded under the 2002 Stock Plan and the base appreciation amount of any SAR awarded under the 2002 Stock Plan shall be subject to stockholder approval and (ii) canceling an Option or SAR at a time when its exercise price or base appreciation amount (as applicable) exceeds the Fair Market Value of the underlying Shares, in exchange for another Option, SAR, Restricted Stock Award, or other Award shall be subject to stockholder approval, unless the cancellation and exchange occurs in connection with a Transaction. Notwithstanding the foregoing, canceling an Option or SAR in exchange for another Option, SAR, Restricted Stock Award, or other Award with an exercise price, purchase price or base appreciation amount (as applicable) that is equal to or greater than the exercise price or base appreciation amount (as applicable) of the original Option or SAR shall not be subject to stockholder approval.

(f)    Notwithstanding the authority granted to any other Committee, the Compensation Committee will have the sole authority and discretion to interpret the 2002 Stock Plan, to establish, amend, and rescind any rules and regulations relating to the 2002 Stock Plan, and to make all other determinations that may be necessary or advisable for the administration of the 2002 Stock Plan.

(g)    Any interpretation of the 2002 Stock Plan by the Compensation Committee and any decision made by it under the 2002 Stock Plan shall be final and binding on all persons.

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5.3    Delegation by Compensation Committee. Except to the extent prohibited by Applicable Law or the applicable rules of a stock exchange, a Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its ministerial duties to any person or persons selected by it. Any such allocation or delegation may be revoked by a Committee at any time.

5.4    Information to be Furnished to Committee. The Company and its Subsidiaries shall furnish any Committee with such data and information as such Committee determines may be required for it to discharge its duties. The records of the Company and its Subsidiaries as to a Participant's employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined to be incorrect. Participants must furnish a Committee such evidence, data or information as such Committee considers desirable to carry out the terms of the 2002 Stock Plan in order to be entitled to benefits under the 2002 Stock Plan.

6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR CORPORATE TRANSACTION

6.1    Changes in Capitalization. Subject to any required action by the stockholders of the Company, (a) the number and/or class of securities covered by each outstanding Award, (b) the price per share covered by each such outstanding Award, (c) the number and/or class of securities which have been authorized for issuance under the 2002 Stock Plan but as to which no Awards have yet been granted or which have been returned to the 2002 Stock Plan upon cancellation or expiration of an Award, and (d) the maximum number of Options, SARs, Stock Unit Awards, Restricted Stock Awards, Restricted Stock Units Awards and Performance Share Awards which may be granted to any Participant in any one-calendar-year period shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company, provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Compensation Committee. The Compensation Committee shall also make adjustments described in (a)-(d) of this Section 6.1 in the event of any distribution of cash or other assets to stockholders other than an ordinary cash dividend. In determining adjustments to be made under this Section 6.1, the Compensation Committee may take into account such factors as it deems appropriate, including (i) the restrictions of Applicable Law, (ii) the potential tax, accounting or other consequences of an adjustment and (iii) the possibility that some Participants might receive an adjustment and a distribution or other unintended benefit, and in light of such factors or circumstances may make adjustments that are not uniform or proportionate among outstanding Awards, modify vesting dates, defer the delivery of stock certificates or make other equitable adjustments. Any such adjustments to outstanding Awards will be effected in a manner that precludes the enlargement of rights and benefits under such Awards. Adjustments, if any, and any determinations or interpretations, including any determination of whether a distribution is other than an ordinary cash dividend, made by the Compensation Committee shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of Shares of any class, or securities convertible into Shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Award.

6.2    Transactions. In the event of the proposed dissolution or liquidation of the Company or of a merger or corporate combination (a "Transaction") in which the successor corporation does not agree to assume the Award or substitute an equivalent Award, the Compensation Committee shall make a determination (subject to Section 7) as to the equitable treatment of outstanding Awards under the 2002 Stock Plan and shall notify Participants of such treatment no later than ten (10) days prior to such proposed Transaction. To the extent it has not been previously exercised, an Award that is not assumed will terminate immediately prior to the consummation of such proposed Transaction.

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7. AMENDMENT AND TERMINATION

The Board may, at any time, amend or terminate the 2002 Stock Plan, provided that (i) no amendment or termination may, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely affect the rights of any Participant or beneficiary under any Award granted under the 2002 Stock Plan prior to the date such amendment is adopted by the Board; provided that modifications or adjustments pursuant to Sections 6.1 or 6.2 or that may cause an Incentive Stock Option to become a Nonstatutory Stock Option shall in no event be deemed to have an adverse effect on any Award, and (ii) no such amendment shall be made without the approval of the Company's stockholders to the extent such approval is required by Applicable Laws, the requirements of any applicable stock exchange, or if such amendment would lessen the stockholder approval requirements of Section 5.2(g) or this Section 7.

8.DEFINED TERMS

In addition to the other definitions contained herein, the following definitions shall apply:

(a)Applicable Law means the corporate, securities and tax laws (including, without limitation, the Delaware corporate law, the Exchange Act, the Securities Act of 1933 and the Code) applicable to the establishment and administration of employee stock incentive plans and the grant of awards thereunder.

(b)Award. The term "Award" shall mean any award or benefit granted under the 2002 Stock Plan, including, without limitation, the grant of Options, SARs, Stock Unit Awards, Restricted Stock Awards, Restricted Stock Unit Awards and Performance Share Awards.

(c)Board. The term "Board" shall mean the Board of Directors of the Company.

(d)Code. The term "Code" means the Internal Revenue Code of 1986, as amended. A reference to any provision of the Code shall include reference to any successor provision of the Code.

(e)Common Stock shall mean the common stock, par value, $.10 per share, of the Company.

(f)Continuous Status as an Employee means the absence of any interruption or termination of the employment relationship by the Company or any Subsidiary. Continuous Status as an employee shall not be considered interrupted in the case of: (i) sick leave, military leave or any other leave of absence approved by the Board, provided that such leave is for a period of not more than ninety (90) days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to Company policy adopted from time to time; or (ii) in the case of transfers between locations of the Company or between the Company, its Subsidiaries or its successor.

(g)Exchange Act means the Securities Exchange Act of 1934, as amended.

(h)    Fair Market Value. For purposes of determining the "Fair Market Value" of a share of Stock granted pursuant to the 2002 Stock Plan as of any date, the following rules shall apply:

(i)    If the principal market for the Stock is the New York Stock Exchange ("NYSE"), then the "Fair Market Value" as of that date shall be the closing price of the stock on the NYSE composite tape on that date as reported in the Wall Street Journal for such date;

(ii)    If the principal market for the Stock is the another national securities exchange or the NASDAQ stock market, then the "Fair Market Value" as of that date shall be the mean between the lowest and highest reported composite sale prices of the Stock on that date on such exchange for such date;

(iii)    If sale prices are not available or if the principal market for the Stock is not the NYSE or another national securities exchange and the Stock is not quoted on the NASDAQ stock market, then the "Fair Market Value" as of that date shall be the average between the highest bid and lowest asked prices for the Stock on such day as reported on the NASDAQ OTC Bulletin Board Service or by the National Quotation Bureau, Incorporated or a comparable service.

(iv)    If the day is not a business day or a day in which the Stock is traded, and as a result, paragraphs (i), (ii) and (iii) next above are inapplicable, the Fair Market Value of the Stock shall be determined as of the last preceding day in

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which the Stock is traded. If paragraphs (i), (ii) and (iii) next above are otherwise inapplicable, then the Fair Market Value of the Stock shall be determined in good faith by the Compensation Committee.

(i)    Incentive Stock Option means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

(j)    Nonstatutory Stock Option means an Option not intended to qualify as an Incentive Stock Option.

(k)    Optionee means a Participant who receives an Option.

(l)    Parent means a "parent corporation", whether now or hereafter existing, as defined in Section 424(e) of the Code.

(m)    Participants. The term "Participant" shall mean any executive, employee or director of the Company, or its Subsidiary. An Award may be granted to an employee, in connection with hiring, retention or otherwise, prior to the date the employee first performs services for the Company or its Subsidiaries, provided that such Awards shall not become vested prior to the date the employee first performs such services. The term "Participant" also includes any non-employee director of the Company, or its Subsidiary.

(n)    Performance Measures means the business criteria applicable to the grant of Awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code.    

    (o)    Share means a share of the Common Stock, as adjusted in accordance with Section 6 of the 2002 Stock Plan.

(p)    Stock. The term "Stock" shall mean shares of Common Stock of the Company.

(q)    Subsidiary or Subsidiaries. The term "Subsidiary" or "Subsidiaries" mean any company during any period in which it is a "subsidiary corporation" (as that term is defined in Code section 424(f)) with respect to the Company.

9. PLAN HISTORY

The 2002 Stock Plan became effective as of October 10, 2002. The 2002 Stock Plan was originally approved by the stockholders of the Company on January 30, 2003. The Board approved an amendment and restatement of the 2002 Stock Plan on December 16, 2004 to (a) include additional Performance Measures and (b) amend Section 6.1 to increase the scope of adjustments that may be made as a result of changes in capitalization of the Company, which amendment and restatement was approved by the stockholders of the Company on January 25, 2005. The Board approved a further amendment and restatement of the 2002 Stock Plan on December 18, 2009 to (a) revise the Performance Measures such that they conform to the Performance Goals under the Franklin Resources, Inc. 2004 Key Executive Incentive Compensation Plan and (b) make certain administrative updates, which amendment and restatement became effective upon its approval by the stockholders of the Company on March 16, 2010. The Board approved a further amendment and restatement of the 2002 Stock Plan on December 16, 2010 to increase the number of authorized Shares subject to the 2002 Stock Plan by ten million (10,000,000) Shares, for a total maximum aggregate of forty million (40,000,000) Shares, which amendment and restatement became effective upon its approval of the stockholders of the Company on March 15, 2011. The Board approved a further amendment and restatement of the 2002 Stock Plan on October 22, 2012 to permit additional committees of the Board to exercise certain authority under the Plan, which amendment and restatement was not subject to the approval of the stockholders of the Company.

9

ATTACHMENT I

PERFORMANCE MEASURES

The Compensation Committee shall grant performance-based compensation Awards tied to one or more of the following business criteria:

(a) annual revenue,

(b) budget comparisons,

(c) controllable profits,

(d) Company earnings per share,

(e) expense management,

(f) improvements in capital structure,

(g) net income,

(h) net or gross sales,

(i) operating income (pre- or post-tax),

(j) profit margins,

(k) operating or gross margin,

(l) profitability of an identifiable business unit or product,

(m) return on investments,

(n) return on sales,

(o) return on stockholders' equity,

(p) total return to stockholders,

(q) assets under management,

(r) investment management performance,

(s) mutual and other investment fund performance,

(t) institutional account performance,

(u) high net worth and other separate account performance,

(v) cash flow, operating cash flow, or cash flow or operating cash flow per share (before or after dividends),

(w) price of the shares or any other publicly traded securities of the Company,

(x) reduction in costs,

(y) return on capital, including return on total capital or return on invested capital,

(z) improvement in or attainment of expense levels or working capital levels, and

(aa) performance of the Company relative to a peer group of companies and/or relevant indexes on any of the foregoing measures.

10

The Performance Measures may be applicable to the Company and/or any of its individual business units and may differ from Participant to Participant. In addition, the Performance Measures shall be calculated in accordance with generally accepted accounting principles, but excluding the effect (whether positive or negative) of any change in accounting standards and any extraordinary, unusual or nonrecurring item, as determined by the Compensation Committee, occurring after the establishment of the Performance Measures applicable to an Award intended to be performance-based compensation. Each such adjustment, if any, shall be made solely for the purpose of providing a consistent basis from period to period for the calculation of Performance Measures in order to prevent the dilution or enlargement of the Participant's rights with respect to an Award intended to be performance-based compensation; provided, however, that certain categories or types of such adjustments can be specifically included (rather than excluded) at the time the Performance Measures are established if so determined by the Compensation Committee.

11

EX-10.26

Exhibit 10.26

FRANKLIN RESOURCES, INC.

AMENDED AND RESTATED ANNUAL INCENTIVE COMPENSATION PLAN

(amended and restated October 22, 2012)

(amended and restated March 16, 2010)

(amended and restated December 13, 2006)

(amended and restated December 16, 2005)

(amended and restated September 22, 2005)

(amended and restated December 16, 2004)

(amended and restated December 11, 2003)

I. PURPOSE

Franklin Resources, Inc. has established this Amended and Restated Annual Incentive Compensation Plan to reward employees for contributions to the Company (as hereinafter defined) by providing them an opportunity to share in the organization's annual performance results. Through these incentives, the Company intends to attract, retain, and motivate eligible employees to achieve the highest levels of performance results in the financial services business.

II. DEFINITIONS

When used in this plan document, the following words and phrases shall have the following meanings:

2.1“Award Pool” means the total dollars available for funding Incentive Awards under the Plan for an applicable Plan Year.

2.2“Bonus Opportunity” means a potential bonus target for a Participant.

2.3“Committee” means the Compensation Committee of the Board of Directors of Franklin Resources, Inc., and/or another committee of the Board of Directors to the extent of such other committee's authority granted by the Board.

2.4“Company” means Franklin Resources, Inc., a Delaware corporation, and its direct and indirect subsidiaries.

2.5“Compensation Committee” means the Compensation Committee of the Franklin Resources, Inc. Board of Directors.

2.6“Equity Award” means a grant of Stock, Options, SARs, Stock Unit Awards, Restricted Stock Awards or Restricted Stock Unit Awards under the 2002 Universal Stock Incentive Plan or successor equity compensation plan, or Mutual Fund Unit Awards.

2.7 “Incentive Award” means the actual current value of an award to a Participant, regardless of the form of the award, determined by a Committee or Management during or following the end of the Plan Year, as applicable.

2.8“Management” means the executive officers of the Company.

2.9“Mutual Fund Unit Award” means the grant of a right to receive shares in mutual funds sponsored by the Company upon the vesting of the units in recognition of and as a reward for the past efforts and contributions of the Participant on behalf of the Company, with such right to receive shares in such mutual funds subject to a risk of forfeiture or other restrictions that will lapse based on the completion of service or achievement of performance objectives by the Participant, as determined by a Committee.

2.10 “Option” means the grant of a right to purchase Stock at a specified exercise price in recognition of and as a reward for the past efforts and contributions of the Participant on behalf of the Company, with the right to purchase such shares of Stock subject to the completion of service or achievement of performance objectives by the Participant, as determined by a Committee.

2.11“Participant” means all employees who have been determined by a Committee or Management to be Participants pursuant to Section 3.1.

2.12“Plan” means the Amended and Restated Annual Incentive Compensation Plan as set forth in this document, as amended from time to time.

2.13“Pre-Bonus Operating Income” (hereafter “PBOI”) means the net operating income of the Company, exclusive of passive income and calculated before non-operating interest, taxes, extraordinary items, and certain special items (such as special compensation payouts on account of a merger) and before the accrual of Incentive Awards under the Plan and awards under the Company's 2004 Key Executive Incentive Compensation Plan or any successor plan.

2.14“Plan Year” means the 12-month period beginning on the first day of each fiscal year of the Company.

2.15“Restricted Stock Award” means the grant of shares of Stock in recognition of and as a reward for the past efforts and contributions of the Participant on behalf of the Company, with such shares of Stock subject to a risk of forfeiture or other restrictions that will lapse based on the completion of service or achievement of performance objectives by the Participant, as determined by a Committee.

2.16“Restricted Stock Unit Award” means the grant of a right to receive Stock upon the vesting of the units in recognition of and as a reward for the past efforts and contributions of the Participant on behalf of the Company, with such right to receive Stock subject to a risk of forfeiture or other restrictions that will lapse based on the completion of service or achievement of performance objectives by the Participant, as determined by a Committee.

2.17“SAR” means the grant of a right to receive, in cash or Stock (as determined by a Committee), value equal to (or otherwise based on) the excess of (a) the fair market value of a specified number of shares of Stock at the time of exercise over (b) a specified exercise price, in recognition of and as a reward for the past efforts and contributions of the Participant on behalf of the Company, with the right to receive such value in cash or Stock subject to the completion of service or achievement of performance objectives by the Participant, as determined by a Committee.

2.18“Stock” means Franklin Resources, Inc. common stock reserved for issuance under the Franklin Resources, Inc. 2002 Universal Stock Incentive Plan or successor equity compensation plan.

2.19“Stock Unit Award” means the grant of a right to receive Stock in the future.

III. PARTICIPATION

3.1All individuals who are employees at the beginning of the Plan Year, except employees who participate in commission-based incentive plans or other incentive arrangements determined by a Committee or Management, are eligible to be designated by a Committee or Management as Participants during that Plan Year. Employees hired during a Plan Year may be added to the Plan as Participants in the discretion of a Committee or Management.

3.2A Participant's Incentive Award will be based upon an evaluation of a Participant's overall performance, including the successful accomplishment of annual goals and objectives, as well as other performance factors.

IV. AWARD POOL FUNDING AND INDIVIDUAL AWARDS

4.1For each Plan Year, the Compensation Committee shall determine the amount to be allocated to the Award Pool, not to exceed Twenty Percent (20%) of PBOI.

4.2A Committee or Management may generally determine the amount of Bonus Opportunities under the Plan. The Committee or Management may advise Participants of particular Bonus Opportunities or ranges of Bonus Opportunities at any time during the Plan Year.

4.3The actual amounts allocated to the Award Pool may be determined and/or revised by the Compensation Committee at any time during or after the end of each Plan Year, based upon actual or projected Company performance and PBOI.

2

4.4Actual Incentive Awards may be determined during or following the end of each Plan Year. The amount of any Incentive Awards determined and paid prior to the end of a Plan Year shall be credited against the Award Pool for such Plan Year so that the net amount remaining in the Award Pool is available for Incentive Awards determined and paid after the end of such Plan Year. Actual Incentive Awards may vary from the Bonus Opportunities depending on the PBOI allocated or projected to be allocated to the Award Pool and a Participant's individual performance.

4.5To promote the highest levels of individual performance, there is no minimum or maximum which applies to individual Incentive Awards of any Participant. Amounts not allocated as Incentive Awards do not carry over to the next Plan Year, and may be used for distribution as incentive compensation to employees who are not Participants in the Plan.

4.6Notwithstanding a Participant's individual performance and anything to the contrary in this Plan, Management or a Committee may decrease (even to zero) or increase the Incentive Award payable to a Participant; provided however, that only a Committee may increase or decrease an Incentive Award payable to a member of Management.

V. PAYMENT OF ANNUAL AWARDS

5.1Incentive Awards may, in a Committee's discretion, be paid in the following time and manner:

(a)Incentive Awards may be paid in cash or in a combination of cash and Equity Awards subject to restrictions and vesting, if any, determined by a Committee to be appropriate. Incentive Awards paid in Equity Awards granted under the 2002 Universal Stock Incentive Plan or successor equity compensation plan shall also be subject to the limit on the maximum number of shares that may be issued under such plan and any additional limitations on the maximum number of shares that may be awarded to any individual in any fiscal or calendar year under such plan.

(b)Any Equity Awards granted as part of an Incentive Award shall be governed by the terms of the applicable award agreement evidencing such Equity Award grant and, in the case of Equity Awards other than Mutual Fund Units, the 2002 Universal Stock Incentive Plan or any successor plan, and shall not be governed by or subject to the terms of this Plan.

(c)The cash portion of an Incentive Award shall be paid at such time and in such manner as a Committee determines. Participants shall be notified in writing as to the date and time of payment of any deferred portion of the Incentive Award.

(d)Equity Awards awarded as part of an Incentive Award shall be distributed at such time during or after the end of the Plan Year as determined by a Committee. Notwithstanding anything in the Plan to the contrary, Equity Awards and any modifications thereto shall be made by a Committee, and, if applicable, in accordance with the 2002 Universal Stock Incentive Plan or successor equity compensation plan.

(e)Notwithstanding the foregoing, the payment of any Incentive Awards determined by the Company to provide for a “deferral of compensation” (within the meaning of Section 1.409A-1(b) of the Treasury regulations under the Internal Revenue Code of 1986, as amended (the “Code”), and any successor thereto) shall be completed no later than two and one-half (2½) months following the end of the calendar year in which such Incentive Awards are earned.

5.2Application of Code Section 409A.

Notwithstanding any other provision of this Plan to the contrary, the Company, in its sole discretion and without Participant consent, may amend or modify the Plan in any manner to provide for the application and effects of Section 409A of the Code (relating to deferred compensation arrangements) and any related regulatory or administrative guidance issued by the Internal Revenue Service, or any successors thereto. The Company shall have the authority to delay the payment of any benefits described under the Plan to the extent it deems necessary or appropriate to comply with Section 409A(a)(2)(B)(i) of the Code (relating to payments made to certain “key employees” of certain publicly-traded companies) and in such event, any such payments to which a Participant would otherwise be entitled during the six (6) month period immediately following his or her separation from service will be paid on the first business day following the expiration of such six (6) month period.

3

VI. PAYMENT IN EVENT OF DEATH, DISABILITY, LEAVE OF ABSENCE OR RETIREMENT

6.1Death of Participant.

A Participant who dies is entitled to a pro-rated Incentive Award based on performance up to the last day worked. Payment shall be made in cash in a single payment during or as soon as practical following the end of the Plan Year in which death occurred. If the Participant dies following the end of a Plan Year but before an Incentive Award for that year has been paid, the Participant's full Incentive Award shall be paid in cash in a single payment when it would otherwise have been paid. Payment of Incentive Awards on account of death shall be paid to the person designated by the Participant as beneficiary under this Plan. If there is no such designation or the designated beneficiary fails to survive the Participant, payment shall be made to the Participant's spouse or if there is none, the Participant's estate. Notwithstanding the foregoing provisions of this Section 6.1 with respect to the payment of Incentive Awards, a Participant's full Incentive Award, a portion of his full Incentive Award, or no portion thereof may be payable to the persons specified above. Such determination shall be made by Management or by a Committee.

6.2Disability.

A Participant who ceases to be an employee on account of disability, as a result of which the Participant shall be eligible for payments under Company long-term disability insurance policies, shall be entitled to receive a pro-rated Incentive Award based on performance up to the last day worked. Payment shall be made in cash in a single installment during or as soon as practical following the end of the Plan Year in which employment terminated. If the Participant ceases to be an employee on account of disability following the end of a Plan Year but before an Incentive Award for that Plan Year has been paid, the Participant's full Incentive Award shall be paid in cash in a single payment when it would otherwise have been paid. Notwithstanding the foregoing provisions of this Section 6.2 with respect to the payment of Incentive Awards, a Participant may receive his full Incentive Award, a portion of his full Incentive Award, or no portion thereof. Such determination shall be made by Management or by a Committee.

6.3Leave of Absence.

A Participant on leave of absence for any portion of the Plan Year may receive his full Incentive Award, a portion of his full Incentive Award, or no portion thereof. Such determination shall be made by Management or by a Committee.

6.4Retirement.

A Participant who retires during the Plan Year is eligible to receive a pro-rated Incentive Award based on performance to the date of retirement in cash in a single payment during or as soon as practical following the end of the fiscal year in which the Participant retires. A Participant has “retired” for purposes of this Plan if he terminates employment with the Company after reaching age 55 with at least 10 years of service to the Company, including service to any entity that is acquired by the Company, provided that the Company may modify this provision as necessary to comply with applicable requirements or practices of relevant non-U.S. jurisdictions. Notwithstanding the foregoing provisions of this Section 6.4 with respect to the payment of Incentive Awards, a Participant may receive his full Incentive Award, a portion of his full Incentive Award, or no portion thereof. Such determination shall be made by Management or by a Committee.

VII. PAYMENT IN EVENT OF TERMINATION OF EMPLOYMENT

7.1Involuntary Termination of Employment.

(a)If a Participant's employment is terminated by the Company as a result of the Company's dissatisfaction with the job related activities of the Participant or conviction of the Participant of a felony, the Participant shall forfeit any rights to any unpaid Incentive Awards under the Plan. Notwithstanding the foregoing, a Committee, in its sole discretion, may (x) pay the Participant a pro-rated Incentive Award based upon performance during the Plan Year to the date of termination or (y) pay the Participant's full Incentive Award (or any greater amount).

(b)If a Participant's employment is terminated for reasons other than those described in Sections 6 and 7.1(a) above, Management or a Committee shall have discretion to pay any or no portion of the Participant's Incentive Award (or any greater amount) following such termination.

4

7.2Voluntary Termination of Employment.

If a Participant voluntarily resigns from employment at the Company prior to the payment of an Incentive Award with respect to a Plan Year, no Incentive Award with respect to such Plan Year will be paid. The Participant shall forfeit the right to any Incentive Awards for such Plan Year and any subsequent Plan Year. Notwithstanding the foregoing, a Committee may (a) pay the Participant a pro-rated Incentive Award based upon performance during the Plan Year to the date of termination or (b) pay the Participant's full Incentive Award (or any greater amount).

VIII. AMENDMENT OR TERMINATION

8.1Amendment.

The Compensation Committee reserves the right, in its sole discretion to amend this Plan at any time in whole or in part; provided, however, that no amendment shall result in the forfeiture or cancellation of any Participant's Incentive Award(s) earned as of the end of the fiscal year immediately preceding the date the Compensation Committee adopts the amendment, unless otherwise agreed to by the affected Participant(s).

8.2Termination.

The Compensation Committee may terminate the Plan at any time. Termination shall not result in the forfeiture or cancellation of any Participant's Incentive Award(s) which have been determined but not yet paid, unless otherwise agreed to by the affected Participant(s).

IX. ADMINISTRATION

9.1Administration of the Plan.

This Plan has been adopted by the stockholders of Franklin Resources, Inc. and shall be administered by the Compensation Committee.

(a)The Compensation Committee shall meet at such times and places and upon such notice as the chairperson determines in consultation with the other Compensation Committee members. A majority of the Compensation Committee shall constitute a quorum. Any acts by the Compensation Committee may be taken at any meeting at which a quorum is present and shall be by majority vote of those members entitled to vote. Additionally, any acts reduced to writing or approved in writing by all the members of the Compensation Committee shall be valid acts of the Compensation Committee.

(b)The Compensation Committee shall have the sole authority, in its absolute discretion, to adopt, amend, and rescind such policies and procedures as, in its opinion, may be advisable in the administration of the Plan, to construe and interpret the Plan, the policies and procedures, and any instruments evidencing Incentive Awards and to make all other determinations deemed necessary or advisable for the administration of the Plan. All decisions, determinations, and interpretations of the Compensation Committee shall be binding on all Participants.

(c)The Plan is intended to meet the requirements of the rules promulgated by the Securities and Exchange Commission under Section 16(b) of the Securities Exchange Act of 1934, as amended, and shall be administered and construed accordingly.

9.2Non-alienation of Benefits.

No benefit under this Plan may be sold, assigned, transferred, conveyed, hypothecated, encumbered, anticipated, or otherwise disposed of, and any attempt to do so shall be void. No such benefit shall, prior to receipt thereof by a Participant, be in any manner subject to the debts, contracts, liabilities, engagements, or torts of such Participant.

9.3No Limitation of Rights.

Nothing in this Plan shall be construed to limit in any way the Company's general personnel policies and procedures particularly with respect to the right of the Company to terminate a Participant's employment at any time for any reason whatsoever with or without cause; nor shall it be evidence of any agreement or understanding, express or implied, that the Company (a) will

5

employ a Participant in any particular position, (b) will ensure participation in any incentive programs, or (c) will grant any awards for such programs.

9.4Applicable Law.

The provisions of the Plan shall be governed by and construed in accordance with the laws of the State of Delaware, with the exception of Delaware's conflict of laws provisions.

9.5Mandatory Arbitration.

The Participant and the Company agree to submit all disputes arising under the Plan or the participation by Participant in the Plan exclusively to final and binding arbitration in accordance with the Company's dispute resolution policies with respect to employment arrangements and compensation plans as in effect from time to time.

X. FORFEITURE OF INCENTIVE AWARDS PURSUANT TO RESTATEMENT OF FINANCIAL RESULTS

Notwithstanding any other provision of this Plan to the contrary, in the event that (i) the Company issues a restatement of financial results to correct a material error and (ii) the Compensation Committee determines, in good faith, that a Participant's fraud or willful misconduct was a significant contributing factor to the need to issue such restatement and (iii) some or all of the Incentive Award that was granted and/or earned prior to such restatement by the Participant would not have been granted and/or earned, as applicable, based upon the restated financial results, the Participant shall immediately return to the Company the Incentive Award, including any shares of Stock or mutual fund shares, or the pre-tax income derived from any disposition of shares of Stock or mutual fund shares previously received in settlement of the Incentive Award that would not have been granted and/or earned based upon the restated financial results (the “Repayment Obligation”). The Company shall be able to enforce the Repayment Obligation by all legal means available, including, without limitation, by withholding such amount from other sums owed by the Company to the Participant.

* * *

This Plan was originally approved by the stockholders of Franklin Resources, Inc. on January 19, 1994. The stockholders of Franklin Resources, Inc. approved an amendment of the Plan on January 24, 1995. The Board of Directors of Franklin Resources, Inc. approved an amendment and restatement of the Plan on December 11, 2003 to (a) provide that up to 20% of PTOI may be allocated to the Award Pool by the Compensation Committee and (b) give broad discretion to the Compensation Committee in determining the amount of Incentive Awards payable to Participants in the Plan, which amendment and restatement was approved by the stockholders of Franklin Resources, Inc. on January 29, 2004. The Board of Directors of Franklin Resources, Inc. approved an amendment and restatement of the Plan on December 16, 2004 to provide that Incentive Awards may be paid in Options, SARs, Stock Unit Awards and Restricted Stock Unit Awards, which amendment and restatement was not subject to the approval of the stockholders of Franklin Resources, Inc. The Board of Directors of Franklin Resources, Inc. approved an amendment and restatement of the Plan on September 22, 2005 principally to (a) provide that the allocation of actual amounts to the Award Pool, Associates' Pool(s) and/or Principals' Pool(s) for a Plan Year and the determination and payment of actual Incentive Awards for a Plan Year may be made in advance of the completion of such Plan Year and (b) make various conforming and other technical changes to the Plan, which amendment and restatement was not subject to the approval of the stockholders of Franklin Resources, Inc. The Board of Directors of Franklin Resources, Inc. approved an amendment and restatement of the Plan on December 16, 2005 principally to change the governing law of the Plan to Delaware, which amendment and restatement was not subject to the approval of the stockholders of Franklin Resources, Inc. The Board of Directors of Franklin Resources, Inc. approved an amendment and restatement of the Plan on December 13, 2006 principally to make clarifying and technical changes to the Plan, which amendment and restatement was not subject to the approval of the stockholders of Franklin Resources, Inc. The Board of Directors of Franklin Resources, Inc. approved an amendment and restatement of the Plan on March 16, 2010 principally to (a) make clarifying and technical changes to the Plan, including to extend certain administrative authority to appropriate officers and members of management personnel in addition to the Compensation Committee, as well as (b) include a clawback provision providing for the forfeiture of Incentive Awards by a Participant in the context of certain material financial restatements resulting from such Participant's misconduct, which amendment and restatement was not subject to the approval of the stockholders of Franklin Resources, Inc. The Board of Directors of Franklin Resources, Inc. approved an amendment and restatement of the Plan on October 22, 2012 to permit additional committees established by the Board to act under the Plan to the extent of the authority granted to any such committee, which amendment and restatement was not subject to the approval of the stockholders of Franklin Resources, Inc.

FRANKLIN RESOURCES, INC.

6

EX-12

EXHIBIT 12

COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES

(dollars in millions)	2012			2011			2010			2009			2008
for the fiscal years ended September 30,
Income before taxes excluding equity in income of investees, noncontrolling interests of consolidated subsidiaries and capitalized interest	$	2,609.6		$	2,625.3		$	2,050.2		$	1,270.8		$	2,219.6
Additions:
Dividends received from equity method investees	7.9			20.0			18.1			7.2			10.9
Interest on uncertain tax positions included in income before taxes	(0.3		)	3.2			5.1			3.5			4.3
Fixed charges
Interest expense - excluding interest on deposits	45.4			53.7			18.4			6.4			30.0
Interest expense - deposits	2.9			4.1			4.7			6.1			8.9
Interest on uncertain tax positions not related to third party	0.3			(3.2		)	(5.1		)	(3.5		)	(4.3		)
Interest factor on rent1	19.5			20.7			22.2			19.6			19.2
Total fixed charges	68.1			75.3			40.2			28.6			53.8
Adjusted earnings	$	2,685.3		$	2,723.8		$	2,113.6		$	1,310.1		$	2,288.6
Ratio of adjusted earnings to fixed charges including interest on deposits	39.4			36.2			52.6			45.8			42.5
Ratio of adjusted earnings to fixed charges excluding interest on deposits	41.1			38.2			59.4			58.0			50.8

________________

¹        Interest factor on rent represents one-third of rental expense (the approximate portion of rental expense representing interest).

EX-21

EXHIBIT 21

FRANKLIN RESOURCES, INC.

LIST OF SUBSIDIARIES

(as of October 16, 2012)

Name	State or Nation of Incorporation or Organization
Balanced Equity Management Pty. Limited	Australia
C&EE General Partner Limited	Delaware
C&EE Private Equity Partners, L.P.	Delaware
Darby Administração de Investimentos Ltda	Brazil
Darby Asia Founder Partner, L.P.	Cayman Islands
Darby Asia Investors (HK), Ltd.	Hong Kong
Darby Asia Investors (India) Private Limited	India
Darby Asia Investors, Ltd.	British Virgin Islands
Darby Asia Mezzanine Fund II Management Co., Ltd.	Cayman Islands
Darby Asia Opportunities Fund III GP, L.P.	Cayman Islands
Darby Asia Opportunities Fund III Management Co, Ltd.	Cayman Islands
Darby Brazil Mezzanine Management LLC	Delaware
Darby CEE Founder Partner II, LLC	Delaware
Darby Colpatria Capital SAS	Colombia
Darby Converging Europe Founder Partner, L.P.	Delaware
Darby Converging Europe Fund III Management	Luxembourg
Darby Emerging Markets Investments, Ltd.	Delaware
Darby Europe Mezzanine Management	Cayman Islands
Darby Holdings, Inc.	Delaware
Darby Latin American Investors, Ltd.	Cayman Islands
Darby Latin American Mezzanine Investments	Cayman Islands
Darby Latin American Mezzanine Management II, LLC	Delaware
Darby Mexico Private Equity, S.A.P.I. de C.V.	Mexico
Darby Overseas Investments, Ltd.	Delaware
Darby Overseas Partners, L.P.	Delaware
Darby Private Equity Brasil Administração de Investimentos Ltda	Brazil
Darby Private Equity Korea Ltd.	Korea
Darby - Hana Infrastructure Fund Management Co., Ltd.	Korea
Darby-ProBanco Investors, LLC	Delaware
DCEF Founder Partner III, L.P.	Scotland
DLAMF II Special Company, LLC	Delaware
FCC Receivables Corp.	Delaware
Fiduciary International Holding, Inc.	New York
Fiduciary International Ireland Limited	Ireland
Fiduciary International, Inc.	New York
Fiduciary Investment Corporation	New York
Fiduciary Investment Management International, Inc.	Delaware
Fiduciary Trust (International) S.A.	Switzerland
Fiduciary Trust Company International	New York
Fiduciary Trust Company of Canada	Canada

Name	State or Nation of Incorporation or Organization
Fiduciary Trust International Limited	England
Fiduciary Trust International of California	California
Fiduciary Trust International of Delaware	Delaware
Fiduciary Trust International of the South	Florida
Franklin Advisers, Inc.	California
Franklin Advisers GP, LLC	Delaware
Franklin Advisory Services, LLC	Delaware
Franklin Capital Corporation	Utah
Franklin Investment Advisory Services, LLC	Delaware
Franklin Mutual Advisers, LLC	Delaware
Franklin Receivables LLC	Delaware
Franklin SPE, LLC	Delaware
Franklin Templeton Asia Holdings Private Ltd.	Singapore
Franklin Templeton Asset Management (India) Private Limited	India
Franklin Templeton Asset Management (Malaysia) Sdn. Bhd	Malaysia
Franklin Templeton Asset Management Mexico, S.A. de C.V.	Mexico
Franklin Templeton Austria GmbH	Austria
Franklin Templeton Bank & Trust, F.S.B.	Utah
Franklin Templeton Capital Holdings Private Limited	Singapore
Franklin Templeton Companies, LLC	Delaware
Franklin Templeton Darby Equity Investment Management (Shanghai) Co., Ltd.	China
Franklin Templeton Financial Services Corp.	New York
Franklin Templeton France S.A.	France
Franklin Templeton Fund Management Limited	United Kingdom
Franklin Templeton Global Investors Limited	United Kingdom
Franklin Templeton GSC Asset Management Sdn. Bhd	Malaysia
Franklin Templeton Holding Limited	Mauritius
Franklin Templeton Institutional, LLC	Delaware
Franklin Templeton Institutional GP, LLC	Delaware
Franklin Templeton International Services (India) Private Limited	India
Franklin Templeton International Services S.A.	Luxembourg
Franklin Templeton Investímentos (Brasil) Ltda.	Brazil
Franklin Templeton Investment Management GmbH	Germany
Franklin Templeton Investment Management Limited	United Kingdom
Franklin Templeton Investment Services GmbH	Germany
Franklin Templeton Investment Services Mexico S. de R.L.	Mexico
Franklin Templeton Investment Trust Management Co., Ltd.	Korea
Franklin Templeton Investments (Asia) Limited	Hong Kong
Franklin Templeton Investments Australia Limited	Australia
Franklin Templeton Investments Corp.	Canada
Franklin Templeton Investments Japan Limited	Japan
Franklin Templeton Investments (ME) Limited	Dubai, U.A.E.
Franklin Templeton Investments Poland sp z o.o.	Poland
Franklin Templeton Investor Services, LLC	Delaware

Name	State or Nation of Incorporation or Organization
Franklin Templeton Italia SIM S.p.A.	Italy
Franklin Templeton Luxembourg Holding S.A.	Luxembourg
Franklin Templeton Magyarorszag Kft	Hungary
Franklin Templeton Management Luxembourg SA	Luxembourg
Franklin Templeton Portfolio Advisors, Inc.	California
Franklin Templeton Real Estate Advisors GP, LLC	Delaware
Franklin Templeton Services Limited	Ireland
Franklin Templeton Services, LLC	Delaware
Franklin Templeton Slovakia, s.r.o.	Slovakia
Franklin Templeton Strategic Investments Ltd.	Cayman Islands
Franklin Templeton Switzerland Ltd.	Switzerland
Franklin Templeton Trustee Services Private Limited	India
Franklin Templeton Uruguay S.A.	Uruguay
Franklin/Templeton Distributors, Inc.	New York
Franklin/Templeton Travel, Inc.	California
F S Capital Group	California
F S Properties, Inc.	California
FT Opportunistic Distressed Fund Ltd.	Cayman Islands
FTC Investor Services Inc.	Canada
FTCI (Cayman) Ltd.	Cayman Islands
ITI Capital Markets Limited	India
LSIMC, LLC	Delaware
Riva Financial Systems Limited	Isle of Man
Templeton Asset Management (Labuan) Limited	Malaysia
Templeton Asset Management Ltd.	Singapore
Templeton Asset Management Limited Mexico, S. de R.L. de C.V.	Mexico
Templeton Asset Management Poland Spolka Akcyjna	Poland
Templeton China Research Limited	Hong Kong
Templeton do Brasil Ltda.	Brazil
Templeton Franklin Global Distributors, Ltd.	Bermuda
Templeton Global Advisors Limited	The Bahamas
Templeton Global Holdings Ltd.	The Bahamas
Templeton International, Inc.	Delaware
Templeton Investment Counsel, LLC	Delaware
Templeton Restructured Investments, L.L.C.	Delaware
Templeton Restructured Investments, Ltd.	Cayman Islands
Templeton Restructured Investments III, Ltd.	Cayman Islands
Templeton Worldwide, Inc.	Delaware
Templeton/Franklin Investment Services, Inc.	Delaware
TSEMF III (Jersey) Limited	Jersey (Channel Islands)
TSEMF IV (Jersey) Limited	Jersey (Channel Islands)

________________

* All subsidiaries currently do business principally under their respective corporate names except as follows: Franklin Templeton Portfolio Advisors, Inc. operates through its Franklin Portfolio Advisors and Templeton Portfolio Advisors divisions; and some Templeton subsidiaries also occasionally use the name Templeton Worldwide.

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Forms S-3 (333-183969) and the Registration Statements on Form S-8 (Nos. 333-143402; 333-128691; 333-103869; 333-100801; 333-57682; 333-89517; 333-83377; 333-70035; 333-48171; and 333-173905) of Franklin Resources, Inc. of our report dated November 14, 2012 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

San Francisco, California

November 14, 2012

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Gregory E. Johnson, certify that:

1. I have reviewed this annual report on Form 10-K of Franklin Resources, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 14, 2012	/s/    GREGORY E. JOHNSON
		Gregory E. Johnson President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Kenneth A. Lewis, certify that:

1. I have reviewed this annual report on Form 10-K of Franklin Resources, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 14, 2012	/s/    KENNETH A. LEWIS
		Kenneth A. Lewis Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002 (FURNISHED HEREWITH)

I, Gregory E. Johnson, President and Chief Executive Officer of Franklin Resources, Inc. (the “Company”), certify, as of the date hereof and solely for purposes of and pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Annual Report on Form 10-K of the Company for the fiscal year ended September 30, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

This Certification has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Dated:	November 14, 2012	/s/    GREGORY E. JOHNSON
		Gregory E. Johnson President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002 (FURNISHED HEREWITH)

I, Kenneth A. Lewis, Executive Vice President and Chief Financial Officer of Franklin Resources, Inc. (the “Company”), certify, as of the date hereof and solely for purposes of and pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Annual Report on Form 10-K of the Company for the fiscal year ended September 30, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

This Certification has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Dated:	November 14, 2012	/s/    KENNETH A. LEWIS
		Kenneth A. Lewis Executive Vice President and Chief Financial Officer

XML

Taxes on Income (Tables)

12 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Abstract]

Components of income tax expense

Taxes on income were as follows:

(in millions)
for the fiscal years ended September 30,	2012		2011		2010
Current expense
Federal	$	602.9	$	576.4	$	426.5
State	56.1		103.8		71.5
Non-U.S.	83.2		122.8		115.0
Deferred expense	20.5		0.4		5.3
Total	$	762.7	$	803.4	$	618.3

Components of deferred tax assets and liabilities

The significant components of deferred tax assets and deferred tax liabilities were as follows:

(in millions)
as of September 30,	2012			2011
Deferred Tax Assets
State taxes	$	(0.9	)	$	19.7
Allowance for loan losses	1.0			4.3
Deferred compensation and employee benefits	62.8			53.7
Stock-based compensation	29.2			23.6
Net operating loss carry-forwards	27.9			24.4
Tax benefit for uncertain tax positions	29.6			29.9
Other	15.6			19.3
Total deferred tax assets	165.2			174.9
Valuation allowance for net operating loss carry-forwards	(17.4		)	(12.3		)
Deferred tax assets, net of valuation allowance	147.8			162.6
Deferred Tax Liabilities
Depreciation on fixed assets	18.6			18.2
Goodwill and other purchased intangibles	253.8			262.8
Deferred commissions	23.6			22.5
Unrealized gains on investments	17.5			2.8
Other	15.7			22.8
Total deferred tax liabilities	329.2			329.1
Net Deferred Tax Liability	$	181.4		$	166.5

Components of net deferred tax assets or liabilities as classified in the consolidated balance sheets

The components of the net deferred tax liability were classified in the consolidated balance sheets as follows:

(in millions)
as of September 30,	2012		2011
Deferred tax assets	$	94.9	$	107.9
Deferred tax liabilities	276.3		274.4
Net Deferred Tax Liability	$	181.4	$	166.5

Reconciliation of the amount of tax expense at the federal statutory rate and taxes on income

The following reconciles the amount of tax expense at the federal statutory rate and taxes on income as reflected in the consolidated statements of income:

(dollar amounts in millions)
for the fiscal years ended September 30,	2012					2011					2010
Federal taxes at statutory rate	$	937.4		35.0	%	$	918.5		35.0	%	$	724.4		35.0	%
State taxes, net of federal tax effect	34.4			1.3	%	63.5			2.4	%	51.7			2.5	%
Effect of non-U.S. operations	(218.8		)	(8.2	)%	(222.0		)	(8.5	)%	(177.1		)	(8.6	)%
Effect of net loss (income) attributable to noncontrolling interests	4.7			0.2	%	36.0			1.4	%	(2.0		)	(0.1	)%
Change in valuation allowance	—			0.0	%	—			0.0	%	(5.2		)	(0.3	)%
Other	5.0			0.2	%	7.4			0.3	%	26.5			1.4	%
Tax Provision	$	762.7		28.5	%	$	803.4		30.6	%	$	618.3		29.9	%

Reconciliation of gross unrecognized tax benefits

A reconciliation of the beginning and ending balances of gross unrecognized tax benefits is as follows:

(in millions)
for the fiscal years ended September 30,	2012			2011			2010
Balance at beginning of year	$	99.7		$	93.3		$	76.0
Additions for tax positions of prior years	16.4			8.8			11.4
Reductions for tax positions of prior years	(6.3		)	(5.1		)	(0.9		)
Additions for tax positions related to the current year	10.0			10.8			12.2
Settlements with taxing authorities	(13.7		)	(4.2		)	(0.8		)
Expirations of statute of limitations	(4.8		)	(3.9		)	(4.6		)
Balance at End of Year	$	101.3		$	99.7		$	93.3

XML

Subsequent Events (Details) (USD $)	12 Months Ended
	Sep. 30, 2012	Nov. 01, 2012
Subsequent Event [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	2.00%
Early Repayment of Senior Debt	$ 305,400,000
Ownership interest acquired		69.00%
Purchase consideration		182,900,000
Assets Under Management at acquisition date	$ 9,000,000,000

XML

Investments - Summary of gross unrealized gains and losses relating to investment securities available-for-sale (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Investments
Cost Basis	$ 793.1	$ 1,279.8
Gross Unrealized Gains	78.7	86.8
Gross Unrealized Losses	(1.8)	(30.1)
Fair Value	870.0	1,336.5
Sponsored Investment Products [Member]
Investments
Cost Basis	516.8	877.6
Gross Unrealized Gains	72.1	78.0
Gross Unrealized Losses	(1.7)	(29.9)
Fair Value	587.2	925.7
Securities of U.S. states and political subdivisions [Member]
Investments
Cost Basis	25.6	40.0
Gross Unrealized Gains	1.2	1.5
Gross Unrealized Losses	0	0
Fair Value	26.8	41.5
Securities of the U.S. Treasury and federal agencies [Member]
Investments
Cost Basis	2.4	2.4
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	2.4	2.4
Corporate debt securities [Member]
Investments
Cost Basis	70.0	120.0
Gross Unrealized Gains	0.3	1.6
Gross Unrealized Losses	0	0
Fair Value	70.3	121.6
Mortgage-backed securities - agency residential [Member]
Investments
Cost Basis	164.8	216.7
Gross Unrealized Gains	4.5	4.9
Gross Unrealized Losses	0	0
Fair Value	169.3	221.6
Other equity securities [Member]
Investments
Cost Basis	13.5	23.1
Gross Unrealized Gains	0.6	0.8
Gross Unrealized Losses	(0.1)	(0.2)
Fair Value	$ 14.0	$ 23.7

XML

Earnings per Share - Narrative (Details) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2010
Earnings Per Share [Abstract]
Shares of non participating nonvested stock	0.1	0.4

XML

Goodwill and Other Intangible Assets - Schedule of changes in carrying values of goodwill (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Goodwill [Roll Forward]
Balance at beginning of year	$ 1,536.2	$ 1,444.3
Business combinations	0	104.6
Foreign exchange and other	4.6	(12.7)
Balance at End of Year	$ 1,540.8	$ 1,536.2

XML

Investments - Continuous Loss Position (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 34.4	$ 228.9
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(0.8)	(29.7)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	21.7	8.8
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	(1.0)	(0.4)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	56.1	237.7
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	(1.8)	(30.1)
Sponsored Investment Products [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	30.0	228.9
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(0.7)	(29.7)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	21.7	4.7
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	(1.0)	(0.2)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	51.7	233.6
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	(1.7)	(29.9)
Other equity securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	4.4	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(0.1)	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	0	4.1
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	0	(0.2)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	4.4	4.1
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	$ (0.1)	$ (0.2)

XML

Debt - Debt Maturity (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012
Debt Maturities In 2013 [Member]
Debt Instrument [Line Items]
Debt maturities within one year of balance sheet date	$ 318.4
Debt Maturities In 2014 [Member]
Debt Instrument [Line Items]
Debt maturities due more than one year of balance sheet date	0
Debt Maturities In 2015 [Member]
Debt Instrument [Line Items]
Debt maturities due more than one year of balance sheet date	260.4
Debt Maturities In 2016 [Member]
Debt Instrument [Line Items]
Debt maturities due more than one year of balance sheet date	8.0
Debt Maturities In 2017 [Member]
Debt Instrument [Line Items]
Debt maturities due more than one year of balance sheet date	298.4
Thereafter [Member]
Debt Instrument [Line Items]
Debt maturities due more than one year of balance sheet date	680.9
Total [Member]
Debt Instrument [Line Items]
Total debt maturities	$ 1,566.1

XML

Employee Benefit Plans - Schedule of changes in plan benefit obligations and assets (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 3.6	$ 3.3	$ 2.9
Interest cost	2.2	2.1	2.0
Plan curtailments	0.5	0	0
Funded Status	0.1	0.7
Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	0	0	0
Interest cost	0.3	0.3	0.4
Plan curtailments	0	0	0
Funded Status	(6.8)	(6.1)
Change in Benefit Obligation [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Benefit obligation at beginning of year	42.8	42.1
Service cost	3.6	3.3
Interest cost	2.2	2.1
Participant contributions	1.4	1.0
Plan curtailments	0.5	0
Benefits paid	(2.4)	(1.4)
Actuarial (gains) losses	2.9	(3.9)
Foreign currency movements	1.7	(0.4)
Benefit Obligation at End of Year	52.7	42.8
Change in Benefit Obligation [Member] | Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Benefit obligation at beginning of year	6.1	7.4
Service cost	0	0
Interest cost	0.3	0.3
Participant contributions	0	0
Plan curtailments	0	0
Benefits paid	(0.4)	(0.5)
Actuarial (gains) losses	0.8	(1.1)
Foreign currency movements	0	0
Benefit Obligation at End of Year	6.8	6.1
Change in Fair Value of Plan Assets [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Participant contributions	1.4	1.0
Benefits paid	(2.4)	(1.4)
Fair value of plan assets at beginning of year	43.5	43.0
Actual return on assets	6.1	(1.9)
Employer contributions	2.4	3.3
Foreign currency movements	1.8	(0.5)
Fair Value of Plan Assets at End of Year	52.8	43.5
Change in Fair Value of Plan Assets [Member] | Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Participant contributions	0	0
Benefits paid	(0.4)	(0.5)
Fair value of plan assets at beginning of year	0	0
Actual return on assets	0	0
Employer contributions	0.4	0.5
Foreign currency movements	0	0
Fair Value of Plan Assets at End of Year	$ 0	$ 0

XML

Signficant Accounting Policies - Narrative (Details)	12 Months Ended
	Sep. 30, 2012
Property, Plant and Equipment [Line Items]
Stock-based compensation award vesting period	3 years
Software useful life	3
Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	3 years
Finite-Lived Intangible Asset, Useful Life	3 years
Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	35 years
Finite-Lived Intangible Asset, Useful Life	15 years

XML

Loans and Allowance for Loan Losses (Tables)

12 Months Ended

Sep. 30, 2012

Allowance for Loan and Lease Losses, Adjustments, Net [Abstract]

Schedule of loans receivable by major category

Loans receivable by major category consisted of the following:

(in millions)
as of September 30,	2012			2011
Commercial loans	$	49.3		$	38.7
Real estate mortgage loans	64.6			77.3
Installment loans	138.8			286.3
Other	2.2			4.8
Total loans receivable	254.9			407.1
Less: allowance for loan losses	(0.5		)	(5.2		)
Loans Receivable, Net	$	254.4		$	401.9

Schedule Of Maturities Of Loans Receivable

Maturities of loans receivable at September 30, 2012 were as follows:

(in millions)	One Year or Less		After One Through  Five Years		After Five Years		Total
Commercial loans	$	47.4	$	1.9	$	—	$	49.3
Real estate mortgage loans	2.7		1.4		60.5		64.6
Installment loans	121.3		6.9		10.6		138.8
Other	1.6		0.1		0.5		2.2
Total	$	173.0	$	10.3	$	71.6	$	254.9

Schedule Of Contractual Maturities Of Loans Receivable Due After Year One By Repricing Characteristic

Contractual maturities of loans receivable due after one year by repricing characteristic at September 30, 2012 were as follows:

(in millions)	Carrying Value
Loans at fixed interest rates	$	64.1
Loans at floating or adjustable interest rates	17.8
Total	$	81.9

Schedule Of Changes In Allowances For Loan Losses

Changes in the allowance for loan losses were as follows:

(in millions)
for the fiscal years ended September 30,	2012			2011			2010
Balance at beginning of year	$	5.2		$	5.4		$	7.0
Provision for loan losses	5.3			4.2			3.3
Charge-offs	(4.3		)	(6.4		)	(6.7		)
Recoveries	2.4			2.0			1.8
Loans sold	(8.1		)	—			—
Balance at End of Year	$	0.5		$	5.2		$	5.4
Total loan charge-offs, net of recoveries, as a percentage of simple monthly average loans receivable	0.63		%	1.07		%	1.31		%
Allowance for loan losses as a percentage of loans receivable	0.20		%	1.28		%	1.43		%

Schedule of loans receivable by impairment methodology

Loans receivable by impairment methodology were as follows:

(in millions)	2012						2011						2010
as of September 30,	Collectively Evaluated			Individually Evaluated			Collectively Evaluated			Individually Evaluated			Collectively Evaluated			Individually Evaluated
Loans receivable	$	254.4		$	0.5		$	390.8		$	16.3		$	362.3		$	18.0
Less: allowance for loan losses	(0.4		)	(0.1		)	(3.6		)	(1.6		)	(3.5		)	(1.9		)
Total	$	254.0		$	0.4		$	387.2		$	14.7		$	358.8		$	16.1

Summary of non-accrual, past due and restructured loans

Non-accrual, past due and restructured loans were as follows:

(in millions)
as of September 30,	2012		2011
Non-accrual loans	$	2.4	$	8.3
Loans delinquent for 90 days or more	—		—
Loans modified in troubled debt restructurings	—		9.3

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Variable Interest Entities and Consolidated Sponsored Investment Products - Narrative (Details) (USD $)	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Principal amount of loans 30 days or more past due		5,400,000
Non-accrual loans	2,400,000	8,300,000
Loans modified in a troubled debt restructuring	0	9,300,000
Transfers into Level 1 from Level 2	0
Transfers into Level 2 from Level 1	0
Debt of consolidated variable interest entities	1,100,900,000	1,035,400,000
Alternative Investments, Fair Value Disclosure	314,200,000
Percentage of consolidated SIPs periodically redeemable	55.00%
Liquidation period in certain funds	5.9
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share, Unfunded Commitments	123,000,000
Unfunded commitments company contractually obligated to fund	2,900,000
AUM of other investment products in which the Company held a variable interest	35,300,000,000	36,100,000,000
Collateralized Auto Loans [Member]
Floating interest rate, minimum	0.67%
Floating interest rate, maximum	9.98%
Interest Rate, Minimum		0.50%
Interest Rate, Maximum		11.18%
Variable Interest Entity [Member]
Debt of consolidated variable interest entities	1,100,900,000	1,035,400,000
Securitization [Member]
Non-accrual loans		3,600,000
Loans modified in a troubled debt restructuring		2,700,000
Interest Rate, Minimum		2.14%
Interest Rate, Maximum		8.18%
Consolidated sponsored investment products [Member]
Interest Rate, Minimum	1.98%	2.69%
Interest Rate, Maximum	7.03%	6.85%
Transfers into Level 1 from Level 2	26,800,000
Transfers into Level 2 from Level 1	1,000,000
Loans Receivable of Securitization Trusts [Member]
Principal amount of loans		155,100,000
Loans Receivable [Member]
Principal amount of loans		83,800,000
Level 3 [Member] | Variable Interest Entity [Member]
Debt of consolidated variable interest entities	67,900,000	83,900,000

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Deposits - Narrative (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Interest expense on deposits	$ 2.9	$ 4.1	$ 4.7
Average rates on deposits	0.42%	0.74%	0.83%

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Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of valuation techniques and significant unobservable inputs used in Level 3 fair value measurements (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2012
Debt Securities [Member]
Variable Interest Entity [Line Items]
Debt securities	317.5
Debt Securities [Member] | Minimum [Member] | Income Approach Valuation Technique [Member]
Variable Interest Entity [Line Items]
Discount Rate	4.90%
Risk Premium	0.00%
Debt Securities [Member] | Maximum [Member] | Income Approach Valuation Technique [Member]
Variable Interest Entity [Line Items]
Discount Rate	25.60%
Risk Premium	7.30%
Debt Securities [Member] | Weighted Average [Member] | Income Approach Valuation Technique [Member]
Variable Interest Entity [Line Items]
Discount Rate	11.80%
Risk Premium	2.10%
Equity Securities [Member] | Income Approach Valuation Technique [Member]
Variable Interest Entity [Line Items]
Equity securities	47.4
Equity Securities [Member] | Market Approach Valuation Technique [Member] | Common Stock [Member]
Variable Interest Entity [Line Items]
Equity securities	144.4
Equity Securities [Member] | Market Approach Valuation Technique [Member] | Preferred Stock [Member]
Variable Interest Entity [Line Items]
Equity securities	21.0
Price To Book Value Ratio	1.7
Equity Securities [Member] | Minimum [Member] | Income Approach Valuation Technique [Member]
Variable Interest Entity [Line Items]
Discount Rate	12.00%
Discount for Lack of Marketability	0.00%
Equity Securities [Member] | Minimum [Member] | Market Approach Valuation Technique [Member]
Variable Interest Entity [Line Items]
EBITDA Multiple	5.5
Discount for Lack of Marketability	15.00%
Equity Securities [Member] | Maximum [Member] | Income Approach Valuation Technique [Member]
Variable Interest Entity [Line Items]
Discount Rate	15.00%
Discount for Lack of Marketability	50.00%
Equity Securities [Member] | Maximum [Member] | Market Approach Valuation Technique [Member]
Variable Interest Entity [Line Items]
EBITDA Multiple	8.6
Discount for Lack of Marketability	30.00%
Equity Securities [Member] | Weighted Average [Member] | Income Approach Valuation Technique [Member]
Variable Interest Entity [Line Items]
Discount Rate	14.80%
Discount for Lack of Marketability	27.80%
Equity Securities [Member] | Weighted Average [Member] | Market Approach Valuation Technique [Member]
Variable Interest Entity [Line Items]
EBITDA Multiple	7.3
Discount for Lack of Marketability	22.10%

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Fair Value Measurement - Narrative (Details) (USD $)	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Transfers into Level 1 from Level 2	$ 0
Transfers into Level 2 from Level 1	0
Transfers into or out of Level 3	$ 0	$ 0	$ 0
Weighted Average [Member] | Income Approach Valuation Technique [Member] | Life settlement contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs Life Expectancy	82
Fair Value Inputs Internal Rate of Return	11.70%
Maximum [Member] | Income Approach Valuation Technique [Member] | Life settlement contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs Life Expectancy	171
Fair Value Inputs Internal Rate of Return	22.30%
Minimum [Member] | Income Approach Valuation Technique [Member] | Life settlement contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs Life Expectancy	22
Fair Value Inputs Internal Rate of Return	1.50%

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Other Income (Expenses) - Narrative (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Other Income and Expenses [Abstract]
Non-investment interest income	$ 3.2
Proceeds from Sale of Available-for-sale Securities	578.1	477.5	247.1
Net gains (losses) on trading investment securities	24.0	(9.1)	17.8
Net gains (losses) on trading investment securities of consolidated SIPs	$ 22.9	$ (39.0)	$ (2.3)

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Debt - Narrative (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012
Debt Instrument [Line Items]
Face value of senior unsecured and unsubordinated notes	$ 600.0
Commercial Paper Available For Issuance	500.0
Line Of Credit Facility Remaining Borrowing Capacity Banking Finance Segment Uncommitted Federal Reserve	270.0
Line Of Credit Facility Remaining Borrowing Capacity Banking Finance Segment Secured Federal Reserve	117.8
Line Of Credit Facility Remaining Borrowing Capacity - Uncommitted Short-term Bank Line Of Credit	15.3
Secured FHLB Short Term Borrowing Capacity	12.3
Debt issuance discount	(2.4)
Debt issuance costs	$ 5.3

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Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of contractual maturities for debt of consolidated VIEs and consolidated SIPs (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012
Debt Maturities In 2013 [Member]
Variable Interest Entity [Line Items]
Debt maturities within one year of balance sheet date	$ 318.4
Debt Maturities In 2013 [Member] | Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Debt maturities within one year of balance sheet date	46.5
Debt Maturities In 2014 [Member]
Variable Interest Entity [Line Items]
Debt maturities due more than one year of balance sheet date	0
Debt Maturities In 2014 [Member] | Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Debt maturities due more than one year of balance sheet date	1.9
Debt Maturities In 2015 [Member]
Variable Interest Entity [Line Items]
Debt maturities due more than one year of balance sheet date	260.4
Debt Maturities In 2015 [Member] | Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Debt maturities due more than one year of balance sheet date	0
Debt Maturities In 2016 [Member]
Variable Interest Entity [Line Items]
Debt maturities due more than one year of balance sheet date	8.0
Debt Maturities In 2016 [Member] | Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Debt maturities due more than one year of balance sheet date	22.0
Debt Maturities In 2017 [Member]
Variable Interest Entity [Line Items]
Debt maturities due more than one year of balance sheet date	298.4
Debt Maturities In 2017 [Member] | Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Debt maturities due more than one year of balance sheet date	14.9
Thereafter [Member]
Variable Interest Entity [Line Items]
Debt maturities due more than one year of balance sheet date	680.9
Thereafter [Member] | Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Debt maturities due more than one year of balance sheet date	1,125.8
Total [Member]
Variable Interest Entity [Line Items]
Total debt maturities	1,566.1
Total [Member] | Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Total debt maturities	$ 1,211.1

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Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of assets and liabilities of the CLOs carried at fair value (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Variable Interest Entity [Line Items]
Net gain from changes in fair value of assets	$ 90.9	$ 34.0
Net losses from changes in fair value of liabilities	(65.3)	(114.0)
Total net gains (losses)	$ 25.6	$ (80.0)	$ 0

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Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of balances of assets and liabilities of VIEs and SIPs measured at fair value on a recurring basis (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Variable Interest Entity [Line Items]
Cash and cash equivalents	$ 5,784.3	$ 5,028.9
Investments	2,583.8	2,422.4
Total assets measured at fair value	2,012.7	1,875.9
Debt of consolidated variable interest entities	1,100.9	1,035.4
Variable Interest Entity [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	224.3	88.2
Investments	984.1	822.6
Debt securities	984.1	822.6
Equity securities	0	0
Debt of consolidated variable interest entities	1,100.9	1,035.4
Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	42.8	81.5
Investments	1,046.6	945.7
Debt securities	317.5	323.2
Equity securities	534.7	261.4
Total [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	224.3	88.2
Receivables of consolidated VIEs	2.7	12.0
Investments	984.1	822.6
Debt securities	373.1	528.9
Equity securities	673.5	416.8
Debt of consolidated variable interest entities	1,100.9	871.2
Other liabilities of consolidated VIEs	61.9	32.3
Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	267.1	169.7
Investments	2,030.7	1,768.3
Debt securities	1,301.6	1,145.8
Equity securities	534.7	261.4
Total assets measured at fair value	2,257.7	1,868.5
Debt of consolidated variable interest entities	1,100.9	871.2
Total liabilities measured at fair value	1,162.8	903.5
Level 1 [Member]
Variable Interest Entity [Line Items]
Total assets measured at fair value	1,659.8	1,399.2
Level 1 [Member] | Variable Interest Entity [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	0	14.7
Receivables of consolidated VIEs	0	0
Investments	0	0
Debt of consolidated variable interest entities	0	0
Other liabilities of consolidated VIEs	0	0
Level 1 [Member] | Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Debt securities	6.3	5.2
Equity securities	145.9	127.0
Level 1 [Member] | Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Total assets measured at fair value	152.2	146.9
Total liabilities measured at fair value	0	0
Level 2 [Member]
Variable Interest Entity [Line Items]
Total assets measured at fair value	338.1	465.8
Level 2 [Member] | Variable Interest Entity [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	224.3	73.5
Receivables of consolidated VIEs	2.7	12.0
Investments	984.1	820.7
Debt of consolidated variable interest entities	1,033.0	787.3
Other liabilities of consolidated VIEs	61.9	32.3
Level 2 [Member] | Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Debt securities	49.3	198.8
Equity securities	0.6	6.1
Level 2 [Member] | Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Total assets measured at fair value	1,261.0	1,111.1
Total liabilities measured at fair value	1,094.9	819.6
Level 3 [Member]
Variable Interest Entity [Line Items]
Total assets measured at fair value	14.8	10.9
Level 3 [Member] | Variable Interest Entity [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	0	0
Receivables of consolidated VIEs	0	0
Investments	0	1.9
Debt of consolidated variable interest entities	67.9	83.9
Other liabilities of consolidated VIEs	0	0
Level 3 [Member] | Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Debt securities	317.5	324.9
Equity securities	527.0	283.7
Level 3 [Member] | Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Total assets measured at fair value	844.5	610.5
Total liabilities measured at fair value	$ 67.9	$ 83.9

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Debt - Outstanding Debt (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Debt Instrument [Line Items]
Commercial Paper	$ 0	$ 30.0
FHLB advances	69.0	69.0
Senior Notes	1,497.1	899.2
Face value of debt	600.0
Stated interest rate	2.00%
Total Debt	1,566.1	998.2
Commercial Paper [Member]
Debt Instrument [Line Items]
Effective Interest Rate		0.16%
FHLB [Member]
Debt Instrument [Line Items]
Effective Interest Rate	3.30%	3.30%
Notes Due 2013 [Member]
Debt Instrument [Line Items]
Senior Notes	299.9	299.7
Face value of debt	300.0
Stated interest rate	2.00%
Effective Interest Rate	2.28%	2.28%
Notes Due 2015 [Member]
Debt Instrument [Line Items]
Senior Notes	249.9	249.8
Face value of debt	250.0
Stated interest rate	3.125%
Effective Interest Rate	3.32%	3.32%
Notes Due 2017 [Member]
Debt Instrument [Line Items]
Senior Notes	298.4	0
Face value of debt	300.0
Stated interest rate	1.375%
Effective Interest Rate	1.66%
Notes Due 2020 [Member]
Debt Instrument [Line Items]
Senior Notes	349.7	349.7
Face value of debt	350.0
Stated interest rate	4.625%
Effective Interest Rate	4.74%	4.75%
Notes Due 2022 [Member]
Debt Instrument [Line Items]
Senior Notes	299.2	0
Face value of debt	$ 300.0
Stated interest rate	2.80%
Effective Interest Rate	2.93%

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Goodwill and Other Intangible Assets - Schedule of intangible assets (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Schedule of Finite-lived and Indefinite-lived Intangible Assets [Line Items]
Amortized intangible assets gross carrying value	$ 215.9	$ 213.8
Accumulated Amortization	(171.9)	(160.9)
Total	44.0	52.9
Total Intangible Assets - Gross Carrying Value	773.0	772.9
Total Intangible Assets - Net Carrying Value	601.1	612.0
Amortized intangible assets [Member] | Customer Base [Member]
Schedule of Finite-lived and Indefinite-lived Intangible Assets [Line Items]
Amortized intangible assets gross carrying value	166.6	166.1
Accumulated Amortization	(135.9)	(126.8)
Total	30.7	39.3
Amortized intangible assets [Member] | Other [Member]
Schedule of Finite-lived and Indefinite-lived Intangible Assets [Line Items]
Amortized intangible assets gross carrying value	49.3	47.7
Accumulated Amortization	(36.0)	(34.1)
Total	13.3	13.6
Non-amortized intangible assets [Member] | Management Contracts [Member]
Schedule of Finite-lived and Indefinite-lived Intangible Assets [Line Items]
Accumulated Amortization	0	0
Non-amortized intangible assets balance	$ 557.1	$ 559.1

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Other Income (Expenses)

12 Months Ended

Sep. 30, 2012

Other Income and Expenses [Abstract]

Other Income (Expenses)

Other Income (Expenses)

Other income (expenses) consisted of the following:

(in millions)
for the fiscal years ended September 30,	2012			2011			2010
Investment and Other Income, Net
Dividend income	$	22.5		$	35.7		$	38.6
Interest income	12.5			11.0			12.9
Gains (losses) on trading investment securities, net	34.7			(1.3		)	30.3
Realized gains on sale of investment securities, available-for-sale	41.0			65.5			17.9
Realized losses on sale of investment securities, available-for-sale	(2.2		)	(0.3		)	(1.6		)
Income (losses) from investments in equity method investees, net of tax	68.6			(1.1		)	19.9
Other-than-temporary impairment of investment securities, available-for-sale	(10.1		)	(7.3		)	(1.5		)
Other-than-temporary impairment of investments in equity method investees and other	—			(6.3		)	—
Gains (losses) on investments of consolidated SIPs, net	(15.9		)	(36.1		)	8.5
Gains (losses) on assets and liabilities of consolidated VIEs, net	25.6			(80.0		)	—
Foreign currency exchange gains (losses), net	7.1			3.3			(4.7		)
Other, net	15.9			18.7			7.3
Total	199.7			1.8			127.6
Interest Expense	(36.7		)	(37.4		)	(16.5		)
Other Income (Expenses), Net	$	163.0		$	(35.6	)	$	111.1

Substantially all of the Company’s dividend income and realized gains and losses on sale of investment securities, available-for-sale were generated by investments in its SIPs. Interest income was primarily generated by cash equivalents and debt securities of U.S. states and political subdivisions, and included $3.2 million of non-investment related interest in fiscal year 2012. Proceeds from the sale of investment securities, available-for-sale were $578.1 million, $477.5 million and $247.1 million for fiscal years 2012, 2011 and 2010.

Net gains (losses) on trading investment securities that were held at September 30, 2012, 2011 and 2010 were $24.0 million, $(9.1) million and $17.8 million. Net gains (losses) on trading investment securities of consolidated SIPs that were held at September 30, 2012, 2011 and 2010 were $22.9 million, $(39.0) million and $(2.3) million.

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Cash and Cash Equivalents - Narrative (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Cash and Cash Equivalents [Abstract]
Required reserve balance	$ 13.3	$ 7.8

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Employee Benefit Plans (Tables)

12 Months Ended

Sep. 30, 2012

Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]

Schedule of changes in plan benefit obligations and assets

Financial information for the plans was as follows:

(in millions)	Pension Benefits						Other Benefits
as of and for the fiscal years ended September 30,	2012			2011			2012			2011
Change in Benefit Obligation
Benefit obligation at beginning of year	$	42.8		$	42.1		$	6.1		$	7.4
Service cost	3.6			3.3			—			—
Interest cost	2.2			2.1			0.3			0.3
Participant contributions	1.4			1.0			—			—
Plan curtailments	0.5			—			—			—
Benefits paid	(2.4		)	(1.4		)	(0.4		)	(0.5		)
Actuarial (gains) losses	2.9			(3.9		)	0.8			(1.1		)
Foreign currency movements	1.7			(0.4		)	—			—
Benefit Obligation at End of Year	$	52.7		$	42.8		$	6.8		$	6.1
Change in Fair Value of Plan Assets
Fair value of plan assets at beginning of year	$	43.5		$	43.0		$	—		$	—
Actual return on assets	6.1			(1.9		)	—			—
Employer contributions	2.4			3.3			0.4			0.5
Participant contributions	1.4			1.0			—			—
Benefits paid	(2.4		)	(1.4		)	(0.4		)	(0.5		)
Foreign currency movements	1.8			(0.5		)	—			—
Fair Value of Plan Assets at End of Year	$	52.8		$	43.5		$	—		$	—
Funded Status	$	0.1		$	0.7		$	(6.8	)	$	(6.1	)

Schedule of amounts recognized in the consolidated balance sheets

(in millions)	Pension Benefits						Other Benefits
as of and for the fiscal years ended September 30,	2012			2011			2012			2011
Amounts Recognized in the Consolidated Balance Sheets
Other assets	$	0.1		$	0.7		$	—		$	—
Compensation and benefits	—			—			(0.5		)	(0.4		)
Other liabilities	—			—			(6.3		)	(5.7		)
Net Asset (Liability)	$	0.1		$	0.7		$	(6.8	)	$	(6.1	)
Weighted-Average Assumptions
Discount rate	4.60		%	5.20		%	3.70		%	4.90		%
Expected long-term rate of return on plan assets1	6.41		%	6.76		%	N/A			N/A
Rate of compensation increase	N/A			4.20		%	2.50		%	4.50		%

___________________

¹  The expected long-term rate of return on plan assets is based on the weighted-average historic performance of each asset class and current market conditions.

Schedule of net periodic benefit costs for all plans

The components of net periodic benefit cost for the plans were as follows.

(in millions)	Pension Benefits									Other Benefits
for the fiscal years ended September 30,	2012			2011			2010			2012		2011		2010
Service cost	$	3.6		$	3.3		$	2.9		$	—	$	—	$	—
Interest cost	2.2			2.1			2.0			0.3		0.3		0.4
Plan curtailments	0.5			—			—			—		—		—
Expected return on plan assets	(3.1		)	(3.2		)	(2.8		)	—		—		—
Amortization of net actuarial losses	—			—			—			—		0.2		—
Net Periodic Benefit Cost	$	3.2		$	2.2		$	2.1		$	0.3	$	0.5	$	0.4

Schedule of benefits expected to be paid over the next ten years

The plan benefits expected to be paid over the next ten years were as follows:

(in millions)	Pension Benefits		Other Benefits
for the fiscal years ending September 30,
2013	$	3.6	$	0.5
2014	0.3		0.5
2015	1.8		0.4
2016	0.2		0.4
2017	0.6		0.4
Thereafter in the succeeding five years	14.3		2.0

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Deposits - Maturities of time deposits of $100,000 or more (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012
Contractual Maturities, Time Deposits, $100,000 or More [Abstract]
3 months or less	$ 11.8
Over 3 months through 6 months	0.2
Over 12 months	0.1
Total	$ 12.1

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Taxes on Income - Reconciliation of gross unrecognized tax benefits (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance at beginning of year	$ 99.7	$ 93.3	$ 76.0
Additions for tax positions of prior years	16.4	8.8	11.4
Reductions for tax positions of prior years	(6.3)	(5.1)	(0.9)
Additions for tax positions related to the current year	10.0	10.8	12.2
Settlements with taxing authorities	(13.7)	(4.2)	(0.8)
Expirations of statute of limitations	(4.8)	(3.9)	(4.6)
Balance at End of Year	$ 101.3	$ 99.7	$ 93.3

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Debt (Tables)

12 Months Ended

Sep. 30, 2012

Debt Disclosure [Abstract]

Schedule of outstanding debt

Debt consisted of the following:

(dollars in millions)	2012		Effective Interest Rate		2011		Effective Interest Rate
as of September 30,
Commercial paper	$	—	N/A		$	30.0	0.16	%
FHLB advances	69.0		3.30	%	69.0		3.30	%
Senior notes
$300 million 2.000% notes due May 2013	299.9		2.28	%	299.7		2.28	%
$250 million 3.125% notes due May 2015	249.9		3.32	%	249.8		3.32	%
$300 million 1.375% notes due September 2017	298.4		1.66	%	—		N/A
$350 million 4.625% notes due May 2020	349.7		4.74	%	349.7		4.75	%
$300 million 2.800% notes due September 2022	299.2		2.93	%	—		N/A
	1,497.1				899.2
Total Debt	$	1,566.1			$	998.2

Schedule of contractual maturities of debt

At September 30, 2012, contractual maturities for debt were as follows:

(in millions)
for the fiscal years ending September 30,
2013	$	318.4
2014	—
2015	260.4
2016	8.0
2017	298.4
Thereafter	680.9
Total	$	1,566.1

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Investments - Narrative (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Schedule of Trading Securities and Other Trading Assets [Line Items]
Aggregate carrying values of investment securities pledged as collateral for the ability to borrow from the Federal Reserve Bank	$ 120.4	$ 156.4
Aggregate carrying values of investment securities pledged as collateral for outstanding FHLB borrowings	45.2	60.8
Aggregate carrying values of investment securities pledged as collateral for ability to borrow from uncommitted short-term bank lines of credit	7.3	6.9
Changes in net holding gains (losses) on investment securities, available-for-sale included in accumulated other comprehensive income	49.9	(29.0)	70.4
Tax effect of the net unrealized holding gains (losses) included in accumulated other comprehensive income	0.9	8.4	(6.8)
Other-than-temporary impairment of available-for-sale investments, primarily related to SIPs	(10.1)	(7.3)	(1.5)
Other-than-temporary impairment of investments in equity method investees and other	$ 0	$ (6.3)	$ 0

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Property and Equipment, Net - Narrative (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense	$ 67.9	$ 71.5	$ 67.7
Impairment loss on property and equipment	$ 0	$ 0	$ 0

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Banking Regulatory Ratios (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Tier 1 capital	$ 6,788.8	$ 6,141.4
Total risk-based capital	$ 6,799.6	$ 6,152.2
Tier 1 leverage ratio	59.00%	55.00%
Tier 1 risk-based capital ratio	54.00%	53.00%
Total risk-based capital ratio	54.00%	53.00%
Capital Adequacy Minimum [Member]
Tier 1 leverage ratio	5.00%
Tier 1 risk-based capital ratio	4.00%
Total risk-based capital ratio	8.00%

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Loans and Allowance for Loan Losses - Narrative (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
Aggregate carrying values of loans receivables pledged as collateral	$ 54.1	$ 47.7
Interest income on loans receivable	$ 16.9	$ 19.7	$ 15.6
Average rates on interest income	4.59%	4.73%	4.21%

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Acquisitions (Details) (USD $)				12 Months Ended
	Nov. 01, 2012	Sep. 30, 2012	Jan. 18, 2011 Rensburg [Member]	Sep. 30, 2011 BEM [Member]	Jul. 06, 2011 BEM [Member]
Business Acquisition [Line Items]
Cash purchase consideration	$ 182,900,000		$ 72,900,000		$ 53,700,000
Number of Shares issued				85,000
Total purchase consideration					65,100,000
Aggregate fair value of common stock issued at acquisition date					11,400,000
Tangible net assets purchase price allocation			10,200,000		2,200,000
Indefinite-lived intangible assets purchase price allocation			52,600,000
Definite-lived intangible assets purchase price allocation					14,500,000
Deferred tax liabilities, purchase price allocation			14,000,000
Goodwill amount purchase price allocation			24,100,000		48,400,000
Acquired Finite-lived Intangible Asset, Weighted Average Useful Life (years)				10 years 0 months 0 days
Assets Under Management at acquisition date		$ 9,000,000,000	$ 1,500,000,000		$ 10,900,000,000

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Acquisitions

12 Months Ended

Sep. 30, 2012

Business Combination, Description [Abstract]

Acquisitions

Acquisitions

On January 18, 2011, the Company acquired all of the outstanding shares of Rensburg Fund Management Limited (“Rensburg”), a specialty U.K. equity manager, for a purchase consideration of $72.9 million in cash. The purchase price was allocated $10.2 million to tangible net assets, $52.6 million to indefinite-lived intangible assets, $14.0 million to deferred tax liabilities and $24.1 million to goodwill. The indefinite-lived intangible assets relate to management contracts. At the acquisition date, Rensburg had $1.5 billion in AUM relating to various U.K. unit trusts. Rensburg has been renamed Franklin Templeton Fund Management Limited.

On July 6, 2011, the Company acquired all of the outstanding shares of Balanced Equity Management Pty. Limited (“BEM”), a specialty Australian equity manager, for $53.7 million in cash and 85,000 shares of Franklin common stock with an aggregate value of $11.4 million at the acquisition date, for a total purchase consideration of $65.1 million. The purchase price was allocated $2.2 million to tangible net assets, $14.5 million to definite-lived intangible assets and $48.4 million to goodwill. The definite-lived intangible assets relate to management contracts and will be amortized over a period of 10 years. At acquisition date, BEM had $10.9 billion in AUM.

The Company has not presented pro forma combined results of operations for these acquisitions because the results of operations as reported in the accompanying consolidated statements of income would not have been materially different.

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Loans and Allowance for Loan Losses - loans receivable by major category (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial loans	$ 49.3	$ 38.7
Real estate mortgage loans	64.6	77.3
Installment loans	138.8	286.3
Other	2.2	4.8
Total loans receivable	254.9	407.1
Less: allowance for loan losses	(0.5)	(5.2)
Loans Receivable, Net	254.4	401.9
One Year or Less [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial loans	47.4
Real estate mortgage loans	2.7
Installment loans	121.3
Other	1.6
Total loans receivable	173.0
After One Through Five Years [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial loans	1.9
Real estate mortgage loans	1.4
Installment loans	6.9
Other	0.1
Total loans receivable	10.3
After Five Years [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial loans	0
Real estate mortgage loans	60.5
Installment loans	10.6
Other	0.5
Total loans receivable	$ 71.6

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Segment Information (Tables)

12 Months Ended

Sep. 30, 2012

Segment Reporting, Measurement Disclosures [Abstract]

Schedule of operating revenues, property and equipment by geographic areas

Geographical information was as follows:

(in millions)
for the fiscal years ended September 30,	2012		2011		2010
Operating Revenues
United States	$	4,791.9	$	4,589.4	$	3,920.0
The Bahamas	904.2		1,041.9		753.7
Asia-Pacific	627.7		688.9		571.1
Europe, the Middle East and Africa	458.6		435.3		279.6
Canada	309.0		344.6		303.0
Latin America	9.6		39.9		25.6
Total	$	7,101.0	$	7,140.0	$	5,853.0
Property and Equipment, Net
United States	$	447.9	$	441.9	$	415.2
The Bahamas	16.5		17.2		17.9
Asia-Pacific	94.3		103.3		85.1
Europe, the Middle East and Africa	13.0		15.0		15.6
Canada	10.4		11.5		14.0
Latin America	0.6		0.8		1.2
Total	$	582.7	$	589.7	$	549.0

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Earnings per Share (Tables)

12 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Schedule of earnings per share basic and diluted

The components of basic and diluted earnings per share were as follows:

(in millions except per share data)
for the fiscal years ended September 30,	2012		2011		2010
Net Income Attributable to Franklin Resources, Inc.	$	1,931.4	$	1,923.6	$	1,445.7
Less: Allocation of earnings to participating nonvested stock and stock unit awards	11.7		8.6		7.6
Net Income Available to Common Stockholders	$	1,919.7	$	1,915.0	$	1,438.1
Weighted-average shares outstanding – basic	213.8		221.0		226.1
Effect of dilutive common stock options and non-participating nonvested stock unit awards	0.6		1.1		1.3
Weighted-Average Shares Outstanding – Diluted	214.4		222.1		227.4
Earnings per Share
Basic	$	8.98	$	8.66	$	6.36
Diluted	$	8.95	$	8.62	$	6.33

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Significant Accounting Policies (Policies)

12 Months Ended

Sep. 30, 2012

Accounting Policies [Abstract]

Business

Business. Franklin Resources, Inc. (“Franklin”) is a holding company that, together with its various subsidiaries (collectively, the “Company”) is referred to as Franklin Templeton Investments. The Company provides investment management and related services to investors globally through products that include investment funds and institutional, high net-worth and separately-managed accounts (collectively, the “sponsored investment products” or “SIPs”). In addition to investment management, the Company's services include fund administration, sales, distribution, shareholder services, transfer agency, trustee, custodial, and other fiduciary services, as well as select private banking services.

Basis of presentation

Basis of Presentation. The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Management believes that the accounting estimates are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual amounts may differ from these estimates. Certain comparative amounts for prior fiscal years have been reclassified to conform to the financial statement presentation as of and for the fiscal year ended September 30, 2012 (“fiscal year 2012”).

Effective September 30, 2012, the Company changed the presentation of its consolidated balance sheets from a classified basis to an unclassified basis which does not distinguish balances as current or non-current. Management believes this presentation election is more useful to readers of its financial statements and provides improved disclosure of the Company's financial position because it aggregates assets and liabilities of the same nature. The previous classified presentation was not utilized to derive any metric by which the Company is measured. The new unclassified presentation is consistent with the manner in which management monitors its financial position, and reduces the presentation complexities resulting from the consolidation of SIPs and variable interest entities (“VIEs”). Amounts for the consolidated balance sheet as of September 30, 2011 have been reclassified to conform to the current year presentation.

Effective July 1, 2012, the Company has one operating segment, investment management and related services. Previously, the Company had a secondary operating segment, banking/finance, which offered select retail banking, private banking and consumer lending services. During fiscal year 2012, the Company significantly reduced these services and now only offers select private banking services to investment management clients. The Company's Chief Executive Officer, who is the chief operating decision maker, no longer reviews financial results from banking/finance activities, and now allocates resources and assesses performance at the consolidated level.

Consolidation

Consolidation. The consolidated financial statements include the accounts of Franklin and its subsidiaries and SIPs in which it has a controlling financial interest. The Company is generally considered to have a controlling financial interest when it owns a majority of the voting interest in an entity. The Company also consolidates VIEs for which it is considered the primary beneficiary and non-VIE limited partnerships and similar structures for which it is deemed to have control. All material intercompany accounts and transactions have been eliminated.

A VIE is an entity in which the equity investment holders have not contributed sufficient capital to finance its activities or the equity investment holders do not have defined rights and obligations normally associated with an equity investment.

The Company uses two models for determining whether it is the primary beneficiary of VIEs. For all investment entity VIEs with the exception of collateralized loan obligations (“CLOs”), the Company is considered to be the primary beneficiary if it has the majority of the risks or rewards of ownership. For all other VIEs, including CLOs, the Company is considered to be the primary beneficiary if it has the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses of or right to receive benefits from the VIE that could potentially be significant to the VIE.

The variable interests that the Company has in investment entity VIEs consist of its equity ownership interest in and/or investment management and related service fees earned from these VIEs. The Company uses expected cash flow scenarios to determine if its investment management and related service fees and/or equity ownership interests provide it with a majority of the VIE's expected losses or residual returns. The Company's VIEs include CLOs and, prior to September 30, 2012, automobile loan securitization trusts. Under both models, the key estimates and assumptions used in the analyses may include the amount of assets under management (“AUM”), investment management and related service fee rates, the life of the investment product, prepayment rates, and the discount rate.

The Company is presumed to control non-VIE limited partnerships and similar structures for which it is the general partner or managing member unless the limited partners or other investors have the substantive ability to remove the Company as general partner or managing member, liquidate the entity or otherwise participate in the decision-making of the entity. The Company's risk of loss in these entities is limited to its investments in the entities as the general partner and managing member entities are structured as limited liability companies.

Earnings per Share

Earnings per Share. Basic earnings per share is computed by dividing net income available to the Company's common shareholders, which exclude participating securities, by the weighted average number of shares of common stock outstanding during the period. The Company's participating securities consist of its nonvested stock and stock unit awards that contain nonforfeitable rights to dividends or dividend equivalents. Diluted earnings per share is computed on the basis of the weighted-average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the two-class method.

Fair Value Measurements

Fair Value Measurements. The Company uses a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based on whether the inputs to those valuation techniques are observable or unobservable. The three levels of fair value hierarchy are set forth below. The Company's assessment of the hierarchy level of the assets or liabilities measured at fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Transfers between levels are recognized at the end of each quarter.

Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2	Observable inputs other than Level 1 quoted prices, such as non-binding quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable or corroborated by observable market data. Level 2 quoted prices are generally obtained from two independent third-party brokers or dealers, including prices derived from model-based valuation techniques for which the significant assumptions are observable in the market or corroborated by observable market data. Quoted prices are validated through price variance analysis, subsequent sales testing, stale price review, price comparison across pricing vendors and due diligence reviews of third-party vendors.
Level 3	Unobservable inputs that are supported by little or no market activity. These inputs require significant management judgment and reflect the Company’s estimation of assumptions that market participants would use in pricing the asset or liability. Level 3 valuations are derived primarily from model-based valuation techniques in which one or more significant inputs are unobservable in the market.

The fair values for Level 3 assets and liabilities are determined using various methodologies in accordance with the Company's global pricing policy which defines valuation and pricing conventions for each security type. When available, fair value is measured based on the reported net asset value of underlying investments or independent third-party broker or dealer price quotes. These inputs are evaluated for reasonableness through various procedures which include due diligence reviews of the third parties, price comparisons across pricing vendors, stale price reviews and subsequent sales testing. If these inputs are not available, the Company primarily employs a market-based method, using purchase multiples observed for comparable third-party transactions, valuations of comparable entities, projected operating results of the investee entity or subsequent financing transactions entered into by the investee entity. If the inputs for a market-based method are not available, the Company utilizes an income-based method, which considers the net present value of anticipated future cash flows of the investment. A discount may be applied due to the nature or duration of any restrictions on the disposition of the investment. The Company reviews and approves the market-based and income-based methods on a periodic basis for changes that would impact the unobservable inputs incorporated into the valuation process. The fair value measurements from these methods are further validated through price variance analysis, subsequent sales testing and market comparable sales.

The Company records the majority of its investments at fair value or amounts that approximate fair value on a recurring basis. Certain assets may also be measured at fair value on a nonrecurring basis. These fair value measurements generally result from the application of lower of cost or fair value accounting or write-downs of individual assets. Fair values are estimated for disclosure purposes for financial instruments that are not measured at fair value.

Fair Value Option

Fair Value Option. The Company elected the fair value option for all assets and liabilities of its consolidated CLOs as this option better matches the changes in fair value of the assets and liabilities. The decision to elect the fair value option, which is irrevocable once elected, is determined on an instrument by instrument basis and applied to an entire instrument. The net gains or losses on assets and liabilities for which the fair value option has been elected include interest income and expense and are recognized in investment and other income, net in the consolidated statements of income.

Cash and Cash Equivalents

Cash and Cash Equivalents include cash on hand, non-interest-bearing and interest-bearing deposits with financial institutions, time deposits, securities of U.S. government-sponsored enterprises and the U.S. Treasury, debt instruments with original maturities of three months or less at the purchase date, and other highly liquid investments, including money market funds, which are readily convertible into cash. Cash and cash equivalents are carried at cost. Due to the short-term nature and liquidity of these financial instruments, the carrying values of these assets approximate fair value and, for disclosure purposes, they are classified as Level 1.

Receivables

Receivables consist primarily of fees receivable from SIPs and are carried at invoiced amounts. Due to the short-term nature and liquidity of the receivables, the carrying values of these assets approximate fair value.

Investment Securities, Trading

Investment Securities, Trading consist of non-consolidated SIPs, and are carried at fair value. Changes in the fair value of trading securities are recognized as gains and losses in earnings. The fair value of these securities is determined based on their published net asset values and they are classified as Level 1.

Investment Securities, Available-for-Sale

Investment Securities, Available-for-Sale consist primarily of non-consolidated SIPs, securities of U.S. states and political subdivisions, securities of the U.S. Treasury and federal agencies, corporate debt securities, mortgage-backed securities, and other equity securities. The securities are carried at fair value. Realized gains and losses are included in investment income using either the average cost method or specific identification method. Unrealized gains and losses are recorded net of tax as part of accumulated other comprehensive income until realized. The fair value of SIPs is determined based on their published net asset values and they are classified as Level 1. The fair value of debt securities is determined using quoted market prices, if available, or independent third-party broker or dealer price quotes, which are evaluated for reasonableness, and they are generally classified as Level 2, except for certain U.S. Treasury securities which are classified as Level 1.

The fair value of other equity securities, which consist primarily of non-sponsored investment products, is generally determined based on their published net asset values, and they are classified as Level 1.

Investments in Equity Method Investees

Investments in Equity Method Investees consist of equity investments in entities, including SIPs, over which the Company is able to exercise significant influence, but not control. Significant influence is generally considered to exist when the Company's ownership interest in the voting stock of the investee is between 20% and 50%, although other factors, such as representation on the investee's board of directors and the impact of commercial arrangements, also are considered in determining whether the equity method of accounting is appropriate. Investments in limited partnerships and limited liability companies for which the Company is not deemed to have control are accounted for using the equity method of accounting when the Company's investment is considered to be more than minor. Under the equity method of accounting, the investments are initially carried at cost and subsequently adjusted by the Company's proportionate share of the entities' net income, which is recognized in earnings.

Other Investments

Other Investments consist of equity investments in entities over which the Company is unable to exercise significant influence and are not marketable, time deposits and life settlement contracts. The equity investments are accounted for under the cost method. For disclosure purposes, the fair value of these investments is generally estimated based on their net asset value and they are classified as Level 3. Time deposits that have maturities greater than three months but less than one year from the date of purchase are carried at cost. Due to the short-term nature and liquidity of these financial instruments, the carrying values of the time deposits approximate fair value, and they are classified as Level 2. Life settlement contracts are carried at fair value, which is determined based on discounted cash flows using significant unobservable inputs, and are classified as Level 3. Inputs used to determine the fair value include life expectancy assumptions and internal rates of return.

Impairment of Investments

Impairment of Investments. Investments other than trading securities are evaluated for other-than-temporary impairment on a quarterly basis when the cost of an investment exceeds its fair value. For equity securities, the Company considers many factors, including the severity and duration of the decline in the fair value below cost, the Company's intent and ability to hold the security for a period of time sufficient for an anticipated recovery in fair value, and the financial condition and specific events related to the issuer. When an impairment of an equity security is determined to be other-than-temporary, the impairment is recognized in earnings. For debt securities, if the Company intends to sell or it is more likely than not that it will be required to sell a security before recovery of its amortized cost, the entire impairment is recognized in earnings. If the Company does not intend to sell or it is not more likely than not that it will be required to sell the security before anticipated recovery of its amortized cost, the impairment is separated into the amount of the total impairment related to the credit loss and the amount of the total impairment related to all other factors. The credit loss component is the difference between the security's amortized cost and the present value of the expected cash flows, and is recognized in earnings. Losses related to all other factors are recognized in accumulated other comprehensive income.

Loans Receivable, net

Loans Receivable, net consist primarily of private banking loans to investment management clients. Prior to September 30, 2012, loans receivable also included retail banking and consumer lending portfolios. Interest on the loans is accrued using the effective interest method. The majority of private banking loans carry variable interest rates, which are adjusted periodically. Loans receivable are carried at cost, net of an allowance for loan losses. For disclosure purposes, the fair value of loans receivable is estimated using discounted cash flow models with interest rates that consider the current credit and interest rate risks inherent in the loans and the current economic and lending conditions, and they are classified as Level 3. For certain loans with no significant credit concerns and frequent repricing, estimated fair values are generally based on the carrying value and they are classified as Level 2.

Allowance for Loan Losses

Allowance for Loan Losses. An allowance for losses on loans receivable is maintained at a level sufficient to absorb probable losses inherent in the loans. Probable losses are estimated based on contractual delinquency status and historical loss experience. The allowance is based on aggregated portfolio segment evaluations, generally by loan type, and reflects the Company's judgment of portfolio risk factors such as economic conditions, bankruptcy trends, product mix, geographic concentrations and other similar items. A loan is charged to the allowance for loan losses when it is deemed probable to be uncollectible, taking into consideration the value of the collateral, the financial condition of the borrower and other factors. Recoveries on loans previously charged-off as uncollectible are credited to the allowance for loan losses.

Loans past due 90 days or more are reviewed individually to determine whether they are collectible. If warranted, after considering collateral level and other factors, loans 90 days past due are placed on non-accrual status. Interest collections on non-accrual loans for which the ultimate collectibility of principal is uncertain are applied as principal reductions; otherwise, such collections are credited to income when received.

Cash and Cash Equivalents of Consolidated SIPs

Cash and Cash Equivalents of Consolidated SIPs consist of cash on hand and deposits with financial institutions and are carried at cost. Due to the short-term nature and liquidity of these financial instruments, the carrying values of these assets approximate fair value and, for disclosure purposes, they are classified as Level 1.

Investments of Consolidated Sponsored Investment Products

Investments of Consolidated SIPs consist of trading securities and other investments that are not generally traded in active markets, and are carried at fair value. Changes in the fair value of the investments are recognized as gains and losses in earnings. The fair value of the trading securities is determined using quoted market prices, or independent third-party broker or dealer price quotes if quoted market prices are not available. These securities are primarily classified as Level 1 or Level 2. If events occur after the close of the primary market for any security, the quoted market prices may be adjusted for the observable price movements within country specific market proxies.

The investments that are not generally traded in active markets primarily consist of equity and secured and unsecured debt securities of entities in emerging markets. The fair value of these securities is generally determined using significant unobservable inputs and they are classified as Level 3. In these instances, the Company employs a market-based approach, using purchase multiples observed for comparable third-party transactions, projected operating results of the investment, valuations of comparable companies, and subsequent financing transactions entered into by the investee entities. If the market-based approach is not available, the Company utilizes an income-based approach, which considers the net present value of anticipated future cash flows of the investment. A discount may also be applied due to the nature or duration of any restrictions on the disposition of the investment. Investments that are not generally traded in active markets also include fund products for which the fair value is estimated using net asset value as a practical expedient and are classified as Level 3.

Cash and cash equivalents of consolidated VIEs

Cash and Cash Equivalentsof Consolidated VIEs consist primarily of highly liquid investments, primarily short-term money market instruments, which are not traded on an active market. The fair value of these instruments is based on market observable inputs and they are classified as Level 2.

Investments of Consolidated VIEs

Investments of Consolidated VIEs consist of corporate debt securities and are carried at fair value. The fair value is primarily obtained from independent third-party broker or dealer price quotes and they are classified as Level 2. If independent price quotes are not available the fair value is determined using significant unobservable inputs and the securities are classified as Level 3. In these instances, the Company primarily employs the market-based approach described above for Level 3 securities held by consolidated SIPs.

Loans receivable of consolidated VIEs

Loans Receivable of Consolidated VIEs, net consisted of automobile loans in securitization trusts which were carried at cost, net of an allowance for loan losses. For disclosure purposes, the fair value was estimated using discounted cash flow models with interest rates that considered the credit and interest rate risks inherent in the loans and the economic and lending conditions.

Property and Equipment, net

Property and Equipment, net are recorded at cost and are depreciated using the straight-line method over their estimated useful lives which range from three to 35 years. Expenditures for repairs and maintenance are charged to expense when incurred. Leasehold improvements are amortized using the straight-line method over their estimated useful lives or the lease term, whichever is shorter.

Internal and external costs incurred in connection with developing or obtaining software for internal use are capitalized and amortized over the estimated useful life of the software of three years beginning when the software project is complete and the application is put into production.

Property and equipment is tested for impairment when there is an indication that the carrying amount of an asset may not be recoverable. Carrying values are not recoverable when the undiscounted cash flows estimated to be generated by the assets are less than their carrying value. When an asset is determined to not be recoverable, the impairment loss is measured based on the excess, if any, of the carrying value of the asset over its respective fair value. Fair value is determined by discounted future cash flows models, appraisals or other applicable methods.

Goodwill and Other Intangible Assets, net

Goodwill and Other Intangible Assets, net. Goodwill represents the excess cost of a business acquisition over the fair value of the net assets acquired. Other intangible assets consist primarily of mutual fund management contracts and customer base assets resulting from business acquisitions. These intangible assets are amortized over their estimated useful lives, which range from three to 15 years, using the straight-line method, unless the asset is determined to have an indefinite useful life. Indefinite-lived intangible assets primarily represent contracts to manage mutual fund assets for which there is no foreseeable limit on the contract period.

Goodwill is tested for impairment annually and when an event occurs or circumstances change that more likely than not reduce the fair value of the related reporting unit below its carrying value.

The goodwill impairment test involves a two-step process. The first step compares the fair value of the reporting unit to its carrying value. If the carrying value is less than the fair value, no impairment exists and the second step is not performed. If the carrying value is higher than the fair value, there is an indication that impairment may exist and the second step is performed to compute the amount of any impairment. In the second step, impairment is computed by comparing the implied fair value of the reporting unit goodwill with the carrying value of the goodwill. The Company has one reporting unit, investment management and related services, consistent with its single operating segment, to which all goodwill has been assigned. Prior to July 1, 2012, the Company had a second reporting unit and operating segment, to which no goodwill had been assigned.

Indefinite-lived intangible assets are tested for impairment annually and when events or changes in circumstances indicate the assets might be impaired. Impairment is indicated when the carrying value of the intangible asset exceeds its fair value.

In estimating the fair value of the reporting unit and indefinite-lived intangible assets, the Company uses valuation techniques based on an income approach under which future cash flows are discounted. The future cash flow estimates include assumptions about revenue and AUM growth rates, the pre-tax profit margin, the average effective fee rate, the effective tax rate, and the discount rate, which is based on the Company's weighted average cost of capital.

Definite-lived intangible assets are tested for impairment quarterly. Impairment is indicated when the carrying value of the asset is not recoverable and exceeds its fair value. In evaluating the recoverability of definite-lived intangible assets, the Company estimates the undiscounted future cash flows to be derived from these assets. The future undiscounted cash flow projections include assumptions about revenue and AUM growth rates, effective fee rates, investor redemptions, the pre-tax profit margin, and expected useful lives. If the carrying value of the asset is not recoverable through the related undiscounted cash flows, the impairment loss is measured based on the amount by which the carrying value of the asset exceeds its fair value. The fair value of the asset is determined by discounted cash flows or other methods as appropriate for the asset type.

Deposits

Deposits are carried at the aggregate amount of deposits held and include interest-bearing and non-interest-bearing demand deposits, savings and time deposits. The fair value of deposits with no stated maturities is considered to approximate their carrying value because they are payable on demand. For disclosure purposes, the fair value of deposits with stated maturities is estimated based on discounted cash flow models using interest rates offered by comparable institutions on deposits with similar remaining maturities. All of the deposits are classified as Level 2.

Commercial Paper

Commercial Paper is carried at amortized cost. Due to the short-term nature and liquidity of these financial instruments, the carrying value approximates fair value and, for disclosure purposes, they are classified as Level 2.

Federal Home Loan Bank Advances

FHLB Advances are carried at the aggregate amount of outstanding advances. For disclosure purposes, the fair value is estimated using discounted cash flow models using rates available to the Company for FHLB advances with similar terms and remaining maturities and they are classified as Level 2.

Senior Notes

Senior Notes are carried at amortized cost. For disclosure purposes, the fair value is estimated using quoted market prices, independent third-party broker or dealer price quotes, or prices of publicly traded debt with similar maturities, credit risk and interest rates. The notes are classified as Level 2.

Debt of consolidated sponsored investment products

Debt of Consolidated SIPs is carried at amortized cost. For disclosure purposes, the fair value is estimated using a discounted cash flow model that considers current interest rate levels, the quality of the underlying collateral and current economic conditions. The debt is classified as Level 3.

Debt of consolidated VIEs

Debt of Consolidated VIEs consists of debt of CLOs, and is carried at fair value. Prior to September 30, 2012, debt of consolidated VIEs also included debt of securitization trusts, which was carried at amortized cost. The fair value of the debt of CLOs is primarily obtained from independent third-party broker or dealer price quotes, in which case the debt is classified as Level 2. The CLOs also issued debt that is classified as Level 3 because its fair value is determined using significant unobservable inputs. In these instances, the Company employs a market-based approach, which uses prices of recent transactions, various market multiples, book values and other relevant information for the instrument or related or other comparable debt instruments to determine the fair value. If the market-based approach is not available, the Company utilizes an income-based approach, which considers the net present value of anticipated future cash flows of the instrument. A discount may also be applied due to the nature or duration of any restrictions on the disposition of the instrument. For disclosure purposes, the fair value of the debt of securitization trusts was determined using independent third-party broker or dealer price quotes.

Other liabilities of consolidated VIEs

Other Liabilities of Consolidated VIEs consist primarily of investment trades pending settlement and are carried at fair value. The fair value of the liabilities is obtained from independent third-party broker or dealer quotes and they are classified as Level 2.

Noncontrolling Interests

Noncontrolling Interests relate almost entirely to consolidated SIPs. Noncontrolling intereststhat are currently redeemable or convertible for cash or other assets at the option of the holder are classified as temporary equity. Nonredeemable noncontrolling interests are classified as a component of equity. Net income (loss) attributable to third-party investors is reflected as net income (loss) attributable to nonredeemable and redeemable noncontrolling interests in the consolidated statements of income. Sales and redemptions of shares of consolidated SIPs are a component of the change in noncontrolling interests included in financing activities in the consolidated statements of cash flows.

Appropriated retained earnings of consolidated VIEs

Appropriated Retained Earnings of Consolidated VIEs represents the difference between the fair values of consolidated CLOs' assets and liabilities. These amounts are recognized as appropriated retained earnings as the CLO debt holders, not the Company, will ultimately receive the benefits or absorb the losses associated with the CLOs' assets and liabilities. Net income (loss) attributable to third-party investors is reflected as net income (loss) attributable to nonredeemable noncontrolling interests in the consolidated statements of income.

Revenues

Revenues. Fees from providing investment management and fund administration services (“investment management fees”), shareholder servicing fees and distribution fees are recognized as earned, over the period in which services are rendered, except for performance-based investment management fees, which are recognized when earned. Sales commissions related to the sale of shares of SIPs are recognized on trade date. Investment management fees are generally determined based on a percentage of AUM, except for performance-based investment management fees, which are based on performance targets established in the related investment management contracts. Shareholder servicing fees are generally calculated based on the number and type of accounts serviced while distribution fees are generally based on a percentage of AUM.

AUM of SIPs is calculated using fair value methods derived primarily from unadjusted quoted market prices, unadjusted independent third-party broker or dealer price quotes in active markets, or market prices or price quotes adjusted for observable price movements after the close of the primary market. The fair values of securities for which market prices are not readily available are internally valued using various methodologies which incorporate significant unobservable inputs as appropriate for each security type and represent an insignificant percentage of total AUM. Pricing of the securities held by SIPs is governed by the Company's global valuation and pricing policy, which defines valuation and pricing conventions for each security type, including practices for responding to unexpected or unusual market events.

Advertising and Promotion

Advertising and Promotion costs are expensed as incurred.

Stock-based Compensation

Stock-based Compensation. The fair value of share-based payment awards is estimated on the date of grant based on the market price of the underlying shares of the Company's common stock and is amortized to compensation expense on a straight-line basis over the related vesting period, which is generally three years. Expense relating to awards subject to performance conditions is recognized if it is probable that the performance goals will be achieved. The probability of achievement is assessed on a quarterly basis. The total number of awards expected to vest is adjusted for estimated forfeitures.

Postretirement Benefits

Postretirement Benefits. Defined contribution plan costs are expensed as incurred. Defined benefit plan costs are expensed as the benefits are earned.

Income Taxes

Income Taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and the reported amounts in the consolidated financial statements using the statutory tax rates in effect for the year when the reported amount of the asset or liability is expected to be recovered or settled, respectively. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying values of deferred tax assets to the amount that is more likely than not to be realized. For each tax position taken or expected to be taken in a tax return, the Company determines whether it is more likely than not that the position will be sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to recognize. The tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. The Company recognizes the accrual of interest on uncertain tax positions in interest expense and penalties in other operating expenses.

As a multinational corporation, the Company operates in various locations outside the United States and generates earnings from its non-U.S. subsidiaries. The Company indefinitely reinvests the undistributed earnings of its non-U.S. subsidiaries, except for income previously taxed in the U.S., subject to regulatory or legal repatriation restrictions or requirements, and the excess net earnings reduced by cash needs for operational and regulatory capital requirements, capital management plans and capital expenditure plans of its Canadian and U.K. consolidated subsidiaries.

Foreign Currency Translation

Foreign Currency Translation. Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where that local currency is the functional currency, are translated at current exchange rates as of the end of the accounting period. The related revenues and expenses are translated at average exchange rates in effect during the period. Net exchange gains and losses resulting from translation are excluded from income and are recorded as part of accumulated other comprehensive income. Foreign currency transaction gains and losses are reflected in investment and other income, net in the consolidated statements of income.

Business Combinations

Business Combinations are accounted for using the acquisition method of accounting. Application of this method requires identification of the acquirer, determination of the acquisition date and measurement of the purchase consideration at fair value. The purchase consideration is allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date, with any excess recognized as goodwill.

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Stock-Based Compensation - Narrative (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Share-based Compensation [Abstract]
Number of authorized additional shares under the USIP	10.0
Number of shares authorized for issuance under the USIP	40.0
Number of shares available for grant under USIP	11.5
Unrecognized compensation cost related to nonvested awards net of estimated forfeitures	$ 109.3
Weighted-average remaining contractual term (in years)	1 year 8 months 12 days
Fair value of stock awards and stock unit awards vested	91.7	97.6	64.8
Weighted-average grant-date fair values of stock awards and stock unit awards granted	$ 106.76	$ 118.78	$ 107.10
Total intrinsic values of share options exercised	61.2	66.2	40.4
Cash received from stock option exercises	27.7	28.3	22.3
Income tax benefits from stock options exercises	16.7	15.3	10.9
Total shares issued under ESIP	0.2
Shares reserved for future issuance under ESIP	2.4
Stock-based compensation	$ 101.3	$ 88.7	$ 81.7

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Investments - Schedule of maturities of available-for-sale debt securities (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Debt Maturities, within One Year, Amortized Cost Basis	$ 72.9
Available-for-sale Securities, Debt Maturities, within One Year, Fair Value	73.2
Available-for-sale Securities, Debt Maturities, after One Through Five Years, Amortized Cost Basis	20.9
Available-for-sale Securities, Debt Maturities, after One Through Five Years, Fair Value	21.8
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years, Amortized Cost Basis	2.6
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years, Fair Value	2.8
Available-for-sale Securities, Debt Maturities, after Ten Years, Amortized Cost Basis	1.6
Available-for-sale Securities, Debt Maturities, after Ten Years, Fair Value	1.7
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis	98.0
Available-for-sale Securities, Debt Securities	$ 99.5

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Other Income (Expenses) (Tables)

12 Months Ended

Sep. 30, 2012

Other Income and Expenses [Abstract]

Schedule of other nonoperating income and expense by component

Other income (expenses) consisted of the following:

(in millions)
for the fiscal years ended September 30,	2012			2011			2010
Investment and Other Income, Net
Dividend income	$	22.5		$	35.7		$	38.6
Interest income	12.5			11.0			12.9
Gains (losses) on trading investment securities, net	34.7			(1.3		)	30.3
Realized gains on sale of investment securities, available-for-sale	41.0			65.5			17.9
Realized losses on sale of investment securities, available-for-sale	(2.2		)	(0.3		)	(1.6		)
Income (losses) from investments in equity method investees, net of tax	68.6			(1.1		)	19.9
Other-than-temporary impairment of investment securities, available-for-sale	(10.1		)	(7.3		)	(1.5		)
Other-than-temporary impairment of investments in equity method investees and other	—			(6.3		)	—
Gains (losses) on investments of consolidated SIPs, net	(15.9		)	(36.1		)	8.5
Gains (losses) on assets and liabilities of consolidated VIEs, net	25.6			(80.0		)	—
Foreign currency exchange gains (losses), net	7.1			3.3			(4.7		)
Other, net	15.9			18.7			7.3
Total	199.7			1.8			127.6
Interest Expense	(36.7		)	(37.4		)	(16.5		)
Other Income (Expenses), Net	$	163.0		$	(35.6	)	$	111.1

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Cash and Cash Equivalents (Tables)

12 Months Ended

Sep. 30, 2012

Cash and Cash Equivalents [Abstract]

Schedule of Cash and Cash Equivalents

Cash and cash equivalents consisted of the following:

(in millions)
as of September 30,	2012		2011
Cash on hand and non-interest-bearing deposits with financial institutions	$	74.7	$	58.0
Interest-bearing deposits with financial institutions	826.5		717.2
SIP money market funds	2,233.4		1,887.8
Securities of U.S. government-sponsored enterprises and the U.S. Treasury	1,560.0		1,173.5
Time deposits	1,019.8		1,113.9
Other	69.9		78.5
Total	$	5,784.3	$	5,028.9

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Investments (Tables)

12 Months Ended

Sep. 30, 2012

Investments [Abstract]

Summary of investments

Investments consisted of the following:

(in millions)
as of September 30,	2012		2011
Investment securities, trading	$	1,130.6	$	528.6
Investment securities, available-for-sale
SIPs	587.2		925.7
Securities of U.S. states and political subdivisions	26.8		41.5
Securities of the U.S. Treasury and federal agencies	2.4		2.4
Corporate debt securities1	70.3		121.6
Mortgage-backed securities – agency residential2	169.3		221.6
Other equity securities	14.0		23.7
Total investment securities, available-for-sale	870.0		1,336.5
Investments in equity method investees	489.0		491.5
Other investments	94.2		65.8
Total	$	2,583.8	$	2,422.4

________________

¹  Corporate debt securities are insured by the Federal Deposit Insurance Corporation or non-U.S. government agencies.

²  Consists of U.S. government-sponsored enterprise obligations.

Summary of the gross unrealized gains and losses relating to investment securities, available-for-sale

A summary of the gross unrealized gains and losses relating to investment securities, available-for-sale is as follows:

(in millions)			Gross Unrealized
as of September 30, 2012	Cost Basis		Gains		Losses			Fair Value
SIPs	$	516.8	$	72.1	$	(1.7	)	$	587.2
Securities of U.S. states and political subdivisions	25.6		1.2		—			26.8
Securities of the U.S. Treasury and federal agencies	2.4		—		—			2.4
Corporate debt securities	70.0		0.3		—			70.3
Mortgage-backed securities – agency residential	164.8		4.5		—			169.3
Other equity securities	13.5		0.6		(0.1		)	14.0
Total	$	793.1	$	78.7	$	(1.8	)	$	870.0

(in millions)			Gross Unrealized
as of September 30, 2011	Cost Basis		Gains		Losses			Fair Value
SIPs	$	877.6	$	78.0	$	(29.9	)	$	925.7
Securities of U.S. states and political subdivisions	40.0		1.5		—			41.5
Securities of the U.S. Treasury and federal agencies	2.4		—		—			2.4
Corporate debt securities	120.0		1.6		—			121.6
Mortgage-backed securities – agency residential	216.7		4.9		—			221.6
Other equity securities	23.1		0.8		(0.2		)	23.7
Total	$	1,279.8	$	86.8	$	(30.1	)	$	1,336.5

Gross unrealized losses and fair value of investment securities, available-for-sale with unrealized losses aggregated by investment category and length of time

The following tables show the gross unrealized losses and fair values of investment securities, available-for-sale with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

(in millions)	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
as of September 30, 2012
SIPs	$	30.0	$	(0.7	)	$	21.7	$	(1.0	)	$	51.7	$	(1.7	)
Other equity securities	4.4		(0.1		)	—		—			4.4		(0.1		)
Total	$	34.4	$	(0.8	)	$	21.7	$	(1.0	)	$	56.1	$	(1.8	)

(in millions)	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
as of September 30, 2011
SIPs	$	228.9	$	(29.7	)	$	4.7	$	(0.2	)	$	233.6	$	(29.9	)
Other equity securities	—		—			4.1		(0.2		)	4.1		(0.2		)
Total	$	228.9	$	(29.7	)	$	8.8	$	(0.4	)	$	237.7	$	(30.1	)

Maturities of available-for-sale debt securities

At September 30, 2012, contractual maturities of available-for-sale debt securities were as follows:

(in millions)	Cost Basis		Fair Value
Due in one year or less	$	72.9	$	73.2
Due after one year through five years	20.9		21.8
Due after five years through ten years	2.6		2.8
Due after ten years	1.6		1.7
Total	$	98.0	$	99.5

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New Accounting Guidance

12 Months Ended

Sep. 30, 2012

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Guidance

New Accounting Guidance

Accounting Guidance Adopted During Fiscal Year 2012

On October 1, 2011, the Company adopted new Financial Accounting Standards Board (“FASB”) guidance that requires separate disclosures about purchases, sales, issuances and other settlements in the rollforward of activity in Level 3 fair value measurements.

On January 1, 2012, the Company adopted new FASB guidance that requires additional qualitative discussion for the sensitivity of recurring Level 3 fair value measurements to changes in the unobservable inputs, quantitative disclosure about the significant unobservable inputs used for all Level 3 measurements, and the categorization by level of the fair value hierarchy for financial instruments that are not measured at fair value.

See Note 7 – Fair Value Measurements and Note 13 – Variable Interest Entities and Consolidated Sponsored Investment Products for the expanded disclosures.

New Accounting Guidance Not Yet Adopted

In July 2012, the FASB issued an amendment to the existing impairment guidance for indefinite-lived intangible assets. The amendment permits a reporting entity to first assess qualitative factors to determine whether it is necessary to perform the annual quantitative impairment test for indefinite-lived intangible assets. The amendment is effective for the Company in the first quarter of the fiscal year ending September 30, 2013 (“fiscal year 2013”). The Company does not expect the adoption of the amendment to have a material impact on its consolidated financial statements.

In September 2011, the FASB issued an amendment to the existing impairment guidance for goodwill. The amendment permits a reporting entity to first assess qualitative factors to determine whether it is necessary to perform step one of the two-step annual goodwill impairment test. The amendment is effective for the Company in the first quarter of fiscal year 2013. The Company does not expect the adoption of the amendment to have a material impact on its consolidated financial statements.

In June 2011, the FASB issued an amendment to the existing requirements for the presentation of comprehensive income. The amendment requires the components of net income and other comprehensive income to be presented in one continuous statement or in two separate but consecutive statements. The adoption of the amendment in the first quarter of fiscal year 2013 will result in changes to the Company's presentation of total comprehensive income.

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Fair Value Measurements (Tables)

12 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Assets measured at fair value on a recurring basis

Assets measured at fair value on a recurring basis were as follows:

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2012
Assets
Investment securities, trading	$	1,058.6	$	69.3	$	2.7	$	1,130.6
Investment securities, available-for-sale
SIPs	587.2		—		—		587.2
Securities of U.S. states and political subdivisions	—		26.8		—		26.8
Securities of the U.S. Treasury and federal agencies	—		2.4		—		2.4
Corporate debt securities	—		70.3		—		70.3
Mortgage-backed securities – agency residential	—		169.3		—		169.3
Other equity securities	14.0		—		—		14.0
Life settlement contracts	—		—		12.1		12.1
Total Assets Measured at Fair Value	$	1,659.8	$	338.1	$	14.8	$	2,012.7

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2011
Assets
Investment securities, trading	$	454.0	$	74.6	$	—	$	528.6
Investment securities, available-for-sale
SIPs	925.7		—		—		925.7
Securities of U.S. states and political subdivisions	—		41.5		—		41.5
Securities of the U.S. Treasury and federal agencies	—		2.4		—		2.4
Corporate debt securities	—		121.6		—		121.6
Mortgage-backed securities – agency residential	—		221.6		—		221.6
Other equity securities	19.5		4.1		0.1		23.7
Life settlement contracts	—		—		10.8		10.8
Total Assets Measured at Fair Value	$	1,399.2	$	465.8	$	10.9	$	1,875.9

Changes in Level 3 assets measured at fair value on a recurring basis

The changes in Level 3 assets measured at fair value on a recurring basis were as follows:

(in millions)	2012			2011			2010
for the fiscal years ended September 30,
Balance at beginning of year	$	10.9		$	32.7		$	39.9
Adjustment for adoption of new consolidation guidance	—			(23.3		)	—
Total realized and unrealized gains (losses):
Included in investment and other income, net	3.3			2.9			6.2
Included in accumulated other comprehensive income	—			—			(0.4		)
Purchases, sales and settlements, net	0.6		1	(1.4		)	(13.0		)
Balance at end of year	$	14.8		$	10.9		$	32.7
Change in unrealized gains included in net income relating to assets held at September 30	$	1.3		$	1.2		$	4.9

_________________

¹     Consists of purchases of $3.9 million, net of settlements of $3.3 million.

Schedule of financial instruments not measured at fair value

Financial instruments that were not measured at fair value were as follows:

(in millions)	2012					2011
as of September 30,	Carrying Value		Estimated Fair Value		Fair Value Level	Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents	$	5,784.3	$	5,784.3	1	$	5,028.9	$	5,028.9
Other investments1	80.2		85.1		2 or 3	51.3		56.9
Loans receivable, net	254.4		258.7		2	401.9		403.1
Financial Liabilities
Deposits	$	671.7	$	672.4	2	$	890.2	$	892.7
Debt:
Commercial paper	—		—		N/A	30.0		30.0
FHLB advances	69.0		74.5		2	69.0		72.6
Senior notes	1,497.1		1,571.2		2	899.2		942.3

_________________

¹     Primarily consist of Level 3 assets.

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Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of changes in allowance for loan losses for the securitization trusts (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Variable Interest Entity [Line Items]
Balance at beginning of year	$ 5.2
Adjustment for adoption of new consolidation guidance	0	(23.3)	0
Provision for loan losses	5.5	4.6	3.3
Balance at End of Year	0.5	5.2
Securitization [Member]
Variable Interest Entity [Line Items]
Balance at beginning of year	5.7	0
Adjustment for adoption of new consolidation guidance	0	14.3
Provision for loan losses	0.2	0.4
Charge-offs	(5.7)	(14.6)
Recoveries	2.4	5.6
Deconsolidation of securitization trust	(2.6)	0
Balance at End of Year	$ 0	$ 5.7
Total loan charge-offs, net of recoveries, as a percentage of simple monthly average loans receivable	3.73%	3.93%
Allowance for loan losses as a percentage of loans receivable		3.68%

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Commitments and Contingencies (Tables)

12 Months Ended

Sep. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Future minimum lease payments under long-term non-cancelable operating leases

Future minimum lease payments under long-term non-cancelable operating leases were as follows as of September 30, 2012:

(in millions)
for the fiscal years ending September 30,	Amount
2013	$	46.8
2014	43.4
2015	35.6
2016	30.2
2017	13.1
Thereafter	29.3
Total Minimum Lease Payments	$	198.4

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Investments - Summary of Investments (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012		Sep. 30, 2011
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investment securities, trading	$ 1,130.6		$ 528.6
Investment securities, available-for-sale	870.0		1,336.5
Investments in equity method investees	489.0		491.5
Other Investments	94.2		65.8
Total	2,583.8		2,422.4
Sponsored Investment Products [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investment securities, available-for-sale	587.2		925.7
Securities of U.S. states and political subdivisions [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investment securities, available-for-sale	26.8		41.5
Securities of the U.S. Treasury and federal agencies [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investment securities, available-for-sale	2.4		2.4
Corporate debt securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investment securities, available-for-sale	70.3	[1]	121.6	[1]
Mortgage-backed securities - agency residential [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investment securities, available-for-sale	169.3	[2]	221.6	[2]
Other equity securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investment securities, available-for-sale	$ 14.0		$ 23.7

[1] Corporate debt securities are insured by the Federal Deposit Insurance Corporation or non-U.S. government agencies.

[2] Consists of U.S. government-sponsored enterprise obligations.

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Goodwill and Other Intangible Assets - Schedule of estimated remaining amortization expense (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2013	$ 10.5
2014	10.5
2015	10.3
2016	5.6
2017	1.4
Thereafter	5.7
Total	$ 44.0	$ 52.9

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Consolidated Statements of Income (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Operating Revenues
Investment management fees	$ 4,458.7	$ 4,531.4	$ 3,574.6
Sales and distribution fees	2,259.3	2,263.5	1,947.1
Shareholder servicing fees	302.5	300.8	283.9
Other, net	80.5	44.3	47.4
Total operating revenues	7,101.0	7,140.0	5,853.0
Operating Expenses
Sales, distribution and marketing	2,739.7	2,712.8	2,282.9
Compensation and benefits	1,255.5	1,231.2	1,081.0
Information systems and technology	182.9	173.1	165.6
Occupancy	129.9	131.0	130.0
General, administrative and other	277.8	232.1	234.8
Total operating expenses	4,585.8	4,480.2	3,894.3
Operating Income	2,515.2	2,659.8	1,958.7
Other Income (Expenses)
Investment and other income (losses), net	199.7	1.8	127.6
Interest expense	(36.7)	(37.4)	(16.5)
Other income (expenses), net	163.0	(35.6)	111.1
Income before taxes	2,678.2	2,624.2	2,069.8
Taxes on income	762.7	803.4	618.3
Net income	1,915.5	1,820.8	1,451.5
Net Income Attributable to Franklin Resources, Inc.	1,931.4	1,923.6	1,445.7
Earnings per Share
Basic	$ 8.98	$ 8.66	$ 6.36
Diluted	$ 8.95	$ 8.62	$ 6.33
Dividends per Share	$ 3.08	$ 1.00	$ 3.88
Nonredeemable Noncontrolling Interests [Member]
Other Income (Expenses)
Net Income (Loss) Attributable to Noncontrolling Interests	(20.9)	(101.6)	0.7
Redeemable Noncontrolling Interests [Member]
Other Income (Expenses)
Net Income (Loss) Attributable to Noncontrolling Interests	$ 5.0	$ (1.2)	$ 5.1

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Banking Regulatory Ratios (Tables)

12 Months Ended

Sep. 30, 2012

Banking and Thrift [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations

Quantitative measures established by regulations to ensure capital adequacy require the Company to maintain a minimum Tier 1 capital and Tier 1 leverage ratio (as defined in the regulations), as well as minimum Tier 1 and Total risk-based capital ratios (as defined in the regulations). The Company's calculation methodology follows the most conservative risk-weighting assumptions within the Federal Reserve Board guidelines. Based on the Company's calculations as of September 30, 2012 and 2011, it exceeded the applicable capital adequacy requirements as listed below.

(dollar amounts in millions)							Capital Adequacy Minimum
as of September 30,	2012			2011
Tier 1 capital	$	6,788.8		$	6,141.4		N/A
Total risk-based capital	6,799.6			6,152.2			N/A
Tier 1 leverage ratio	59		%	55		%	5%
Tier 1 risk-based capital ratio	54		%	53		%	4%
Total risk-based capital ratio	54		%	53		%	8%

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Taxes on Income - Reconciliation of the amount of tax expense at the federal statutory rate and taxes on income (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract]
Federal taxes at statutory rate	$ 937.4	$ 918.5	$ 724.4
Federal statutory rate	35.00%	35.00%	35.00%
State taxes, net of federal tax effect	34.4	63.5	51.7
State taxes, net of federal tax effect rate	1.30%	2.40%	2.50%
Effect of non-U.S. operations	(218.8)	(222.0)	(177.1)
Effect of non-U.S. operation rate	(8.20%)	(8.50%)	(8.60%)
Effect of net loss (income) attributable to noncontrolling interest	4.7	36.0	(2.0)
Effect of net loss (income) attributable to noncontrolling interest rate	0.20%	1.40%	(0.10%)
Change in valuation allowance	0	0	(5.2)
Change in valuation allowance rate	0.00%	0.00%	(0.30%)
Other	5.0	7.4	26.5
Other rate	0.20%	0.30%	1.40%
Tax Provision	$ 762.7	$ 803.4	$ 618.3
Effective Tax Rate	28.50%	30.60%	29.90%

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Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Net Income	$ 1,915.5	$ 1,820.8	$ 1,451.5
Adjustments to reconcile net income to net cash provided byoperating activities:
Depreciation and amortization	212.0	243.6	267.4
Stock-based compensation	101.3	88.7	81.7
Excess tax benefit from stock-based compensation	(19.7)	(14.7)	(11.7)
Net (gains) losses on sale of assets	(34.6)	(67.8)	(17.5)
Losses (income) from investments in equity method investees, net of tax	(68.6)	1.1	(19.9)
Other-than-temporary impairment of investments	10.1	13.6	1.5
Net (gains) losses on investments of consolidated sponsored investment products	16.5	0	0
Net (gains) losses of consolidated variable interest entities	(23.9)	86.8	0
Provision for loan losses	5.5	4.6	3.3
Deferred income taxes	16.3	(3.3)	(12.1)
Changes in operating assets and liabilities:
Increase in receivables, prepaid expenses and other	(222.8)	(230.3)	(282.3)
Increase in trading securities, net	(577.8)	(257.7)	(72.9)
Increase in trading securities of consolidated sponsored investment products, net	(203.0)	(260.7)	(70.1)
Increase (decrease) in accrued compensation and benefits	(2.6)	72.9	122.0
Increase (decrease) in commissions payable	14.4	65.5	83.0
Increase (decrease) in income taxes payable	(74.9)	32.5	93.9
Increase (decrease) in other liabilities	2.5	26.2	33.2
Net cash provided by (used in) operating activities	1,066.2	1,621.8	1,651.0
Net cash provided by (used in) investing activities
Purchase of investments	(247.2)	(499.5)	(695.5)
Liquidation of investments	831.9	690.7	784.4
Purchase of investments by consolidated sponsored investment products	(188.5)	0	0
Liquidation of investments by consolidated sponsored investment products	55.9	0	0
Purchase of investments by consolidated variable interest entities	(417.5)	(1,058.2)	0
Liquidation of investments by consolidated variable interest entities	520.1	1,295.6	0
Decrease (increase) in loans receivable, net	26.0	(30.0)	(64.2)
Proceeds from sale of loans	141.8	0	0
Decrease in loans receivable held by consolidated variable interest entities, net	59.7	157.1	0
Additions of property and equipment, net	(78.4)	(131.7)	(57.4)
Acquisitions of subsidiaries, net of cash acquired	0	(111.1)	0
Cash and cash equivalents recognized due to consolidation of variable interest entity	169.6	0	0
Cash and cash equivalents recognized due to adoption of new consolidation guidance	0	45.8	0
Cash and cash equivalents recognized due to consolidation adjustment for sponsored investment products	0	77.2	0
Net cash provided by (used in) investing activities	873.4	435.9	(32.7)
Net cash provided by (used in) financing activities
Increase (decrease) in deposits	(218.5)	234.5	(8.8)
Issuance of common stock	49.1	49.6	41.8
Dividends paid on common stock	(663.0)	(216.3)	(883.5)
Repurchase of common stock	(797.4)	(954.2)	(675.8)
Excess tax benefit from stock-based compensation	19.7	14.7	11.7
Increase (decrease) in commercial paper, net	(30.0)	(0.1)	(34.5)
Proceeds from issuance of debt	592.3	20.0	952.0
Payments on debt	0	(2.2)	(66.0)
Proceeds from issuance of debt by consolidated sponsored investment products	122.6	0	0
Payments on debt by consolidated sponsored investment products	(144.7)	0	0
Payments on debt by consolidated variable interest entities	227.1	358.0	0
Noncontrolling interests	212.1	243.8	68.2
Net Cash Provided by (Used in) Financing Activities	(1,084.9)	(968.2)	(594.9)
Effect of Exchange Rate on Cash and Cash Equivalents	(1.9)	(14.6)	(4.2)
Increase in cash and cash equivalents	852.8	1,074.9	1,019.2
Cash and cash equivalents, beginning of year	5,198.6	4,123.7	3,104.5
Cash and Cash Equivalents, End of Year	6,051.4	5,198.6	4,123.7
Supplemental Disclosure of Non-Cash Information
Increase (decrease) in noncontrolling interests due to net consolidation (deconsolidation) of certain sponsored investment products	(188.1)	343.6	(118.4)
Increase in assets (liabilities), net related to consolidation of variable interest entities	(174.9)	60.8	0
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	819.8	761.9	533.3
Cash paid for interest	42.8	41.1	7.1
Cash paid for interest by consolidated sponsored investments products and consolidated variable interest entities	$ 50.5	$ 50.9	$ 0

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Taxes on Income - Components of deferred tax assets and liabilities (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Deferred Tax Assets
State taxes	$ (0.9)	$ 19.7
Allowance for loan losses	1.0	4.3
Deferred compensation and employee benefits	62.8	53.7
Stock-based compensation	29.2	23.6
Net operating loss carry-forwards	27.9	24.4
Tax benefit for uncertain tax positions	29.6	29.9
Other	15.6	19.3
Total deferred tax assets	165.2	174.9
Valuation allowance for net operating loss carry-forwards	(17.4)	(12.3)
Deferred tax assets, net of valuation allowance	147.8	162.6
Deferred Tax Liabilities
Depreciation on fixed assets	18.6	18.2
Goodwill and other purchased intangibles	253.8	262.8
Deferred commissions	23.6	22.5
Unrealized gains on investments	17.5	2.8
Other	15.7	22.8
Deferred Tax Liabilities, Gross	329.2	329.1
Net Deferred Tax Liability	$ 181.4	$ 166.5

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Fair Value Measurements - Changes in Level 3 assets measured at fair value on a recurring basis (Details) (USD $)	12 Months Ended
	Sep. 30, 2012		Sep. 30, 2011	Sep. 30, 2010
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	$ 10,900,000		$ 32,700,000	$ 39,900,000
Adjustment for adoption of new consolidation guidance	0		(23,300,000)	0
Total realized and unrealized gains (losses) included in investments and other income (losses), net	3,300,000		2,900,000	6,200,000
Total realized and unrealized gains (losses) included in accumulated other comprehensive income	0		0	(400,000)
Purchases, sales and settlements, net	600,000	[1]	(1,400,000)	(13,000,000)
Balance	14,800,000		10,900,000	32,700,000
Change in unrealized gains included in net income relating to assets held at the end of the period	1,300,000		1,200,000	4,900,000
Purchases	3,900,000
Settlements	(3,300,000)
Investments of Consolidated VIEs [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	1,900,000		0
Adjustment for adoption of new consolidation guidance			1,800,000
Purchases, sales and settlements, net			0
Balance	0		1,900,000
Change in unrealized gains included in net income relating to assets held at the end of the period	0		100,000
Purchases	0
Settlements	0
Debt of Consolidated VIEs [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Adjustment for adoption of new consolidation guidance			(71,400,000)
Change in unrealized gains included in net income relating to assets held at the end of the period	(4,000,000)		(45,600,000)
Level 3 [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	610,500,000		3,300,000
Adjustment for adoption of new consolidation guidance			1,800,000
Purchases, sales and settlements, net			14,100,000
Balance	844,500,000		610,500,000
Change in unrealized gains included in net income relating to assets held at the end of the period	6,700,000		400,000
Purchases	375,000,000
Settlements	$ 0

[1] Consists of purchases of $3.9 million, net of settlements of $3.3 million.

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Commitments and Contingencies - Future minimum lease payments under long-term non-cancelable operating leases (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012
Commitments and Contingencies Disclosure [Abstract]
2013	$ 46.8
2014	43.4
2015	35.6
2016	30.2
2017	13.1
Thereafter	29.3
Total Minimum Lease Payments	$ 198.4

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Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Sep. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of changes in carrying value of goodwill

Changes in the carrying value of goodwill were as follows:

(in millions)
for the fiscal years ended September 30,	2012		2011
Balance at beginning of year	$	1,536.2	$	1,444.3
Business combinations	—		104.6
Foreign exchange and other	4.6		(12.7		)
Balance at End of Year	$	1,540.8	$	1,536.2

Schedule of intangible assets

Intangible assets were as follows:

	2012							2011
(in millions)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
as of September 30,
Definite-lived intangible assets
Customer base	$	166.6	$	(135.9	)	$	30.7	$	166.1	$	(126.8	)	$	39.3
Other	49.3		(36.0		)	13.3		47.7		(34.1		)	13.6
	215.9		(171.9		)	44.0		213.8		(160.9		)	52.9
Indefinite-lived intangible assets
Management contracts	557.1		—			557.1		559.1		—			559.1
Total	$	773.0	$	(171.9	)	$	601.1	$	772.9	$	(160.9	)	$	612.0

Schedule of estimated remaining amortization expense

The estimated remaining amortization expense related to definite-lived intangible assets as of September 30, 2012 was as follows:

(in millions)
for the fiscal years ending September 30,	Amount
2013	$	10.5
2014	10.5
2015	10.3
2016	5.6
2017	1.4
Thereafter	5.7
Total	$	44.0

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Loans and Allowance for Loan Losses - Schedule of Loans Receivable by Impairment Methodology (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 254.9	$ 407.1
Less: allowance for loan losses	(0.5)	(5.2)
Total	254.4	401.9
Collectively Evaluated [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	254.4	390.8	362.3
Less: allowance for loan losses	0.4	3.6	3.5
Total	254.0	387.2	358.8
Individually Evaluated [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	0.5	16.3	18.0
Less: allowance for loan losses	0.1	1.6	1.9
Total	$ 0.4	$ 14.7	$ 16.1

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Stock-Based Compensation

12 Months Ended

Sep. 30, 2012

Share-based Compensation [Abstract]

Stock-Based Compensation

Stock-Based Compensation

The Company’s stock-based compensation plans include the Amended and Restated Annual Incentive Compensation Plan (the “AIP”) and the 2002 Universal Stock Incentive Plan, as amended and restated (the “USIP”). Under the terms of the AIP, eligible employees may receive cash, equity awards and/or mutual fund unit awards generally based on the performance of the Company, its funds and the individual employee. The USIP provides for the issuance of the Company’s common stock for various stock-related awards to officers, directors and employees. In March 2011, the Company's stockholders approved an amendment and restatement of the USIP increasing the number of authorized shares available for issuance under the USIP by 10.0 million shares to a total of 40.0 million shares. At September 30, 2012, approximately 11.5 million shares were available for grant under the USIP. In addition to stock awards and stock unit awards, the Company may award options and other forms of stock-based compensation to officers, directors and employees under the USIP. The Compensation Committee of the Board of Directors determines the terms and conditions of awards under the AIP and USIP.

Stock and Stock Unit Awards

Stock awards generally entitle holders to the right to sell the underlying shares of the Company’s common stock once the awards vest. Stock unit awards generally entitle holders to receive the underlying shares of common stock once the awards vest. Certain performance-based long-term stock and stock unit awards have been granted which generally vest based on the achievement of predetermined Company financial performance goals. In the event a performance measure is not achieved at or above a specified threshold level, the portion of the award tied to such performance measure is forfeited.

Total unrecognized compensation cost related to nonvested stock and stock unit awards, net of estimated forfeitures, was $109.3 million at September 30, 2012. This cost is expected to be recognized over a remaining weighted-average vesting period of 1.7 years. The total fair value of stock awards and stock unit awards vested during fiscal years 2012, 2011 and 2010 was $91.7 million, $97.6 million and $64.8 million. The weighted-average grant-date fair values of stock awards and stock unit awards granted during fiscal years 2012, 2011 and 2010 were $106.76, $118.78 and $107.10 per share.

Nonvested stock and stock unit award activity was as follows:

(shares in thousands)	Shares		Weighted- Average Grant-Date Fair Value
Nonvested balance at September 30, 2011	1,085		$	114.57
Granted	1,099		106.76
Vested	(810	)	110.85
Forfeited/canceled	(47	)	110.91
Nonvested Balance at September 30, 2012	1,327		$	110.50

Stock Options

Stock option activity was as follows:

(shares in thousands, aggregate intrinsic value in millions)	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at September 30, 2011	1,369		$	38.69
Granted	22		38.55
Exercised	(787	)	35.60
Expired/canceled	(4	)	36.08
Outstanding and Exercisable at September 30, 2012	600		$	41.33	0.8	$	50.2

Stock option awards generally were granted at prices that were either equal to or above the market value of the underlying shares of the Company’s common stock on the date of grant and expire no later than ten years after the grant date. No stock option awards have been granted since November 2004, except for approximately 22 thousand shares that were issued in conjunction with a special cash dividend in December 2011. All stock options granted through November 2004 were fully vested and all related compensation cost was recognized prior to fiscal year 2010. The total intrinsic values of share options exercised during fiscal years 2012, 2011 and 2010 were $61.2 million, $66.2 million and $40.4 million.

Cash received from stock option exercises during fiscal years 2012, 2011 and 2010 was $27.7 million, $28.3 million and $22.3 million. Income tax benefits from the stock option exercises were $16.7 million, $15.3 million and $10.9 million during the same periods.

Employee Stock Investment Plan

The amended and restated Franklin Resources, Inc. 1998 Employee Stock Investment Plan (the “ESIP”), allows eligible participants to buy shares of the Company’s common stock at a discount of its market value on defined dates. The Compensation Committee of the Board of Directors determines the terms and conditions of awards under the ESIP. A total of 0.2 million shares were issued under the ESIP during fiscal year 2012. At September 30, 2012, approximately 2.4 million shares were reserved for future issuance under this plan.

All Stock-Based Plan Arrangements

Total stock-based compensation costs of $101.3 million, $88.7 million and $81.7 million were recognized in the consolidated statements of income during fiscal years 2012, 2011 and 2010.

The Company generally does not repurchase shares upon share option exercise or vesting of stock and stock unit awards. However, in order to pay taxes due in connection with the vesting of employee and executive officer stock and stock unit awards, shares are repurchased using a net stock issuance method.

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Deposits (Tables)

12 Months Ended

Sep. 30, 2012

Deposits [Abstract]

Schedule of deposits held in U.S. offices

Deposits, all of which are held in the Company’s U.S. offices, were as follows:

(in millions)
as of September 30,	2012		2011
Non-interest-bearing demand deposits	$	149.4	$	189.6
Interest-bearing deposits
Demand deposits	12.7		25.2
Savings deposits	461.2		575.9
Time deposits	48.4		99.5
Total interest-bearing deposits	522.3		700.6
Total	$	671.7	$	890.2

Maturities of time deposits of $100,000 or more

Maturities of time deposits in amounts of $100,000 or more were as follows:

(in millions)
as of September 30, 2012	Amount
3 months or less	$	11.8
Over 3 months through 6 months	0.2
Over 12 months	0.1
Total	$	12.1

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Commitments and Contingencies - Narrative (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Lease expense	$ 58.7	$ 62.1	$ 66.6
Sublease income	2.0	1.4	1.7
Future minimum rentals to be received under non-cancelable subleases	9.3
Committed capital contributions	68.8
Off-balance sheet cash	202.4	124.5
Certain insureds policy limits	$ 88.0

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Segment Information

12 Months Ended

Sep. 30, 2012

Segment Reporting, Measurement Disclosures [Abstract]

Segment Information

Segment Information

Effective July 1, 2012, the Company has one operating segment, investment management and related services, from which it derives all of its operating revenues and income. Previously, the Company had a second operating segment, banking/finance, which offered select retail banking, private banking and consumer lending services. See Note 1 – Significant Accounting Policies, Basis of Presentation.

Geographical information was as follows:

(in millions)
for the fiscal years ended September 30,	2012		2011		2010
Operating Revenues
United States	$	4,791.9	$	4,589.4	$	3,920.0
The Bahamas	904.2		1,041.9		753.7
Asia-Pacific	627.7		688.9		571.1
Europe, the Middle East and Africa	458.6		435.3		279.6
Canada	309.0		344.6		303.0
Latin America	9.6		39.9		25.6
Total	$	7,101.0	$	7,140.0	$	5,853.0
Property and Equipment, Net
United States	$	447.9	$	441.9	$	415.2
The Bahamas	16.5		17.2		17.9
Asia-Pacific	94.3		103.3		85.1
Europe, the Middle East and Africa	13.0		15.0		15.6
Canada	10.4		11.5		14.0
Latin America	0.6		0.8		1.2
Total	$	582.7	$	589.7	$	549.0

Operating revenues are generally allocated to geographic areas based on the location of the office providing services.

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Property and Equipment, Net - Summary of property and equipment (Details) (USD $) In Millions, unless otherwise specified										12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2012 Furniture, software and equipment [Member]	Sep. 30, 2011 Furniture, software and equipment [Member]	Sep. 30, 2012 Premises and leasehold improvements [Member]	Sep. 30, 2011 Premises and leasehold improvements [Member]	Sep. 30, 2012 Land [Member]	Sep. 30, 2011 Land [Member]	Sep. 30, 2012 Minimum [Member]	Sep. 30, 2012 Minimum [Member] Furniture, software and equipment [Member]	Sep. 30, 2012 Minimum [Member] Premises and leasehold improvements [Member]	Sep. 30, 2012 Maximum [Member]	Sep. 30, 2012 Maximum [Member] Furniture, software and equipment [Member]	Sep. 30, 2012 Maximum [Member] Premises and leasehold improvements [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Property and Equipment, Gross	$ 1,302.7	$ 1,274.3		$ 667.4	$ 647.1	$ 560.3	$ 552.0	$ 75.0	$ 75.2
Less: Accumulated depreciation and amortization	(720.0)	(684.6)
Property and equipment, net	$ 582.7	$ 589.7	$ 549.0
Property, Plant and Equipment, Useful Life										3 years	3 years	5 years	35 years	10 years	35 years

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Segment Information - Schedule of operating revenues, property and equipment by geographic areas (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Revenues from external customers and long-lived assets [line items]
Operating revenues	$ 7,101.0	$ 7,140.0	$ 5,853.0
Property and equipment, net	582.7	589.7	549.0
United States [Member]
Revenues from external customers and long-lived assets [line items]
Operating revenues	4,791.9	4,589.4	3,920.0
Property and equipment, net	447.9	441.9	415.2
The Bahamas [Member]
Revenues from external customers and long-lived assets [line items]
Operating revenues	904.2	1,041.9	753.7
Property and equipment, net	16.5	17.2	17.9
Asia-Pacific [Member]
Revenues from external customers and long-lived assets [line items]
Operating revenues	627.7	688.9	571.1
Property and equipment, net	94.3	103.3	85.1
Europe, the Middle East and Africa [Member]
Revenues from external customers and long-lived assets [line items]
Operating revenues	458.6	435.3	279.6
Property and equipment, net	13.0	15.0	15.6
Canada [Member]
Revenues from external customers and long-lived assets [line items]
Operating revenues	309.0	344.6	303.0
Property and equipment, net	10.4	11.5	14.0
Latin America [Member]
Revenues from external customers and long-lived assets [line items]
Operating revenues	9.6	39.9	25.6
Property and equipment, net	$ 0.6	$ 0.8	$ 1.2

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Significant Accounting Policies

12 Months Ended

Sep. 30, 2012

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Business. Franklin Resources, Inc. (“Franklin”) is a holding company that, together with its various subsidiaries (collectively, the “Company”) is referred to as Franklin Templeton Investments. The Company provides investment management and related services to investors globally through products that include investment funds and institutional, high net-worth and separately-managed accounts (collectively, the “sponsored investment products” or “SIPs”). In addition to investment management, the Company's services include fund administration, sales, distribution, shareholder services, transfer agency, trustee, custodial, and other fiduciary services, as well as select private banking services.

Basis of Presentation. The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Management believes that the accounting estimates are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual amounts may differ from these estimates. Certain comparative amounts for prior fiscal years have been reclassified to conform to the financial statement presentation as of and for the fiscal year ended September 30, 2012 (“fiscal year 2012”).

Effective September 30, 2012, the Company changed the presentation of its consolidated balance sheets from a classified basis to an unclassified basis which does not distinguish balances as current or non-current. Management believes this presentation election is more useful to readers of its financial statements and provides improved disclosure of the Company's financial position because it aggregates assets and liabilities of the same nature. The previous classified presentation was not utilized to derive any metric by which the Company is measured. The new unclassified presentation is consistent with the manner in which management monitors its financial position, and reduces the presentation complexities resulting from the consolidation of SIPs and variable interest entities (“VIEs”). Amounts for the consolidated balance sheet as of September 30, 2011 have been reclassified to conform to the current year presentation.

Effective July 1, 2012, the Company has one operating segment, investment management and related services. Previously, the Company had a secondary operating segment, banking/finance, which offered select retail banking, private banking and consumer lending services. During fiscal year 2012, the Company significantly reduced these services and now only offers select private banking services to investment management clients. The Company's Chief Executive Officer, who is the chief operating decision maker, no longer reviews financial results from banking/finance activities, and now allocates resources and assesses performance at the consolidated level.

Consolidation. The consolidated financial statements include the accounts of Franklin and its subsidiaries and SIPs in which it has a controlling financial interest. The Company is generally considered to have a controlling financial interest when it owns a majority of the voting interest in an entity. The Company also consolidates VIEs for which it is considered the primary beneficiary and non-VIE limited partnerships and similar structures for which it is deemed to have control. All material intercompany accounts and transactions have been eliminated.

A VIE is an entity in which the equity investment holders have not contributed sufficient capital to finance its activities or the equity investment holders do not have defined rights and obligations normally associated with an equity investment.

The Company uses two models for determining whether it is the primary beneficiary of VIEs. For all investment entity VIEs with the exception of collateralized loan obligations (“CLOs”), the Company is considered to be the primary beneficiary if it has the majority of the risks or rewards of ownership. For all other VIEs, including CLOs, the Company is considered to be the primary beneficiary if it has the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses of or right to receive benefits from the VIE that could potentially be significant to the VIE.

The variable interests that the Company has in investment entity VIEs consist of its equity ownership interest in and/or investment management and related service fees earned from these VIEs. The Company uses expected cash flow scenarios to determine if its investment management and related service fees and/or equity ownership interests provide it with a majority of the VIE's expected losses or residual returns. The Company's VIEs include CLOs and, prior to September 30, 2012, automobile loan securitization trusts. Under both models, the key estimates and assumptions used in the analyses may include the amount of assets under management (“AUM”), investment management and related service fee rates, the life of the investment product, prepayment rates, and the discount rate.

The Company is presumed to control non-VIE limited partnerships and similar structures for which it is the general partner or managing member unless the limited partners or other investors have the substantive ability to remove the Company as general partner or managing member, liquidate the entity or otherwise participate in the decision-making of the entity. The Company's risk of loss in these entities is limited to its investments in the entities as the general partner and managing member entities are structured as limited liability companies.

Earnings per Share. Basic earnings per share is computed by dividing net income available to the Company's common shareholders, which exclude participating securities, by the weighted average number of shares of common stock outstanding during the period. The Company's participating securities consist of its nonvested stock and stock unit awards that contain nonforfeitable rights to dividends or dividend equivalents. Diluted earnings per share is computed on the basis of the weighted-average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the two-class method.

Fair Value Measurements. The Company uses a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based on whether the inputs to those valuation techniques are observable or unobservable. The three levels of fair value hierarchy are set forth below. The Company's assessment of the hierarchy level of the assets or liabilities measured at fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Transfers between levels are recognized at the end of each quarter.

Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2	Observable inputs other than Level 1 quoted prices, such as non-binding quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable or corroborated by observable market data. Level 2 quoted prices are generally obtained from two independent third-party brokers or dealers, including prices derived from model-based valuation techniques for which the significant assumptions are observable in the market or corroborated by observable market data. Quoted prices are validated through price variance analysis, subsequent sales testing, stale price review, price comparison across pricing vendors and due diligence reviews of third-party vendors.
Level 3	Unobservable inputs that are supported by little or no market activity. These inputs require significant management judgment and reflect the Company’s estimation of assumptions that market participants would use in pricing the asset or liability. Level 3 valuations are derived primarily from model-based valuation techniques in which one or more significant inputs are unobservable in the market.

The fair values for Level 3 assets and liabilities are determined using various methodologies in accordance with the Company's global pricing policy which defines valuation and pricing conventions for each security type. When available, fair value is measured based on the reported net asset value of underlying investments or independent third-party broker or dealer price quotes. These inputs are evaluated for reasonableness through various procedures which include due diligence reviews of the third parties, price comparisons across pricing vendors, stale price reviews and subsequent sales testing. If these inputs are not available, the Company primarily employs a market-based method, using purchase multiples observed for comparable third-party transactions, valuations of comparable entities, projected operating results of the investee entity or subsequent financing transactions entered into by the investee entity. If the inputs for a market-based method are not available, the Company utilizes an income-based method, which considers the net present value of anticipated future cash flows of the investment. A discount may be applied due to the nature or duration of any restrictions on the disposition of the investment. The Company reviews and approves the market-based and income-based methods on a periodic basis for changes that would impact the unobservable inputs incorporated into the valuation process. The fair value measurements from these methods are further validated through price variance analysis, subsequent sales testing and market comparable sales.

The Company records the majority of its investments at fair value or amounts that approximate fair value on a recurring basis. Certain assets may also be measured at fair value on a nonrecurring basis. These fair value measurements generally result from the application of lower of cost or fair value accounting or write-downs of individual assets. Fair values are estimated for disclosure purposes for financial instruments that are not measured at fair value.

Fair Value Option. The Company elected the fair value option for all assets and liabilities of its consolidated CLOs as this option better matches the changes in fair value of the assets and liabilities. The decision to elect the fair value option, which is irrevocable once elected, is determined on an instrument by instrument basis and applied to an entire instrument. The net gains or losses on assets and liabilities for which the fair value option has been elected include interest income and expense and are recognized in investment and other income, net in the consolidated statements of income.

Cash and Cash Equivalents include cash on hand, non-interest-bearing and interest-bearing deposits with financial institutions, time deposits, securities of U.S. government-sponsored enterprises and the U.S. Treasury, debt instruments with original maturities of three months or less at the purchase date, and other highly liquid investments, including money market funds, which are readily convertible into cash. Cash and cash equivalents are carried at cost. Due to the short-term nature and liquidity of these financial instruments, the carrying values of these assets approximate fair value and, for disclosure purposes, they are classified as Level 1.

Receivables consist primarily of fees receivable from SIPs and are carried at invoiced amounts. Due to the short-term nature and liquidity of the receivables, the carrying values of these assets approximate fair value.

Investments consist of investment securities, trading and available-for-sale, investments in equity method investees and other investments.

Investment Securities, Trading consist of non-consolidated SIPs, and are carried at fair value. Changes in the fair value of trading securities are recognized as gains and losses in earnings. The fair value of these securities is determined based on their published net asset values and they are classified as Level 1.

Investment Securities, Available-for-Sale consist primarily of non-consolidated SIPs, securities of U.S. states and political subdivisions, securities of the U.S. Treasury and federal agencies, corporate debt securities, mortgage-backed securities, and other equity securities. The securities are carried at fair value. Realized gains and losses are included in investment income using either the average cost method or specific identification method. Unrealized gains and losses are recorded net of tax as part of accumulated other comprehensive income until realized. The fair value of SIPs is determined based on their published net asset values and they are classified as Level 1. The fair value of debt securities is determined using quoted market prices, if available, or independent third-party broker or dealer price quotes, which are evaluated for reasonableness, and they are generally classified as Level 2, except for certain U.S. Treasury securities which are classified as Level 1.

The fair value of other equity securities, which consist primarily of non-sponsored investment products, is generally determined based on their published net asset values, and they are classified as Level 1.

Investments in Equity Method Investees consist of equity investments in entities, including SIPs, over which the Company is able to exercise significant influence, but not control. Significant influence is generally considered to exist when the Company's ownership interest in the voting stock of the investee is between 20% and 50%, although other factors, such as representation on the investee's board of directors and the impact of commercial arrangements, also are considered in determining whether the equity method of accounting is appropriate. Investments in limited partnerships and limited liability companies for which the Company is not deemed to have control are accounted for using the equity method of accounting when the Company's investment is considered to be more than minor. Under the equity method of accounting, the investments are initially carried at cost and subsequently adjusted by the Company's proportionate share of the entities' net income, which is recognized in earnings.

Other Investments consist of equity investments in entities over which the Company is unable to exercise significant influence and are not marketable, time deposits and life settlement contracts. The equity investments are accounted for under the cost method. For disclosure purposes, the fair value of these investments is generally estimated based on their net asset value and they are classified as Level 3. Time deposits that have maturities greater than three months but less than one year from the date of purchase are carried at cost. Due to the short-term nature and liquidity of these financial instruments, the carrying values of the time deposits approximate fair value, and they are classified as Level 2. Life settlement contracts are carried at fair value, which is determined based on discounted cash flows using significant unobservable inputs, and are classified as Level 3. Inputs used to determine the fair value include life expectancy assumptions and internal rates of return.

Impairment of Investments. Investments other than trading securities are evaluated for other-than-temporary impairment on a quarterly basis when the cost of an investment exceeds its fair value. For equity securities, the Company considers many factors, including the severity and duration of the decline in the fair value below cost, the Company's intent and ability to hold the security for a period of time sufficient for an anticipated recovery in fair value, and the financial condition and specific events related to the issuer. When an impairment of an equity security is determined to be other-than-temporary, the impairment is recognized in earnings. For debt securities, if the Company intends to sell or it is more likely than not that it will be required to sell a security before recovery of its amortized cost, the entire impairment is recognized in earnings. If the Company does not intend to sell or it is not more likely than not that it will be required to sell the security before anticipated recovery of its amortized cost, the impairment is separated into the amount of the total impairment related to the credit loss and the amount of the total impairment related to all other factors. The credit loss component is the difference between the security's amortized cost and the present value of the expected cash flows, and is recognized in earnings. Losses related to all other factors are recognized in accumulated other comprehensive income.

Loans Receivable, net consist primarily of private banking loans to investment management clients. Prior to September 30, 2012, loans receivable also included retail banking and consumer lending portfolios. Interest on the loans is accrued using the effective interest method. The majority of private banking loans carry variable interest rates, which are adjusted periodically. Loans receivable are carried at cost, net of an allowance for loan losses. For disclosure purposes, the fair value of loans receivable is estimated using discounted cash flow models with interest rates that consider the current credit and interest rate risks inherent in the loans and the current economic and lending conditions, and they are classified as Level 3. For certain loans with no significant credit concerns and frequent repricing, estimated fair values are generally based on the carrying value and they are classified as Level 2.

Allowance for Loan Losses. An allowance for losses on loans receivable is maintained at a level sufficient to absorb probable losses inherent in the loans. Probable losses are estimated based on contractual delinquency status and historical loss experience. The allowance is based on aggregated portfolio segment evaluations, generally by loan type, and reflects the Company's judgment of portfolio risk factors such as economic conditions, bankruptcy trends, product mix, geographic concentrations and other similar items. A loan is charged to the allowance for loan losses when it is deemed probable to be uncollectible, taking into consideration the value of the collateral, the financial condition of the borrower and other factors. Recoveries on loans previously charged-off as uncollectible are credited to the allowance for loan losses.

Loans past due 90 days or more are reviewed individually to determine whether they are collectible. If warranted, after considering collateral level and other factors, loans 90 days past due are placed on non-accrual status. Interest collections on non-accrual loans for which the ultimate collectibility of principal is uncertain are applied as principal reductions; otherwise, such collections are credited to income when received.

Cash and Cash Equivalents of Consolidated SIPs consist of cash on hand and deposits with financial institutions and are carried at cost. Due to the short-term nature and liquidity of these financial instruments, the carrying values of these assets approximate fair value and, for disclosure purposes, they are classified as Level 1.

Investments of Consolidated SIPs consist of trading securities and other investments that are not generally traded in active markets, and are carried at fair value. Changes in the fair value of the investments are recognized as gains and losses in earnings. The fair value of the trading securities is determined using quoted market prices, or independent third-party broker or dealer price quotes if quoted market prices are not available. These securities are primarily classified as Level 1 or Level 2. If events occur after the close of the primary market for any security, the quoted market prices may be adjusted for the observable price movements within country specific market proxies.

The investments that are not generally traded in active markets primarily consist of equity and secured and unsecured debt securities of entities in emerging markets. The fair value of these securities is generally determined using significant unobservable inputs and they are classified as Level 3. In these instances, the Company employs a market-based approach, using purchase multiples observed for comparable third-party transactions, projected operating results of the investment, valuations of comparable companies, and subsequent financing transactions entered into by the investee entities. If the market-based approach is not available, the Company utilizes an income-based approach, which considers the net present value of anticipated future cash flows of the investment. A discount may also be applied due to the nature or duration of any restrictions on the disposition of the investment. Investments that are not generally traded in active markets also include fund products for which the fair value is estimated using net asset value as a practical expedient and are classified as Level 3.

Cash and Cash Equivalentsof Consolidated VIEs consist primarily of highly liquid investments, primarily short-term money market instruments, which are not traded on an active market. The fair value of these instruments is based on market observable inputs and they are classified as Level 2.

Investments of Consolidated VIEs consist of corporate debt securities and are carried at fair value. The fair value is primarily obtained from independent third-party broker or dealer price quotes and they are classified as Level 2. If independent price quotes are not available the fair value is determined using significant unobservable inputs and the securities are classified as Level 3. In these instances, the Company primarily employs the market-based approach described above for Level 3 securities held by consolidated SIPs.

Loans Receivable of Consolidated VIEs, net consisted of automobile loans in securitization trusts which were carried at cost, net of an allowance for loan losses. For disclosure purposes, the fair value was estimated using discounted cash flow models with interest rates that considered the credit and interest rate risks inherent in the loans and the economic and lending conditions.

Property and Equipment, net are recorded at cost and are depreciated using the straight-line method over their estimated useful lives which range from three to 35 years. Expenditures for repairs and maintenance are charged to expense when incurred. Leasehold improvements are amortized using the straight-line method over their estimated useful lives or the lease term, whichever is shorter.

Internal and external costs incurred in connection with developing or obtaining software for internal use are capitalized and amortized over the estimated useful life of the software of three years beginning when the software project is complete and the application is put into production.

Property and equipment is tested for impairment when there is an indication that the carrying amount of an asset may not be recoverable. Carrying values are not recoverable when the undiscounted cash flows estimated to be generated by the assets are less than their carrying value. When an asset is determined to not be recoverable, the impairment loss is measured based on the excess, if any, of the carrying value of the asset over its respective fair value. Fair value is determined by discounted future cash flows models, appraisals or other applicable methods.

Goodwill and Other Intangible Assets, net. Goodwill represents the excess cost of a business acquisition over the fair value of the net assets acquired. Other intangible assets consist primarily of mutual fund management contracts and customer base assets resulting from business acquisitions. These intangible assets are amortized over their estimated useful lives, which range from three to 15 years, using the straight-line method, unless the asset is determined to have an indefinite useful life. Indefinite-lived intangible assets primarily represent contracts to manage mutual fund assets for which there is no foreseeable limit on the contract period.

Goodwill is tested for impairment annually and when an event occurs or circumstances change that more likely than not reduce the fair value of the related reporting unit below its carrying value.

The goodwill impairment test involves a two-step process. The first step compares the fair value of the reporting unit to its carrying value. If the carrying value is less than the fair value, no impairment exists and the second step is not performed. If the carrying value is higher than the fair value, there is an indication that impairment may exist and the second step is performed to compute the amount of any impairment. In the second step, impairment is computed by comparing the implied fair value of the reporting unit goodwill with the carrying value of the goodwill. The Company has one reporting unit, investment management and related services, consistent with its single operating segment, to which all goodwill has been assigned. Prior to July 1, 2012, the Company had a second reporting unit and operating segment, to which no goodwill had been assigned.

Indefinite-lived intangible assets are tested for impairment annually and when events or changes in circumstances indicate the assets might be impaired. Impairment is indicated when the carrying value of the intangible asset exceeds its fair value.

In estimating the fair value of the reporting unit and indefinite-lived intangible assets, the Company uses valuation techniques based on an income approach under which future cash flows are discounted. The future cash flow estimates include assumptions about revenue and AUM growth rates, the pre-tax profit margin, the average effective fee rate, the effective tax rate, and the discount rate, which is based on the Company's weighted average cost of capital.

Definite-lived intangible assets are tested for impairment quarterly. Impairment is indicated when the carrying value of the asset is not recoverable and exceeds its fair value. In evaluating the recoverability of definite-lived intangible assets, the Company estimates the undiscounted future cash flows to be derived from these assets. The future undiscounted cash flow projections include assumptions about revenue and AUM growth rates, effective fee rates, investor redemptions, the pre-tax profit margin, and expected useful lives. If the carrying value of the asset is not recoverable through the related undiscounted cash flows, the impairment loss is measured based on the amount by which the carrying value of the asset exceeds its fair value. The fair value of the asset is determined by discounted cash flows or other methods as appropriate for the asset type.

Deposits are carried at the aggregate amount of deposits held and include interest-bearing and non-interest-bearing demand deposits, savings and time deposits. The fair value of deposits with no stated maturities is considered to approximate their carrying value because they are payable on demand. For disclosure purposes, the fair value of deposits with stated maturities is estimated based on discounted cash flow models using interest rates offered by comparable institutions on deposits with similar remaining maturities. All of the deposits are classified as Level 2.

Debt consists of commercial paper, Federal Home Loan Bank ("FHLB") advances and senior notes.

Commercial Paper is carried at amortized cost. Due to the short-term nature and liquidity of these financial instruments, the carrying value approximates fair value and, for disclosure purposes, they are classified as Level 2.

FHLB Advances are carried at the aggregate amount of outstanding advances. For disclosure purposes, the fair value is estimated using discounted cash flow models using rates available to the Company for FHLB advances with similar terms and remaining maturities and they are classified as Level 2.

Senior Notes are carried at amortized cost. For disclosure purposes, the fair value is estimated using quoted market prices, independent third-party broker or dealer price quotes, or prices of publicly traded debt with similar maturities, credit risk and interest rates. The notes are classified as Level 2.

Debt of Consolidated SIPs is carried at amortized cost. For disclosure purposes, the fair value is estimated using a discounted cash flow model that considers current interest rate levels, the quality of the underlying collateral and current economic conditions. The debt is classified as Level 3.

Debt of Consolidated VIEs consists of debt of CLOs, and is carried at fair value. Prior to September 30, 2012, debt of consolidated VIEs also included debt of securitization trusts, which was carried at amortized cost. The fair value of the debt of CLOs is primarily obtained from independent third-party broker or dealer price quotes, in which case the debt is classified as Level 2. The CLOs also issued debt that is classified as Level 3 because its fair value is determined using significant unobservable inputs. In these instances, the Company employs a market-based approach, which uses prices of recent transactions, various market multiples, book values and other relevant information for the instrument or related or other comparable debt instruments to determine the fair value. If the market-based approach is not available, the Company utilizes an income-based approach, which considers the net present value of anticipated future cash flows of the instrument. A discount may also be applied due to the nature or duration of any restrictions on the disposition of the instrument. For disclosure purposes, the fair value of the debt of securitization trusts was determined using independent third-party broker or dealer price quotes.

Other Liabilities of Consolidated VIEs consist primarily of investment trades pending settlement and are carried at fair value. The fair value of the liabilities is obtained from independent third-party broker or dealer quotes and they are classified as Level 2.

Noncontrolling Interests relate almost entirely to consolidated SIPs. Noncontrolling intereststhat are currently redeemable or convertible for cash or other assets at the option of the holder are classified as temporary equity. Nonredeemable noncontrolling interests are classified as a component of equity. Net income (loss) attributable to third-party investors is reflected as net income (loss) attributable to nonredeemable and redeemable noncontrolling interests in the consolidated statements of income. Sales and redemptions of shares of consolidated SIPs are a component of the change in noncontrolling interests included in financing activities in the consolidated statements of cash flows.

Appropriated Retained Earnings of Consolidated VIEs represents the difference between the fair values of consolidated CLOs' assets and liabilities. These amounts are recognized as appropriated retained earnings as the CLO debt holders, not the Company, will ultimately receive the benefits or absorb the losses associated with the CLOs' assets and liabilities. Net income (loss) attributable to third-party investors is reflected as net income (loss) attributable to nonredeemable noncontrolling interests in the consolidated statements of income.

Revenues. Fees from providing investment management and fund administration services (“investment management fees”), shareholder servicing fees and distribution fees are recognized as earned, over the period in which services are rendered, except for performance-based investment management fees, which are recognized when earned. Sales commissions related to the sale of shares of SIPs are recognized on trade date. Investment management fees are generally determined based on a percentage of AUM, except for performance-based investment management fees, which are based on performance targets established in the related investment management contracts. Shareholder servicing fees are generally calculated based on the number and type of accounts serviced while distribution fees are generally based on a percentage of AUM.

AUM of SIPs is calculated using fair value methods derived primarily from unadjusted quoted market prices, unadjusted independent third-party broker or dealer price quotes in active markets, or market prices or price quotes adjusted for observable price movements after the close of the primary market. The fair values of securities for which market prices are not readily available are internally valued using various methodologies which incorporate significant unobservable inputs as appropriate for each security type and represent an insignificant percentage of total AUM. Pricing of the securities held by SIPs is governed by the Company's global valuation and pricing policy, which defines valuation and pricing conventions for each security type, including practices for responding to unexpected or unusual market events.

Advertising and Promotion costs are expensed as incurred.

Stock-based Compensation. The fair value of share-based payment awards is estimated on the date of grant based on the market price of the underlying shares of the Company's common stock and is amortized to compensation expense on a straight-line basis over the related vesting period, which is generally three years. Expense relating to awards subject to performance conditions is recognized if it is probable that the performance goals will be achieved. The probability of achievement is assessed on a quarterly basis. The total number of awards expected to vest is adjusted for estimated forfeitures.

Postretirement Benefits. Defined contribution plan costs are expensed as incurred. Defined benefit plan costs are expensed as the benefits are earned.

Income Taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and the reported amounts in the consolidated financial statements using the statutory tax rates in effect for the year when the reported amount of the asset or liability is expected to be recovered or settled, respectively. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying values of deferred tax assets to the amount that is more likely than not to be realized. For each tax position taken or expected to be taken in a tax return, the Company determines whether it is more likely than not that the position will be sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to recognize. The tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. The Company recognizes the accrual of interest on uncertain tax positions in interest expense and penalties in other operating expenses.

As a multinational corporation, the Company operates in various locations outside the United States and generates earnings from its non-U.S. subsidiaries. The Company indefinitely reinvests the undistributed earnings of its non-U.S. subsidiaries, except for income previously taxed in the U.S., subject to regulatory or legal repatriation restrictions or requirements, and the excess net earnings reduced by cash needs for operational and regulatory capital requirements, capital management plans and capital expenditure plans of its Canadian and U.K. consolidated subsidiaries.

Foreign Currency Translation. Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where that local currency is the functional currency, are translated at current exchange rates as of the end of the accounting period. The related revenues and expenses are translated at average exchange rates in effect during the period. Net exchange gains and losses resulting from translation are excluded from income and are recorded as part of accumulated other comprehensive income. Foreign currency transaction gains and losses are reflected in investment and other income, net in the consolidated statements of income.

Business Combinations are accounted for using the acquisition method of accounting. Application of this method requires identification of the acquirer, determination of the acquisition date and measurement of the purchase consideration at fair value. The purchase consideration is allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date, with any excess recognized as goodwill.

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Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Assets
Cash and cash equivalents	$ 5,784.3	$ 5,028.9
Receivables	850.2	773.2
Investments	2,583.8	2,422.4
Loans receivable, net	254.4	401.9
Deferred taxes	94.9	107.9
Property and equipment, net	582.7	589.7
Goodwill and other intangible assets, net	2,141.9	2,148.2
Other	161.5	216.2
Total Assets	14,751.5	13,775.8
Liabilities and Stockholders' Equity
Compensation and benefits	400.5	400.9
Accounts payable and accrued expenses	241.6	265.9
Commissions	383.9	369.5
Deposits	671.7	890.2
Income taxes	11.4	128.8
Debt	1,566.1	998.2
Debt of consolidated sponsored investment products	110.2	134.9
Debt of consolidated variable interest entities (including $1,100.9 and $871.2 at fair value at September 30, 2012 and 2011)	1,100.9	1,035.4
Deferred taxes	276.3	274.4
Other	139.8	122.8
Total liabilities	4,964.3	4,653.3
Redeemable Noncontrolling Interests	26.7	18.6
Stockholders' Equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; none issued	0	0
Common stock, $0.10 par value, 1,000,000,000 shares authorized; 212,208,957 and 217,693,435 shares issued and outstanding, at September 30, 2012 and 2011	21.2	21.8
Retained earnings	9,084.4	8,443.5
Appropriated retained earnings of consolidated variable interest entities	33.7	19.0
Accumulated other comprehensive income	62.0	40.4
Total Franklin Resources, Inc. stockholders' equity	9,201.3	8,524.7
Nonredeemable noncontrolling interests	559.2	579.2
Total stockholders' equity	9,760.5	9,103.9
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	14,751.5	13,775.8
Variable Interest Entity [Member]
Assets
Cash and cash equivalents	224.3	88.2
Receivables	2.7	12.0
Investments	984.1	822.6
Loans receivable, net	0	149.4
Other	0	17.8
Total Assets	1,211.1	1,090.0
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses	0	0
Debt of consolidated variable interest entities (including $1,100.9 and $871.2 at fair value at September 30, 2012 and 2011)	1,100.9	1,035.4
Other	61.9	32.3
Total liabilities	1,162.8	1,067.7
Redeemable Noncontrolling Interests	0	0
Stockholders' Equity
Nonredeemable noncontrolling interests	0	0
Total stockholders' equity	48.3	22.3
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	1,211.1	1,090.0
Consolidated sponsored investment products [Member]
Assets
Cash and cash equivalents	42.8	81.5
Receivables	23.7	15.3
Investments	1,046.6	945.7
Loans receivable, net	0	0
Other	0.7	0.8
Total Assets	1,113.8	1,043.3
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses	21.8	14.2
Other	8.5	8.5
Total liabilities	140.5	157.6
Redeemable Noncontrolling Interests	26.7	18.6
Stockholders' Equity
Nonredeemable noncontrolling interests	556.8	575.1
Total stockholders' equity	946.6	867.1
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	$ 1,113.8	$ 1,043.3

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Deposits

12 Months Ended

Sep. 30, 2012

Deposits [Abstract]

Deposits

Deposits

Deposits, all of which are held in the Company’s U.S. offices, were as follows:

(in millions)
as of September 30,	2012		2011
Non-interest-bearing demand deposits	$	149.4	$	189.6
Interest-bearing deposits
Demand deposits	12.7		25.2
Savings deposits	461.2		575.9
Time deposits	48.4		99.5
Total interest-bearing deposits	522.3		700.6
Total	$	671.7	$	890.2

Interest expense on deposits totaled $2.9 million, $4.1 million and $4.7 million, with average rates of 0.42%, 0.74% and 0.83%, for fiscal years 2012, 2011 and 2010.

Maturities of time deposits in amounts of $100,000 or more were as follows:

(in millions)
as of September 30, 2012	Amount
3 months or less	$	11.8
Over 3 months through 6 months	0.2
Over 12 months	0.1
Total	$	12.1

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Employee Benefit Plans - Narrative (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Number of years worked for post retirement medical benefits	10 years 0 months 0 days
Post-retirement age for medical benefits	55 years 0 months 0 days
Expected future contributions to benefit plans in next fiscal year	$ 0.5
Participants annual maximum contribution to defined contribution plan	50.00%
Percentage of annual bonus eligible for defined contribution to plan	100.00%
Defined Contribution Plan, Cost Recognized	36.8	34.3	21.0
Equity Securities [Member]
Defined benefit pension plan assets investments	46.3	37.1
Debt Securities [Member]
Defined benefit pension plan assets investments	3.7	3.5
Cash and Cash Equivalents [Member]
Defined benefit pension plan assets investments	$ 2.8	$ 2.9

XML

Taxes on Income - Components of income tax expense (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Income Tax Disclosure [Abstract]
Federal	$ 602.9	$ 576.4	$ 426.5
State	56.1	103.8	71.5
Non-U.S.	83.2	122.8	115.0
Deferred expense	20.5	0.4	5.3
Total Provision for Income Taxes	$ 762.7	$ 803.4	$ 618.3

XML

Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of Maximum Exposure to Loss (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
VIE carrying value	$ 243.5	$ 218.9
Receivables [Member]
VIE carrying value	43.8	42.2
Investments [Member]
VIE carrying value	$ 199.7	$ 176.7

XML

Document and Entity Information Document (USD $)	12 Months Ended
	Sep. 30, 2012	Oct. 31, 2012	Mar. 30, 2012
Document Information [Line Items]
Entity Registrant Name	Franklin Resources Inc
Entity Central Index Key	0000038777
Document Type	10-K
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 15,571,362,732
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		212,293,567

XML

Debt

12 Months Ended

Sep. 30, 2012

Debt Disclosure [Abstract]

Debt

Debt

The disclosures below include details of the Company’s debt, excluding that of consolidated VIEs and consolidated SIPs. See Note 13 – Variable Interest Entities and Consolidated Sponsored Investment Products for information related to the debt of these entities.

Debt consisted of the following:

(dollars in millions)	2012		Effective Interest Rate		2011		Effective Interest Rate
as of September 30,
Commercial paper	$	—	N/A		$	30.0	0.16	%
FHLB advances	69.0		3.30	%	69.0		3.30	%
Senior notes
$300 million 2.000% notes due May 2013	299.9		2.28	%	299.7		2.28	%
$250 million 3.125% notes due May 2015	249.9		3.32	%	249.8		3.32	%
$300 million 1.375% notes due September 2017	298.4		1.66	%	—		N/A
$350 million 4.625% notes due May 2020	349.7		4.74	%	349.7		4.75	%
$300 million 2.800% notes due September 2022	299.2		2.93	%	—		N/A
	1,497.1				899.2
Total Debt	$	1,566.1			$	998.2

In prior years, the Company secured advances from the FHLB to fund its banking services. The outstanding advances are subject to collateralization requirements.

In September 2012, the Company issued senior unsecured and unsubordinated notes with a total face value of $600.0 million due in September 2017 and 2022. Net proceeds from the issuance of the notes were used in October 2012 to redeem the $300 million 2.000% senior notes due in May 2013, and in November 2012 to finance the acquisition of a majority interest in K2 Advisors Holdings LLC (see Note 21 – Subsequent Events); the remaining net proceeds will be used for general corporate purposes. The notes have fixed interest rates with interest payable semi-annually. The notes were issued at a collective discount of $2.4 million that is being amortized over the term of the notes. The Company incurred approximately $5.3 million in debt issuance costs, which are included in other assets in the consolidated balance sheet and are being amortized over the term of the notes.

The senior notes contain an optional redemption feature that allows the Company to redeem each series of notes prior to maturity in whole or in part at any time, at a make-whole redemption price. The indentures governing the notes contain limitations on the Company’s ability and the ability of its subsidiaries to pledge voting stock or profit participating equity interests in its subsidiaries to secure other debt without similarly securing the notes equally and ratably. The indentures also include requirements that must be met if the Company consolidates or merges with, or sells all or substantially all of its assets to, another entity. As of September 30, 2012, the Company was in compliance with the covenants of the notes.

At September 30, 2012, contractual maturities for debt were as follows:

(in millions)
for the fiscal years ending September 30,
2013	$	318.4
2014	—
2015	260.4
2016	8.0
2017	298.4
Thereafter	680.9
Total	$	1,566.1

At September 30, 2012, the Company had $500.0 million of short-term commercial paper available for issuance under an uncommitted private placement program which has been inactive since April 2012, $270.0 million available in uncommitted short-term bank lines of credit under the Federal Reserve system, $117.8 million available through the secured Federal Reserve Bank short-term discount window, $15.3 million available in uncommitted short-term bank lines of credit and $12.3 million available in secured FHLB short-term borrowing capacity.

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Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of balance of consolidated VIEs and consolidated SIPs (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Variable Interest Entity [Line Items]
Cash and cash equivalents	$ 5,784.3	$ 5,028.9
Receivables	850.2	773.2
Investments	2,583.8	2,422.4
Loans receivable, net	254.4	401.9
Other Assets	161.5	216.2
Total Assets	14,751.5	13,775.8
Accounts payable and accrued expenses	241.6	265.9
Debt of consolidated variable interest entities	1,100.9	1,035.4
Debt	1,566.1	998.2
Debt of consolidated sponsored investment products	110.2	134.9
Other liabilities	139.8	122.8
Liabilities	4,964.3	4,653.3
Redeemable Noncontrolling Interests	26.7	18.6
Nonredeemable noncontrolling interests	559.2	579.2
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	9,760.5	9,103.9
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	14,751.5	13,775.8
Variable Interest Entity [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	224.3	88.2
Receivables	2.7	12.0
Investments	984.1	822.6
Loans receivable, net	0	149.4
Other Assets	0	17.8
Total Assets	1,211.1	1,090.0
Accounts payable and accrued expenses	0	0
Debt of consolidated variable interest entities	1,100.9	1,035.4
Other liabilities	61.9	32.3
Liabilities	1,162.8	1,067.7
Redeemable Noncontrolling Interests	0	0
Nonredeemable noncontrolling interests	0	0
Other equity	48.3	22.3
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	48.3	22.3
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	1,211.1	1,090.0
Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	42.8	81.5
Receivables	23.7	15.3
Investments	1,046.6	945.7
Loans receivable, net	0	0
Other Assets	0.7	0.8
Total Assets	1,113.8	1,043.3
Accounts payable and accrued expenses	21.8	14.2
Other liabilities	8.5	8.5
Liabilities	140.5	157.6
Redeemable Noncontrolling Interests	26.7	18.6
Nonredeemable noncontrolling interests	556.8	575.1
Other equity	389.8	292.0
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	946.6	867.1
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	1,113.8	1,043.3
Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	267.1	169.7
Receivables	26.4	27.3
Investments	2,030.7	1,768.3
Loans receivable, net	0	149.4
Other Assets	0.7	18.6
Total Assets	2,324.9	2,133.3
Accounts payable and accrued expenses	21.8	14.2
Debt of consolidated variable interest entities	1,100.9	871.2
Debt of consolidated sponsored investment products	110.2	299.1
Other liabilities	70.4	40.8
Liabilities	1,303.3	1,225.3
Redeemable Noncontrolling Interests	26.7	18.6
Nonredeemable noncontrolling interests	556.8	575.1
Other equity	438.1	314.3
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	994.9	889.4
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	$ 2,324.9	$ 2,133.3

XML

Variable Interest Entities and Consolidated Sponsored Investment Products - Financial instruments of consolidated VIEs and consolidated SIPs not measured at fair value (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Variable Interest Entity [Line Items]
Cash and cash equivalents	$ 5,784.3	$ 5,028.9
Loans receivable, net	254.4	401.9
Debt	1,566.1	998.2
Debt of consolidated sponsored investment products	110.2	134.9
Variable Interest Entity [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	224.3	88.2
Loans receivable, net	0	149.4
Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	42.8	81.5
Loans receivable, net	0	0
Fair Value Hierachy	3
Carrying Value [Member]
Variable Interest Entity [Line Items]
Loans receivable, net	254.4
Carrying Value [Member] | Variable Interest Entity [Member]
Variable Interest Entity [Line Items]
Loans receivable, net	0	149.4
Debt	0	164.2
Carrying Value [Member] | Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	42.8	81.5
Debt of consolidated sponsored investment products	110.2	134.9
Estimated Fair Value [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	5,784.3	5,028.9
Loans receivable, net	258.7	403.1
Estimated Fair Value [Member] | Variable Interest Entity [Member]
Variable Interest Entity [Line Items]
Loans receivable, net	0	153.2
Debt	0	167.9
Estimated Fair Value [Member] | Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	42.8	81.5
Debt of consolidated sponsored investment products	$ 113.0	$ 117.0
Cash and Cash Equivalents [Member]
Variable Interest Entity [Line Items]
Fair Value Hierachy	1
Cash and Cash Equivalents [Member] | Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Fair Value Hierachy	1

XML

Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Investments at fair value	$ 2,000.6	$ 1,865.1
Debt at fair value	$ 1,100.9	$ 871.2
Preferred Stock, Par or Stated Value Per Share	$ 1.00	$ 1.00
Preferred Stock, Shares Authorized	1,000,000	1,000,000
Preferred Stock, Shares Issued	0	0
Common Stock, Par or Stated Value Per Share	$ 0.10	$ 0.10
Common Stock, Shares Authorized	1,000,000,000	1,000,000,000
Common Stock, Shares, Issued	212,208,957	217,693,435
Common Stock, Shares, Outstanding	212,208,957	217,693,435

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Investments

12 Months Ended

Sep. 30, 2012

Investments [Abstract]

Investments

Investments

The disclosures below include details of the Company’s investments, excluding those of consolidated VIEs and consolidated SIPs. See Note 13 – Variable Interest Entities and Consolidated Sponsored Investment Products for information related to the investments held by these entities.

Investments consisted of the following:

(in millions)
as of September 30,	2012		2011
Investment securities, trading	$	1,130.6	$	528.6
Investment securities, available-for-sale
SIPs	587.2		925.7
Securities of U.S. states and political subdivisions	26.8		41.5
Securities of the U.S. Treasury and federal agencies	2.4		2.4
Corporate debt securities1	70.3		121.6
Mortgage-backed securities – agency residential2	169.3		221.6
Other equity securities	14.0		23.7
Total investment securities, available-for-sale	870.0		1,336.5
Investments in equity method investees	489.0		491.5
Other investments	94.2		65.8
Total	$	2,583.8	$	2,422.4

________________

¹  Corporate debt securities are insured by the Federal Deposit Insurance Corporation or non-U.S. government agencies.

²  Consists of U.S. government-sponsored enterprise obligations.

At September 30, 2012 and 2011, investment securities with aggregate carrying amounts of $120.4 million and $156.4 million were pledged as collateral for the ability to borrow from the Federal Reserve Bank, $45.2 million and $60.8 million were pledged as collateral for outstanding FHLB borrowings and amounts available in secured FHLB short-term borrowing capacity, and $7.3 million and $6.9 million were pledged as collateral for the ability to borrow from uncommitted short-term bank lines of credit (see Note 12 – Debt).

A summary of the gross unrealized gains and losses relating to investment securities, available-for-sale is as follows:

(in millions)			Gross Unrealized
as of September 30, 2012	Cost Basis		Gains		Losses			Fair Value
SIPs	$	516.8	$	72.1	$	(1.7	)	$	587.2
Securities of U.S. states and political subdivisions	25.6		1.2		—			26.8
Securities of the U.S. Treasury and federal agencies	2.4		—		—			2.4
Corporate debt securities	70.0		0.3		—			70.3
Mortgage-backed securities – agency residential	164.8		4.5		—			169.3
Other equity securities	13.5		0.6		(0.1		)	14.0
Total	$	793.1	$	78.7	$	(1.8	)	$	870.0

(in millions)			Gross Unrealized
as of September 30, 2011	Cost Basis		Gains		Losses			Fair Value
SIPs	$	877.6	$	78.0	$	(29.9	)	$	925.7
Securities of U.S. states and political subdivisions	40.0		1.5		—			41.5
Securities of the U.S. Treasury and federal agencies	2.4		—		—			2.4
Corporate debt securities	120.0		1.6		—			121.6
Mortgage-backed securities – agency residential	216.7		4.9		—			221.6
Other equity securities	23.1		0.8		(0.2		)	23.7
Total	$	1,279.8	$	86.8	$	(30.1	)	$	1,336.5

The net unrealized holding gains (losses) on investment securities, available-for-sale included in accumulated other comprehensive income were $49.9 million, $(29.0) million and $70.4 million for fiscal years 2012, 2011 and 2010. The tax effects of the net unrealized holding gains (losses) included in accumulated other comprehensive income were $0.9 million, $8.4 million and $(6.8) million for fiscal years 2012, 2011 and 2010.

The following tables show the gross unrealized losses and fair values of investment securities, available-for-sale with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

(in millions)	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
as of September 30, 2012
SIPs	$	30.0	$	(0.7	)	$	21.7	$	(1.0	)	$	51.7	$	(1.7	)
Other equity securities	4.4		(0.1		)	—		—			4.4		(0.1		)
Total	$	34.4	$	(0.8	)	$	21.7	$	(1.0	)	$	56.1	$	(1.8	)

(in millions)	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
as of September 30, 2011
SIPs	$	228.9	$	(29.7	)	$	4.7	$	(0.2	)	$	233.6	$	(29.9	)
Other equity securities	—		—			4.1		(0.2		)	4.1		(0.2		)
Total	$	228.9	$	(29.7	)	$	8.8	$	(0.4	)	$	237.7	$	(30.1	)

The Company recognized other-than-temporary impairment of available-for-sale investments, primarily related to SIPs, in the amounts of $10.1 million, $7.3 million and $1.5 million during fiscal years 2012, 2011 and 2010. In fiscal year 2011, the Company also recognized $6.3 million of other-than-temporary impairment of investments in equity method investees and other. The Company did not recognize any other-than-temporary impairment of available-for-sale debt securities during fiscal years 2012, 2011 and 2010.

At September 30, 2012, contractual maturities of available-for-sale debt securities were as follows:

(in millions)	Cost Basis		Fair Value
Due in one year or less	$	72.9	$	73.2
Due after one year through five years	20.9		21.8
Due after five years through ten years	2.6		2.8
Due after ten years	1.6		1.7
Total	$	98.0	$	99.5

Mortgage-backed securities are not included in the table above as their actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.

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Cash and Cash Equivalents

12 Months Ended

Sep. 30, 2012

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents

Cash and Cash Equivalents

The disclosures below include details of the Company’s cash and cash equivalents, excluding those of consolidated VIEs and consolidated SIPs. See Note 13 – Variable Interest Entities and Consolidated Sponsored Investment Products for information related to the cash and cash equivalents of these entities.

Cash and cash equivalents consisted of the following:

(in millions)
as of September 30,	2012		2011
Cash on hand and non-interest-bearing deposits with financial institutions	$	74.7	$	58.0
Interest-bearing deposits with financial institutions	826.5		717.2
SIP money market funds	2,233.4		1,887.8
Securities of U.S. government-sponsored enterprises and the U.S. Treasury	1,560.0		1,173.5
Time deposits	1,019.8		1,113.9
Other	69.9		78.5
Total	$	5,784.3	$	5,028.9

Federal Reserve Board regulations require certain of the Company’s banking subsidiaries to maintain reserve balances on deposits with the Federal Reserve Banks. The required reserve balances were $13.3 million at September 30, 2012, and $7.8 million at September 30, 2011.

The Company maintains cash and cash equivalents with financial institutions in various countries, limits the amount of credit exposure with any given financial institution and conducts ongoing evaluations of the creditworthiness of the financial institutions with which it does business.

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Employee Benefit Plans

12 Months Ended

Sep. 30, 2012

Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]

Defined Benefit Plans

Employee Benefit Plans

Defined Benefit Plans

Franklin Templeton Global Investors Limited, a subsidiary of Franklin located in the U.K., sponsors a defined benefit pension plan. In addition, Fiduciary Trust Company International, a subsidiary of Franklin located in the U.S., sponsors a defined benefit healthcare plan that provides post-retirement medical benefits to full-time employees who have worked ten years and attained age 55 while in the service of Fiduciary Trust, or have met alternate eligibility criteria. The healthcare plan was closed to new entrants in 2003.

Financial information for the plans was as follows:

(in millions)	Pension Benefits						Other Benefits
as of and for the fiscal years ended September 30,	2012			2011			2012			2011
Change in Benefit Obligation
Benefit obligation at beginning of year	$	42.8		$	42.1		$	6.1		$	7.4
Service cost	3.6			3.3			—			—
Interest cost	2.2			2.1			0.3			0.3
Participant contributions	1.4			1.0			—			—
Plan curtailments	0.5			—			—			—
Benefits paid	(2.4		)	(1.4		)	(0.4		)	(0.5		)
Actuarial (gains) losses	2.9			(3.9		)	0.8			(1.1		)
Foreign currency movements	1.7			(0.4		)	—			—
Benefit Obligation at End of Year	$	52.7		$	42.8		$	6.8		$	6.1
Change in Fair Value of Plan Assets
Fair value of plan assets at beginning of year	$	43.5		$	43.0		$	—		$	—
Actual return on assets	6.1			(1.9		)	—			—
Employer contributions	2.4			3.3			0.4			0.5
Participant contributions	1.4			1.0			—			—
Benefits paid	(2.4		)	(1.4		)	(0.4		)	(0.5		)
Foreign currency movements	1.8			(0.5		)	—			—
Fair Value of Plan Assets at End of Year	$	52.8		$	43.5		$	—		$	—
Funded Status	$	0.1		$	0.7		$	(6.8	)	$	(6.1	)

(in millions)	Pension Benefits						Other Benefits
as of and for the fiscal years ended September 30,	2012			2011			2012			2011
Amounts Recognized in the Consolidated Balance Sheets
Other assets	$	0.1		$	0.7		$	—		$	—
Compensation and benefits	—			—			(0.5		)	(0.4		)
Other liabilities	—			—			(6.3		)	(5.7		)
Net Asset (Liability)	$	0.1		$	0.7		$	(6.8	)	$	(6.1	)
Weighted-Average Assumptions
Discount rate	4.60		%	5.20		%	3.70		%	4.90		%
Expected long-term rate of return on plan assets1	6.41		%	6.76		%	N/A			N/A
Rate of compensation increase	N/A			4.20		%	2.50		%	4.50		%

___________________

¹  The expected long-term rate of return on plan assets is based on the weighted-average historic performance of each asset class and current market conditions.

The components of net periodic benefit cost for the plans were as follows.

(in millions)	Pension Benefits									Other Benefits
for the fiscal years ended September 30,	2012			2011			2010			2012		2011		2010
Service cost	$	3.6		$	3.3		$	2.9		$	—	$	—	$	—
Interest cost	2.2			2.1			2.0			0.3		0.3		0.4
Plan curtailments	0.5			—			—			—		—		—
Expected return on plan assets	(3.1		)	(3.2		)	(2.8		)	—		—		—
Amortization of net actuarial losses	—			—			—			—		0.2		—
Net Periodic Benefit Cost	$	3.2		$	2.2		$	2.1		$	0.3	$	0.5	$	0.4

As of September 30, 2012 and 2011, the Company’s defined benefit pension plan assets were invested in investment funds with holdings of $46.3 million and $37.1 million in equity securities, $3.7 million and $3.5 million in debt securities, and $2.8 million and $2.9 million in cash and cash equivalents. The fair value of the investment funds, which are classified as Level 1, is determined based on the published net asset value of the funds. There were no pension plan assets classified as Level 2 or 3 during fiscal years 2012 or 2011.

The Company has no target allocation set for the defined benefit pension plan as the plan members control all investment decisions. The plan was closed to new contributions in May 2012, and the Company does not expect to make contributions to the plan in fiscal year 2013. The defined benefit healthcare plan is an unfunded benefit plan. The Company expects to contribute $0.5 million to the plan in fiscal year 2013.

The plan benefits expected to be paid over the next ten years were as follows:

(in millions)	Pension Benefits		Other Benefits
for the fiscal years ending September 30,
2013	$	3.6	$	0.5
2014	0.3		0.5
2015	1.8		0.4
2016	0.2		0.4
2017	0.6		0.4
Thereafter in the succeeding five years	14.3		2.0

Defined Contribution Plans

The Company sponsors a 401(k) plan that covers substantially all U.S. employees who meet certain employment requirements. Participants may contribute up to 50% of pretax annual compensation and up to 100% of the cash portion of the participant's year-end bonus, as defined by the plan and subject to Internal Revenue Code limitations, each year to the plan. In addition, certain of the Company's non-U.S. subsidiaries sponsor defined contribution plans primarily for the purpose of providing deferred compensation incentives for its employees and to comply with local regulatory requirements. The total expenses recognized for defined contribution plans in the consolidated statements of income were $36.8 million, $34.3 million and $21.0 million for fiscal years 2012, 2011 and 2010.

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Variable Interest Entities and Consolidated Sponsored Investment Products

12 Months Ended

Sep. 30, 2012

Variable Interest Entities [Abstract]

Variable Interest Entities

Variable Interest Entities and Consolidated Sponsored Investment Products

The Company sponsors and manages various types of investment products, which consist of both VIEs and non-VIEs. As described in Note 1 – Significant Accounting Policies, the Company consolidates the non-VIE products which it controls and the VIE products for which it is the primary beneficiary. The Company has no right to the consolidated products' assets, other than its direct equity investment in them, and management fees earned from them. The debt holders of these consolidated entities have no recourse to the Company's assets beyond the level of its direct investment, therefore the Company bears no risks associated with the entities' liabilities. Prior to September 30, 2012, the Company also consolidated certain automobile loan securitization trust VIEs, for which its risk of loss was limited in the same manner as for the consolidated investment products.

The balances of consolidated VIEs and consolidated SIPs included in the Company's consolidated balance sheets were as follows:

	2012						2011
(in millions)	Consolidated						Consolidated
as of September 30,	VIEs		SIPs		Total		VIEs		SIPs		Total
Assets
Cash and cash equivalents	$	224.3	$	42.8	$	267.1	$	88.2	$	81.5	$	169.7
Receivables	2.7		23.7		26.4		12.0		15.3		27.3
Investments	984.1		1,046.6		2,030.7		822.6		945.7		1,768.3
Loans receivable, net	—		—		—		149.4		—		149.4
Other assets	—		0.7		0.7		17.8		0.8		18.6
Total Assets	$	1,211.1	$	1,113.8	$	2,324.9	$	1,090.0	$	1,043.3	$	2,133.3
Liabilities
Accounts payable and accrued expenses	$	—	$	21.8	$	21.8	$	—	$	14.2	$	14.2
Debt, at fair value	1,100.9		—		1,100.9		871.2		—		871.2
Debt	—		110.2		110.2		164.2		134.9		299.1
Other liabilities	61.9		8.5		70.4		32.3		8.5		40.8
Total liabilities	1,162.8		140.5		1,303.3		1,067.7		157.6		1,225.3
Redeemable Noncontrolling Interests	—		26.7		26.7		—		18.6		18.6
Stockholders' Equity
Nonredeemable noncontrolling interests	—		556.8		556.8		—		575.1		575.1
Other equity	48.3		389.8		438.1		22.3		292.0		314.3
Total stockholders' equity	48.3		946.6		994.9		22.3		867.1		889.4
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	$	1,211.1	$	1,113.8	$	2,324.9	$	1,090.0	$	1,043.3	$	2,133.3

The consolidated VIEs and consolidated SIPs did not have a significant impact on net income attributable to the Company in fiscal years 2012, 2011 and 2010.

Consolidated VIEs - Collateralized Loan Obligations

The Company provides collateral management services to its sponsored CLOs, which are asset-backed financing entities collateralized by a pool of corporate debt securities, and are considered VIEs. The Company generally earns senior and subordinated management fees from the CLOs based on the par value of outstanding investments and, in certain instances, may also receive performance-based fees. In addition, the Company holds equity interests in certain of these entities. The debt holders of the CLOs have recourse only to the corresponding collateralized assets, which cannot be used by the Company for any other purpose. Scheduled debt payments are based on the performance of the CLOs collateral pool and may be prepaid prior to the contractual maturity dates. The Company is the primary beneficiary of the CLOs as it has the power to direct the activities that most significantly impact the CLOs' economic performance in its role as collateral manager and holds a variable interest for which the Company has the right to receive benefits that could potentially be significant to the CLOs.

The assets and liabilities of the CLOs are carried at fair value. Changes in the fair values were as follows:

(in millions)	2012			2011
for the fiscal years ended September 30,
Net gains from changes in fair value of assets	$	90.9		$	34.0
Net losses from changes in fair value of liabilities	(65.3		)	(114.0		)
Total net gains (losses)	$	25.6		$	(80.0	)

The following table presents the unpaid principal balance and fair values of investments, including investments 90 days or more past due, and debt of the CLOs:

(in millions)	Total  Investments			Investments 90 Days or More Past Due			Long-term Debt
as of September 30, 2012
Unpaid principal balance	$	996.1		$	7.2		$	1,186.5
Excess unpaid principal over fair value	(12.0		)	(6.7		)	(85.6		)
Fair value	$	984.1		$	0.5		$	1,100.9
as of September 30, 2011
Unpaid principal balance	$	887.8		$	21.6		$	1,044.9
Excess unpaid principal over fair value	(65.2		)	(10.2		)	(173.7		)
Fair value	$	822.6		$	11.4		$	871.2

Consolidated VIEs - Automobile Loan Securitization Trusts

In previous years, the Company entered into automobile loan securitization transactions with securitization trusts, which then issued asset-backed securities to private investors. The securitization transactions were comprised of prime, non-prime and sub-prime contracts for retail installment sales that were secured by new and used automobiles purchased from motor vehicle dealers. The Company retained the interest-only strips receivable and cash on deposit in the transactions, which represented the Company's contractual right to receive excess interest and cash from the securitization trusts.

The Company was the primary beneficiary of the securitization trusts as it also retained servicing responsibilities for the trusts and received annual servicing fees. The holders of the asset-backed securities had recourse only to the collateralized assets of the securitization trusts, which could not be used by the Company for any other purpose.

During fiscal year 2012, the Company exercised its repurchase rights with respect to the outstanding loans in two of the three remaining securitization trusts and sold these loans and the Company's residual interest in the surviving trust. As the Company also transferred its servicing responsibilities for the last trust and is no longer its primary beneficiary, it did not consolidate any securitization trusts as of September 30, 2012.

At September 30, 2011, the principal amount of loans serviced by the Company that were held by the securitization trusts was $155.1 million and of loans that were managed together with the trusts was $83.8 million. The total principal amount of loans 30 days or more past due was $5.4 million.

Changes in the allowance for loan losses for the securitization trusts were as follows:

(in millions)
for the fiscal years ended September 30,	2012			2011
Balance at beginning of year	$	5.7		$	—
Adjustment for adoption of new consolidation guidance	—			14.3
Provision for loan losses	0.2			0.4
Charge-offs	(5.7		)	(14.6		)
Recoveries	2.4			5.6
Deconsolidation of securitization trust	(2.6		)	—
Balance at End of Year	$	—		$	5.7
Total loan charge-offs, net of recoveries, as a percentage of simple monthly average loans receivable	3.73		%	3.93		%
Allowance for loan losses as a percentage of loans receivable	N/A			3.68		%

At September 30, 2011, the outstanding principal amount of non-accrual loans was $3.6 million and of loans modified in troubled debt restructurings was $2.7 million, and there were no loans delinquent for 90 days or more. Loans receivable other than those modified in troubled debt restructurings were collectively evaluated for impairment. Interest income recognized for loans modified in troubled debt restructurings was not significant in fiscal years 2012 and 2011.

Consolidated SIPs

Consolidated SIPs primarily consist of non-VIE limited partnerships and similar structures that the Company controls and other fund products in which the Company has a controlling financial interest.

Investments

Investments of consolidated VIEs and consolidated SIPs consisted of the following:

	2012						2011
(in millions)	Consolidated						Consolidated
as of September 30,	VIEs		SIPs		Total		VIEs		SIPs		Total
Investment securities, trading	$	—	$	194.4	$	194.4	$	—	$	361.1	$	361.1
Other debt securities	984.1		317.5		1,301.6		822.6		323.2		1,145.8
Other equity securities	—		534.7		534.7		—		261.4		261.4
Total Investments	$	984.1	$	1,046.6	$	2,030.7	$	822.6	$	945.7	$	1,768.3

Investments of consolidated VIEs consist of corporate debt securities. Other debt and equity securities of consolidated SIPs primarily consist of direct investments in equity and secured and unsecured debt securities of entities in emerging markets, which are generally not traded in active markets. Other equity securities also include investments in funds that are not traded in active markets.

Debt

Debt of consolidated VIEs and consolidated SIPs consisted of the following:

(dollars in millions)	2012		Effective Interest Rate		2011		Effective Interest Rate
as of September 30,
Debt of consolidated VIEs:
Debt of CLOs, at fair value, due fiscal years 2016-2024	$	1,100.9	1.48	%	$	871.2	1.20	%
Debt of securitization trusts, due fiscal years 2013-2016	—		N/A		164.2		5.86	%
	1,100.9				1,035.4
Debt of consolidated SIPs due fiscal years 2013-2018	110.2		4.20	%	134.9		5.29	%
Total Debt	$	1,211.1			$	1,170.3

The debt of CLOs had floating interest rates ranging from 0.67% to 9.98% at September 30, 2012, and both fixed and floating interest rates ranging from 0.50% to 11.18% at September 30, 2011. The debt of securitization trusts had both fixed and floating interest rates ranging from 2.14% to 8.18% at September 30, 2011.

The debt of consolidated SIPs had both fixed and floating interest rates ranging from 1.98% to 7.03% at September 30, 2012, and from 2.69% to 6.85% at September 30, 2011. The repayment of amounts outstanding under certain debt agreements is secured by the assets of the consolidated SIPs and, in some cases, a pledge of the right to call capital.

At September 30, 2012, contractual maturities for debt of consolidated VIEs and consolidated SIPs were as follows:

(in millions)
for the fiscal years ending September 30,
2013	$	46.5
2014	1.9
2015	—
2016	22.0
2017	14.9
Thereafter	1,125.8
Total	$	1,211.1

Fair Value Measurements

The tables below present the balances of assets and liabilities of consolidated VIEs and consolidated SIPs measured at fair value on a recurring basis.

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2012
Assets
Cash and cash equivalents of consolidated VIEs	$	—	$	224.3	$	—	$	224.3
Receivables of consolidated VIEs	—		2.7		—		2.7
Investments of consolidated VIEs	—		984.1		—		984.1
Investments of consolidated SIPs
Debt securities	6.3		49.3		317.5		373.1
Equity securities	145.9		0.6		527.0		673.5
Total Assets Measured at Fair Value	$	152.2	$	1,261.0	$	844.5	$	2,257.7
Liabilities
Debt of consolidated VIEs	$	—	$	1,033.0	$	67.9	$	1,100.9
Other liabilities of consolidated VIEs	—		61.9		—		61.9
Total Liabilities Measured at Fair Value	$	—	$	1,094.9	$	67.9	$	1,162.8

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2011
Assets
Cash and cash equivalents of consolidated VIEs	$	14.7	$	73.5	$	—	$	88.2
Receivables of consolidated VIEs	—		12.0		—		12.0
Investments of consolidated VIEs	—		820.7		1.9		822.6
Investments of consolidated SIPs
Debt securities	5.2		198.8		324.9		528.9
Equity securities	127.0		6.1		283.7		416.8
Total Assets Measured at Fair Value	$	146.9	$	1,111.1	$	610.5	$	1,868.5
Liabilities
Debt of consolidated VIEs	$	—	$	787.3	$	83.9	$	871.2
Other liabilities of consolidated VIEs	—		32.3		—		32.3
Total Liabilities Measured at Fair Value	$	—	$	819.6	$	83.9	$	903.5

Transfers into Level 1 from Level 2 were $26.8 million, and transfers into Level 2 from Level 1 were $1.0 million during fiscal year 2012. Securities were transferred into Level 1 when they were valued using unadjusted quoted market prices and no longer had adjustments for observable price movements due to decreased liquidity within country-specific market proxies. Securities were transferred into Level 2 when they were valued based on prices of comparable or similar securities because quoted market prices were not available as trading in the securities was temporarily halted. There were no significant transfers between Level 1 and Level 2 during fiscal years 2011 and 2010.

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for fiscal years 2012, 2011 and 2010 were as follows:

(in millions)	Investments of Consolidated VIEs			Investments of Consolidated SIPs						Total  Level 3 Assets			Debt of Consolidated VIEs
for the fiscal year ended September 30, 2012				Debt			Equity
Balance at October 1, 2011	$	1.9		$	324.9		$	283.7		$	610.5		$	(83.9	)
Realized and unrealized gains (losses) included in investment and other income, net	(1.2		)	(31.2		)	13.1			(19.3		)	(5.0		)
Purchases	—			63.0			312.0			375.0			—
Sales	(1.4		)	(33.1		)	(78.8		)	(113.3		)	—
Settlements	—			—			—			—			23.8
Consolidation of variable interest entity	—			—			—			—			(4.6		)
Transfers into Level 3	1.6			—			—			1.6			—
Transfers out of Level 3	(0.9		)	—			—			(0.9		)	—
Effect of exchange rate changes	—			(6.1		)	(3.0		)	(9.1		)	1.8
Balance at September 30, 2012	$	—		$	317.5		$	527.0		$	844.5		$	(67.9	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at September 30, 2012	$	—		$	2.9		$	3.8		$	6.7		$	(4.0	)

(in millions)	Investments of Consolidated VIEs		Investments of Consolidated SIPs			Total Level 3 Assets			Debt of Consolidated VIEs
for the fiscal year ended September 30, 2011
Balance at October 1, 2010	$	—	$	3.3		$	3.3		$	—
Adjustment for adoption of new consolidation guidance	1.8		—			1.8			(71.4		)
Realized and unrealized gains (losses) included in investment and other income, net	0.1		(1.3		)	(1.2		)	(45.6		)
Purchases, sales and settlements, net	—		14.1			14.1			36.7
Consolidation adjustment	—		593.1			593.1			—
Transfers out of Level 3, net	—		(0.6		)	(0.6		)	—
Effect of exchange rate changes	—		—			—			(3.6		)
Balance at September 30, 2011	$	1.9	$	608.6		$	610.5		$	(83.9	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at September 30, 2011	$	0.1	$	0.3		$	0.4		$	(45.6	)

(in millions)	Investments of Consolidated SIPs
for the fiscal year ended September 30, 2010
Balance at October 1, 2009	$	2.1
Realized and unrealized gains (losses) included in investment and other income, net	(1.1		)
Purchases, sales and settlements, net	2.8
Transfers out of Level 3, net	(0.5		)
Total Level 3 Assets at September 30, 2010	$	3.3
Change in unrealized gains included in net income relating to assets held at September 30, 2010	$	0.1

Investments of consolidated SIPs during fiscal years 2011 and 2010 consisted primarily of equity securities.

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets at September 30, 2012 were as follows:

(in millions)	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Debt securities	$	317.5	Discounted cash flow	Discount rate	4.9%–25.6% (11.8%)
				Risk premium	0.0%–7.3% (2.1%)
Equity securities	144.4		Market comparable companies	EBITDA multiple	5.5–8.6 (7.3)
				Discount for lack of marketability	15.0%–30.0% (22.1%)
	47.4		Discounted cash flow	Discount rate	12.0%–15.0% (14.8%)
				Discount for lack of marketability	0.0%–50.0% (27.8%)
	21.0		Market pricing	Price to book value ratio	1.7

At September 30, 2012, Level 3 debt securities held by consolidated SIPs consisted of mezzanine loans, convertible debentures and corporate loans and notes, and equity securities consisted primarily of common and preferred shares.

The fair values of certain Level 3 assets and liabilities that were determined based on third-party pricing information or reported net asset value are excluded from the above table. At September 30, 2012, the exclusions consisted of $67.9 million of debt of consolidated VIEs that was valued using third-party broker or dealer price quotes and $314.2 million of investments in various funds held by consolidated SIPs for which fair value was estimated using net asset value as a practical expedient. Approximately 55% of these investments consist of an investment in a global fixed-income fund which is periodically redeemable, with certain restrictions. The other investments are in real estate and private equity funds which generally invest directly in real estate and equity securities. The investments in these funds are nonredeemable and are expected to be returned through distributions as a result of liquidations of the funds' underlying assets over a weighted-average period of approximately 5.9 years. The SIPs' unfunded commitments to the funds totaled approximately $123.0 million at September 30, 2012, of which the Company was contractually obligated to fund $2.9 million based on its ownership percentage in the SIPs.

Following are descriptions of the sensitivity of the Level 3 recurring fair value measurements to changes in the significant unobservable inputs presented in the above table.

For securities utilizing the discounted cash flow valuation technique, a significant increase (decrease) in the discount rate, risk premium or discount for lack of marketability in isolation would result in a significantly lower (higher) fair value measurement. The discount for lack of marketability used to determine fair value may include other factors such as liquidity or credit risk. Generally, a change in the discount rate is accompanied by a directionally similar change in the risk premium and discount for lack of marketability.

For securities utilizing the market comparable companies valuation technique, a significant increase (decrease) in the EBITDA multiple in isolation would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the discount for lack of marketability in isolation would result in a significantly lower (higher) fair value measurement. The discount for lack of marketability used to determine fair value may include other factors such as liquidity or credit risk.

For securities utilizing a market pricing valuation technique, a significant increase (decrease) in the price to book value ratio would result in a significantly higher (lower) fair value measurement.

Financial instruments of consolidated VIEs and consolidated SIPs that were not measured at fair value were as follows:

(in millions)	September 30, 2012					September 30, 2011
	Carrying Value		Estimated Fair Value		Fair Value Level	Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents of consolidated SIPs	$	42.8	$	42.8	1	$	81.5	$	81.5
Loans receivable of consolidated VIEs, net	—		$	—	N/A	$	149.4	$	153.2
Financial Liabilities
Debt of consolidated VIEs	$	—	$	—	N/A	$	164.2	$	167.9
Debt of consolidated SIPs	110.2		113.0		3	134.9		117.0

Non-consolidated VIEs

VIEs for which the Company is not the primary beneficiary consist of certain sponsored and other investment products from which the Company earns investment management and related services fees and/or has an equity ownership interest in the VIE.

The carrying values of the investment management and related service fees receivable from and the equity ownership interests in these VIEs included in the Company's consolidated balance sheets at September 30, 2012 and 2011 are set forth below. These amounts represent the Company's maximum exposure to loss from these VIEs.

(in millions)
as of September 30,	2012		2011
Receivables	$	43.8	$	42.2
Investments	199.7		176.7
Total	$	243.5	$	218.9

The Company's total AUM of non-consolidated VIEs was $35.3 billion at September 30, 2012 and $36.1 billion at September 30, 2011.

While the Company has no contractual obligation to do so, it routinely makes cash investments in the course of launching SIPs. The Company also may voluntarily elect to provide its SIPs with additional direct or indirect financial support based on its business objectives. The Company did not provide financial or other support to its SIPs during the fiscal years ended September 30, 2012 and 2011.

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Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of investments of consolidated VIEs and consolidated SIPs (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Variable Interest Entity [Line Items]
Investment securities, trading	$ 1,130.6	$ 528.6
Investments	2,583.8	2,422.4
Variable Interest Entity [Member]
Variable Interest Entity [Line Items]
Investment securities, trading	0	0
Other debt securities	984.1	822.6
Other equity securities	0	0
Investments	984.1	822.6
Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Investment securities, trading	194.4	361.1
Other debt securities	317.5	323.2
Other equity securities	534.7	261.4
Investments	1,046.6	945.7
Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Investment securities, trading	194.4	361.1
Other debt securities	1,301.6	1,145.8
Other equity securities	534.7	261.4
Investments	$ 2,030.7	$ 1,768.3

XML

Property and Equipment, Net

12 Months Ended

Sep. 30, 2012

Property, Plant and Equipment, Net [Abstract]

Property and Equipment, Net

Property and Equipment, Net

Property and equipment consisted of the following:

(in millions)							Useful Lives In Years
as of September 30,	2012			2011
Furniture, software and equipment	$	667.4		$	647.1		3 – 10
Premises and leasehold improvements	560.3			552.0			5 – 35
Land	75.0			75.2			N/A
Total cost	1,302.7			1,274.3
Less: Accumulated depreciation and amortization	(720.0		)	(684.6		)
Property and Equipment, Net	$	582.7		$	589.7

Depreciation and amortization expense related to property and equipment was $67.9 million, $71.5 million and $67.7 million in fiscal years 2012, 2011 and 2010. No impairment loss in value of property and equipment was recognized during fiscal years 2012, 2011 and 2010 as the Company determined there was no indicator of impairment.

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Fair Value Measurements - Financial instruments not measured at fair value (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012		Sep. 30, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	$ 5,784.3		$ 5,028.9
Loans receivable, net	254.4		401.9
Deposits	671.7		890.2
Commercial Paper	0		30.0
FHLB advances	69.0		69.0
Senior Notes	1,497.1		899.2
Carrying Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other Investments	80.2	[1]	51.3	[1]
Loans receivable, net	254.4
Deposits	671.7
Commercial Paper	0		30.0
FHLB advances	69.0		69.0
Senior Notes	1,497.1		899.2
Estimated Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	5,784.3		5,028.9
Other Investments	85.1	[1]	56.9	[1]
Loans receivable, net	258.7		403.1
Deposits	672.4		892.7
Commercial Paper	0		30.0
FHLB advances	74.5		72.6
Senior Notes	$ 1,571.2		$ 942.3
Cash and Cash Equivalents [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Hierachy	1
Loans Receivable [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Hierachy	2
Bank Time Deposits [Member] | Other Investments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Hierachy	2
Cost-method Investments [Member] | Other Investments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Hierachy	3
Deposits [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Hierachy	2
Federal Home Loan Bank Advances [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Hierachy	2
Senior Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Hierachy	2

[1] Primarily consist of Level 3 assets.

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Other Income (Expenses) - Schedule of Other Nonoperating Income and Expense by Component (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Other Income and Expenses [Abstract]
Dividend income	$ 22.5	$ 35.7	$ 38.6
Interest income	12.5	11.0	12.9
Gains (losses) on trading investment securities, net	34.7	(1.3)	30.3
Realized gains on sale of investment securities, available-for-sale	41.0	65.5	17.9
Realized losses on sale of investment securities, available-for-sale	(2.2)	(0.3)	(1.6)
Income (losses) from investments in equity method investees, net of tax	68.6	(1.1)	19.9
Other-than-temporary impairment of investment securities, available-for-sale	(10.1)	(7.3)	(1.5)
Other-than-temporary impairment of investments in equity method investees and other	0	(6.3)	0
Gains (losses) on investments of consolidated SIPs, net	(15.9)	(36.1)	8.5
Gains (losses) on assets and liabilities of consolidated VIEs, net	(25.6)	80.0	0
Foreign currency exchange gains (losses), net	7.1	3.3	(4.7)
Other, net	15.9	18.7	7.3
Total	199.7	1.8	127.6
Interest expense	(36.7)	(37.4)	(16.5)
Other income (expenses), net	$ 163.0	$ (35.6)	$ 111.1

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Fair Value Measurements

12 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The disclosures below include details of the Company’s fair value measurements, excluding those of consolidated VIEs and consolidated SIPs. See Note 13 – Variable Interest Entities and Consolidated Sponsored Investment Products for information related to fair value measurements of the assets and liabilities of these entities.

Assets measured at fair value on a recurring basis were as follows:

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2012
Assets
Investment securities, trading	$	1,058.6	$	69.3	$	2.7	$	1,130.6
Investment securities, available-for-sale
SIPs	587.2		—		—		587.2
Securities of U.S. states and political subdivisions	—		26.8		—		26.8
Securities of the U.S. Treasury and federal agencies	—		2.4		—		2.4
Corporate debt securities	—		70.3		—		70.3
Mortgage-backed securities – agency residential	—		169.3		—		169.3
Other equity securities	14.0		—		—		14.0
Life settlement contracts	—		—		12.1		12.1
Total Assets Measured at Fair Value	$	1,659.8	$	338.1	$	14.8	$	2,012.7

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2011
Assets
Investment securities, trading	$	454.0	$	74.6	$	—	$	528.6
Investment securities, available-for-sale
SIPs	925.7		—		—		925.7
Securities of U.S. states and political subdivisions	—		41.5		—		41.5
Securities of the U.S. Treasury and federal agencies	—		2.4		—		2.4
Corporate debt securities	—		121.6		—		121.6
Mortgage-backed securities – agency residential	—		221.6		—		221.6
Other equity securities	19.5		4.1		0.1		23.7
Life settlement contracts	—		—		10.8		10.8
Total Assets Measured at Fair Value	$	1,399.2	$	465.8	$	10.9	$	1,875.9

There were no transfers between Level 1 and Level 2 during fiscal year 2012, and there were no significant transfers between Level 1 and Level 2 during fiscal years 2011 and 2010. There were no transfers into or out of Level 3 during fiscal years 2012, 2011 and 2010.

The changes in Level 3 assets measured at fair value on a recurring basis were as follows:

(in millions)	2012			2011			2010
for the fiscal years ended September 30,
Balance at beginning of year	$	10.9		$	32.7		$	39.9
Adjustment for adoption of new consolidation guidance	—			(23.3		)	—
Total realized and unrealized gains (losses):
Included in investment and other income, net	3.3			2.9			6.2
Included in accumulated other comprehensive income	—			—			(0.4		)
Purchases, sales and settlements, net	0.6		1	(1.4		)	(13.0		)
Balance at end of year	$	14.8		$	10.9		$	32.7
Change in unrealized gains included in net income relating to assets held at September 30	$	1.3		$	1.2		$	4.9

_________________

¹     Consists of purchases of $3.9 million, net of settlements of $3.3 million.

The fair values of life settlement contracts were determined using a discounted cash flow valuation technique. Significant unobservable inputs used in the fair value measurements at September 30, 2012 included life expectancy, which ranged from 22 months to 171 months with a weighted-average of 82 months, and internal rate of return, which ranged from 1.5% to 22.3% with a weighted-average of 11.7%. A significant increase (decrease) in the life expectancy or the internal rate of return in isolation would result in a significantly lower (higher) fair value measurement.

Financial instruments that were not measured at fair value were as follows:

(in millions)	2012					2011
as of September 30,	Carrying Value		Estimated Fair Value		Fair Value Level	Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents	$	5,784.3	$	5,784.3	1	$	5,028.9	$	5,028.9
Other investments1	80.2		85.1		2 or 3	51.3		56.9
Loans receivable, net	254.4		258.7		2	401.9		403.1
Financial Liabilities
Deposits	$	671.7	$	672.4	2	$	890.2	$	892.7
Debt:
Commercial paper	—		—		N/A	30.0		30.0
FHLB advances	69.0		74.5		2	69.0		72.6
Senior notes	1,497.1		1,571.2		2	899.2		942.3

_________________

¹     Primarily consist of Level 3 assets.

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Loans and Allowances for Loan Losses

12 Months Ended

Sep. 30, 2012

Allowance for Loan and Lease Losses, Adjustments, Net [Abstract]

Loans and Allowance for Loan Losses

Loans and Allowance for Loan Losses

The disclosures below include details of the Company’s loans and allowance for loan losses, excluding those of consolidated VIEs. See Note 13 – Variable Interest Entities and Consolidated Sponsored Investment Products for information related to the loans and allowance for loan losses of these entities.

Loans receivable by major category consisted of the following:

(in millions)
as of September 30,	2012			2011
Commercial loans	$	49.3		$	38.7
Real estate mortgage loans	64.6			77.3
Installment loans	138.8			286.3
Other	2.2			4.8
Total loans receivable	254.9			407.1
Less: allowance for loan losses	(0.5		)	(5.2		)
Loans Receivable, Net	$	254.4		$	401.9

At September 30, 2012, loans receivable, net primarily consisted of private banking loans to investment management clients. Loans receivable at September 30, 2011 also included retail banking and consumer lending portfolios, which were sold during fiscal year 2012. No loan loss allowance is provided on private banking loans because these loans generally are payable on demand and are fully secured by assets under the Company's control or subject to rights of offset. At September 30, 2012 and 2011, loans receivable with aggregate carrying values of $54.1 million and $47.7 million were pledged as collateral for the ability to obtain FHLB advances.

Interest income on loans receivable totaled $16.9 million, $19.7 million and $15.6 million, with average rates of 4.59%, 4.73% and 4.21%, for fiscal years 2012, 2011 and 2010.

Maturities of loans receivable at September 30, 2012 were as follows:

(in millions)	One Year or Less		After One Through  Five Years		After Five Years		Total
Commercial loans	$	47.4	$	1.9	$	—	$	49.3
Real estate mortgage loans	2.7		1.4		60.5		64.6
Installment loans	121.3		6.9		10.6		138.8
Other	1.6		0.1		0.5		2.2
Total	$	173.0	$	10.3	$	71.6	$	254.9

Contractual maturities of loans receivable due after one year by repricing characteristic at September 30, 2012 were as follows:

(in millions)	Carrying Value
Loans at fixed interest rates	$	64.1
Loans at floating or adjustable interest rates	17.8
Total	$	81.9

Changes in the allowance for loan losses were as follows:

(in millions)
for the fiscal years ended September 30,	2012			2011			2010
Balance at beginning of year	$	5.2		$	5.4		$	7.0
Provision for loan losses	5.3			4.2			3.3
Charge-offs	(4.3		)	(6.4		)	(6.7		)
Recoveries	2.4			2.0			1.8
Loans sold	(8.1		)	—			—
Balance at End of Year	$	0.5		$	5.2		$	5.4
Total loan charge-offs, net of recoveries, as a percentage of simple monthly average loans receivable	0.63		%	1.07		%	1.31		%
Allowance for loan losses as a percentage of loans receivable	0.20		%	1.28		%	1.43		%

Loans receivable by impairment methodology were as follows:

(in millions)	2012						2011						2010
as of September 30,	Collectively Evaluated			Individually Evaluated			Collectively Evaluated			Individually Evaluated			Collectively Evaluated			Individually Evaluated
Loans receivable	$	254.4		$	0.5		$	390.8		$	16.3		$	362.3		$	18.0
Less: allowance for loan losses	(0.4		)	(0.1		)	(3.6		)	(1.6		)	(3.5		)	(1.9		)
Total	$	254.0		$	0.4		$	387.2		$	14.7		$	358.8		$	16.1

Non-accrual, past due and restructured loans were as follows:

(in millions)
as of September 30,	2012		2011
Non-accrual loans	$	2.4	$	8.3
Loans delinquent for 90 days or more	—		—
Loans modified in troubled debt restructurings	—		9.3

Interest income recognized for loans modified in troubled debt restructurings was not significant in fiscal years 2012, 2011 and 2010.

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Goodwill and Other Intangible Assets

12 Months Ended

Sep. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Changes in the carrying value of goodwill were as follows:

(in millions)
for the fiscal years ended September 30,	2012		2011
Balance at beginning of year	$	1,536.2	$	1,444.3
Business combinations	—		104.6
Foreign exchange and other	4.6		(12.7		)
Balance at End of Year	$	1,540.8	$	1,536.2

Intangible assets were as follows:

	2012							2011
(in millions)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
as of September 30,
Definite-lived intangible assets
Customer base	$	166.6	$	(135.9	)	$	30.7	$	166.1	$	(126.8	)	$	39.3
Other	49.3		(36.0		)	13.3		47.7		(34.1		)	13.6
	215.9		(171.9		)	44.0		213.8		(160.9		)	52.9
Indefinite-lived intangible assets
Management contracts	557.1		—			557.1		559.1		—			559.1
Total	$	773.0	$	(171.9	)	$	601.1	$	772.9	$	(160.9	)	$	612.0

The Company's annual impairment tests of goodwill and indefinite-lived intangible assets as of August 1, 2012, 2011 and 2010 indicated that there was no impairment in the value of these assets.

Amortization expense related to definite-lived intangible assets was $10.6 million, $10.9 million and $10.4 million for fiscal years 2012, 2011 and 2010. No impairment loss in the value of the assets was recognized during these periods.

The estimated remaining amortization expense related to definite-lived intangible assets as of September 30, 2012 was as follows:

(in millions)
for the fiscal years ending September 30,	Amount
2013	$	10.5
2014	10.5
2015	10.3
2016	5.6
2017	1.4
Thereafter	5.7
Total	$	44.0

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Loans and Allowance for Loan Losses - Changes in Allowances For Loan Losses (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of year	$ 5.2
Provision for loan losses	5.5	4.6	3.3
Balance at End of Year	0.5	5.2
Parent Company [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of year	5.2	5.4	7.0
Provision for loan losses	5.3	4.2	3.3
Charge-offs	(4.3)	(6.4)	(6.7)
Recoveries	2.4	2.0	1.8
Loans sold	(8.1)	0	0
Balance at End of Year	$ 0.5	$ 5.2	$ 5.4
Total loan charge-offs, net of recoveries, as a percentage of simple monthly average loans receivable	0.63%	1.07%	1.31%
Allowance for loan losses as a percentage of loans receivable	0.20%	1.28%	1.43%

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Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of debt of consolidated VIEs and consolidated SIPs (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Variable Interest Entity [Line Items]
Debt of consolidated variable interest entities	$ 1,100.9	$ 1,035.4
Debt	1,566.1	998.2
Debt of consolidated sponsored investment products	110.2	134.9
Variable Interest Entity [Member]
Variable Interest Entity [Line Items]
Debt of consolidated variable interest entities	1,100.9	1,035.4
Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Effective Interest Rate	4.20%	5.29%
Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Debt of consolidated variable interest entities	1,100.9	871.2
Debt of consolidated sponsored investment products	110.2	299.1
Total Debt	1,211.1	1,170.3
Long Term Debt of Consolidated Variable Interest Entities At Fair Value [Member]
Variable Interest Entity [Line Items]
Effective Interest Rate	1.48%	1.20%
Long Term Debt of Consolidated Variable Interest Entities At Fair Value [Member] | Variable Interest Entity [Member]
Variable Interest Entity [Line Items]
Debt of consolidated variable interest entities		871.2
Long Term Debt of Consolidated Variable Interest Entities Due 2013 2016 [Member]
Variable Interest Entity [Line Items]
Effective Interest Rate		5.86%
Long Term Debt of Consolidated Variable Interest Entities Due 2013 2016 [Member] | Variable Interest Entity [Member]
Variable Interest Entity [Line Items]
Debt	$ 0	$ 164.2

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Loans and Allowance for Loan Losses - Summary of Loan Delinquency Information (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Allowance for Loan and Lease Losses, Adjustments, Net [Abstract]
Non-accrual loans	$ 2.4	$ 8.3
Loans delinquent for 90 days or more	0	0
Loans modified in a troubled debt restructuring	$ 0	$ 9.3

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Stock-Based Compensation - Summary of stock option activity (Details) (USD $) In Millions, except Share data in Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Shares outstanding beginning balance	1,369
Weighted average exercise price beginning balance	$ 38.69
Granted shares	22
Weighted average exercise price - granted options	$ 38.55
Exercised shares	(787)
Weighted average exercise price - options exercised	$ 35.60
Expired/canceled shares	(4)
Weighted average exercise price - shares expired/canceled	$ 36.08
Shares outstanding ending balance	600
Weighted average exercise price ending balance	$ 41.33
Weighted average remaining contractual term (years)	0 years 9 months 19 days
Aggregate intrinsic value balance	$ 50.2

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Loans and Allowance for Loan Losses - Contractual Maturities of Loans Receivable Due After One Year by Repricing Characteristic (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012
Allowance for Loan and Lease Losses, Adjustments, Net [Abstract]
Loans at fixed interest rates	$ 64.1
Loans at floating or adjustable interest rates	17.8
Total	$ 81.9

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Taxes on Income - Narrative (Details) (USD $)	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Income Tax Disclosure [Abstract]
Pre-tax foreign income included in income before taxes	$ 966,300,000	$ 1,028,200,000	$ 902,100,000
Benefits related to utilization of net operating loss carry-forwards	500,000	700,000	2,500,000
Tax benefits associated with stock-based compensation plans	22,600,000	16,300,000	11,900,000
Income Tax Holiday, Aggregate Dollar Amount	80,000,000	78,300,000	37,000,000
Income Tax Holiday, Income Tax Benefits Per Share	$ 0.37	$ 0.37	$ 0.16
Foreign net operating loss carry-forwards	84,100,000
Foreign net operating loss carry forwards expiration amount	48,600,000
State net operating loss carry-forward expiration amount	182,400,000
Valuation allowance	(5,100,000)	(1,600,000)
Cumulative undistributed foreign earnings	5,600,000,000
Accrued interest on uncertain tax positions	14,600,000	20,300,000
Interest expense (benefit) recognized	(300,000)	3,200,000	5,100,000
Estimated decrease in unrecognized tax benefits within the next twelve months	$ 4,100,000

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Property and Equipment, Net (Tables)

12 Months Ended

Sep. 30, 2012

Property, Plant and Equipment, Net [Abstract]

Summary of property and equipment

Property and equipment consisted of the following:

(in millions)							Useful Lives In Years
as of September 30,	2012			2011
Furniture, software and equipment	$	667.4		$	647.1		3 – 10
Premises and leasehold improvements	560.3			552.0			5 – 35
Land	75.0			75.2			N/A
Total cost	1,302.7			1,274.3
Less: Accumulated depreciation and amortization	(720.0		)	(684.6		)
Property and Equipment, Net	$	582.7		$	589.7

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Cash and Cash Equivalents (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Cash and Cash Equivalents [Abstract]
Cash on hand and non-interest-bearing deposits with financial institutions	$ 74.7	$ 58.0
Interest-bearing deposits with financial institutions	826.5	717.2
SIP money market funds	2,233.4	1,887.8
Securities of U.S. government-sponsored enterprises and the U.S. Treasury	1,560.0	1,173.5
Time deposits	1,019.8	1,113.9
Other	69.9	78.5
Total	$ 5,784.3	$ 5,028.9

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Commitments and Contingencies

12 Months Ended

Sep. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Proceedings

The Company is from time to time involved in litigation relating to claims arising in the normal course of business. Management is of the opinion that the ultimate resolution of such claims will not materially affect the Company's business, financial position, results of operations or liquidity. In management's opinion, an adequate accrual has been made as of September 30, 2012, to provide for any probable losses that may arise from such matters for which the Company could reasonably estimate an amount.

Other Commitments and Contingencies

The Company leases office space and equipment under operating leases expiring at various dates through fiscal year 2022. Lease expense was $58.7 million, $62.1 million and $66.6 million and sublease income totaled $2.0 million, $1.4 million and $1.7 million for fiscal years 2012, 2011 and 2010.

Future minimum lease payments under long-term non-cancelable operating leases were as follows as of September 30, 2012:

(in millions)
for the fiscal years ending September 30,	Amount
2013	$	46.8
2014	43.4
2015	35.6
2016	30.2
2017	13.1
Thereafter	29.3
Total Minimum Lease Payments	$	198.4

Future minimum rentals to be received under non-cancelable subleases totaled $9.3 million at September 30, 2012.

While the Company has no contractual obligation to do so, it routinely makes cash investments in the course of launching SIPs. At September 30, 2012, the Company had $68.8 million of committed capital contributions which primarily relate to discretionary commitments to invest in planned SIP launches. These unfunded commitments are not recorded in the Company's consolidated balance sheet.

The Company, in its role as agent or trustee, facilitates the settlement of investor share purchase, redemption, and other transactions with affiliated mutual funds. The Company is appointed by the affiliated mutual funds as agent or trustee to manage, on their behalf, bank deposit accounts that contain only (i) cash remitted by investors to the affiliated mutual funds for the direct purchase of fund shares, or (ii) cash remitted by the affiliated mutual funds for direct delivery to the investors for either the proceeds of fund shares liquidated at the investors’ direction, or dividends and capital gains earned on fund shares. At September 30, 2012 and 2011, the Company held cash of approximately $202.4 million and $124.5 million off-balance sheet in agency or trust for investors and the affiliated mutual funds.

In conjunction with an insurance recovery for prior years' losses, the Company agreed to indemnify its insurance provider and hold it harmless against future payments that it may be required to make to any insured who does not release his, her or its rights under the relevant policy or relating to claims under that policy up to available policy limits. The Company also agreed to indemnify those insured funds that agreed to release any rights under the relevant policy or relating to claims under that policy, to the same extent of the released rights. While management believes that the chance of the Company having to make any payments as a result of these indemnities is remote, policy limits for certain insureds could be up to $88.0 million in the aggregate.

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Banking Regulatory Ratios

12 Months Ended

Sep. 30, 2012

Banking and Thrift [Abstract]

Banking Regulatory Ratios

Banking Regulatory Ratios

Franklin is a bank holding company and a financial holding company subject to various regulatory capital requirements administered by federal banking agencies, including the Federal Reserve Board. Failure to meet minimum capital requirements can result in certain mandatory, and possibly additional, discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. The Company must meet specific capital adequacy guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulations to ensure capital adequacy require the Company to maintain a minimum Tier 1 capital and Tier 1 leverage ratio (as defined in the regulations), as well as minimum Tier 1 and Total risk-based capital ratios (as defined in the regulations). The Company's calculation methodology follows the most conservative risk-weighting assumptions within the Federal Reserve Board guidelines. Based on the Company's calculations as of September 30, 2012 and 2011, it exceeded the applicable capital adequacy requirements as listed below.

(dollar amounts in millions)							Capital Adequacy Minimum
as of September 30,	2012			2011
Tier 1 capital	$	6,788.8		$	6,141.4		N/A
Total risk-based capital	6,799.6			6,152.2			N/A
Tier 1 leverage ratio	59		%	55		%	5%
Tier 1 risk-based capital ratio	54		%	53		%	4%
Total risk-based capital ratio	54		%	53		%	8%

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Taxes on Income - Components of net deferred tax assets or liabilities as classified in the consolidated balance sheet (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Income Tax Disclosure [Abstract]
Deferred tax assets	$ 94.9	$ 107.9
Deferred tax liabilities	276.3	274.4
Net Deferred Tax Liability	$ 181.4	$ 166.5

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Earnings per Share - Schedule of Earnings per Share Basic and Diluted (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Earnings Per Share Reconciliation [Abstract]
Net Income Attributable to Franklin Resources, Inc.	$ 1,931.4	$ 1,923.6	$ 1,445.7
Less: Allocation of earnings to participating nonvested stock and stock unit awards	11.7	8.6	7.6
Net Income Available to Common Stockholders	$ 1,919.7	$ 1,915.0	$ 1,438.1
Weighted average shares outstanding - basic	213.8	221.0	226.1
Effect of dilutive common stock options and non-participating nonvested stock unit awards	0.6	1.1	1.3
Weighted-Average Shares Outstanding - Diluted	214.4	222.1	227.4
Earnings Per Share [Abstract]
Basic	$ 8.98	$ 8.66	$ 6.36
Diluted	$ 8.95	$ 8.62	$ 6.33

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Employee Benefit Plans - Schedule of amounts recognized in the consolidated balance sheets (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012		Sep. 30, 2011
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Non-current assets	$ 0.1		$ 0.7
Current liabilities	0		0
Other non-current liabilities	0		0
Net Asset (Liability)	0.1		0.7
Discount rate	4.60%		5.20%
Expected long-term rate of return on plan assets	6.41%	[1]	6.76%
Rate of compensation increase			4.20%
Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Non-current assets	0		0
Current liabilities	(0.5)		(0.4)
Other non-current liabilities	(6.3)		(5.7)
Net Asset (Liability)	$ (6.8)		$ (6.1)
Discount rate	3.70%		4.90%
Rate of compensation increase	2.50%		4.50%

[1] The expected long-term rate of return on plan assets is based on the weighted-average historic performance of each asset class and current market conditions.

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Stock-Based Compensation (Tables)

12 Months Ended

Sep. 30, 2012

Share-based Compensation [Abstract]

Summary of nonvested stock and stock unit award activity

Nonvested stock and stock unit award activity was as follows:

(shares in thousands)	Shares		Weighted- Average Grant-Date Fair Value
Nonvested balance at September 30, 2011	1,085		$	114.57
Granted	1,099		106.76
Vested	(810	)	110.85
Forfeited/canceled	(47	)	110.91
Nonvested Balance at September 30, 2012	1,327		$	110.50

Summary of stock option activity

Stock option activity was as follows:

(shares in thousands, aggregate intrinsic value in millions)	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at September 30, 2011	1,369		$	38.69
Granted	22		38.55
Exercised	(787	)	35.60
Expired/canceled	(4	)	36.08
Outstanding and Exercisable at September 30, 2012	600		$	41.33	0.8	$	50.2

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Employee Benefit Plans - Schedule of plan benefits expected to be paid over the next ten years (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
2013	$ 3.6
2014	0.3
2015	1.8
2016	0.2
2017	0.6
Thereafter in the succeeding five years	14.3
Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
2013	0.5
2014	0.5
2015	0.4
2016	0.4
2017	0.4
Thereafter in the succeeding five years	$ 2.0

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Consolidated Statements of Stockholders' Equity, Redeemable Noncontrolling Interests and Comprehensive Income Statement (USD $) In Millions, unless otherwise specified	Total	Nonredeemable Noncontrolling Interests [Member]	Redeemable Noncontrolling Interests [Member]	Common Stock [Member]	Capital in Excess of Par Value [Member]	Retained Earnings [Member]	Appropriated Retained Earnings of Consolidated Variable Interest Entities [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Stockholders' Equity [Member]	Total Stockholders' Equity [Member]	Other Comprehensive Income (Loss) [Member]
Beginning balance at Sep. 30, 2009			$ 65.1
Beginning balance at Sep. 30, 2009										7,634.4
Beginning balance at Sep. 30, 2009		2.2
Beginning balance at Sep. 30, 2009				22.9	0	7,505.9	0	103.4	7,632.2
Beginning balance - Shares at Sep. 30, 2009				229.3
Adjustment for adoption of new consolidation guidance	0
Net Income Attributable to Franklin Resources, Inc.	1,445.7					1,445.7			1,445.7
Net Income (Loss) Attributable to Noncontrolling Interests		0.7	5.1
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	1,451.5									1,446.4	1,451.5
Other comprehensive income (loss)
Net unrealized gains (losses) on investments, net of tax								48.8	48.8	48.8	48.8
Currency translation adjustments								22.1	22.1	22.1	22.1
Net unrealized gains (losses) on defined benefit plans, net of tax								(0.6)	(0.6)	(0.6)	(0.6)
Total comprehensive income											1,521.8
Less: comprehensive income (loss) attributable to noncontrolling interest											5.8
Total comprehensive income attributable to Franklin Resources, Inc.											1,516.0
Cash dividends on common stock						(886.1)			(886.1)	(886.1)
Repurchase of common stock - Shares				(6.6)
Repurchase of common stock - Amount				(0.6)	(140.0)	(535.2)			(675.8)	(675.8)
Issuance of common stock - Shares				1.3
Issuance of common stock - Amount				0.1	110.4				110.5	110.5
Excess tax benefit from stock-based compensation	11.9				11.9				11.9	11.9
Stock-based compensation					17.7				17.7	17.7
Noncontrolling Interests
Net subscriptions (redemptions)		0.5	67.7							0.5
Net consolidations (deconsolidations) of certain sponsored investment products	(118.4)	0	(118.4)							0
Disproportional dividends on equity investment						0.6			0.6	0.6
Ending balance at Sep. 30, 2010			19.5
Ending balance at Sep. 30, 2010										7,730.4
Ending balance at Sep. 30, 2010		3.4
Ending balance at Sep. 30, 2010				22.4	0	7,530.9	0	173.7	7,727.0
Ending balance - Shares at Sep. 30, 2010				224.0
Adjustment for adoption of new consolidation guidance	(23.3)					1.5	105.8	(0.7)	106.6	106.6
Net Income Attributable to Franklin Resources, Inc.	1,923.6					1,923.6			1,923.6
Net Income (Loss) Attributable to Noncontrolling Interests		(101.6)	(1.2)
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	1,820.8									1,822.0	1,820.8
Net income (loss) reclassified to appropriated retained earnings		86.8					(86.8)		(86.8)
Other comprehensive income (loss)
Net unrealized gains (losses) on investments, net of tax								(78.6)	(78.6)	(78.6)	(78.6)
Currency translation adjustments								(53.7)	(53.7)	(53.7)	(53.7)
Net unrealized gains (losses) on defined benefit plans, net of tax								(0.3)	(0.3)	(0.3)	(0.3)
Total comprehensive income											1,688.2
Less: comprehensive income (loss) attributable to noncontrolling interest											(102.8)
Total comprehensive income attributable to Franklin Resources, Inc.											1,791.0
Cash dividends on common stock						(221.5)			(221.5)	(221.5)
Repurchase of common stock - Shares				(8.2)
Repurchase of common stock - Amount				(0.8)	(165.9)	(787.5)			(954.2)	(954.2)
Issuance of common stock - Shares				1.9
Issuance of common stock - Amount				0.2	139.8				140.0	140.0
Excess tax benefit from stock-based compensation	16.3				16.3				16.3	16.3
Stock-based compensation					9.8				9.8	9.8
Noncontrolling Interests
Net subscriptions (redemptions)		110.7	135.8							110.7
Net consolidations (deconsolidations) of certain sponsored investment products	343.6	479.1	(135.5)							479.1
Purchase of noncontrolling equity interest		0.8				(3.5)			(3.5)	(2.7)
Ending balance at Sep. 30, 2011	18.6		18.6
Ending balance at Sep. 30, 2011	9,103.9									9,103.9
Ending balance at Sep. 30, 2011	579.2	579.2
Ending balance at Sep. 30, 2011	8,524.7			21.8	0	8,443.5	19.0	40.4	8,524.7
Ending balance - Shares at Sep. 30, 2011				217.7
Adjustment for adoption of new consolidation guidance	0
Net Income Attributable to Franklin Resources, Inc.	1,931.4					1,931.4			1,931.4
Net Income (Loss) Attributable to Noncontrolling Interests		(20.9)	5.0
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	1,915.5									1,910.5	1,915.5
Net income (loss) reclassified to appropriated retained earnings		(20.0)					20.0		20.0	0
Other comprehensive income (loss)
Net unrealized gains (losses) on investments, net of tax								22.2	22.2	22.2	22.2
Currency translation adjustments								0.3	0.3	0.3	0.3
Net unrealized gains (losses) on defined benefit plans, net of tax								(0.9)	(0.9)	(0.9)	(0.9)
Total comprehensive income											1,937.1
Less: comprehensive income (loss) attributable to noncontrolling interest											(15.9)
Total comprehensive income attributable to Franklin Resources, Inc.											1,953.0
Cash dividends on common stock						(666.7)			(666.7)	(666.7)
Repurchase of common stock - Shares				(7.5)
Repurchase of common stock - Amount				(0.7)	(172.9)	(623.8)			(797.4)	(797.4)
Issuance of common stock - Shares				2.0
Issuance of common stock - Amount				0.1	139.1				139.2	139.2
Excess tax benefit from stock-based compensation	22.6				22.0				22.0	22.0
Stock-based compensation					11.8				11.8	11.8
Noncontrolling Interests
Net subscriptions (redemptions)		138.3	73.8							138.3
Net consolidations (deconsolidations) of certain sponsored investment products	(188.1)	(117.4)	(70.7)							(117.4)
Consolidation of variable interest entity							(5.3)		(5.3)	(5.3)
Ending balance at Sep. 30, 2012	26.7		26.7
Ending balance at Sep. 30, 2012	9,760.5									9,760.5
Ending balance at Sep. 30, 2012	559.2	559.2
Ending balance at Sep. 30, 2012	$ 9,201.3			$ 21.2	$ 0	$ 9,084.4	$ 33.7	$ 62.0	$ 9,201.3
Ending balance - Shares at Sep. 30, 2012				212.2

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Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of changes in Level 3 assets and liabilities of consolidated VIEs and consolidated SIPs (Details) (USD $)	12 Months Ended
	Sep. 30, 2012		Sep. 30, 2011	Sep. 30, 2010
Variable Interest Entity [Line Items]
Adjustment for adoption of new consolidation guidance	$ 0		$ (23,300,000)	$ 0
Balance	10,900,000		32,700,000	39,900,000
Purchases	3,900,000
Purchases, sales and settlements, net	600,000	[1]	(1,400,000)	(13,000,000)
Settlements	(3,300,000)
Transfers out of Level 3, net	0		0	0
Balance	14,800,000		10,900,000	32,700,000
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at the end of the period	1,300,000		1,200,000	4,900,000
Investments of Consolidated VIEs [Member]
Variable Interest Entity [Line Items]
Adjustment for adoption of new consolidation guidance			1,800,000
Balance	1,900,000		0
Realized and unrealized gains (losses)included in investment and other income(losses), net	(1,200,000)		100,000
Purchases	0
Purchases, sales and settlements, net			0
Sales	(1,400,000)
Settlements	0
Consolidation of variable interest entity	0
Consolidation adjustment			0
Transfers Into Level 3	1,600,000
Transfers out of Level 3	(900,000)
Transfers out of Level 3, net			0
Effect of exchange rate changes	0		0
Balance	0		1,900,000
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at the end of the period	0		100,000
Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Adjustment for adoption of new consolidation guidance			0
Balance			3,300,000	2,100,000
Realized and unrealized gains (losses)included in investment and other income(losses), net			(1,300,000)	(1,100,000)
Purchases, sales and settlements, net			14,100,000	2,800,000
Consolidation adjustment			593,100,000
Transfers out of Level 3, net			(600,000)	(500,000)
Effect of exchange rate changes			0
Balance			608,600,000	3,300,000
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at the end of the period			300,000	100,000
Debt Securities [Member]
Variable Interest Entity [Line Items]
Balance	324,900,000
Realized and unrealized gains (losses)included in investment and other income(losses), net	(31,200,000)
Purchases	63,000,000
Sales	(33,100,000)
Settlements	0
Consolidation of variable interest entity	0
Transfers Into Level 3	0
Transfers out of Level 3	0
Effect of exchange rate changes	(6,100,000)
Balance	317,500,000
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at the end of the period	2,900,000
Equity Securities [Member]
Variable Interest Entity [Line Items]
Balance	283,700,000
Realized and unrealized gains (losses)included in investment and other income(losses), net	13,100,000
Purchases	312,000,000
Sales	(78,800,000)
Settlements	0
Consolidation of variable interest entity	0
Transfers Into Level 3	0
Transfers out of Level 3	0
Effect of exchange rate changes	(3,000,000)
Balance	527,000,000
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at the end of the period	3,800,000
Debt of Consolidated VIEs [Member]
Variable Interest Entity [Line Items]
Adjustment for adoption of new consolidation guidance			(71,400,000)
Balance	(83,900,000)		0
Realized and unrealized gains (losses)included in investment and other income(losses), net	(5,000,000)		(45,600,000)
Purchases	0
Purchases, sales and settlements, net			36,700,000
Sales	0
Settlements	23,800,000
Consolidation of variable interest entity	(4,600,000)
Consolidation adjustment			0
Transfers Into Level 3	0
Transfers out of Level 3	0
Transfers out of Level 3, net			0
Effect of exchange rate changes	1,800,000		(3,600,000)
Balance	(67,900,000)		(83,900,000)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at the end of the period	(4,000,000)		(45,600,000)
Level 3 [Member]
Variable Interest Entity [Line Items]
Adjustment for adoption of new consolidation guidance			1,800,000
Balance	610,500,000		3,300,000
Realized and unrealized gains (losses)included in investment and other income(losses), net	(19,300,000)		(1,200,000)
Purchases	375,000,000
Purchases, sales and settlements, net			14,100,000
Sales	(113,300,000)
Settlements	0
Consolidation of variable interest entity	0
Consolidation adjustment			593,100,000
Transfers Into Level 3	1,600,000
Transfers out of Level 3	(900,000)
Transfers out of Level 3, net			(600,000)
Effect of exchange rate changes	(9,100,000)		0
Balance	844,500,000		610,500,000
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at the end of the period	$ 6,700,000		$ 400,000

[1] Consists of purchases of $3.9 million, net of settlements of $3.3 million.

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Earnings per Share

12 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share

The components of basic and diluted earnings per share were as follows:

(in millions except per share data)
for the fiscal years ended September 30,	2012		2011		2010
Net Income Attributable to Franklin Resources, Inc.	$	1,931.4	$	1,923.6	$	1,445.7
Less: Allocation of earnings to participating nonvested stock and stock unit awards	11.7		8.6		7.6
Net Income Available to Common Stockholders	$	1,919.7	$	1,915.0	$	1,438.1
Weighted-average shares outstanding – basic	213.8		221.0		226.1
Effect of dilutive common stock options and non-participating nonvested stock unit awards	0.6		1.1		1.3
Weighted-Average Shares Outstanding – Diluted	214.4		222.1		227.4
Earnings per Share
Basic	$	8.98	$	8.66	$	6.36
Diluted	$	8.95	$	8.62	$	6.33

Non-participating nonvested stock unit awards excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive were 0.1 million for the fiscal year ended September 30, 2012, de minimus for the fiscal year ended September 30, 2011, and 0.4 million for the fiscal year ended September 30, 2010.

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Fair Value Measurements - Fair Value, by Balance Sheet Grouping (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012		Sep. 30, 2011
Investment securities, trading	$ 1,130.6		$ 528.6
Investment securities, available-for-sale	870.0		1,336.5
Life settlement contracts	12.1		10.8
Total assets measured at fair value	2,012.7		1,875.9
Level 1 [Member]
Investment securities, trading	1,058.6		454.0
Life settlement contracts	0		0
Total assets measured at fair value	1,659.8		1,399.2
Level 2 [Member]
Investment securities, trading	69.3		74.6
Life settlement contracts	0		0
Total assets measured at fair value	338.1		465.8
Level 3 [Member]
Investment securities, trading	2.7		0
Life settlement contracts	12.1		10.8
Total assets measured at fair value	14.8		10.9
Sponsored Investment Products [Member]
Investment securities, available-for-sale	587.2		925.7
Sponsored Investment Products [Member] | Level 1 [Member]
Investment securities, available-for-sale	587.2		925.7
Sponsored Investment Products [Member] | Level 2 [Member]
Investment securities, available-for-sale	0		0
Sponsored Investment Products [Member] | Level 3 [Member]
Investment securities, available-for-sale	0		0
Securities of U.S. states and political subdivisions [Member]
Investment securities, available-for-sale	26.8		41.5
Securities of U.S. states and political subdivisions [Member] | Level 1 [Member]
Investment securities, available-for-sale	0		0
Securities of U.S. states and political subdivisions [Member] | Level 2 [Member]
Investment securities, available-for-sale	26.8		41.5
Securities of U.S. states and political subdivisions [Member] | Level 3 [Member]
Investment securities, available-for-sale	0		0
Securities of the U.S. Treasury and federal agencies [Member]
Investment securities, available-for-sale	2.4		2.4
Securities of the U.S. Treasury and federal agencies [Member] | Level 1 [Member]
Investment securities, available-for-sale	0		0
Securities of the U.S. Treasury and federal agencies [Member] | Level 2 [Member]
Investment securities, available-for-sale	2.4		2.4
Securities of the U.S. Treasury and federal agencies [Member] | Level 3 [Member]
Investment securities, available-for-sale	0		0
Corporate debt securities [Member]
Investment securities, available-for-sale	70.3	[1]	121.6	[1]
Corporate debt securities [Member] | Level 1 [Member]
Investment securities, available-for-sale	0		0
Corporate debt securities [Member] | Level 2 [Member]
Investment securities, available-for-sale	70.3		121.6
Corporate debt securities [Member] | Level 3 [Member]
Investment securities, available-for-sale	0		0
Mortgage-backed securities - agency residential [Member]
Investment securities, available-for-sale	169.3	[2]	221.6	[2]
Mortgage-backed securities - agency residential [Member] | Level 1 [Member]
Investment securities, available-for-sale	0		0
Mortgage-backed securities - agency residential [Member] | Level 2 [Member]
Investment securities, available-for-sale	169.3		221.6
Mortgage-backed securities - agency residential [Member] | Level 3 [Member]
Investment securities, available-for-sale	0		0
Other equity securities [Member]
Investment securities, available-for-sale	14.0		23.7
Other equity securities [Member] | Level 1 [Member]
Investment securities, available-for-sale	14.0		19.5
Other equity securities [Member] | Level 2 [Member]
Investment securities, available-for-sale	0		4.1
Other equity securities [Member] | Level 3 [Member]
Investment securities, available-for-sale	$ 0		$ 0.1

[1] Corporate debt securities are insured by the Federal Deposit Insurance Corporation or non-U.S. government agencies.

[2] Consists of U.S. government-sponsored enterprise obligations.

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Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of unpaid principal balance and fair value of investments and debt of CLOs (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Investments	$ 2,583.8	$ 2,422.4
Total investments, fair value	2,000.6	1,865.1
Total Debt	1,566.1	998.2
Collateralized Loan Obligations [Member]
Investments	996.1	887.8
Total investments, excess unpaid principal over fair value	(12.0)	(65.2)
Total investments, fair value	984.1	822.6
Investments - 90 days or more past due, unpaid principal balance	7.2	21.6
Investments - 90 days or more past due, excess unpaid principal over fair value	(6.7)	(10.2)
Investments - 90 days or more past due, fair value	0.5	11.4
Total Debt	1,186.5	1,044.9
Long-term debt, excess unpaid principal over fair value	(85.6)	(173.7)
Long-term debt, fair value	1,100.9	871.2
Variable Interest Entity [Member]
Investments	$ 984.1	$ 822.6

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Employee Benefit Plans - Schedule of net periodic benefit costs for all plans (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Pension Benefits [Member]
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Service cost	$ 3.6	$ 3.3	$ 2.9
Interest cost	2.2	2.1	2.0
Plan curtailments	0.5	0	0
Expected return on plan assets	(3.1)	(3.2)	(2.8)
Amortization of net actuarial losses (gains)	0	0	0
Net Periodic Benefit Cost	3.2	2.2	2.1
Other Benefits [Member]
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Service cost	0	0	0
Interest cost	0.3	0.3	0.4
Plan curtailments	0	0	0
Expected return on plan assets	0	0	0
Amortization of net actuarial losses (gains)	0	0.2	0
Net Periodic Benefit Cost	$ 0.3	$ 0.5	$ 0.4

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Goodwill and Other Intangible Assets - Narrative (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Finite-Lived Intangible Assets [Line Items]
Asset Impairment Charges	$ 0	$ 0	$ 0
Amortization expense	$ 10.6	$ 10.9	$ 10.4

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Subsequent Events

12 Months Ended

Sep. 30, 2012

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On October 24, 2012, the Company redeemed its outstanding 2.000% senior notes due in May 2013 at a make-whole redemption price of $305.4 million.

On November 1, 2012, the Company acquired an ownership interest of approximately 69% in K2 Advisors Holdings LLC ("K2") for a purchase consideration of $182.9 million in cash. The Company has agreed to acquire the remaining ownership interest in K2 over a multi-year period beginning in fiscal year 2017. K2 is a fund of hedge funds solutions provider with approximately $9.0 billion in assets under management as of September 30, 2012.

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Deposits - Schedule of deposits held in U.S. offices (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Sep. 30, 2011
Deposits [Abstract]
Non-interest-bearing demand deposits	$ 149.4	$ 189.6
Demand deposits	12.7	25.2
Savings deposits	461.2	575.9
Time deposits	48.4	99.5
Total interest-bearing deposits	522.3	700.6
Total	$ 671.7	$ 890.2

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Variable Interest Entities and Consolidated Sponsored Investment Products (Tables)

12 Months Ended

Sep. 30, 2012

Variable Interest Entities [Abstract]

Schedule of balances of consolidated VIEs and consolidated SIPs

The balances of consolidated VIEs and consolidated SIPs included in the Company's consolidated balance sheets were as follows:

	2012						2011
(in millions)	Consolidated						Consolidated
as of September 30,	VIEs		SIPs		Total		VIEs		SIPs		Total
Assets
Cash and cash equivalents	$	224.3	$	42.8	$	267.1	$	88.2	$	81.5	$	169.7
Receivables	2.7		23.7		26.4		12.0		15.3		27.3
Investments	984.1		1,046.6		2,030.7		822.6		945.7		1,768.3
Loans receivable, net	—		—		—		149.4		—		149.4
Other assets	—		0.7		0.7		17.8		0.8		18.6
Total Assets	$	1,211.1	$	1,113.8	$	2,324.9	$	1,090.0	$	1,043.3	$	2,133.3
Liabilities
Accounts payable and accrued expenses	$	—	$	21.8	$	21.8	$	—	$	14.2	$	14.2
Debt, at fair value	1,100.9		—		1,100.9		871.2		—		871.2
Debt	—		110.2		110.2		164.2		134.9		299.1
Other liabilities	61.9		8.5		70.4		32.3		8.5		40.8
Total liabilities	1,162.8		140.5		1,303.3		1,067.7		157.6		1,225.3
Redeemable Noncontrolling Interests	—		26.7		26.7		—		18.6		18.6
Stockholders' Equity
Nonredeemable noncontrolling interests	—		556.8		556.8		—		575.1		575.1
Other equity	48.3		389.8		438.1		22.3		292.0		314.3
Total stockholders' equity	48.3		946.6		994.9		22.3		867.1		889.4
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	$	1,211.1	$	1,113.8	$	2,324.9	$	1,090.0	$	1,043.3	$	2,133.3

Schedule of assets and liabilities of the Collateralized Loan Obligations carried at fair value

The assets and liabilities of the CLOs are carried at fair value. Changes in the fair values were as follows:

(in millions)	2012			2011
for the fiscal years ended September 30,
Net gains from changes in fair value of assets	$	90.9		$	34.0
Net losses from changes in fair value of liabilities	(65.3		)	(114.0		)
Total net gains (losses)	$	25.6		$	(80.0	)

Unpaid principal balance and fair value of investments and debt of CLOs

The following table presents the unpaid principal balance and fair values of investments, including investments 90 days or more past due, and debt of the CLOs:

(in millions)	Total  Investments			Investments 90 Days or More Past Due			Long-term Debt
as of September 30, 2012
Unpaid principal balance	$	996.1		$	7.2		$	1,186.5
Excess unpaid principal over fair value	(12.0		)	(6.7		)	(85.6		)
Fair value	$	984.1		$	0.5		$	1,100.9
as of September 30, 2011
Unpaid principal balance	$	887.8		$	21.6		$	1,044.9
Excess unpaid principal over fair value	(65.2		)	(10.2		)	(173.7		)
Fair value	$	822.6		$	11.4		$	871.2

Schedule of changes in allowance for loan losses for the securitization trusts

Changes in the allowance for loan losses for the securitization trusts were as follows:

(in millions)
for the fiscal years ended September 30,	2012			2011
Balance at beginning of year	$	5.7		$	—
Adjustment for adoption of new consolidation guidance	—			14.3
Provision for loan losses	0.2			0.4
Charge-offs	(5.7		)	(14.6		)
Recoveries	2.4			5.6
Deconsolidation of securitization trust	(2.6		)	—
Balance at End of Year	$	—		$	5.7
Total loan charge-offs, net of recoveries, as a percentage of simple monthly average loans receivable	3.73		%	3.93		%
Allowance for loan losses as a percentage of loans receivable	N/A			3.68		%

Schedule of investments of consolidated VIEs and consolidated SIPs

Investments of consolidated VIEs and consolidated SIPs consisted of the following:

	2012						2011
(in millions)	Consolidated						Consolidated
as of September 30,	VIEs		SIPs		Total		VIEs		SIPs		Total
Investment securities, trading	$	—	$	194.4	$	194.4	$	—	$	361.1	$	361.1
Other debt securities	984.1		317.5		1,301.6		822.6		323.2		1,145.8
Other equity securities	—		534.7		534.7		—		261.4		261.4
Total Investments	$	984.1	$	1,046.6	$	2,030.7	$	822.6	$	945.7	$	1,768.3

Schedule of debt of consolidated VIEs and consolidated SIPs

Debt of consolidated VIEs and consolidated SIPs consisted of the following:

(dollars in millions)	2012		Effective Interest Rate		2011		Effective Interest Rate
as of September 30,
Debt of consolidated VIEs:
Debt of CLOs, at fair value, due fiscal years 2016-2024	$	1,100.9	1.48	%	$	871.2	1.20	%
Debt of securitization trusts, due fiscal years 2013-2016	—		N/A		164.2		5.86	%
	1,100.9				1,035.4
Debt of consolidated SIPs due fiscal years 2013-2018	110.2		4.20	%	134.9		5.29	%
Total Debt	$	1,211.1			$	1,170.3

Schedule of contractual maturities for debt of consolidated VIEs and consolidated SIPs

At September 30, 2012, contractual maturities for debt of consolidated VIEs and consolidated SIPs were as follows:

(in millions)
for the fiscal years ending September 30,
2013	$	46.5
2014	1.9
2015	—
2016	22.0
2017	14.9
Thereafter	1,125.8
Total	$	1,211.1

Schedule of balances of assets and liabilities of consolidated VIEs and consolidated SIPs measured at fair value on a recurring basis

The tables below present the balances of assets and liabilities of consolidated VIEs and consolidated SIPs measured at fair value on a recurring basis.

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2012
Assets
Cash and cash equivalents of consolidated VIEs	$	—	$	224.3	$	—	$	224.3
Receivables of consolidated VIEs	—		2.7		—		2.7
Investments of consolidated VIEs	—		984.1		—		984.1
Investments of consolidated SIPs
Debt securities	6.3		49.3		317.5		373.1
Equity securities	145.9		0.6		527.0		673.5
Total Assets Measured at Fair Value	$	152.2	$	1,261.0	$	844.5	$	2,257.7
Liabilities
Debt of consolidated VIEs	$	—	$	1,033.0	$	67.9	$	1,100.9
Other liabilities of consolidated VIEs	—		61.9		—		61.9
Total Liabilities Measured at Fair Value	$	—	$	1,094.9	$	67.9	$	1,162.8

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2011
Assets
Cash and cash equivalents of consolidated VIEs	$	14.7	$	73.5	$	—	$	88.2
Receivables of consolidated VIEs	—		12.0		—		12.0
Investments of consolidated VIEs	—		820.7		1.9		822.6
Investments of consolidated SIPs
Debt securities	5.2		198.8		324.9		528.9
Equity securities	127.0		6.1		283.7		416.8
Total Assets Measured at Fair Value	$	146.9	$	1,111.1	$	610.5	$	1,868.5
Liabilities
Debt of consolidated VIEs	$	—	$	787.3	$	83.9	$	871.2
Other liabilities of consolidated VIEs	—		32.3		—		32.3
Total Liabilities Measured at Fair Value	$	—	$	819.6	$	83.9	$	903.5

Schedule of changes in Level 3 assets and liabilities of consolidated VIEs and consolidated SIPs

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for fiscal years 2012, 2011 and 2010 were as follows:

(in millions)	Investments of Consolidated VIEs			Investments of Consolidated SIPs						Total  Level 3 Assets			Debt of Consolidated VIEs
for the fiscal year ended September 30, 2012				Debt			Equity
Balance at October 1, 2011	$	1.9		$	324.9		$	283.7		$	610.5		$	(83.9	)
Realized and unrealized gains (losses) included in investment and other income, net	(1.2		)	(31.2		)	13.1			(19.3		)	(5.0		)
Purchases	—			63.0			312.0			375.0			—
Sales	(1.4		)	(33.1		)	(78.8		)	(113.3		)	—
Settlements	—			—			—			—			23.8
Consolidation of variable interest entity	—			—			—			—			(4.6		)
Transfers into Level 3	1.6			—			—			1.6			—
Transfers out of Level 3	(0.9		)	—			—			(0.9		)	—
Effect of exchange rate changes	—			(6.1		)	(3.0		)	(9.1		)	1.8
Balance at September 30, 2012	$	—		$	317.5		$	527.0		$	844.5		$	(67.9	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at September 30, 2012	$	—		$	2.9		$	3.8		$	6.7		$	(4.0	)

(in millions)	Investments of Consolidated VIEs		Investments of Consolidated SIPs			Total Level 3 Assets			Debt of Consolidated VIEs
for the fiscal year ended September 30, 2011
Balance at October 1, 2010	$	—	$	3.3		$	3.3		$	—
Adjustment for adoption of new consolidation guidance	1.8		—			1.8			(71.4		)
Realized and unrealized gains (losses) included in investment and other income, net	0.1		(1.3		)	(1.2		)	(45.6		)
Purchases, sales and settlements, net	—		14.1			14.1			36.7
Consolidation adjustment	—		593.1			593.1			—
Transfers out of Level 3, net	—		(0.6		)	(0.6		)	—
Effect of exchange rate changes	—		—			—			(3.6		)
Balance at September 30, 2011	$	1.9	$	608.6		$	610.5		$	(83.9	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at September 30, 2011	$	0.1	$	0.3		$	0.4		$	(45.6	)

(in millions)	Investments of Consolidated SIPs
for the fiscal year ended September 30, 2010
Balance at October 1, 2009	$	2.1
Realized and unrealized gains (losses) included in investment and other income, net	(1.1		)
Purchases, sales and settlements, net	2.8
Transfers out of Level 3, net	(0.5		)
Total Level 3 Assets at September 30, 2010	$	3.3
Change in unrealized gains included in net income relating to assets held at September 30, 2010	$	0.1

Schedule of valuation techniques and significant unobservable inputs used in Level 3 fair value measurements

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets at September 30, 2012 were as follows:

(in millions)	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Debt securities	$	317.5	Discounted cash flow	Discount rate	4.9%–25.6% (11.8%)
				Risk premium	0.0%–7.3% (2.1%)
Equity securities	144.4		Market comparable companies	EBITDA multiple	5.5–8.6 (7.3)
				Discount for lack of marketability	15.0%–30.0% (22.1%)
	47.4		Discounted cash flow	Discount rate	12.0%–15.0% (14.8%)
				Discount for lack of marketability	0.0%–50.0% (27.8%)
	21.0		Market pricing	Price to book value ratio	1.7

Schedule of financial instruments of consolidated VIEs and consolidated SIPs not measured at fair value

Financial instruments of consolidated VIEs and consolidated SIPs that were not measured at fair value were as follows:

(in millions)	September 30, 2012					September 30, 2011
	Carrying Value		Estimated Fair Value		Fair Value Level	Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents of consolidated SIPs	$	42.8	$	42.8	1	$	81.5	$	81.5
Loans receivable of consolidated VIEs, net	—		$	—	N/A	$	149.4	$	153.2
Financial Liabilities
Debt of consolidated VIEs	$	—	$	—	N/A	$	164.2	$	167.9
Debt of consolidated SIPs	110.2		113.0		3	134.9		117.0

Schedule of Variable Interest Entities

The carrying values of the investment management and related service fees receivable from and the equity ownership interests in these VIEs included in the Company's consolidated balance sheets at September 30, 2012 and 2011 are set forth below. These amounts represent the Company's maximum exposure to loss from these VIEs.

(in millions)
as of September 30,	2012		2011
Receivables	$	43.8	$	42.2
Investments	199.7		176.7
Total	$	243.5	$	218.9

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Taxes on Income

12 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Abstract]

Taxes on Income

Taxes on Income

Taxes on income were as follows:

(in millions)
for the fiscal years ended September 30,	2012		2011		2010
Current expense
Federal	$	602.9	$	576.4	$	426.5
State	56.1		103.8		71.5
Non-U.S.	83.2		122.8		115.0
Deferred expense	20.5		0.4		5.3
Total	$	762.7	$	803.4	$	618.3

Included in income before taxes was $966.3 million, $1,028.2 million and $902.1 million of pre-tax non-U.S. income for fiscal years 2012, 2011 and 2010. The provision for U.S. income taxes in fiscal years 2012, 2011 and 2010 included benefits of $0.5 million, $0.7 million and $2.5 million related to the utilization of net operating loss carry-forwards. In fiscal years 2012, 2011 and 2010, the Company’s income taxes payable for federal, state and non-U.S. purposes have been reduced by tax benefits of $22.6 million, $16.3 million and $11.9 million associated with its stock-based compensation plans. The benefits were recorded as an increase in capital in excess of par value.

The Company’s income in certain countries is subject to reduced tax rates due to tax rulings and tax holidays. The impact of the reduced rates on income tax expense was $80.0 million or $0.37 per diluted share for fiscal year 2012, $78.3 million or $0.37 per diluted share for fiscal year 2011, and $37.0 million or $0.16 per diluted share for fiscal year 2010. The tax rulings will expire in fiscal years 2020 and 2022.

The significant components of deferred tax assets and deferred tax liabilities were as follows:

(in millions)
as of September 30,	2012			2011
Deferred Tax Assets
State taxes	$	(0.9	)	$	19.7
Allowance for loan losses	1.0			4.3
Deferred compensation and employee benefits	62.8			53.7
Stock-based compensation	29.2			23.6
Net operating loss carry-forwards	27.9			24.4
Tax benefit for uncertain tax positions	29.6			29.9
Other	15.6			19.3
Total deferred tax assets	165.2			174.9
Valuation allowance for net operating loss carry-forwards	(17.4		)	(12.3		)
Deferred tax assets, net of valuation allowance	147.8			162.6
Deferred Tax Liabilities
Depreciation on fixed assets	18.6			18.2
Goodwill and other purchased intangibles	253.8			262.8
Deferred commissions	23.6			22.5
Unrealized gains on investments	17.5			2.8
Other	15.7			22.8
Total deferred tax liabilities	329.2			329.1
Net Deferred Tax Liability	$	181.4		$	166.5

Deferred income tax assets and liabilities that relate to the same tax jurisdiction are recorded net on the consolidated balance sheets. The components of the net deferred tax liability were classified in the consolidated balance sheets as follows:

(in millions)
as of September 30,	2012		2011
Deferred tax assets	$	94.9	$	107.9
Deferred tax liabilities	276.3		274.4
Net Deferred Tax Liability	$	181.4	$	166.5

At September 30, 2012, there were $84.1 million of non-U.S. net operating loss carry-forwards, $48.6 million of which expire between 2014 and 2023 with the remaining carry-forwards having an indefinite life. In addition, there were $182.4 million in state net operating loss carry-forwards that expire between 2013 and 2032. A partial valuation allowance has been provided to offset the related deferred tax assets due to the uncertainty of realizing the benefit of the net operating loss carry-forwards. The valuation allowance increased $5.1 million in fiscal year 2012 and decreased $1.6 million in the prior year.

The Company has made no provision for U.S. income taxes on $5.6 billion of cumulative undistributed non-U.S. earnings that are indefinitely reinvested at September 30, 2012. Determination of the potential amount of unrecognized deferred U.S. income tax liability related to such reinvested non-U.S. earnings is not practicable because of the numerous assumptions associated with this hypothetical calculation. However, foreign tax credits would be available to reduce some portion of this amount. Changes to the Company’s policy of reinvestment or repatriation of non-U.S. earnings may have a significant effect on its financial condition and results of operations.

The following reconciles the amount of tax expense at the federal statutory rate and taxes on income as reflected in the consolidated statements of income:

(dollar amounts in millions)
for the fiscal years ended September 30,	2012					2011					2010
Federal taxes at statutory rate	$	937.4		35.0	%	$	918.5		35.0	%	$	724.4		35.0	%
State taxes, net of federal tax effect	34.4			1.3	%	63.5			2.4	%	51.7			2.5	%
Effect of non-U.S. operations	(218.8		)	(8.2	)%	(222.0		)	(8.5	)%	(177.1		)	(8.6	)%
Effect of net loss (income) attributable to noncontrolling interests	4.7			0.2	%	36.0			1.4	%	(2.0		)	(0.1	)%
Change in valuation allowance	—			0.0	%	—			0.0	%	(5.2		)	(0.3	)%
Other	5.0			0.2	%	7.4			0.3	%	26.5			1.4	%
Tax Provision	$	762.7		28.5	%	$	803.4		30.6	%	$	618.3		29.9	%

A reconciliation of the beginning and ending balances of gross unrecognized tax benefits is as follows:

(in millions)
for the fiscal years ended September 30,	2012			2011			2010
Balance at beginning of year	$	99.7		$	93.3		$	76.0
Additions for tax positions of prior years	16.4			8.8			11.4
Reductions for tax positions of prior years	(6.3		)	(5.1		)	(0.9		)
Additions for tax positions related to the current year	10.0			10.8			12.2
Settlements with taxing authorities	(13.7		)	(4.2		)	(0.8		)
Expirations of statute of limitations	(4.8		)	(3.9		)	(4.6		)
Balance at End of Year	$	101.3		$	99.7		$	93.3

If recognized, substantially all of this amount, net of any deferred tax benefits, would favorably affect the Company’s effective income tax rate in future periods.

Accrued interest on uncertain tax positions at September 30, 2012 and 2011 was approximately $14.6 million and $20.3 million, and is not presented in the unrecognized tax benefits table above. Interest expense (benefit) of $(0.3) million, $3.2 million and $5.1 million was recognized in the consolidated statements of income during fiscal years 2012, 2011 and 2010. Accrued penalties at September 30, 2012 and 2011 were insignificant.

The Company files a consolidated U.S. federal income tax return, multiple U.S. state and local income tax returns, and income tax returns in multiple non-U.S. jurisdictions. The Company is subject to examination by the taxing authorities in these jurisdictions. The Company’s major tax jurisdictions and the tax years for which the statutes of limitations have not expired are as follows: India 1997 to 2012; Canada, Hong Kong and Singapore 2005 to 2012; U.S. federal 2006 to 2012; the State of California 2007 to 2012; New York City and the State of New Jersey 2008 to 2012; the States of Florida, Massachusetts, and New York 2009 to 2012; and Luxembourg and the U.K. 2010 to 2012.

The Company has on-going examinations in various stages of completion in New York City, the State of Florida, Canada, Hong Kong, India, Singapore and the U.S. Examination outcomes and the timing of settlements are subject to significant uncertainty. Such settlements may involve some or all of the following: the payment of additional taxes, the adjustment of deferred taxes and/or the recognition of unrecognized tax benefits. The Company has recognized a tax benefit only for those positions that meet the more-likely-than-not recognition threshold. It is reasonably possible that the total unrecognized tax benefit as of September 30, 2012 could decrease by an estimated $4.1 million within the next twelve months as a result of the expiration of statutes of limitations in the U.S. federal and certain U.S. state and local and non-U.S. tax jurisdictions, and potential settlements with U.S. states and non-U.S. taxing authorities. The unrecognized tax benefits described above are contractual obligations; however, at this time, the Company cannot make a reliable estimate as to the timing of cash settlements beyond the next twelve months. The amounts of unrecognized tax benefits and related interest that are expected to be paid in the next twelve months are insignificant.

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Stock-Based Compensation - Summary of nonvested stock and stock unit award activity (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
Nonvested balance shares	1,085
Nonvested balance, Weighted Average Grant Date Fair Value	$ 114.57
Shares granted	1,099
Weighted Average Grant Date Fair Value of shares granted	$ 106.76
Shares vested	(810)
Weighted Average Grant Date Fair Value of shares vested	$ 110.85
Shares forfeited/cancelled	(47)
Weighted Average Grant Date Fair Value of shares forfeited/cancelled	$ 110.91
Nonvested balance shares	1,327
Nonvested balance, Weighted Average Grant Date Fair Value	$ 110.50