10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

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

For the quarterly period ended March 31, 2014

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, CA	94403
(Address of principal executive offices)	(Zip Code)

(650) 312-2000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the 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 Exchange Act).    o  YES    x  NO

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Outstanding: 627,689,616 shares of common stock, par value $0.10 per share, of Franklin Resources, Inc. as of April 21, 2014.

INDEX TO FORM 10-Q

			Page
PART I		Financial Information
	Item 1.	Financial Statements (unaudited)
		Condensed Consolidated Statements of Income	3
		Condensed Consolidated Statements of Comprehensive Income	4
		Condensed Consolidated Balance Sheets	5
		Condensed Consolidated Statements of Cash Flows	7
		Notes to Condensed Consolidated Financial Statements	9
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
	Item 4.	Controls and Procedures	48
PART II		Other Information
	Item 1.	Legal Proceedings	49
	Item 1A.	Risk Factors	49
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
	Item 6.	Exhibits	50
Signatures			51
Exhibit Index

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

FRANKLIN RESOURCES, INC.

Condensed Consolidated Statements of Income

Unaudited

	Three Months Ended March 31,						Six Months Ended March 31,
(in millions, except per share data)	2014			2013			2014			2013
Operating Revenues
Investment management fees	$	1,368.0		$	1,267.5		$	2,741.8		$	2,467.4
Sales and distribution fees	638.6			642.7			1,275.3			1,246.8
Shareholder servicing fees	67.7			76.6			143.8			151.0
Other, net	21.6			26.8			44.5			50.2
Total operating revenues	2,095.9			2,013.6			4,205.4			3,915.4
Operating Expenses
Sales, distribution and marketing	766.3			780.8			1,543.0			1,511.7
Compensation and benefits	372.3			355.1			721.3			690.2
Information systems and technology	51.0			44.8			101.2			88.4
Occupancy	33.8			31.9			66.9			65.3
General, administrative and other	86.5			71.6			173.9			145.3
Total operating expenses	1,309.9			1,284.2			2,606.3			2,500.9
Operating Income	786.0			729.4			1,599.1			1,414.5
Other Income (Expenses)
Investment and other income, net	17.0			96.5			65.2			142.0
Interest expense	(11.4		)	(10.9		)	(24.0		)	(25.4		)
Other income, net	5.6			85.6			41.2			116.6
Income before taxes	791.6			815.0			1,640.3			1,531.1
Taxes on income	238.8			221.6			491.5			433.0
Net income	552.8			593.4			1,148.8			1,098.1
Less: Net income (loss) attributable to
Nonredeemable noncontrolling interests	(7.2		)	17.8			(24.4		)	5.1
Redeemable noncontrolling interests	(1.0		)	2.8			8.4			4.1
Net Income Attributable to Franklin Resources, Inc.	$	561.0		$	572.8		$	1,164.8		$	1,088.9
Earnings per Share
Basic	$	0.89		$	0.90		$	1.85		$	1.71
Diluted	0.89			0.90			1.84			1.70
Dividends per Share	$	0.120		$	0.097		$	0.24		$	1.19

See Notes to Condensed Consolidated Financial Statements.

3

FRANKLIN RESOURCES, INC.

Condensed Consolidated Statements of Comprehensive Income

Unaudited

(in millions)	Three Months Ended March 31,						Six Months Ended March 31,
	2014			2013			2014			2013
Net Income	$	552.8		$	593.4		$	1,148.8		$	1,098.1
Other Comprehensive Income (Loss)
Net unrealized gains (losses) on investments, net of tax	1.5			(16.9		)	(8.5		)	(19.0		)
Currency translation adjustments, net of tax	(0.1		)	(38.9		)	8.0			(35.0		)
Net unrealized gains (losses) on defined benefit plans, net of tax	0.1			0.7			(1.2		)	0.7
Total comprehensive income	554.3			538.3			1,147.1			1,044.8
Less: Comprehensive income (loss) attributable to
Nonredeemable noncontrolling interests	(7.2		)	17.8			(24.4		)	5.1
Redeemable noncontrolling interests	(1.0		)	2.8			8.4			4.1
Comprehensive Income Attributable to Franklin Resources, Inc.	$	562.5		$	517.7		$	1,163.1		$	1,035.6

See Notes to Condensed Consolidated Financial Statements.

4

FRANKLIN RESOURCES, INC.

Condensed Consolidated Balance Sheets

Unaudited

(dollars in millions)	March 31, 2014		September 30, 2013
Assets
Cash and cash equivalents	$	6,814.7	$	6,186.0
Receivables	987.6		1,038.9
Investments (including $1,867.4 and $1,892.7 at fair value at March 31, 2014 and September 30, 2013)	2,610.6		2,439.2
Loans held for sale	218.3		—
Loans receivable, net	3.8		229.7
Assets of consolidated variable interest entities
Cash and cash equivalents	56.8		44.0
Investments, at fair value	878.4		941.1
Assets of consolidated sponsored investment products
Cash and cash equivalents	39.4		93.1
Investments, at fair value	1,339.3		1,203.2
Deferred taxes	118.8		112.4
Property and equipment, net	553.5		564.1
Goodwill and other intangible assets, net	2,346.7		2,359.2
Other	169.5		179.4
Total Assets	$	16,137.4	$	15,390.3
Liabilities
Compensation and benefits	$	331.8	$	444.5
Accounts payable and accrued expenses	261.5		262.8
Commissions	446.9		437.7
Deposits	674.1		586.8
Debt	1,197.9		1,197.7
Debt of consolidated variable interest entities, at fair value	886.2		988.5
Debt of consolidated sponsored investment products	145.3		108.9
Deferred taxes	266.3		272.5
Other	281.0		283.6
Total liabilities	4,491.0		4,583.0
Commitments and Contingencies (Note 9)
Redeemable Noncontrolling Interests	173.2		121.8

[Table continued on next page]

See Notes to Condensed Consolidated Financial Statements.

5

FRANKLIN RESOURCES, INC.

Condensed Consolidated Balance Sheets

Unaudited

[Table continued from previous page]

(dollars in millions, except per share data)	March 31, 2014		September 30, 2013
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; 627,803,784 and 630,917,532 shares issued and outstanding at March 31, 2014 and September 30, 2013	62.8		63.1
Retained earnings	10,779.7		9,991.2
Appropriated retained earnings of consolidated variable interest entities	18.3		12.7
Accumulated other comprehensive income	4.4		6.1
Total Franklin Resources, Inc. stockholders’ equity	10,865.2		10,073.1
Nonredeemable noncontrolling interests	608.0		612.4
Total stockholders’ equity	11,473.2		10,685.5
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$	16,137.4	$	15,390.3

See Notes to Condensed Consolidated Financial Statements.

6

FRANKLIN RESOURCES, INC.

Condensed Consolidated Statements of Cash Flows

Unaudited

	Six Months Ended March 31,
(in millions)	2014			2013
Net Income	$	1,148.8		$	1,098.1
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred sales commissions	66.3			67.8
Depreciation and other amortization	50.8			46.8
Stock-based compensation	64.3			57.1
Excess tax benefit from stock-based compensation	(5.0		)	(11.7		)
Gains on sale of assets	(32.0		)	(27.8		)
Income from investments in equity method investees	(34.6		)	(42.2		)
Net (gains) losses on other investments of consolidated sponsored investment products	33.8			(46.0		)
Net (gains) losses of consolidated variable interest entities	(8.3		)	26.5
Other	(1.6		)	3.9
Changes in operating assets and liabilities:
Increase in receivables, prepaid expenses and other	(112.0		)	(201.7		)
Increase in trading securities, net	(75.4		)	(83.9		)
Increase in trading securities of consolidated sponsored investment products, net	(437.8		)	(69.3		)
Originations of loans held for sale	(37.3		)	—
Decrease in accrued compensation and benefits	(113.3		)	(89.2		)
Increase in commissions payable	9.2			38.9
Increase (decrease) in income taxes payable	(22.7		)	16.6
Increase (decrease) in other liabilities	146.2			(12.1		)
Net cash provided by operating activities	639.4			771.8
Purchase of investments	(138.3		)	(137.4		)
Liquidation of investments	287.5			321.3
Purchase of investments by consolidated sponsored investment products	(204.2		)	(144.1		)
Liquidation of investments by consolidated sponsored investment products	54.1			88.9
Purchase of investments by consolidated variable interest entities	(79.9		)	(360.9		)
Liquidation of investments by consolidated variable interest entities	215.0			333.4
Decrease in loans receivable, net	36.8			16.5
Decrease in loans held for sale	8.2			—
Additions of property and equipment, net	(28.4		)	(28.2		)
Acquisition of subsidiary, net of cash acquired	—			5.7
Increase (decrease) in cash from net consolidation (deconsolidation) of sponsored investment products	(148.9		)	2.8
Net cash provided by investing activities	1.9			98.0
Increase in deposits	86.2			2.5
Issuance of common stock	20.4			27.3
Dividends paid on common stock	(139.9		)	(759.3		)
Repurchase of common stock	(315.9		)	(121.3		)
Excess tax benefit from stock-based compensation	5.0			11.7
Payments on debt	—			(479.4		)
Proceeds from issuance of debt by consolidated sponsored investment products	408.3			301.1
Payments on debt by consolidated sponsored investment products	(372.4		)	(324.8		)

[Table continued on next page]

See Notes to Condensed Consolidated Financial Statements.

7

FRANKLIN RESOURCES, INC.

Condensed Consolidated Statements of Cash Flows

Unaudited

[Table continued from previous page]

	Six Months Ended March 31,
(in millions)	2014			2013
Payments on debt by consolidated variable interest entities	$	(119.8	)	$	(95.3	)
Payments on contingent consideration liability	(2.8		)	—
Noncontrolling interests	367.5			87.6
Net cash used in financing activities	(63.4		)	(1,349.9		)
Effect of exchange rate changes on cash and cash equivalents	9.9			(15.5		)
Increase (decrease) in cash and cash equivalents	587.8			(495.6		)
Cash and cash equivalents, beginning of period	6,323.1			6,051.4
Cash and Cash Equivalents, End of Period	$	6,910.9		$	5,555.8
Supplemental Disclosure of Non-Cash Activities
Transfer of loans receivable, net to loans held for sale	$	189.2		$	—
Contingent consideration liability recognized due to acquisition	—			90.6
Increase in noncontrolling interests due to acquisition	—			38.2
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	$	537.1		$	430.1
Cash paid for interest	21.1			26.8
Cash paid for interest by consolidated sponsored investment products and consolidated variable interest entities	23.3			24.7

See Notes to Condensed Consolidated Financial Statements.

8

FRANKLIN RESOURCES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2014

(Unaudited)

Note 1 – Basis of Presentation

The unaudited interim financial statements of Franklin Resources, Inc. (“Franklin”) and its consolidated subsidiaries (collectively, the “Company”) included herein have been prepared by the Company in accordance with the instructions to Form 10-Q and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Under these rules and regulations, some information and footnote disclosures normally included in financial statements prepared under accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been shortened or omitted. Management believes that all adjustments necessary for a fair statement of the financial position and the results of operations for the periods shown have been made. All adjustments are normal and recurring. These financial statements should be read together with the Company’s audited financial statements included in its Form 10-K for the fiscal year ended September 30, 2013 (“fiscal year 2013”). Certain amounts for the comparative prior fiscal year period have been reclassified to conform to the financial statement presentation as of and for the period ended March 31, 2014.

Note 2 – New Accounting Guidance

On October 1, 2013, the Company adopted new Financial Accounting Standards Board guidance that requires an entity to report significant reclassifications out of accumulated other comprehensive income by component either on the face of the financial statements or in the notes. See Note 12–Accumulated Other Comprehensive Income for the expanded disclosures.

Note 3 – Stockholders' Equity and Redeemable Noncontrolling Interests

The changes in total stockholders’ equity and redeemable noncontrolling interests were as follows:

(in millions)	Franklin Resources, Inc. Stockholders’ Equity			Nonredeemable Noncontrolling Interests			Total Stockholders’ Equity			Redeemable Noncontrolling Interests
for the six months ended March 31, 2014
Balance at October 1, 2013	$	10,073.1		$	612.4		$	10,685.5		$	121.8
Net income (loss)	1,164.8			(24.4		)	1,140.4			8.4
Net income reclassified to appropriated retained earnings	5.6			(5.6		)	—
Other comprehensive loss	(1.7		)				(1.7		)
Cash dividends on common stock	(151.4		)				(151.4		)
Repurchase of common stock	(315.9		)				(315.9		)
Noncontrolling interests
Net subscriptions				25.6			25.6			341.9
Net deconsolidation of sponsored investment products				—			—			(298.9		)
Other1	90.7						90.7
Balance at March 31, 2014	$	10,865.2		$	608.0		$	11,473.2		$	173.2

^{__________________} 

¹  Primarily relates to stock-based compensation plans.

9

(in millions)	Franklin Resources, Inc. Stockholders’ Equity			Nonredeemable Noncontrolling Interests		Total Stockholders’ Equity			Redeemable Noncontrolling Interests
for the six months ended March 31, 2013
Balance at October 1, 2012	$	9,201.3		$	559.2	$	9,760.5		$	26.7
Net income	1,088.9			5.1		1,094.0			4.1
Net loss reclassified to appropriated retained earnings	(28.2		)	28.2		—
Other comprehensive loss	(53.3		)			(53.3		)
Cash dividends on common stock	(763.6		)			(763.6		)
Repurchase of common stock	(121.3		)			(121.3		)
Noncontrolling interests
Net subscriptions				55.6		55.6			32.0
Net consolidation (deconsolidation) of sponsored investment products				4.4		4.4			(15.1		)
Acquisition				5.4		5.4			32.8
Other1	96.2					96.2
Balance at March 31, 2013	$	9,420.0		$	657.9	$	10,077.9		$	80.5

^{__________________} 

¹  Primarily relates to stock-based compensation plans.

During the three and six months ended March 31, 2014, the Company repurchased 3.4 million and 5.9 million shares of its common stock at a cost of $178.8 million and $315.9 million under its stock repurchase program. In December 2013, the Company's Board of Directors authorized the repurchase of up to 30.0 million additional shares of its common stock under the stock repurchase program. At March 31, 2014, 35.3 million shares remained available for repurchase under the program, which is not subject to an expiration date. During the three and six months ended March 31, 2013, the Company repurchased 0.5 million and 2.7 million shares of its common stock at a cost of $23.3 million and $121.3 million.

Note 4 – Earnings per Share

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

(in millions, except per share data)	Three Months Ended March 31,				Six Months Ended March 31,
	2014		2013		2014		2013
Net Income Attributable to Franklin Resources, Inc.	$	561.0	$	572.8	$	1,164.8	$	1,088.9
Less: Allocation of earnings to participating nonvested stock and stock unit awards	3.9		4.0		7.3		7.4
Net Income Available to Common Stockholders	$	557.1	$	568.8	$	1,157.5	$	1,081.5
Weighted-average shares outstanding – basic	626.1		634.0		627.1		634.2
Effect of dilutive common stock options and non-participating nonvested stock unit awards	0.4		0.7		0.4		0.9
Weighted-Average Shares Outstanding – Diluted	626.5		634.7		627.5		635.1
Earnings per Share
Basic	$	0.89	$	0.90	$	1.85	$	1.71
Diluted	0.89		0.90		1.84		1.70

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 three and six months ended March 31, 2014 and de minimus for the three and six months ended March 31, 2013.

10

Note 5 – Investments

The disclosures below include details of the Company’s investments, excluding those of consolidated variable interest entities (“VIEs”) and consolidated sponsored investment products (“SIPs”). See Note 8–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)	March 31, 2014		September 30, 2013
Investment securities, trading	$	1,274.5	$	1,196.7
Investment securities, available-for-sale
SIPs	466.5		534.6
Securities of U.S. states and political subdivisions	17.4		23.1
Securities of the U.S. Treasury and federal agencies	2.2		2.3
Mortgage-backed securities – agency residential1	86.6		110.9
Other equity securities	6.6		11.3
Total investment securities, available-for-sale	579.3		682.2
Investments in equity method investees	664.9		485.4
Other investments	91.9		74.9
Total	$	2,610.6	$	2,439.2

^{__________________} 

¹  Consist of U.S. government-sponsored enterprise obligations.

At March 31, 2014 and September 30, 2013, investment securities with aggregate carrying amounts of $66.7 million and $82.5 million were pledged as collateral for the ability to borrow from the Federal Reserve Bank, $15.6 million and $28.4 million were pledged as collateral for amounts available in secured Federal Home Loan Bank (“FHLB”) short-term borrowing capacity, and $6.5 million and $7.1 million were pledged as collateral for the ability to borrow from uncommitted short-term bank lines of credit (see Note 7 - 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 March 31, 2014	Cost Basis		Gains		Losses			Fair Value
SIPs	$	404.9	$	63.3	$	(1.7	)	$	466.5
Securities of U.S. states and political subdivisions	16.9		0.5		—			17.4
Securities of the U.S. Treasury and federal agencies	2.2		—		—			2.2
Mortgage-backed securities – agency residential	85.0		1.7		(0.1		)	86.6
Other equity securities	6.3		0.3		—			6.6
Total	$	515.3	$	65.8	$	(1.8	)	$	579.3

(in millions)			Gross Unrealized
as of September 30, 2013	Cost Basis		Gains		Losses			Fair Value
SIPs	$	465.4	$	71.7	$	(2.5	)	$	534.6
Securities of U.S. states and political subdivisions	22.3		0.8		—			23.1
Securities of the U.S. Treasury and federal agencies	2.3		—		—			2.3
Mortgage-backed securities – agency residential	108.9		2.0		—			110.9
Other equity securities	10.9		0.4		—			11.3
Total	$	609.8	$	74.9	$	(2.5	)	$	682.2

11

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

	Less Than 12 Months					12 Months or Greater					Total
(in millions)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
as of March 31, 2014
SIPs	$	15.0	$	(0.8	)	$	1.8	$	(0.9	)	$	16.8	$	(1.7	)
Mortgage-backed securities – agency residential	17.0		(0.1		)	—		—			17.0		(0.1		)
Total	$	32.0	$	(0.9	)	$	1.8	$	(0.9	)	$	33.8	$	(1.8	)

	Less Than 12 Months					12 Months or Greater					Total
(in millions)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
as of September 30, 2013
SIPs	$	50.3	$	(2.4	)	$	1.4	$	(0.1	)	$	51.7	$	(2.5	)

The Company did not recognize any other-than-temporary impairment of investments during the three months ended March 31, 2014. During the six months ended March 31, 2014, the Company recognized $0.6 million of other-than-temporary impairment, of which $0.4 million related to available-for-sale SIPs. The Company recognized $0.7 million and $1.0 million of other-than-temporary impairment during the three and six months ended March 31, 2013, including $0.3 million in the six-month period related to available-for-sale SIPs.

At March 31, 2014, contractual maturities of available-for-sale debt securities were as follows:

(in millions)	Cost Basis		Fair Value
Due in one year or less	$	5.1	$	5.2
Due after one year through five years	12.4		12.8
Due after five years through ten years	—		—
Due after ten years	1.6		1.6
Total	$	19.1	$	19.6

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 6 – 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 8 – Variable Interest Entities and Consolidated Sponsored Investment Products for information related to fair value measurements of the assets and liabilities of these entities.

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 and liabilities measured at fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

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.

12

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

(in millions)	Level 1		Level 2		Level 3		Total
as of March 31, 2014
Assets
Investment securities, trading	$	1,193.4	$	81.1	$	—	$	1,274.5
Investment securities, available-for-sale
SIPs	466.5		—		—		466.5
Securities of U.S. states and political subdivisions	—		17.4		—		17.4
Securities of the U.S. Treasury and federal agencies	—		2.2		—		2.2
Mortgage-backed securities – agency residential	—		86.6		—		86.6
Other equity securities	2.0		4.6		—		6.6
Life settlement contracts	—		—		13.6		13.6
Total Assets Measured at Fair Value	$	1,661.9	$	191.9	$	13.6	$	1,867.4
Liabilities
Contingent consideration liabilities	$	—	$	—	$	104.2	$	104.2

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2013
Assets
Investment securities, trading	$	1,121.5	$	75.2	$	—	$	1,196.7
Investment securities, available-for-sale
SIPs	534.6		—		—		534.6
Securities of U.S. states and political subdivisions	—		23.1		—		23.1
Securities of the U.S. Treasury and federal agencies	—		2.3		—		2.3
Mortgage-backed securities – agency residential	—		110.9		—		110.9
Other equity securities	11.3		—		—		11.3
Life settlement contracts	—		—		13.8		13.8
Total Assets Measured at Fair Value	$	1,667.4	$	211.5	$	13.8	$	1,892.7
Liabilities
Contingent consideration liabilities	$	—	$	—	$	97.7	$	97.7

The fair values of substantially all trading investments, all available-for-sale SIPs and certain other equity securities are determined based on their published net asset values. The fair values of certain trading investments, all available-for-sale debt securities and certain other equity securities are determined using quoted market prices, if available, or independent third-party broker or dealer price quotes, which are evaluated for reasonableness. The fair value of life settlement contracts is determined using a discounted cash flow valuation technique.

The fair value of contingent consideration liabilities is determined using an income-based method which considers the net present value of anticipated future cash flows. Substantially all of the balance relates to the Company's commitment to acquire the remaining interests in K2 Advisors Holdings, LLC. There were no transfers between Level 1 and Level 2, or into or out of Level 3, during the three and six months ended March 31, 2014 and 2013.

13

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

	2014						2013
(in millions)	Investments			Contingent Consideration Liabilities			Investments			Contingent Consideration Liabilities
for the three months ended March 31,
Balance at beginning of period	$	13.9		$	(101.2	)	$	13.0		$	(90.3	)
Total realized and unrealized gains (losses)
Included in investment and other income, net	1.0			—			0.5			—
Included in general, administrative and other expense	—			(3.0		)	—			0.2
Other	—			(0.1		)	—			0.1
Purchases	—			—			0.1			—
Settlements	(1.3		)	0.1			(0.2		)	—
Balance at End of Period	$	13.6		$	(104.2	)	$	13.4		$	(90.0	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	$	0.3		$	(3.1	)	$	0.3		$	0.3

	2014						2013
(in millions)	Investments			Contingent Consideration Liabilities			Investments			Contingent Consideration Liabilities
for the six months ended March 31,
Balance at beginning of period	$	13.8		$	(97.7	)	$	14.8		$	—
Acquisition	—			—			—			(90.6		)
Total realized and unrealized gains (losses)
Included in investment and other income, net	1.7			—			0.9			—
Included in general, administrative and other expense	—			(8.9		)	—			(2.2		)
Other	—			(0.4		)	—			(0.2		)
Purchases	0.1			—			0.7			—
Sales	(0.7		)	—			(1.6		)	—
Settlements	(1.3		)	2.8			(1.4		)	3.0
Balance at End of Period	$	13.6		$	(104.2	)	$	13.4		$	(90.0	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	$	0.6		$	(9.3	)	$	0.7		$	(2.4	)

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements were as follows:

(in millions)
as of March 31, 2014	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Life settlement contracts	$	13.6	Discounted cash flow	Life expectancy	24–155 months (74)
				Discount rate	3.3%–21.7% (11.7%)
Contingent consideration liabilities	104.2		Discounted cash flow	AUM growth rate	6.0%–22.8% (13.0%)
				EBITDA margin	26.8% - 39.9% (35.7%)
				Discount rate	14.0%

(in millions)
as of September 30, 2013	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Life settlement contracts	$	13.8	Discounted cash flow	Life expectancy	25–160 months (76)
				Discount rate	3.3%–21.7% (11.7%)
Contingent consideration liabilities	97.7		Discounted cash flow	AUM growth rate	6.0%–25.0% (14.6%)
				EBITDA margin	26.4% - 38.9% (34.4%)
				Discount rate	14.0%

For life settlement contracts, a significant increase (decrease) in the life expectancy or the discount rate in isolation would result in a significantly lower (higher) fair value measurement.

14

For contingent consideration liabilities, a significant increase (decrease) in the AUM growth rate or EBITDA margin, or decrease (increase) in the discount rate, in isolation would result in a significantly higher (lower) fair value measurement.

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

(in millions)		March 31, 2014				September 30, 2013
	Fair Value Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents	1	$	6,814.7	$	6,814.7	$	6,186.0	$	6,186.0
Other investments1	2 or 3	78.3		86.9		61.1		69.2
Loans held for sale	2	218.3		218.5		—		—
Loans receivable, net	2	3.8		3.9		229.7		230.1
Financial Liabilities
Deposits	2	$	674.1	$	674.1	$	586.8	$	587.2
Debt	2	1,197.9		1,230.6		1,197.7		1,221.5

_________________

¹     Primarily consist of Level 3 assets.

Loans held for sale consist of collateralized private banking loans and are carried at the lower of cost or estimated fair value. The fair value is estimated based on the whole loan market price that was received in the subsequent sale.

Note 7 – Debt

The disclosures below include details of the Company’s debt, excluding that of consolidated VIEs and consolidated SIPs. See Note 8 – 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)	March 31, 2014		September 30, 2013		Effective Interest Rate
$250 million 3.125% notes due May 2015	$	249.9	$	249.9	3.32	%
$300 million 1.375% notes due September 2017	298.9		298.7		1.66	%
$350 million 4.625% notes due May 2020	349.7		349.7		4.74	%
$300 million 2.800% notes due September 2022	299.4		299.4		2.93	%
Total Debt	$	1,197.9	$	1,197.7

At March 31, 2014, the Company’s outstanding senior unsecured and unsubordinated notes had an aggregate face value of $1.2 billion. The notes have fixed interest rates with interest payable semi-annually and 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. At March 31, 2014, the Company was in compliance with the covenants of the notes.

At March 31, 2014, maturities for debt were as follows:

(in millions)	Amount
for the fiscal years ending September 30,
2014	$	—
2015	249.9
2016	—
2017	298.9
2018	—
Thereafter	649.1
Total	$	1,197.9

15

At March 31, 2014, 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, $260.0 million available in uncommitted short-term bank lines of credit under the Federal Reserve system, $65.3 million available through the secured Federal Reserve Bank short-term discount window, $14.8 million available in secured FHLB short-term borrowing capacity and $13.6 million available in uncommitted short-term bank lines of credit.

Note 8 – 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. The Company consolidates the VIE products for which it is the primary beneficiary and the non-VIE products which it controls. The Company has no right to the consolidated products' assets, other than its direct equity investment in them, and/or investment 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 other risks associated with the entities' liabilities.

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

	March 31, 2014						September 30, 2013
	Consolidated						Consolidated
(in millions)	VIEs		SIPs		Total		VIEs		SIPs		Total
Assets
Cash and cash equivalents	$	56.8	$	39.4	$	96.2	$	44.0	$	93.1	$	137.1
Receivables	4.0		24.9		28.9		37.7		19.1		56.8
Investments, at fair value	878.4		1,339.3		2,217.7		941.1		1,203.2		2,144.3
Other assets	—		0.7		0.7		—		0.7		0.7
Total Assets	$	939.2	$	1,404.3	$	2,343.5	$	1,022.8	$	1,316.1	$	2,338.9
Liabilities
Accounts payable and accrued expenses	$	—	$	31.9	$	31.9	$	—	$	25.2	$	25.2
Debt, at fair value	886.2		—		886.2		988.5		—		988.5
Debt	—		145.3		145.3		—		108.9		108.9
Other liabilities	26.3		10.9		37.2		10.9		8.5		19.4
Total liabilities	912.5		188.1		1,100.6		999.4		142.6		1,142.0
Redeemable Noncontrolling Interests	—		173.2		173.2		—		121.8		121.8
Stockholders' Equity
Franklin Resources, Inc.'s interests	26.7		449.2		475.9		23.4		454.8		478.2
Nonredeemable noncontrolling interests	—		593.8		593.8		—		596.9		596.9
Total stockholders' equity	26.7		1,043.0		1,069.7		23.4		1,051.7		1,075.1
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	$	939.2	$	1,404.3	$	2,343.5	$	1,022.8	$	1,316.1	$	2,338.9

The consolidated VIEs and consolidated SIPs did not have a significant impact on net income attributable to the Company during the three and six months ended March 31, 2014 and 2013.

Consolidated VIEs

Consolidated VIEs consist of sponsored collateralized loan obligations (“CLOs”), which are asset-backed financing entities collateralized by a pool of corporate debt securities.

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

	Three Months Ended March 31,						Six Months Ended March 31,
(in millions)	2014			2013			2014			2013
Net gains from changes in fair value of assets	$	11.0		$	18.9		$	24.4		$	41.1
Net losses from changes in fair value of liabilities	(8.8		)	(26.6		)	(16.5		)	(67.9		)
Total Net Gains (Losses)	$	2.2		$	(7.7	)	$	7.9		$	(26.8	)

16

The following tables present the unpaid principal balance and fair value 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			Debt
as of March 31, 2014
Unpaid principal balance	$	872.4	$	8.1		$	918.8
Difference between unpaid principal balance and fair value	6.0		(7.9		)	(32.6		)
Fair Value	$	878.4	$	0.2		$	886.2

(in millions)	Total Investments			Investments 90 Days or More Past Due			Debt
as of September 30, 2013
Unpaid principal balance	$	943.6		$	7.9		$	1,017.8
Difference between unpaid principal balance and fair value	(2.5		)	(7.7		)	(29.3		)
Fair Value	$	941.1		$	0.2		$	988.5

Consolidated SIPs

Consolidated SIPs 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. The Company consolidated 31 SIPs as of March 31, 2014, and 36 SIPs as of September 30, 2013. SIPs are typically consolidated when the Company makes an initial investment in a newly launched fund or limited partnership entity. They are deconsolidated when the Company redeems its investment in the SIP or its voting interests decrease to a minority percentage. The Company's investments in SIPs subsequent to deconsolidation are accounted for as trading or available-for-sale investment securities, or equity method or cost method investments depending on the nature of the SIP and the Company's level of ownership.

Investments

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

	March 31, 2014						September 30, 2013
	Consolidated						Consolidated
(in millions)	VIEs		SIPs		Total		VIEs		SIPs		Total
Investment securities, trading	$	—	$	258.1	$	258.1	$	—	$	244.1	$	244.1
Other debt securities	878.4		268.5		1,146.9		941.1		272.3		1,213.4
Other equity securities	—		812.7		812.7		—		686.8		686.8
Total Investments	$	878.4	$	1,339.3	$	2,217.7	$	941.1	$	1,203.2	$	2,144.3

Investments of consolidated VIEs consist of corporate debt securities. Investment securities, trading held by consolidated SIPs consist of debt and equity securities that are traded in active markets. Other debt and equity securities held by consolidated SIPs primarily consist of direct investments in secured and unsecured debt securities and equity 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:

	March 31, 2014		Effective Interest Rate		September 30, 2013		Effective Interest Rate
(dollars in millions)
Debt of consolidated VIEs, at fair value, due fiscal years 2018-2024	$	886.2	1.38	%	$	988.5	1.32	%
Debt of consolidated SIPs due fiscal years 2014-2019	145.3		3.62	%	108.9		4.08	%
Total Debt	$	1,031.5			$	1,097.4

The debt of consolidated VIEs had floating interest rates ranging from 0.47% to 9.74% at March 31, 2014, and from 0.50% to 9.77% at September 30, 2013.

17

The debt of consolidated SIPs had both fixed and floating interest rates ranging from 2.19% to 5.83% at March 31, 2014, and from 2.45% to 5.83% at September 30, 2013. The repayment of amounts outstanding under the debt agreements is secured by the assets of the consolidated SIPs or a pledge of the right to call capital.

At March 31, 2014, contractual maturities for debt of consolidated VIEs and consolidated SIPs were as follows:

(in millions)
for the fiscal years ending September 30,
2014	$	71.9
2015	—
2016	—
2017	28.1
2018	288.7
Thereafter	642.8
Total	$	1,031.5

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.See Note 6 – Fair Value Measurements for information related to the three levels of fair value hierarchy.

(in millions)	Level 1		Level 2		Level 3		Total
as of March 31, 2014
Assets
Cash and cash equivalents of consolidated VIEs	$	56.8	$	—	$	—	$	56.8
Receivables of consolidated VIEs	—		4.0		—		4.0
Investments of consolidated VIEs	—		877.9		0.5		878.4
Investments of consolidated SIPs
Debt securities	0.8		99.1		268.5		368.4
Equity securities	158.4		260.4		552.1		970.9
Total Assets Measured at Fair Value	$	216.0	$	1,241.4	$	821.1	$	2,278.5
Liabilities
Debt of consolidated VIEs	$	—	$	835.1	$	51.1	$	886.2
Other liabilities of consolidated VIEs	—		26.3		—		26.3
Other liabilities of consolidated SIPs	3.1		—		—		3.1
Total Liabilities Measured at Fair Value	$	3.1	$	861.4	$	51.1	$	915.6

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2013
Assets
Cash and cash equivalents of consolidated VIEs	$	44.0	$	—	$	—	$	44.0
Receivables of consolidated VIEs	—		37.7		—		37.7
Investments of consolidated VIEs	—		940.6		0.5		941.1
Investments of consolidated SIPs
Debt securities	4.5		83.8		272.3		360.6
Equity securities	158.1		213.6		470.9		842.6
Total Assets Measured at Fair Value	$	206.6	$	1,275.7	$	743.7	$	2,226.0
Liabilities
Debt of consolidated VIEs	$	—	$	928.8	$	59.7	$	988.5
Other liabilities of consolidated VIEs	—		10.9		—		10.9
Total Liabilities Measured at Fair Value	$	—	$	939.7	$	59.7	$	999.4

18

The fair value of cash and cash equivalents of consolidated VIEs is based on quoted market prices. The fair values of the other assets and liabilities of consolidated VIEs are primarily obtained from independent third-party broker or dealer price quotes. The fair value of a portion of the debt of consolidated VIEs is determined using significant unobservable inputs in a market-based approach.

Investments of consolidated SIPs consist of trading securities and other investments that are not generally traded in active markets. 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. The fair value of debt and equity securities not traded in active markets, other than fund products, is determined using significant unobservable inputs in either a market-based or income-based approach. The fair value of fund products not traded in active markets is determined using net asset value (“NAV”) as a practical expedient.

Other liabilities of consolidated SIPs consist of short positions in debt and equity securities. The fair value of the liabilities is determined based on the fair value of the underlying securities using quoted market prices, or independent third-party broker or dealer price quotes if quoted market prices securities are not available. 

The investments in fund products for which fair value was estimated using NAV as a practical expedient consisted of the following:

(in millions)	Redemption Frequency	Fair Value Level	March 31, 2014		September 30, 2013
Global fixed-income fund	Monthly	2	$	234.8	$	191.8
Hedge funds	Monthly or quarterly	2	24.0		6.6
Real estate and private equity funds	Nonredeemable	3	314.2		242.1
Hedge funds	Annually or triennially	3	2.2		1.5
Total			$	575.2	$	442.0

The investments in real estate and private equity funds are expected to be returned through distributions as a result of liquidations of the funds' underlying assets over a weighted-average period of 4.2 years and 4.7 years at March 31, 2014 and September 30, 2013. The consolidated SIPs' unfunded commitments to these funds totaled $170.1 million and $135.5 million at March 31, 2014 and September 30, 2013, of which the Company was contractually obligated to fund $3.9 million and $2.8 million based on its ownership percentage in the SIPs.

Transfers into Level 2 from Level 1 were $0.1 million during the three and six months ended March 31, 2014, and transfers into Level 1 from Level 2 were nil and $0.1 million during the same periods. Transfers into Level 2 from Level 1 were nil and $47.0 million during the three and six months ended March 31, 2013, and transfers into Level 1 from Level 2 were $53.8 million during both periods. The transfers into Level 2 from Level 1 during the prior year consisted of securities for which the quoted market prices were adjusted as of December 31, 2012 due to significant price changes in U.S.-traded market proxies resulting from the resolution of U.S. fiscal cliff negotiations. The impacted securities trade in 16 different countries in Europe, Asia and Latin America. The adjustments were made after the close of the foreign markets and were based on third-party factors derived from model-based valuation techniques for which the significant assumptions were observable in the market. The transfers into Level 1 from Level 2 were securities that were valued using unadjusted quoted market prices.

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

(in millions)	Investments of Consolidated VIEs		Investments of Consolidated SIPs						Total  Level 3 Assets			Debt of Consolidated VIEs
for the three months ended March 31, 2014			Debt			Equity
Balance at January 1, 2014	$	0.5	$	254.4		$	502.6		$	757.5		$	(52.2	)
Realized and unrealized gains (losses) included in investment and other income, net	—		6.3			(15.8		)	(9.5		)	1.1
Purchases	—		16.5			76.3			92.8			—
Sales	—		(8.7		)	(11.1		)	(19.8		)	—
Effect of exchange rate changes	—		—			0.1			0.1			—
Balance at March 31, 2014	$	0.5	$	268.5		$	552.1		$	821.1		$	(51.1	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at March 31, 2014	$	—	$	11.0		$	(14.6	)	$	(3.6	)	$	1.1

19

(in millions)	Investments of Consolidated VIEs		Investments of Consolidated SIPs						Total  Level 3 Assets			Debt of Consolidated VIEs
for the six months ended March 31, 2014			Debt			Equity
Balance at October 1, 2013	$	0.5	$	272.3		$	470.9		$	743.7		$	(59.7	)
Realized and unrealized gains (losses) included in investment and other income, net	—		(21.4		)	(19.5		)	(40.9		)	8.6
Purchases	—		38.7			126.5			165.2			—
Sales	—		(22.6		)	(26.7		)	(49.3		)	—
Effect of exchange rate changes	—		1.5			0.9			2.4			—
Balance at March 31, 2014	$	0.5	$	268.5		$	552.1		$	821.1		$	(51.1	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at March 31, 2014	$	—	$	(22.5	)	$	(18.6	)	$	(41.1	)	$	8.6

(in millions)	Investments of Consolidated SIPs						Total  Level 3 Assets			Debt of Consolidated VIEs
for the three months ended March 31, 2013	Debt			Equity
Balance at January 1, 2013	$	326.2		$	537.6		$	863.8		$	(78.3	)
Realized and unrealized gains (losses) included in investment and other income, net	(2.7		)	40.2			37.5			2.5
Purchases	30.1			66.5			96.6			—
Sales	(19.4		)	(18.4		)	(37.8		)	—
Effect of exchange rate changes	(4.0		)	(1.4		)	(5.4		)	—
Balance at March 31, 2013	$	330.2		$	624.5		$	954.7		$	(75.8	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at March 31, 2013	$	(2.2	)	$	40.1		$	37.9		$	2.5

(in millions)	Investments of Consolidated SIPs						Total  Level 3 Assets			Debt of Consolidated VIEs
for the six months ended March 31, 2013	Debt			Equity
Balance at October 1, 2012	$	317.5		$	527.0		$	844.5		$	(67.9	)
Realized and unrealized gains (losses) included in investment and other income, net	5.8			50.0			55.8			(7.9		)
Purchases	53.4			85.9			139.3			—
Sales	(46.0		)	(39.1		)	(85.1		)	—
Acquisition	—			0.8			0.8			—
Effect of exchange rate changes	(0.5		)	(0.1		)	(0.6		)	—
Balance at March 31, 2013	$	330.2		$	624.5		$	954.7		$	(75.8	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at March 31, 2013	$	6.7		$	51.4		$	58.1		$	(7.9	)

There were no transfers into or out of Level 3 during the three and six months ended March 31, 2014 and 2013.

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements were as follows:

(in millions)
as of March 31, 2014	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Debt securities	$	268.5	Discounted cash flow	Discount rate	3.6%–18.0% (11.5%)
				Risk premium	0.0%–18.0% (2.3%)
Equity securities	176.6		Market comparable companies	EBITDA multiple	1.0–14.0 (7.5)
				Discount for lack of marketability	20.0%-50.0% (41.4%)
	29.8		Market pricing	Price to book value ratio	1.8–2.8 (2.1)
	29.3		Discounted cash flow	Discount rate	6.0%–18.0% (16.3%)

20

(in millions)
as of September 30, 2013	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Debt securities	$	272.3	Discounted cash flow	Discount rate	5.7%–25.6% (8.3%)
				Risk premium	0.0%–19.3% (2.2%)
Equity securities	137.4		Market comparable companies	EBITDA multiple	5.0–10.2 (8.0)
				Discount for lack of marketability	20.0%–30.0% (23.7%)
	70.8		Discounted cash flow	Discount rate	12.0%–18.0% (16.2%)
				Discount for lack of marketability	0.0%–50.0% (20.6%)
	19.1		Market pricing	Price to book value ratio	1.7

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 at March 31, 2014 and September 30, 2013.

The fair values of Level 3 assets and liabilities that were determined based on third-party pricing information or NAV are excluded from the above two tables. At March 31, 2014 and September 30, 2013, the exclusions consisted of $51.1 million and $59.7 million of debt of consolidated VIEs that was valued using third-party broker or dealer price quotes and $316.4 million and $243.6 million of investments in various funds held by consolidated SIPs for which fair value was estimated using NAV as a practical expedient.

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 tables.

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 SIPs that were not measured at fair value were as follows:

(in millions)		March 31, 2014				September 30, 2013
	Fair Value Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents of consolidated SIPs	1	$	39.4	$	39.4	$	93.1	$	93.1
Financial Liabilities
Debt of consolidated SIPs	3	145.3		145.4		108.9		110.4

Non-consolidated VIEs

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

The carrying values of the investment management fees receivable from and the equity ownership interests in these VIEs included in the Company’s condensed consolidated balance sheets are set forth below. These amounts represent the Company’s maximum exposure to loss from these investment products.

21

(in millions)	March 31, 2014		September 30, 2013
Receivables	$	62.9	$	46.3
Investments	213.1		198.5
Total	$	276.0	$	244.8

The Company’s total AUM of non-consolidated VIEs was $40.0 billion at March 31, 2014 and $37.3 billion at September 30, 2013.

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 fiscal year 2013 or the six months ended March 31, 2014.

Note 9 – 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 March 31, 2014 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, 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 March 31, 2014 and September 30, 2013, the Company held cash of $157.2 million and $236.4 million off-balance sheet in agency or trust for investors and the affiliated mutual funds.

At March 31, 2014, there were no changes that would have a material effect on the other commitments and contingencies reported in the Company’s Form 10-K for fiscal year 2013.

Note 10 – Stock-Based Compensation

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 that 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 $189.6 million at March 31, 2014. This cost is expected to be recognized over a remaining weighted-average vesting period of 1.9 years.

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, 2013	3,732		$	40.61
Granted	2,624		53.87
Vested	(488	)	39.49
Forfeited/canceled	(116	)	44.53
Nonvested Balance at March 31, 2014	5,752		$	46.67

22

Note 11 – Other Income (Expenses)

Other income (expenses) consisted of the following:

	Three Months Ended March 31,						Six Months Ended March 31,
(in millions)	2014			2013			2014			2013
Investment and Other Income, Net
Dividend income	$	2.2		$	2.7		$	5.3		$	5.5
Interest income	2.4			2.4			4.7			5.5
Gains on trading investment securities, net	3.7			8.3			7.1			13.6
Realized gains on sale of investment securities, available-for-sale	11.0			6.6			30.6			27.8
Realized losses on sale of investment securities, available-for-sale	(0.2		)	—			(0.8		)	—
Income from investments in equity method investees	9.7			20.4			34.6			42.2
Other-than-temporary impairment of investments	—			(0.7		)	(0.6		)	(1.0		)
Gains (losses) on investments of consolidated SIPs, net	(15.4		)	41.5			(20.7		)	62.4
Gains (losses) on assets and liabilities of consolidated VIEs, net	2.2			(7.7		)	7.9			(26.8		)
Foreign currency exchange gains (losses), net	(2.1		)	18.6			(12.6		)	7.3
Other, net	3.5			4.4			9.7			5.5
Total	17.0			96.5			65.2			142.0
Interest Expense	(11.4		)	(10.9		)	(24.0		)	(25.4		)
Other Income, Net	$	5.6		$	85.6		$	41.2		$	116.6

Substantially all of the dividend income and realized gains and losses on sale of available-for-sale securities were generated by investments in non-consolidated SIPs. Interest income was primarily generated by cash equivalents and investments in trading securities and debt securities of U.S. states and political subdivisions. Proceeds from the sale of available-for-sale securities were $63.0 million and $188.6 million for the three and six months ended March 31, 2014, and $41.0 million and $200.0 million for the three and six months ended March 31, 2013.

The Company recognized net gains on trading investment securities that were held at March 31, 2014 and 2013 of $3.3 million and $5.2 million during the three and six months ended March 31, 2014, and $7.7 million and $9.4 million during the three and six months ended March 31, 2013. Net gains (losses) on trading investment securities of consolidated SIPs that were held at March 31, 2014 and 2013 were $(0.3) million and $7.4 million during the three and six months ended March 31, 2014, and $7.3 million and $13.4 million during the three and six months ended March 31, 2013.

Note 12 – Accumulated Other Comprehensive Income

Changes in accumulated other comprehensive income by component were as follows:

(in millions)	Unrealized Gains (Losses) on Investments			Currency Translation Adjustments			Unrealized Gains (Losses) on Defined Benefit Plans			Total
for the three months ended March 31, 2014
Balance at January 1, 2014	$	61.9		$	(55.1	)	$	(3.9	)	$	2.9
Other comprehensive income (loss) before reclassifications, net of tax	4.1			(0.1		)	0.1			4.1
Reclassifications to investment and other income, net, net of tax	(2.6		)	—			—			(2.6		)
Total other comprehensive income (loss)	1.5			(0.1		)	0.1			1.5
Balance at March 31, 2014	$	63.4		$	(55.2	)	$	(3.8	)	$	4.4

23

(in millions)	Unrealized Gains (Losses) on Investments			Currency Translation Adjustments			Unrealized Losses on Defined Benefit Plans			Total
for the six months ended March 31, 2014
Balance at October 1, 2013	$	71.9		$	(63.2	)	$	(2.6	)	$	6.1
Other comprehensive income (loss) before reclassifications, net of tax	5.0			8.0			(1.2		)	11.8
Reclassifications to investment and other income, net, net of tax	(13.5		)	—			—			(13.5		)
Total other comprehensive income (loss)	(8.5		)	8.0			(1.2		)	(1.7		)
Balance at March 31, 2014	$	63.4		$	(55.2	)	$	(3.8	)	$	4.4

Note 13 – Banking Regulatory Ratios

Franklin is a bank holding company and a financial holding company subject to various U.S. regulatory capital requirements. Based on the Company's calculations, it exceeded the applicable capital adequacy requirements as listed below.

(dollar amounts in millions)	March 31, 2014			September 30, 2013			Capital Adequacy Minimum
Tier 1 capital	$	8,255.4		$	7,449.2		N/A
Total risk-based capital	8,294.3			7,482.6			N/A
Tier 1 leverage ratio	62		%	58		%	4	%
Tier 1 risk-based capital ratio	60		%	58		%	4	%
Total risk-based capital ratio	61		%	58		%	8	%

Note 14 – Subsequent Event

On April 10, 2014, the Company sold the balance of its loans held for sale for an insignificant gain.

Item 2. 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 below, which describes 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 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 Form 10-Q 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.

The following discussion should be read in conjunction with our Form 10-K for the fiscal year ended September 30, 2013 (“fiscal year 2013”) filed with the U.S. Securities and Exchange Commission (the “SEC”), and the condensed consolidated financial statements and notes thereto included elsewhere in this Form 10-Q.

24

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 SIPs and investment management and related services are distributed or marketed to the public globally under the following distinct brand names: Franklin®, Templeton®, Mutual Series®, Bissett®, Fiduciary Trust™, Darby®, Balanced Equity Management® and K2®. 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 provide sub-advisory services to certain investment products sponsored by other companies which may be sold to the public under the brand names of those other companies or on a co-branded basis.

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 below, 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 the first half of our fiscal year, the global equity markets provided strong gains, evidenced by increases of 10% in the MSCI World Index and 13% in the S&P 500 Index. However, volatility increased during our second fiscal quarter due to investor concerns about mixed economic data, the crisis in Ukraine and the economic slowdown in China, resulting in modest quarterly increases of 1% in the MSCI World Index and 2% in the S&P 500 Index. The global bond markets showed signs of stabilization during the second fiscal quarter, and the Barclays Global Aggregate Index increased 2% for the period. The overall market improvement benefited our assets under management, fee revenues and operating income, all of which increased significantly from the first half of fiscal year 2013.

Our total AUM at March 31, 2014 was $886.9 billion, 5% higher than at September 30, 2013 and 8% higher than at March 31, 2013. Simple monthly average AUM (“average AUM”) for the three and six months ended March 31, 2014increased9% and 11% from the same periods in the prior fiscal year, primarily driven by $68.7 billion of market appreciation during the previous twelve months.

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, regulatory changes adopted by the Commodity Futures Trading Commission in 2012 and the Foreign Account Tax Compliance Act impose additional restrictions, limitations and registration and reporting requirements on our business. 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 expect that such regulatory requirements and developments will cause us to incur additional administrative and compliance costs.

Uncertainties regarding economic stabilization and improvement remain for 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 seek 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 set forth below.

25

RESULTS OF OPERATIONS

	Three Months Ended March 31,						Percent Change		Six Months Ended March 31,						Percent Change
(dollar amounts in millions, except per share data)	2014			2013					2014			2013
Operating revenues	$	2,095.9		$	2,013.6		4	%	$	4,205.4		$	3,915.4		7	%
Operating income	786.0			729.4			8	%	1,599.1			1,414.5			13	%
Net income attributable to Franklin Resources, Inc.	561.0			572.8			(2	)%	1,164.8			1,088.9			7	%
Diluted earnings per share	$	0.89		$	0.90		(1	)%	$	1.84		$	1.70		8	%
Operating margin1	37.5		%	36.2		%			38.0		%	36.1		%

^{___________________} 

¹  Defined as operating income divided by total operating revenues.

Operating income increased$56.6 million and $184.6 million for the three and six months ended March 31, 2014, as compared to the same periods in the prior fiscal year, primarily due to 8% and 11% increases in investment management fees, which were driven by 9% and 11% increases in average AUM.

Net income attributable to Franklin Resources, Inc. decreased $11.8 million for the three months ended March 31, 2014, as a decrease in investment and other income, net more than offset the increase in operating income. Net income attributable to Franklin Resources, Inc. increased $75.9 million for the six months ended March 31, 2014, primarily due to the increase in operating income, partially offset by a decrease in investment and other income, net.

The changes in diluted earnings per share for the three and six months ended March 31, 2014 were consistent with the changes in net income and the impacts of 1% decreases in diluted average common shares outstanding primarily resulting from repurchases of shares of our common stock during the twelve-month period ended March 31, 2014.

ASSETS UNDER MANAGEMENT

AUM by investment objective was as follows:

(dollar amounts in billions)	March 31, 2014		March 31, 2013		Percent Change
Equity
Global/international	$	262.8	$	231.0	14	%
United States	110.1		88.9		24	%
Total equity	372.9		319.9		17	%
Hybrid	154.0		129.2		19	%
Fixed-Income
Tax-free	70.1		84.5		(17	)%
Taxable
Global/international	223.5		226.5		(1	)%
United States	60.1		58.2		3	%
Total fixed-income	353.7		369.2		(4	)%
Cash Management	6.3		5.4		17	%
Total	$	886.9	$	823.7	8	%
Average for the Three-Month Period	$	876.4	$	807.3	9	%
Average for the Six-Month Period	$	870.0	$	786.0	11	%

AUM at March 31, 2014increased8% from March 31, 2013, primarily due to $68.7 billion of market appreciation during the twelve-month period. Strong positive returns in global markets resulted in valuation increases in all long-term investment objectives with the exception of tax-free fixed-income, which was negatively impacted by investor concerns regarding the economic outlook for certain municipalities.

Average AUM also benefited from market appreciation, increasing 9% and 11% during the three and six months ended March 31, 2014, as compared to the same periods in the prior fiscal year. Average AUM 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.

26

Average AUM and the mix of average AUM by investment objective are shown below.

(dollar amounts in billions)	Average AUM				Percent		Mix of Average AUM
for the three months ended March 31,	2014		2013		Change		2014		2013
Equity
Global/international	$	258.6	$	229.3	13	%	30	%	28	%
United States	107.0		85.5		25	%	12	%	11	%
Total equity	365.6		314.8		16	%	42	%	39	%
Hybrid	149.9		125.3		20	%	17	%	15	%
Fixed-Income
Tax-free	69.7		84.8		(18	)%	8	%	11	%
Taxable
Global/international	225.2		218.7		3	%	25	%	27	%
United States	59.6		58.0		3	%	7	%	7	%
Total fixed-income	354.5		361.5		(2	)%	40	%	45	%
Cash Management	6.4		5.7		12	%	1	%	1	%
Total	$	876.4	$	807.3	9	%	100	%	100	%

(dollar amounts in billions)	Average AUM				Percent		Mix of Average AUM
for the six months ended March 31,	2014		2013		Change		2014		2013
Equity
Global/international	$	256.1	$	223.0	15	%	29	%	28	%
United States	104.2		83.7		24	%	12	%	11	%
Total equity	360.3		306.7		17	%	41	%	39	%
Hybrid	146.3		120.1		22	%	17	%	15	%
Fixed-Income
Tax-free	70.6		84.6		(17	)%	8	%	11	%
Taxable
Global/international	227.1		211.1		8	%	26	%	27	%
United States	59.2		57.6		3	%	7	%	7	%
Total fixed-income	356.9		353.3		1	%	41	%	45	%
Cash Management	6.5		5.9		10	%	1	%	1	%
Total	$	870.0	$	786.0	11	%	100	%	100	%

Components of the change in AUM were as follows:

(dollar amounts in billions)	Three Months Ended March 31,						Percent Change		Six Months Ended March 31,						Percent Change
	2014			2013					2014			2013
Beginning AUM	$	879.1		$	781.8		12	%	$	844.7		$	749.9		13	%
Long-term sales	49.8			59.5			(16	)%	99.6			105.5			(6	)%
Long-term redemptions	(56.7		)	(40.9		)	39	%	(106.4		)	(85.6		)	24	%
Net cash management	(0.2		)	(0.3		)	(33	)%	(0.3		)	(1.3		)	(77	)%
Net new flows	(7.1		)	18.3			NM		(7.1		)	18.6			NM
Reinvested distributions	3.3			3.4			(3	)%	13.0			12.5			4	%
Net flows	(3.8		)	21.7			NM		5.9			31.1			(81	)%
Distributions	(4.3		)	(4.3		)	0	%	(15.6		)	(15.3		)	2	%
Acquisition	—			—			0	%	—			8.7			(100	)%
Appreciation and other1	15.9			24.5			(35	)%	51.9			49.3			5	%
Ending AUM	$	886.9		$	823.7		8	%	$	886.9		$	823.7		8	%

^{__________________} 

¹  Includes impact of foreign exchange revaluation.

27

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

(in billions)	Equity									Fixed-Income
for the three months ended March 31, 2014	Global/ International			United States			Hybrid			Tax-Free			Taxable Global/ International			Taxable United States			Cash Management			Total
AUM at January 1, 2014	$	260.4		$	105.3		$	147.8		$	69.0		$	231.3		$	58.7		$	6.6		$	879.1
Long-term sales	13.2			8.2			8.1			2.3			14.3			3.7			—			49.8
Long-term redemptions	(14.4		)	(6.2		)	(7.2		)	(3.6		)	(22.0		)	(3.3		)	—			(56.7		)
Net exchanges	—			0.6			0.5			(0.2		)	(1.1		)	0.3			(0.1		)	—
Net cash management	—			—			—			—			—			—			(0.2		)	(0.2		)
Net new flows	(1.2		)	2.6			1.4			(1.5		)	(8.8		)	0.7			(0.3		)	(7.1		)
Reinvested distributions	0.1			0.1			1.1			0.6			1.1			0.3			—			3.3
Net flows	(1.1		)	2.7			2.5			(0.9		)	(7.7		)	1.0			(0.3		)	(3.8		)
Distributions	(0.2		)	(0.1		)	(1.3		)	(0.7		)	(1.5		)	(0.5		)	—			(4.3		)
Appreciation and other1	3.7			2.2			5.0			2.7			1.4			0.9			—			15.9
AUM at March 31, 2014	$	262.8		$	110.1		$	154.0		$	70.1		$	223.5		$	60.1		$	6.3		$	886.9

^{__________________} 

¹  Includes impact of foreign exchange revaluation.

(in billions)	Equity									Fixed-Income
for the three months ended March 31, 2013	Global/ International			United States			Hybrid			Tax-Free			Taxable Global/ International			Taxable United States			Cash Management			Total
AUM at January 1, 2013	$	222.2		$	81.2		$	121.0		$	84.3		$	209.8		$	57.6		$	5.7		$	781.8
Long-term sales	12.0			4.0			6.2			3.2			29.6			4.5			—			59.5
Long-term redemptions	(11.4		)	(4.6		)	(3.8		)	(2.8		)	(14.3		)	(4.0		)	—			(40.9		)
Net exchanges	0.1			0.1			0.4			(0.2		)	—			(0.4		)	—			—
Net cash management	—			—			—			—			—			—			(0.3		)	(0.3		)
Net new flows	0.7			(0.5		)	2.8			0.2			15.3			0.1			(0.3		)	18.3
Reinvested distributions	0.2			—			1.0			0.6			1.2			0.4			—			3.4
Net flows	0.9			(0.5		)	3.8			0.8			16.5			0.5			(0.3		)	21.7
Distributions	(0.1		)	(0.1		)	(1.2		)	(0.8		)	(1.6		)	(0.5		)	—			(4.3		)
Appreciation and other1	8.0			8.3			5.6			0.2			1.8			0.6			—			24.5
AUM at March 31, 2013	$	231.0		$	88.9		$	129.2		$	84.5		$	226.5		$	58.2		$	5.4		$	823.7

^{__________________} 

¹  Includes impact of foreign exchange revaluation.

AUM increased$7.8 billion or 1% during the quarter ended March 31, 2014, primarily due to $15.9 billion of market appreciation, partially offset by $7.1 billion of net new outflows. The market appreciation occurred in all long-term investment objectives and reflected positive returns in global markets, as evidenced by increases in the MSCI World and S&P 500 indexes of 1% and 2%. Long-term sales decreased16% to $49.8 billion, as compared to the prior-year period, primarily due to lower sales of global/international fixed-income products, partially offset by higher sales of equity and hybrid products. Long-term redemptions increased39% to $56.7 billion, primarily due to higher redemptions of global/international fixed-income and hybrid products.

AUM increased$41.9 billion or 5% during the quarter ended March 31, 2013, resulting from $24.5 billion of market appreciation and $18.3 billion of net new flows. Overall positive returns in global markets, evidenced by increases in the MSCI World and S&P 500 indexes of 8% and 11%, resulted in market appreciation in all long-term investment objectives, most significantly in equity and hybrid products.

28

(in billions)	Equity									Fixed-Income
for the six months ended March 31, 2014	Global/ International			United States			Hybrid			Tax-Free			Taxable Global/ International			Taxable United States			Cash Management			Total
AUM at October 1, 2013	$	243.9		$	97.2		$	137.5		$	72.4		$	228.8		$	58.3		$	6.6		$	844.7
Long-term sales	28.3			14.3			14.6			4.2			30.2			8.0			—			99.6
Long-term redemptions	(26.7		)	(12.3		)	(11.3		)	(8.1		)	(40.4		)	(7.6		)	—			(106.4		)
Net exchanges	0.3			1.0			1.3			(1.0		)	(1.7		)	0.1			—			—
Net cash management	—			—			—			—			—			—			(0.3		)	(0.3		)
Net new flows	1.9			3.0			4.6			(4.9		)	(11.9		)	0.5			(0.3		)	(7.1		)
Reinvested distributions	3.1			2.6			2.6			1.2			2.7			0.8			—			13.0
Net flows	5.0			5.6			7.2			(3.7		)	(9.2		)	1.3			(0.3		)	5.9
Distributions	(3.5		)	(2.8		)	(3.0		)	(1.5		)	(3.7		)	(1.1		)	—			(15.6		)
Appreciation and other1	17.4			10.1			12.3			2.9			7.6			1.6			—			51.9
AUM at March 31, 2014	$	262.8		$	110.1		$	154.0		$	70.1		$	223.5		$	60.1		$	6.3		$	886.9

^{__________________} 

¹  Includes impact of foreign exchange revaluation.

(in billions)	Equity									Fixed-Income
for the six months ended March 31, 2013	Global/ International			United States			Hybrid			Tax-Free			Taxable Global/ International			Taxable United States			Cash Management			Total
AUM at October 1, 2012	$	214.9		$	82.2		$	110.1		$	83.2		$	196.4		$	56.7		$	6.4		$	749.9
Long-term sales	21.6			7.4			11.7			7.0			49.3			8.5			—			105.5
Long-term redemptions	(25.2		)	(9.7		)	(8.6		)	(6.0		)	(28.3		)	(7.8		)	—			(85.6		)
Net exchanges	(0.1		)	(0.2		)	0.2			(0.2		)	0.2			(0.2		)	0.3			—
Net cash management	—			—			—			—			—			—			(1.3		)	(1.3		)
Net new flows	(3.7		)	(2.5		)	3.3			0.8			21.2			0.5			(1.0		)	18.6
Reinvested distributions	2.7			1.4			2.2			1.2			4.1			0.9			—			12.5
Net flows	(1.0		)	(1.1		)	5.5			2.0			25.3			1.4			(1.0		)	31.1
Distributions	(2.7		)	(1.6		)	(2.7		)	(1.6		)	(5.4		)	(1.3		)	—			(15.3		)
Acquisition	—			—			8.7			—			—			—			—			8.7
Appreciation and other1	19.8			9.4			7.6			0.9			10.2			1.4			—			49.3
AUM at March 31, 2013	$	231.0		$	88.9		$	129.2		$	84.5		$	226.5		$	58.2		$	5.4		$	823.7

^{__________________} 

¹  Includes impact of foreign exchange revaluation.

AUM increased$42.2 billion or 5% during the six months ended March 31, 2014, primarily due to $51.9 billion of market appreciation, partially offset by $7.1 billion of net new outflows. The market appreciation occurred in all long-term investment objectives, most significantly in equity and hybrid products, and reflected positive returns in global markets, as evidenced by increases in the MSCI World and S&P 500 indexes of 10% and 13%. Long-term sales decreased6% to $99.6 billion, as compared to the prior-year period, primarily due to lower sales of global/international fixed-income products, partially offset by higher sales of equity products. Long-term redemptions increased24% to $106.4 billion due to higher redemptions in all long-term investment objectives, most significantly in global/international fixed-income products, with the exception of taxable U.S. fixed-income products.

AUM increased $73.8 billion or 10% during the six months ended March 31, 2013, primarily resulting from $49.3 billion of market appreciation and $18.6 billion of net new flows. Overall positive returns in global markets, evidenced by increases in the MSCI World and S&P 500 indexes of 11% and 10%, resulted in market appreciation in all long-term investment objectives. The net new flows primarily resulted from global/international fixed-income products.

29

Average AUM by sales region is shown below.

	Three Months Ended March 31,				Percent Change		Six Months Ended March 31,				Percent Change
(dollar amounts in billions)	2014		2013				2014		2013
United States	$	571.5	$	522.4	9	%	$	565.1	$	511.3	11	%
International
Europe, the Middle East and Africa	148.8		136.9		9	%	149.2		131.0		14	%
Asia-Pacific	89.7		84.1		7	%	89.1		81.3		10	%
Canada	38.2		35.3		8	%	37.9		34.9		9	%
Latin America1	28.2		28.6		(1	)%	28.7		27.5		4	%
Total international	304.9		284.9		7	%	304.9		274.7		11	%
Total	$	876.4	$	807.3	9	%	$	870.0	$	786.0	11	%

^{__________________} 

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 investment performance of our taxable fixed-income products has been strong with AUM frequently outperforming the benchmarks and peer group medians for the one-, three-, five- and ten-year periods ended March 31, 2014. Our global/international fixed-income funds generated notable results with at least 87% of AUM exceeding the benchmarks and at least 94% of AUM exceeding the peer group medians for the three-, five- and ten-year periods, as did our hybrid products with at least 84% of AUM exceeding the benchmarks and at least 96% of AUM exceeding the peer group medians for all four periods presented. In addition, 99% of AUM in our tax-free fixed-income products exceeded the peer group median for the ten-year period. The performance of our global/international equity products has also been solid with at least 59% of AUM exceeding the benchmarks and peer group medians for all four periods; however the performance of our United States equity products has mostly lagged the benchmarks and peer group medians during the periods presented. 

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 March 31, 2014	1-Year		3-Year		5-Year		10-Year		1-Year		3-Year		5-Year		10-Year
Equity
Global/international	61	%	61	%	63	%	66	%	59	%	75	%	64	%	68	%
United States	37	%	10	%	12	%	41	%	48	%	62	%	42	%	44	%
Total equity	53	%	44	%	45	%	56	%	55	%	71	%	56	%	58	%
Hybrid	87	%	84	%	86	%	95	%	96	%	99	%	99	%	98	%
Fixed-Income
Tax-free	25	%	60	%	56	%	34	%	76	%	68	%	56	%	99	%
Taxable
Global/international	43	%	87	%	95	%	95	%	72	%	94	%	99	%	99	%
United States	65	%	53	%	62	%	55	%	80	%	79	%	40	%	69	%
Total fixed-income	43	%	76	%	81	%	74	%	74	%	86	%	79	%	93	%

AUM measured in the benchmark and peer group rankings represents 89% and 85% of our total AUM as of March 31, 2014. 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 March 31, 2014. 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, cash management and funds acquired in fiscal year 2013 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

30

been different. These results assume the reinvestment of dividends, are based on data available as of April 21, 2014 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 operating revenue category.

(dollar amounts in millions)	Three Months Ended March 31,				Percent Change		Six Months Ended March 31,				Percent Change
	2014		2013				2014		2013
Investment management fees	$	1,368.0	$	1,267.5	8	%	$	2,741.8	$	2,467.4	11	%
Sales and distribution fees	638.6		642.7		(1	)%	1,275.3		1,246.8		2	%
Shareholder servicing fees	67.7		76.6		(12	)%	143.8		151.0		(5	)%
Other, net	21.6		26.8		(19	)%	44.5		50.2		(11	)%
Total Operating Revenues	$	2,095.9	$	2,013.6	4	%	$	4,205.4	$	3,915.4	7	%

Investment Management Fees

Investment management fees are generally calculated under contractual arrangements with our SIPs and the products for which we provide sub-advisory services 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.

Investment management fees increased $100.5 million and $274.4 million for the three and six months ended March 31, 2014, almost entirely due to 9% and 11% increases in average AUM. The increase for the three-month period was partially offset by the impact of a slightly lower effective fee rate. Average AUM increased in all sales regions, with the exception of Latin America for the three-month period, and across all long-term investment objectives, with the exception of tax-free fixed-income.

Our effective investment management fee rate (annualized investment management fees divided by average AUM) was 62.4 and 63.0 basis points for the three and six months ended March 31, 2014, as compared to 62.8 basis points for each of the same periods in the prior fiscal year. The rate decrease for the three-month period was primarily due to the impact of fee rebates, which were included in distribution expense in the prior year, and a slightly higher weighting of U.S. products AUM, partially offset by higher performance fees. The rate increase for the six-month period was primarily due to higher performance fees, partially offset by the impact of fee rebates.

Performance-based investment management fees were $10.2 million and $36.2 million for the three and six months ended March 31, 2014 and $2.2 million and $5.1 million for the same periods in the prior fiscal year. The increase for the six-month period was primarily related to products managed by K2 Advisors Holdings, LLC and its subsidiaries (“K2”).

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.

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.

31

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)	Three Months Ended March 31,				Percent Change		Six Months Ended March 31,				Percent Change
	2014		2013				2014		2013
Asset-based fees	$	446.7	$	419.8	6	%	$	900.2	$	823.5	9	%
Sales-based fees	188.8		220.2		(14	)%	368.6		418.2		(12	)%
Contingent sales charges	3.1		2.7		15	%	6.5		5.1		27	%
Sales and Distribution Fees	$	638.6	$	642.7	(1	)%	$	1,275.3	$	1,246.8	2	%

Asset-based distribution fees increased$26.9 million and $76.7 million for the three and six months ended March 31, 2014 primarily due to 5% and 7% increases in the related average AUM and a higher mix of equity AUM in both periods. Equity products typically generate higher distribution fees than fixed-income products. Annualized distribution fees as a percentage of average AUM were 0.20% and 0.21% for the three and six months ended March 31, 2014 and 0.21% for the same periods in the prior fiscal year.

Sales-based fees decreased$31.4 million and $49.6 million for the three and six months ended March 31, 2014 primarily due to a lower mix of U.S. product commissionable sales and a 5% decrease in total commissionable sales in both periods. U.S. products typically generate higher sales fees than non-U.S. products. Sales fees as a percentage of commissionable sales were 2.9% and 3.0% for the three and six months ended March 31, 2014, and 3.2% and 3.3% for the same periods in the prior fiscal year. Commissionable sales represented 13% and 12% of total sales for the three and six months ended March 31, 2014 and 12% for the same periods in the prior fiscal year.

Contingent sales charges are earned from investor redemptions within a 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 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 that were in place through December 31, 2013 provided that accounts closed in the calendar year remain billable for four months after the end of the calendar year. Accordingly, the level of fees varies with the change in open accounts and the level of closed accounts that remain billable. A change to the pricing structure in Canada effective January 1, 2014 resulted in the bundling of investment management and servicing fees, therefore shareholder servicing fees are no longer charged to SIPs in Canada.

Other services include tax planning and 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 decreased $8.9 million and $7.2 million for the three and six months ended March 31, 2014, primarily due to the change in fee structure in Canada. The Canada decreases of $11.8 million and $12.9 million were partially offset by increases of $1.5 million and $2.6 million from SIPs in the U.S., $0.9 million and $1.7 million in trustee services fees, and $0.3 million and $1.7 million from SIPs in Europe. The higher U.S. SIP fees primarily resulted from increases in active accounts of 8% and 7%, and the higher trustee fees and Europe SIP fees primarily resulted from higher levels of related AUM.

Other, Net

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

Other, net revenue decreased$5.2 million and $5.7 million for the three and six months ended March 31, 2014 primarily due to $4.8 million and $4.6 million decreases in income from consolidated SIPs, and $0.3 million and $0.9 million decreases resulting from a continued decline in the level of lending activities.

32

OPERATING EXPENSES

The table below presents the percentage change in each operating expense category.

	Three Months Ended March 31,				Percent Change		Six Months Ended March 31,				Percent Change
(dollar amounts in millions)	2014		2013				2014		2013
Sales, distribution and marketing	$	766.3	$	780.8	(2	)%	$	1,543.0	$	1,511.7	2	%
Compensation and benefits	372.3		355.1		5	%	721.3		690.2		5	%
Information systems and technology	51.0		44.8		14	%	101.2		88.4		14	%
Occupancy	33.8		31.9		6	%	66.9		65.3		2	%
General, administrative and other	86.5		71.6		21	%	173.9		145.3		20	%
Total Operating Expenses	$	1,309.9	$	1,284.2	2	%	$	2,606.3	$	2,500.9	4	%

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 investors. The deferred sales commissions are amortized over the periods in which commissions are generally recovered from related revenues.

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

	Three Months Ended March 31,				Percent     Change		Six Months Ended March 31,				Percent     Change
(dollar amounts in millions)	2014		2013				2014		2013
Asset-based expenses	$	562.5	$	541.4	4	%	$	1,141.0	$	1,056.0	8	%
Sales-based expenses	171.7		204.5		(16	)%	335.7		387.9		(13	)%
Amortization of deferred sales commissions	32.1		34.9		(8	)%	66.3		67.8		(2	)%
Sales, Distribution and Marketing	$	766.3	$	780.8	(2	)%	$	1,543.0	$	1,511.7	2	%

Asset-based expenses increased$21.1 million for the three months ended March 31, 2014 primarily due to a $19.6 million increase in distribution expense related to U.S. products. This increase primarily resulted from a 5% increase in the related average U.S. AUM and a higher mix of equity and hybrid products, which generally have higher expense rates than fixed-income products. Distribution expense related to non-U.S. products decreased slightly as an $11.9 million increase primarily resulting from a 4% increase in the related average international AUM was more than offset by a decrease of $13.9 million related to fee rebates, which were included in distribution expense in the prior year.

Asset-based expenses increased$85.0 million for the six months ended March 31, 2014 primarily due to distribution expense increases of $46.8 million related to U.S. products and $33.4 million related to non-U.S. products. The distribution expense increases primarily resulted from higher related average AUM of 6% in the U.S. and 8% internationally and a higher mix of equity and hybrid products globally. The non-U.S. product expense increase was partially offset by a decrease of $24.7 million related to fee rebates.

Annualized asset-based expenses as a percentage of average AUM were 0.26% for the three and six months ended March 31, 2014 and 0.27% for the same periods in the prior fiscal year. 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.

Sales-based expenses decreased$32.8 million and $52.2 million for the three and six months ended March 31, 2014 primarily due to a lower mix of U.S. product commissionable sales and a 5% decrease in total commissionable sales in both periods. U.S. products typically generate higher sales commissions than non-U.S. products. Sales-based expenses as a percentage of sales-based fees were 91% for the three and six months ended March 31, 2014 and 93% for the same periods in the prior fiscal year.

Amortization of deferred sales commissions decreased$2.8 million and $1.5 million for the three and six months ended March 31, 2014 primarily due to lower sales of U.S. Class C shares, which are sold without a front-end sales charge to investors,

33

partially offset by higher deferred sales commissions in Canada resulting from a prior year change to self-financing of up-front commissions on shares sold without a front-end sales charge to investors.

Compensation and Benefits

Compensation and benefit expenses increased$17.2 million and $31.1 million for the three and six months ended March 31, 2014 primarily due to increases in variable compensation and salaries, wages and benefits. Variable compensation increased $11.4 million and $12.3 million primarily due to higher bonus expense based on our performance. Salaries, wages and benefits increased $8.0 million and $23.5 million primarily due to higher staffing levels and annual merit salary adjustments that were effective December 1, 2013 and 2012. Compensation and benefit expenses as a percentage of operating revenues were 18% and 17% for the three and six months ended March 31, 2014 and 18% for the same periods in the prior fiscal year. At March 31, 2014, our global workforce had increased to approximately 9,000 employees from approximately 8,700 employees at March 31, 2013.

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 expenses increased$6.2 million and $12.8 million for the three and six months ended March 31, 2014 primarily due to increases of $4.1 million and $9.0 million related to higher investments in strategic technology projects for operational purposes and $1.7 million and $3.3 million in external data service costs.

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

	Three Months Ended March 31,						Six Months Ended March 31,
(in millions)	2014			2013			2014			2013
Net carrying value at beginning of period	$	88.6		$	91.1		$	93.5		$	90.3
Additions, net of disposals	10.4			10.4			16.3			20.5
Amortization	(10.9		)	(10.5		)	(21.7		)	(19.8		)
Net Carrying Value at End of Period	$	88.1		$	91.0		$	88.1		$	91.0

Occupancy

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

Occupancy expenses increased$1.9 million and $1.6 million for the three and six months ended March 31, 2014 primarily due to increases in rent expense, property taxes and building maintenance expense.

General, Administrative and Other

General, administrative and other operating expenses primarily consist of fund administration services and shareholder servicing fees payable to external parties, corporate travel and entertainment, advertising and promotion costs, professional fees, and other miscellaneous expenses. Effective January 1, 2014, we assumed responsibility for certain operating expenses of our Canadian funds in exchange for an AUM-based administration fee.

General, administrative and other operating expenses increased$14.9 million and $28.6 million for the three and six months ended March 31, 2014 primarily due to Canadian fund expenses, the acquisition of K2 in November 2012 and higher levels of third party servicing and professional fees. The increase due to Canadian fund expenses was $5.0 million for both periods. The change in the fair value of the K2 contingent consideration liability increased $3.3 million and $6.6 million due to K2's performance and the amortization of K2's intangible assets increased $0.7 million and $2.1 million due to the timing of the acquisition and final valuation of the assets. Third party servicing fees increased $4.0 million and $6.3 million primarily due to a pricing structure change, and professional fees increased $0.9 million and $4.1 million due to changes in our private banking business and other corporate activities.

34

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)

Other income (expenses) were as follows:

	Three Months Ended March 31,						Percent     Change		Six Months Ended March 31,						Percent     Change
(in millions)	2014			2013					2014			2013
Investment and other income, net	$	17.0		$	96.5		(82	)%	$	65.2		$	142.0		(54	)%
Interest expense	(11.4		)	(10.9		)	5	%	(24.0		)	(25.4		)	(6	)%
Other Income, Net	$	5.6		$	85.6		(93	)%	$	41.2		$	116.6		(65	)%

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

Other income, net decreased$80.0 million and $75.4 million for the three and six months ended March 31, 2014 primarily due to net losses from securities held by consolidated SIPs and from foreign currency exchange. Lower market valuations resulted in $15.4 million and $20.7 million of net losses from securities held by consolidated SIPs as compared to $41.5 million and $62.4 million of net gains in the prior-year periods. The U.S. dollar weakened against the Euro in the current year, resulting in net foreign currency exchange losses of $2.1 million and $12.6 million as compared to $18.6 million and $7.3 million of net gains in the prior-year periods. The decrease for the six-month period was partially offset by $7.9 million of net gains from changes in the fair value of the assets and liabilities of consolidated collateralized loan obligations ("CLOs") as compared to $26.8 million of net losses in the prior year.

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 condensed 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.

35

The consolidated cash, cash equivalents and investments portfolio by investment objective at March 31, 2014 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 VIEs and SIPs Included in Total Portfolio		Percent of Total
Cash and Cash Equivalents	$	6,910.9	59	%	$	—	0	%	$	96.2	4	%
Investment Securities
Equity
Global/international	537.2		5	%	—		0	%	455.9		20	%
United States	20.9		0	%	—		0	%	—		0	%
Total equity	558.1		5	%	—		0	%	455.9		20	%
Hybrid	276.1		2	%	—		0	%	198.2		9	%
Fixed-Income
Tax-free	17.4		0	%	—		0	%	—		0	%
Taxable
Global/international	1,025.8		9	%	82.0		6	%	654.5		28	%
United States	2,194.1		19	%	1,192.5		94	%	909.1		39	%
Total fixed-income	3,237.3		28	%	1,274.5		100	%	1,563.6		67	%
Total Investment Securities	4,071.5		35	%	1,274.5		100	%	2,217.7		96	%
Other Investments	756.8		6	%	—		0	%	—		0	%
Total Cash and Cash Equivalents and Investments	$	11,739.2	100	%	$	1,274.5	100	%	$	2,313.9	100	%

Investments of consolidated VIEs and SIPs are generally assigned a classification in the table above based on the investment objective of the consolidated VIEs and SIPs holding the securities. Other investments include $606.0 million of investments in equity method investees that hold securities that are subject to market valuation risks and primarily have a global/international equity investment objective.

TAXES ON INCOME

As a multi-national corporation, we provide many of 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 was 30.2% and 30.0% for the three and six months ended March 31, 2014, as compared to 27.2% and 28.3% for the same periods in the prior fiscal year. The rate increases were primarily due to lower forecasted non-U.S. earnings in lower tax jurisdictions, the impact of changes in state tax legislation in the current year and net losses attributable to noncontrolling interests for the current year periods as compared to net income for the same periods in the prior year.

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:

	Six Months Ended March 31,
(in millions)	2014			2013
Cash Flow Data
Operating cash flows	$	639.4		$	771.8
Investing cash flows	1.9			98.0
Financing cash flows	(63.4		)	(1,349.9		)

Net cash provided by operating activities decreased during the six months ended March 31, 2014, despite an increase in net income, primarily due to a higher net increase in trading securities of consolidated SIPs, partially offset by a higher increase in other liabilities related to short positions of consolidated SIPs and a lower increase in receivables, prepaid expenses and other. Net

36

cash provided by investing activities decreased mainly due to a decrease in cash due to net deconsolidation of SIPs, and higher purchases, net of liquidations, of investments by consolidated SIPs, partially offset by net liquidations of investments by consolidated VIEs in the current year compared to net purchases in the prior year. Net cash used in financing activities decreased primarily due to lower dividends paid on common stock in the current year, payments on debt in the prior year, and higher subscriptions in consolidated SIPs by 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/or investment 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 other 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.

Our liquid assets and debt consisted of the following:

(in millions)	March 31, 2014		September 30, 2013
Assets
Cash and cash equivalents	$	6,814.7	$	6,186.0
Receivables	958.7		982.1
Investments	2,377.1		2,280.8
Total Liquid Assets	$	10,150.5	$	9,448.9
Liabilities
Debt	1,197.9		1,197.7

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 March 31, 2014increased from September 30, 2013 primarily due to net cash provided by operating 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 36% and 64% at March 31, 2014, and 37% and 63% at September 30, 2013.

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 March 31, 2014, our U.S. and non-U.S. subsidiaries held $2,097.0 million and $2,090.5 million of liquid assets to satisfy operational and regulatory requirements and capital contributions to our SIPs, as compared to $1,864.7 million and $2,178.7 million held at September 30, 2013. Included in these amounts were U.S. and non-U.S. liquid assets that were restricted from transfer to Franklin and other subsidiaries of $615.2 million and $370.0 million at March 31, 2014 and $551.0 million and $334.6 million at September 30, 2013.

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 prior fiscal years, we issued senior unsecured and unsubordinated notes for general corporate purposes, to redeem outstanding notes and to finance an acquisition. At March 31, 2014, $1,197.9 million of the notes were outstanding with a total face value of $1,200.0 million. The notes consist of $250.0 million issued at a fixed interest rate of 3.125% per annum which

37

mature in 2015, $300.0 million issued at a fixed interest rate of 1.375% per annum which mature in 2017, $350.0 million issued at a fixed interest rate of 4.625% per annum which mature in 2020 and $300.0 million issued at a fixed interest rate of 2.800% per annum which mature in 2022.

Interest on the 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 March 31, 2014, we were in compliance with the covenants of the notes.

At March 31, 2014, 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, $260.0 million available in uncommitted short-term bank lines of credit under the Federal Reserve system, $65.3 million available through the secured Federal Reserve Bank short-term discount window, $14.8 million available in secured Federal Home Loan Bank short-term borrowing capacity and $13.6 million available in uncommitted short-term bank lines of credit.

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, invest in our SIPs, fund property and equipment purchases, 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 $0.24 per share ($0.12 per share per quarter) during the six months ended March 31, 2014, and regular cash dividends of $0.19 per share ($0.097 per share per quarter) and a special cash dividend of $1.00 per share during the six months ended March 31, 2013. 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 the three and six months ended March 31, 2014 , we repurchased 3.4 million and 5.9 million shares of our common stock at a cost of $178.8 million and $315.9 million. In December 2013, our Board of Directors authorized the repurchase of up to 30.0 million additional shares of our common stock under the stock repurchase program. At March 31, 2014, 35.3 million shares remained available for repurchase under the program, which is not subject to an expiration date. During the three and six months ended March 31, 2013, we repurchased approximately 0.5 million and 2.7 million shares of our common stock at a cost of $23.3 million and $121.3 million.

During the six months ended March 31, 2014 and 2013, we invested $72.4 million and $5.6 million, net of redemptions, in our SIPs.

In October 2012, we redeemed our outstanding 2.000% senior notes due in May 2013 at a make-whole redemption price of $305.4 million.

In November 2012, we acquired an ownership interest of approximately 69% in K2. The purchase consideration included a $182.9 million cash investment in K2, which was primarily used to retire $176.5 million of debt immediately following the acquisition.

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, COMMITMENTS AND CONTINGENT LIABILITIES

At March 31, 2014, there were no material changes outside the ordinary course of business in our contractual obligations, commitments and contingent liabilities that are summarized in our Form 10-K for the fiscal year ended September 30, 2013.

38

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. At March 31, 2014 and September 30, 2013, we held cash of $157.2 million and $236.4 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. Actual results may differ from those estimates under different assumptions. The following are updates to our critical accounting policies disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the fiscal year ended September 30, 2013.

Consolidation

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

Our VIEs are all investment entities and our variable interests consist of our equity ownership interest in and/or investment management fees earned from these entities. As of March 31, 2014, we were the primary beneficiary of three CLOs and two other SIP VIEs.

Fair Value Measurements

We record a substantial amount of our investments at fair value or amounts that approximate fair value on a recurring basis. 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.

As of March 31, 2014, 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 debt securities of entities and funds that are not traded in active markets. Level 3 liabilities, comprised of contingent consideration liabilities and debt of consolidated VIEs, represented 15% of total liabilities measured at fair value at March 31, 2014. There were no transfers into or out of Level 3 during the six months ended March 31, 2014.

Goodwill and Other Intangible Assets

Subsequent to our annual impairment tests as of August 1, 2013, 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 our 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. As of March 31, 2014, the undiscounted future cash flow projections for $90.0 million, or 91%, of our definite-lived intangible assets exceeded their carrying values by at least 55%. We estimated the future undiscounted cash flows for these assets using AUM growth rates ranging from (5)% to 23%. As of March 31, 2014, a decline in these assets' related AUM of 36% could cause us to evaluate whether their fair value is below the carrying value. There was no impairment of definite-lived intangible assets during the six months ended March 31, 2014.

Revenues

Investment management fees, other than performance-based fees, and distribution fees are determined based on a percentage of AUM, primarily on a monthly basis using average daily AUM. Performance-based investment management fees are based on performance targets established in the related investment management contracts. AUM is generally based on the fair value of the underlying securities held by SIPs and 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 the underlying securities for which market

39

prices are not readily available are internally valued using various methodologies which incorporate unobservable inputs as appropriate for each security type. As of March 31, 2014, our total AUM by fair value hierarchy level was 51% Level 1, 48% Level 2 and 1% Level 3.

NEW ACCOUNTING GUIDANCE

See Note 2 – New Accounting Guidance in the notes to condensed consolidated financial statements in Item 1 of Part I of this Form 10-Q.

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 financial results. 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 compete in a changing global economy and 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. 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. Any decrease in the value or amount of our AUM because of market volatility or other factors, such as a decline in the price of stocks, in particular market segments or in the securities market generally, negatively impacts our revenues and income. We are subject to significant risk of asset volatility from changes in the global financial, equity and debt markets. Individual financial, equity and debt markets may be adversely affected by economic, political, financial or other instabilities that are particular to the country or region 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. Global economic conditions, exacerbated by war, terrorism, natural disasters or financial crises, changes in the equity or debt marketplaces, 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, the crisis in Ukraine and any related sanctions, 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, in our discretion, provide financial support to a fund to enable it to maintain sufficient liquidity in such event. Changes in investor preferences regarding our more popular investment products also could cause sizable redemptions and lower the value of our AUM, which would result in lower revenue and operating results. 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 market declines, interest rate volatility or uncertainty, increased redemptions or other factors could negatively impact our revenues and income.

We are subject to extensive, 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/or conflicting, and frequently changing rules, regulations, policies and legal interpretations in the countries in which we operate, including those with respect to securities and other financial instruments, advisory, banking, accounting, tax, compensation, ethics, data protection, privacy and escheatment laws and regulations.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), as well as other legislative and regulatory changes, impose additional restrictions and limitations on us, resulting in increased scrutiny and oversight of our financial services and products. We continue to analyze the impact of the Dodd-Frank Act as implementing rules are adopted and become effective. Under the Dodd-Frank Act, which imposes a number of new regulations governing derivative transactions,

40

certain categories of swaps are currently required, and further categories of swaps are likely to be required, to be submitted for clearing by a regulated clearing organization and reported on a swap execution facility, and the posting of collateral will be required for uncleared swaps. These and other requirements are likely to impact how we manage our investment strategies because of, among other things, an increase in the costs and expenses of utilizing swaps and other derivatives. The so-called “Volcker Rule” provisions of the Dodd-Frank 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. In December 2013, the final regulations implementing the Volcker Rule were issued by the U.S. Securities and Exchange Commission (“SEC”), the Commodity Futures Trading Commission (“CFTC”), and the three federal banking agencies, the Federal Reserve Board (“FRB”), the Federal Deposit Insurance Corporation (“FDIC”), and the Office of the Comptroller of the Currency (“OCC”). The effective date of the final rule was April 1, 2014, but banking institutions will have until July 21, 2015 to conform their activities and investments to the requirements of the Volcker Rule. We are continuing to prepare for the potential impact of the Volcker Rule and the final rules adopted thereunder. The Dodd-Frank Act also authorized the establishment of the Financial Stability Oversight Council (“FSOC”), the mandate of which is to identify and respond to threats to U.S. financial stability. The FSOC may designate non-bank financial companies as systemically important financial institutions (“SIFIs”), which are subject to supervision and regulation by the FRB. The FSOC, as well as other global regulators, are considering what threats to global financial stability, if any, arise from asset management companies and/or the funds that they manage, and whether such threats can be mitigated by treating such entities as SIFIs and subjecting them to additional regulation. To the extent that we or our funds are subject to such a SIFI designation, such regulation, which could include requirements related to risk-based capital, leverage, liquidity, credit exposure, stress testing, resolution plans, early remediation, and certain risk management requirements, could impact our business. In addition to the rulemaking mandated by the Dodd-Frank Act, rules adopted by the CFTC in 2012 removed or limited previously available exemptions and exclusions from registration and regulation as a commodity pool operator and commodity trading advisor on which we had relied, resulting in the imposition of either additional registration, disclosure, reporting and recordkeeping requirements or more stringent requirements to comply with the remaining exemptions or exclusions for operators of certain of our registered mutual funds and other pooled vehicles that use or trade in futures, swaps and other derivatives considered commodity interests and subject to regulation by the CFTC. Additionally, the SEC has adopted its final rule setting forth the definition of a municipal adviser and requiring such advisers to register with the Municipal Securities Rulemaking Board. We continue to monitor this rule to determine registration requirements for certain Franklin entities. Further, 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 impose customer due diligence, reporting and withholding requirements on certain non-U.S. financial institutions. Full implementation of FATCA will be phased in over the next several years. Also, the SEC has developed proposals for stricter regulation of money market funds that could significantly change the structure and operations of those funds. We expect that such regulatory requirements and developments will cause us to incur additional administrative and compliance costs.

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, rules, 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 or charters, 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. We are also subject to the rules and regulations promulgated by the CFTC and the National Futures Association. Because of our non-U.S. operations and/or trading in our sponsored investment products (“SIPs”) 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. We are also subject to the laws and regulations of states and other jurisdictions regarding the reporting and escheatment of unclaimed or abandoned property. 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 that are investment advisers to registered investment companies. Our subsidiaries must comply with myriad 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.

41

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 Dodd-Frank 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 Dodd-Frank Act, together with other regulatory initiatives, 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. In July 2013, the U.S. federal banking agencies adopted new capital rules to implement the Basel Committee's capital framework, known as “Basel III”, for U.S. bank holding companies and banks. Basel III will impose more stringent capital requirements on Franklin and its banking subsidiaries. The new capital rules will become effective for Franklin, Fiduciary Trust Company International (“Fiduciary Trust”) and Franklin Templeton Bank & Trust, F.S.B. (“FTB&T”) on January 1, 2015 (subject to certain phase-in periods through January 1, 2019). 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 subsidiaries Fiduciary Trust and FTB&T are subject to extensive regulation, supervision and examination by their respective banking regulators, which include the FDIC for both, the New York State Department of Financial Services for Fiduciary Trust, and the OCC for FTB&T.

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 adversely impact our broader business objectives. Moreover, being subject to banking regulation may put us at a disadvantage compared to our competitors which are not subject to such requirements.

U.S. 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 financial condition and results of operations. 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 Dodd-Frank 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, certain provisions of the Dodd-Frank Act still require the adoption of implementing rules. We may be required to invest significant additional management time and resources to address the new regulations being adopted pursuant to the Dodd-Frank Act. 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 operating 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, investment, 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

42

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, 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 information and cyber security infrastructure, software applications, technology or other systems that are critical to our operations could harm our operations and reputation. We are highly dependent upon the use of various proprietary and third-party information and security technology, software applications and other technology systems to operate our business. We are also dependent on the effectiveness of our information and cyber security infrastructure, policies, procedures and capabilities to protect our computer and telecommunications systems and the data that reside on or are transmitted through them. We use our technology to, among other things, support our operations, 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 external hacker attack by one or more cyber criminals (including phishing attacks attempting to get clients to provide confidential information) or an authorized employee or vendor inadvertently causing us to release confidential information, which could materially harm our operations and reputation. Breach of our technology systems could result in the unauthorized disclosure or modification of sensitive or confidential information, loss of valuable information, breach of client contracts, liability for stolen assets, information or identity, remediation costs to repair damage caused by the breach, additional security costs to mitigate against future incidents, regulatory actions and litigation costs resulting from the incident. Moreover, loss or unauthorized disclosure 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 a decline in our revenues or common stock price.

Further, although we take precautions to password protect and encrypt our laptops and sensitive information on our other mobile electronic devices, if such devices are stolen, misplaced or left unattended, they 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 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. In order to be competitive and comply with our agreements, 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 SIPs 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

43

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. 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. 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 also vary widely, or be inconsistent or less developed or mature than other distributors. 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. Recently, certain laws and regulations outside the U.S. have included extraterritorial application. This may lead to duplicative or conflicting legal or regulatory burdens and additional costs and risks. In addition, from time to time we enter into international joint ventures or take minority stakes in companies in which we may not have control. These investments may involve risks, including the risk that the controlling stakeholder or 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 stakeholder, joint venture partner or the entity itself may result in liability for us or harm to our reputation or adversely affect the value of our investment in the entity.

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. Laws and regulations, including those contained in or relating to the Capital Requirements Directive of the European Union (“EU”), those recently adopted under the EU's Alternative Investment Fund Manager Directive, those required to be adopted under the Dodd-Frank Act and certain provisions of the EU's new Undertakings for Collective Investment in Transferable Securities V Directive and Markets in Financial Instruments Directive II, 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 share, revenues and income

44

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 SIPs that meets investor demand and our ability to maintain our investment management fees and pricing structure 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 and financial intermediaries. 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 Dodd-Frank 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. In addition, the U.K. and the Netherlands have adopted regimes which ban the payment of commissions to intermediaries in relation to certain sales to retail customers and similar regimes are under consideration in several other markets. Depending on their exact terms, such regimes may result in existing flows of business moving to less profitable channels or even to competitors providing substitutable products outside the regime. 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 brand names have been, and continue to be, well received both in our industry and with our clients, reflecting the fact that our brands, like our business, are 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 clients and we may be unable to continue to attract new clients or develop new business. If we fail to address, 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 operating expenses in response to market conditions; variations in the level of total compensation expense due to, among

45

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 manage and grow our business 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 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 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 authorities or regulatory bodies or we may become the subject of governmental or regulatory investigations and/or examinations, or 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, by-laws and standard form of director indemnification agreement we are obligated under certain conditions, 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,

46

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 regulatory and supervisory standards. Franklin and its banking subsidiaries are subject to significant regulation, supervision and examination by their respective banking regulators, which includes minimum regulatory capital standards. Franklin is subject to minimum capital and other regulatory and supervisory standards because it is a bank holding company and financial holding company registered with and supervised by the FRB under the BHC Act, and Franklin’s banking subsidiaries are subject to substantially similar minimum capital rules and to other regulatory and supervisory standards administered by the FDIC and the OCC. Our business could be negatively affected if Franklin or its banking 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 U.S. federal banking agencies’ new capital rules implementing the Basel III capital framework in the U.S. will impose more stringent capital requirements on Franklin and its banking subsidiaries. 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 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. Certain of our subsidiaries are subject to regulatory restrictions which may limit their ability to transfer funds to their parent companies and/or our ability to repatriate funds to the U.S. Our financial condition could be adversely affected if certain of our subsidiaries are unable to distribute funds to us.

Item 3. 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. 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/or investment 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 and deposits . At March 31, 2014, we had exposure from $1,673.7 million of investments in debt securities and SIPs that invest in debt securities, $218.3 million of loans held for sale, $3.8 million of net loans receivable and $526.7 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

47

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 also monitor the interest rates and average maturities of our loan and deposit portfolios. At March 31, 2014, we had no exposure to changes in interest rates from debt obligations as all of our outstanding debt was issued at fixed rates.

As of March 31, 2014, 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 the majority of our revenues are earned 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 condensed 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 8% of the total cash and cash equivalents and investments at March 31, 2014. 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 10% of the total cash and cash equivalents and investments at March 31, 2014. 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.

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 March 31, 2014.If such a 10% increase or decrease in carrying values were to occur, the changes from trading investment securities and direct investments in consolidated VIEs and consolidated SIPs would result in a $173.2 million increase or decrease in our pre-tax earnings. The changes from available-for-sale investment securities would not result in a change to other-than-temporary impairment charges that would be material to our pre-tax earnings.

(in millions)	Carrying Value		Carrying Value Assuming  a 10% Increase		Carrying Value Assuming  a 10% Decrease
Investment securities, trading	$	1,274.5	$	1,401.9	$	1,147.1
Investment securities, available-for-sale	579.3		637.2		521.4
Direct investments in consolidated VIEs and consolidated SIPs	457.9		503.7		412.1
Total	$	2,311.7	$	2,542.8	$	2,080.6

Item 4. 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 March 31, 2014. Based on their evaluation, the Company’s principal executive and principal financial officers concluded that the Company’s disclosure controls and procedures as of March 31, 2014 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 March 31, 2014, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

48

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

For a description of our legal proceedings, please see the description set forth in the “Legal Proceedings” section in Note 9 – Commitments and Contingencies in the notes to the condensed consolidated financial statements in Item 1 of Part I of this Form 10-Q, which is incorporated herein by reference.

Item 1A. Risk Factors.

Our Form 10-K for the fiscal year ended September 30, 2013 filed with the SEC includes a discussion of the Risk Factors applicable to us, which are also set forth under the heading “Risk Factors” in Item 2 of Part I of this Form 10-Q. There are no material changes from the Risk Factors as previously disclosed in our Form 10-K for the fiscal year ended September 30, 2013.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table provides information with respect to the shares of our common stock that we repurchased during the three months ended March 31, 2014.

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
January 2014	67,726	$	57.41	67,726	38,649,889
February 2014	1,698,600	$	52.24	1,698,600	36,951,289
March 2014	1,637,000	$	52.62	1,637,000	35,314,289
Total	3,403,326			3,403,326

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. In order to pay taxes due in connection with the vesting of employee and executive officer stock and stock unit awards, we may repurchase shares under our program using a net stock issuance method. In December 2013, we announced that our Board of Directors authorized the repurchase of up to 30.0 million additional shares of our common stock under the stock repurchase program. At March 31, 2014, 35.3 million shares remained available for repurchase under the program, which is not subject to an expiration date. There were no unregistered sales of equity securities during the period covered by this report.

49

Item 6. 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 December 10, 2013), incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed with the SEC on December 11, 2013 (File No. 001-09318)
10.1	Representative Form of Management Company Services Agreement between Franklin Templeton International Services S.à r.l. and certain funds (filed herewith)
10.2	2014 Key Executive Incentive Compensation Plan (effective December 10, 2013), incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on March 13, 2014 (File No. 001-09318)*
10.3	Non-Employee Director Compensation as of March 31, 2014 (filed herewith)*
10.4	Named Executive Officer Compensation as of March 31, 2014 (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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, formatted in Extensible Business Reporting Language (XBRL), include: (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) related notes (filed herewith)

__________

*        Compensatory Plan or Arrangement

50

SIGNATURES

Pursuant to the requirements 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.
		(Registrant)
Date:	April 28, 2014	By:	/S/ KENNETH A. LEWIS
			Kenneth A. Lewis
			Chief Financial Officer and Executive Vice President
			(Duly Authorized Officer and Principal Financial Officer)

51

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 December 10, 2013), incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed with the SEC on December 11, 2013 (File No. 001-09318)
10.1	Representative Form of Management Company Services Agreement between Franklin Templeton International Services S.à r.l. and certain funds (filed herewith)
10.2	2014 Key Executive Incentive Compensation Plan (effective December 10, 2013), incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on March 13, 2014 (File No. 001-09318)*
10.3	Non-Employee Director Compensation as of March 31, 2014 (filed herewith)*
10.4	Named Executive Officer Compensation as of March 31, 2014 (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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, formatted in Extensible Business Reporting Language (XBRL), include: (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flow

__________

*        Compensatory Plan or Arrangement

52

EX-10.1

Exhibit 10.1

FORM OF MANAGEMENT COMPANY SERVICES AGREEMENT

THIS AGREEMENT is made as of the [_________], 201[_].

BETWEEN

[________________________] incorporated under the laws of [____________] and having its registered office at [_____________________], registered with [_________________] (the “Fund”) of the first part;

AND

Franklin Templeton International Services S.à r.l., a société à responsabilité limitée incorporated under the laws of the Grand Duchy of Luxembourg and having its registered office at 8A, rue Albert Borschette, L-1246 Luxembourg, registered with the Luxembourg Register of Commerce and Companies under number B 36.979 (the “Management Company”) of the second part;

the Fund and the Management Company being individually referred to hereinafter as a "Party", and collectively as the “Parties”.

WHEREAS

(A) The Fund is an investment company with variable capital pursuant to Part I of the Law and is organised as investment company with multiple sub-funds (the "Sub-Funds") as listed in Appendix 1, the principal object of which is to invest its net assets in transferable securities and other permitted liquid financial assets, as more fully described in the prospectus of the Fund as amended from time to time (the "Prospectus") and its articles of incorporation (the "Articles").

(B) Pursuant to article 33 (1) of the Law, the Fund has appointed [_________________], having its registered office at [________________________] to act as depositary bank (the "Depositary").

(C) The Management Company is a management company authorised under Article 101 (2) of the Law.

(D) The Fund hereby wishes to appoint the Management Company to act as its management company under the Law, to perform certain asset management, administrative, and principal distribution duties and to provide registrar and transfer agency services as well as corporate and domiciliary agency services in connection with the business of the Fund and more fully described hereinafter.

(E) The Management Company is ready and willing to act as the Fund’s management company, subject to and in accordance with the provisions hereinafter set forth.

1

Unless otherwise specifically defined in this Agreement, all capitalised terms herein shall have the same meaning as in the Prospectus. In relation to this Agreement, unless the context otherwise requires, all reference to the Fund shall include a reference to each of its Sub-Funds, including Sub-Funds created in the future.

NOW IT IS HEREBY AGREED AS FOLLOWS:

Definition

In this Agreement and in all amendments hereto the following words and expressions shall, where not inconsistent with the context, have the following meanings respectively:

"Agreement" means this agreement together with all its signed appendices;

"Articles" means the articles of incorporation of the Fund as amended from time to time;

"Board" means the board of directors of the Fund;

“CSSF Circular” means the Circular 12/546 on the authorisation and organisation of Luxembourg management companies subject to Chapter 15 of the Law as well as investment companies which have not designated a management company within the meaning of Article 27 of the Law, as amended from time to time or any successor CSSF circular thereto;

"Law" means the Luxembourg Law of 17 December 2010 relating to undertakings for collective investment, as amended from time to time;

"Luxembourg Supervisory Authority" means the Luxembourg supervisory authority, the Commission de Surveillance du Secteur Financier or any of its successors;

"Prospectus" means the prospectus of the Fund and the key investor information document, in force from time to time, including all addenda and / or supplements;

"Regulation" means the CSSF Regulation n° 10-4 of 24 December 2010 transposing Commission Directive 2010/43/EU of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards organisational requirements, conflicts of interest, conduct of business, risk management and content of the agreement between a depositary and a management company, as amended from time to time or any successor regulation thereto;

"Shareholder(s)" means, unless otherwise specified, the shareholder(s) of the Fund;

"Shares" means the shares of the Fund;

"Sub-Funds" means a separate portfolio of assets established within the Fund with one or more classes which is invested in accordance with a specific investment objective.

In this Agreement, unless otherwise specified:

(a) references to clauses, sub-clauses, appendices and paragraphs are to clauses, sub-clauses, appendices and paragraphs of this Agreement;

(b) headings to clauses are for convenience only and do not form part of the operative provision of this Agreement and shall be ignored in construing the same;

(c) a reference to any statute or statutory provision shall be construed as a reference to the same as it may have been, or may from time to time be, re-enacted; and

(d) references to a "person" shall be construed so as to include any individual, firm, company, government, state or agency of a state, local or municipal authority or government body or any joint venture, association or partnership (whether or not having separate legal personality).

2

1 APPOINTMENT OF THE MANAGEMENT COMPANY

The Fund hereby appoints Franklin Templeton International Services S.à r.l. as its management company to carry out the management functions listed in Annex II of the Law, and Franklin Templeton International Services S.à r.l. hereby confirms acceptance of such appointment and the attendant duties and responsibilities in accordance with the provisions of this Agreement.

2 GENERAL

2.1 The Management Company will observe and comply with the provisions of the Articles, the Prospectus and any orders or guidelines received from time to time from the Board ("Instructions") unless such orders conflict with the Management Company's duties.

2.2 Subject to the overall responsibility of the Board the Management Company shall be responsible for the day-to-day management of the affairs of the Fund in accordance with the Articles, the Prospectus and the Instructions.

2.3 The Management Company shall perform risk-monitoring procedures in accordance with all applicable laws and regulations.

2.4 In carrying out its duties, the Management Company shall at all times observe all applicable legal and regulatory provisions and, in particular, the Regulation and the prudential rules as may be determined from time to time by the Luxembourg Supervisory Authority.

2.5 If certain activities are delegated by the Management Company to third parties (the "Service Providers") as set out in clause 4 below, the Management Company shall observe or ensure that its Service Providers observe, all applicable provisions of the relevant laws and regulations including but not limited to (i) the provisions of the CSSF Circular, (ii) the requirements of performing initial and ongoing due diligence on delegates and (iii) the principles of Article 111 of the Law; the Management Company shall in addition supervise at any time the activities carried out by the Service Providers and co-ordinate the activities of the different Service Providers with respect to the Fund, in accordance with the Prospectus, the Articles, the Instructions, the Law and the Regulation. In no case shall the Management Company's liability be affected by the fact that the Management Company delegated any functions to third parties.

2.6 The Management Company undertakes to maintain such appropriate levels of human and technical resources as the business and the investment policy/strategy of the Sub-Funds may from time to time require in order to perform its duties hereunder.

2.7 The Management Company further undertakes to define and implement at any time procedures and arrangements as further details in the Regulation and the CSSF Circular to minimise conflicts of interest, to act honestly, fairly and with due skill, care and diligence in the best interests of the Fund.

3

3 DUTIES AND RESPONSIBILITIES OF THE MANAGEMENT COMPANY

3.1 The Management Company shall be responsible for the investment management of the assets of the Fund, the administration of the Fund and the implementation of the Fund’s distribution and marketing policy.

3.2 The Management Company is entrusted with the day to day management of the assets of all the Sub-Funds. The Management Company shall have the power to purchase, subscribe or otherwise acquire or deal in investments and securities and to sell, redeem, exchange, vary or transpose the same at its full discretion on behalf and in the name of the Fund and its Sub-Funds, provided that the Management Company shall observe and comply with the restrictions as set out in the Prospectus as well as with any Instructions.

All rights of voting conferred by the investments made by the Management Company on behalf and in the name of the Fund and its Sub-Funds, may be exercised in such manner and as detailed in the relevant internal policy as the Management Company may determine. The Fund shall from time to time upon written request from the Management Company execute and deliver, or, if appropriate, cause to be executed and delivered by the Depositary, to the Management Company such powers of attorney or proxies authorising such attorney or proxies to exercise any rights conferred by, or otherwise act in respect of all or any part of the investments.

The Management Company shall keep or cause to be kept on behalf of the Fund such books, records and statements expressed in such currencies as may be necessary to give a complete record of all transactions carried out by the Management Company on behalf of the Fund and such other books, records and statements as may be required by the relevant laws and the Articles and as may be necessary to give a complete record of all other transactions carried out by the Management Company on behalf of the Fund and shall permit the Fund and its employees and agents and the auditors of the Fund to inspect such books, records and statements at all reasonable times.

The Management Company shall employ a risk management process which enables it to monitor and measure at any time the risks arising from the business of the Fund, in accordance with the applicable laws, regulations and ESMA recommendations or guidelines (including but not limited to ESMA Guidelines 10/788 and CSSF Circular on the presentation of the main regulatory changes in risk management following the publication of the Regulation and ESMA clarifications, further clarifications from the CSSF on risk management rules and the definition of the content and format of the risk management process to be communicated to the CSSF).

The Management Company may delegate its duties hereunder in accordance with the provisions of clause 4 below.

3.3 The Management Company is entrusted with the central administration functions for the Fund which are to be performed for a société d'investissement à capital variable in application of the Law and applicable regulations.

The Management Company will inter alia:

1)    be responsible for keeping the register of shareholders of the Fund;

4

2)    keep the accounts of the Fund and such financial books and records as may be necessary and required by applicable legislation;

3)    determine the net asset value of the Sub-Funds on the relevant valuation days and arrange for the publication/availability of the net asset values;

4)    process all subscription, conversion and redemption orders of shares of the Fund;

5)    deal with the issue, transfer and redemption of the shares of the Sub-Funds including the receipt and transfer of the related issue, sale and redemption proceeds;

6)    undertake the necessary steps to maintain any registration with governmental or similar agencies and liaise with the service providers of the Fund;

7)    provide corporate and domiciliary agency services and, in this respect, deal with all correspondence to and from the Fund as well as with all publications, reports, circulars, etc.;

8)    perform all other duties required for the efficient administration of the Fund as separately agreed between the Fund and the Management Company (remaining however within the limits of Annex II of the Law).

The Management Company is authorized (so far as is permitted by applicable laws) to maintain all accounts, registers, corporate books and other documents on computer records and to produce at any time during the course of legal proceedings, copies or reproductions of these documents made by photographic, photostatic or data processing procedures as judicial proof.

The Management Company shall be obliged to hold third party information confidential, to comply with all relevant data protection and client confidentiality laws and to maintain any such regulatory or other authorizations, licenses or approvals.

3.4 The Management Company will act as the Fund’s principal distributor and may undertake marketing and distribution activities either directly or through duly appointed distributors (whether global distributors and/or sub-distributors) as agreed from time to time with the Fund.

Upon the request of the Board, the Management Company shall undertake the registration of the Shares for public offering and sale in foreign jurisdictions.

The Management Company may appoint a general distributor for the distribution of the Shares which may in turn appoint sub-distributors to distribute the Shares in accordance with the rules and regulations of the countries of distribution and the Prospectus. Depending on the situation, such third parties may not have any authority to act as agent of the Management Company. The Management Company undertakes to implement or to cause the general distributor (or its sub-distributors) to implement anti-money laundering and prevention of terrorism financing measures in accordance with the Luxembourg laws and regulations applicable to the Fund and the Management Company.

5

3.5 The Management Company shall provide to the Board periodic reports on its activities and transactions the content and frequency which will be agreed from time to time between the Management Company and the Fund. The Management Company shall provide reports at such other times as the Board may reasonably request.

4 DELEGATION OF THE DUTIES OF THE MANAGEMENT COMPANY

4.1 The Management Company may, in accordance with the provisions of Article 110 of the Law and the relevant regulations and prudential rules, as may be amended, under its own supervision and responsibility, delegate one or more of its functions to Service Providers.

4.2 Any delegation may be subject to the prior approval of the Board to the extent required under applicable Luxembourg laws and regulations. Delegations may be further subject to the approval of the Luxembourg Supervisory Authority and shall be disclosed in the Prospectus, to the extent required under applicable Luxembourg laws and regulations.

4.3 The delegation shall not prevent the effectiveness of supervision by the Management Company and in particular shall not prevent the latter from acting or the Fund from being managed in the best interests of the Shareholders.

4.3.1 In particular the Management Company shall, when entering into delegation agreements with Service Providers, ensure (i) that such agreements provide for the effective monitoring of the delegated activity by the Management Company at any time, (ii) that they take into account the requirements of the provisions of the CSSF Circular (in particular section 7.1.) and (iii) that the Management Company has appropriate access to the systems used by the Service Providers or that it has access to any relevant data on reasonable request.

The Management Company shall further ensure that it receives regular reports from the Service Providers enabling it to assess whether:

(i) the Fund’s assets are invested pursuant to (i) the provisions of the Prospectus and the Articles and (ii) the applicable laws and regulations;

(ii) the risk management methods undertaken and applied are sufficient to allow the Management Company to control and measure at any time the risks associated with the investments made by the Fund, in particular financial positions and the contribution of these to the general risk profile of the Sub-Funds and the Fund; and

(iii) the marketing policy of the Fund is being complied with where applicable.

(iv) the Service Providers act in the best interests of the Fund and execute the investment decisions taken for the account of the Fund in accordance with the objective, the investment strategies and the risk limitations of the Fund, take all reasonable measures in order to execute directly all orders themselves to obtain the best result, respectively in order to ensure that orders placed with other entities for execution are executed to obtain the best possible result; they shall execute rapidly and equitably portfolio transactions on behalf of the Fund that they manage;

6

(v) the Service Providers implement and maintain operationally a business continuity plan and a disaster recovery plan.

4.3.2 The Management Company shall also ensure that the agreements with Service Providers allow (i) the conducting officers of the Management Company (the “Conducting Officers”) to monitor and control effectively at any time the activity of the Service Providers and (ii) the Conducting Officers and the Management Company’s staff access to the data documenting the activities performed by the Service Providers for and on behalf of the Management Company or the Fund; that the Conducting Officers are not prevented to give at any time further instructions to the Service Providers and that the agreements with the Service Providers may be terminated at any time with immediate effect in order to safeguard the interests of the Shareholders.

4.4 The Management Company shall only delegate its functions to Service Providers that are duly qualified and hold the necessary authorisations as may be required in their country of incorporation. The Management Company shall in this regard carry out such verifications and due diligence as may be necessary to assess that the Service Providers are duly organised to carry out such functions.

4.5 The investment management functions may only be delegated to an entity which in its home country is subject to a supervisory authority which the Luxembourg Supervisory Authority recognises and has established co-operation with and complies with any further Luxembourg requirements as may be imposed from time to time.

4.6 In the case of the delegation of the investment management functions, the Management Company shall ensure that the investment management agreement entered into with the investment manager (the “Investment Manager”) refers to the applicable investment policy and investment restrictions and the legal and regulatory provisions applicable to the investments of the Fund or to the Fund current prospectus, which contains this information.

4.7 The administration functions described under 3.3 may be delegated in accordance with the applicable Luxembourg laws, regulations and the prudential rules.

4.8 Without prejudice to the generality of the foregoing, the Management Company shall:

4.8.1 review and monitor on an on-going basis, the performance of the investments and report thereon as the Fund shall reasonably require;

4.8.2 review and monitor on an on-going basis the compliance by the Service Providers with all laws and regulations and, in particular, with the investment policy and restrictions as set out in the Law, the Prospectus, the Articles and all investment instructions which may from time to time be communicated by the Fund;

4.8.3 ensure that the Service Providers to whom one or more functions have been delegated are promptly notified of any Instructions regarding their activities;

4.8.4 ensure that the Board receives reports on all actions that the Management Company has taken in order to effectively carry out the investment objectives and policies of the Fund and its Sub-Funds in relation to investments forming part of the assets of the Fund and its Sub-Funds;

4.8.5 inform the Fund of the discontinuation of the delegation to any one Service Provider by the Management Company;

7

4.8.6 ensure that the Board receives reports covering any error, breach of investment policy, investment restrictions or other material event without undue delay which the Fund could reasonably expect to be brought to its attention; and

4.8.7 generally, ensure that the Board receives any such other information and reports as the Fund may reasonably require.

5 INSTRUCTIONS

Instructions shall be deemed to have been received by the Management Company in respect of any of the matters referred to in this Agreement upon receipt of written, cabled, telexed, telefaxed or e-mail instructions or of instructions given by any other means agreed by the Parties and given or purporting to be given by the Fund or its agents or by one or more persons as the Fund or its agents shall from time to time have authorized to give the particular type of instructions to the Management Company and which the Management Company has agreed to accept. A copy of a decision of the Board or its agents may be received and accepted by the Management Company as conclusive evidence of the authority of any such person or persons to act and may be considered as in full force and effect until receipt by the Management Company of written notice to the contrary.

6 CHARGES AND EXPENSES OF THE MANAGEMENT COMPANY

6.1 The Management Company (whether its duties have been delegated or not) shall be responsible for the payment of the staff, personnel and office space and the operation of computer systems (hardware and software) necessary to perform its obligations under this Agreement.

6.2 For the services rendered, the facilities furnished and expenses undertaken under this Agreement, the Management Company shall receive a fee as agreed from time to time (the “Management Fee”) and as detailed in Appendix 2.

6.3 The remuneration and other sums payable to Service Providers appointed by the Management Company in accordance with this Agreement shall be paid in accordance with the provisions of the respective agreements and as disclosed, as the case may be, in the Prospectus.

6.4 Transactions effected by the Management Company on behalf of the Fund which bear costs of commission, stamp duty and any taxes chargeable in accordance with the relevant market shall be paid or reimbursed by the Fund on demand.

6.5 The Management Fee is exclusive of VAT, which, if chargeable, shall be charged in addition where appropriate at the rate for the time being applicable.

6.6 The Management Fee shall be payable as further detailed in Appendix 2.

6.7 The fees payable to the Management Company under this Agreement shall be its sole remuneration for its services. The Management Company confirms that it shall meet all its own expenses incurred in performing services under this Agreement, including but not limited to organisation expenses, legal, audit expenses, clerical and all other administrative

8

expenses. Extraordinary expenses which are incurred by the Management Company as a result of special assignments from the Fund or of events outside of the ordinary course of business, such as expenses in relation to the dissolution of the Fund or any of its Sub-Funds can be charged separately unless otherwise agreed upon by the Parties or except where contrary to applicable law or regulations.

6.8 The Management Company shall receive reimbursement from the Fund for all out-of-pocket expenses reasonably incurred by the Management Company in the performance of its duties under this Agreement.

7 LIABILITY OF THE MANAGEMENT COMPANY

7.1 The Management Company agrees to exercise the due care and diligence which can be expected from a professional in carrying out its duties under this Agreement provided, however, that the Management Company shall not be liable to the Fund for any loss suffered by the Fund in connection with the subject matter of this Agreement except as a consequence of non-performance of its obligations and duties and of bad faith, negligence or wilful default in the performance of its obligations and duties. The Management Company shall not be under any liability on account of anything done or suffered by it in good faith in accordance with or in pursuance of any legal instruction given by or on behalf of the Fund or its Board.

The Management Company shall not be liable for any investment loss arising out of any investment decision or act or omission by the Management Company, any affiliate or any agent or any appointed Investment Manager provided the investment loss did not arise as the result of a breach in the investment policies or investment restrictions of the Fund as stated in the Prospectus or of a non-performance of the Management Company's obligations and duties.

7.2 The Management Company shall not be liable or have any responsibility of any kind for any loss or damage incurred or suffered by the Fund or by any third party as the result of any failure, interruption or delay in the performance of its duties or a Service Provider’s obligations under this Agreement, resulting from any events not reasonably within the control of the Management Company or a Service Provider (a "force majeure" event within the meaning of article 1148 of the Luxembourg Civil Code as defined from time to time by the Luxembourg jurisdiction).

7.3 The Management Company's liability towards the Fund under this Agreement shall not be affected by the fact that the Management Company has delegated certain functions to Service Providers.

7.4 The Management Company shall not be liable or have responsibility or any kind in relation to any act or fact or the omission thereof that has or should have occurred in the course of the business of the Fund prior to the appointment of the Management Company becoming effective.

8 REPRESENTATIONS BY THE MANAGEMENT COMPANY

The Management Company represents and warrants that (i) it has the power and authority to enter into this Agreement; (ii) the terms of this Agreement and all actions contemplated hereby are in accordance with all applicable laws, rules and regulations; (iii) it has the necessary licenses and approvals to act as a management company; (iv) this Agreement has

9

been duly authorised and executed by the Management Company and constitutes a legal, valid and binding contract, (v) it has at the time of entering into the Agreement at least the minimum level of capital and own funds required under the Law; and (vi) it has adopted various policies and procedures required under the Regulation and has implemented these policies and procedures as well as taken measures to ensure that Service Providers comply, if required, with the aforesaid policies and procedures.

The Management Company further agrees that it shall (i) promptly notify the Fund upon the occurrence of any event which would cause the foregoing representations and warranties to be no longer true; and (ii) indemnify the Fund for any loss or liability it may incur as a result of the inaccuracy or breach by the Fund of any of the foregoing representations.

9 CONFLICTS OF INTEREST

The Management Company undertakes to disclose all and any conflicts of interest that may arise regarding the provision of its services in writing to the Board. The Management Company represents and warrants that conflicts of interest procedures have been implemented in accordance with the requirements of the Regulation and the CSSF Circular. Notwithstanding this, the Management Company shall be at liberty to act as management company to any other person or persons it may think fit and nothing herein contained shall prevent the Management Company from contracting or entering into any financial, banking, commercial, advisory or other transactions whether on its own account or on the account of other as may be allowable by law and regulation.

10 REPRESENTATIONS BY THE FUND

The Fund represents and warrants that (i) it has the power and authority to enter into this Agreement; (ii) the terms of this Agreement and all actions contemplated hereby are in accordance with all applicable laws, rules and regulations (iii) this Agreement has been duly authorised and executed by the Fund and constitutes a legal, valid and binding contract with the Fund; and (iv) the Fund will have full responsibility for the payment of all taxes due on capital or income held or collected in respect of its assets.

The Fund further agrees that it shall promptly (i) notify the Management Company upon the occurrence of any event which would cause the foregoing representations and warranties to be no longer true; and (ii) provide the Management Company with true and complete copies of each amendment to the Fund's policies and guidelines.

11 OBLIGATIONS OF THE FUND

The Fund confirms its obligation to meet all such expenses as described in the Prospectus and as may be agreed between the Parties from time to time.

10

12 INDEMNITY

The Fund agrees to indemnify the Management Company, its directors, officers and employees and any delegates appointed pursuant to Clause 4 and their directors, officers or employees against all expenses, losses, damages, liabilities, demands, charges and claims of any kind or nature whatsoever (including, without limitation, any reasonable legal expenses and costs and expenses relating to investigating or defending any demands, charges and claims subject to the prior consultation of the Fund) that may be incurred by it or made against it either (i) as a consequence of any breach by the Fund of the Agreement or (ii) arising out of any action properly taken by the Management Company in accordance with the Agreement or (iii) as a result of the non-payment by the Fund of the Management Fee which falls due under this Agreement.

The Management Company agrees to indemnify the Fund, its directors and officers against all expenses, losses, damages, liabilities, demands, charges and claims of any kind or nature whatsoever (including, without limitation, any reasonable legal expenses and costs and expenses relating to investigating or defending any demands, charges and claims subject to the prior consultation of the Management Company) that may be incurred by it or made against it either (i) as a consequence of any breach by the Management Company of the Agreement or (ii) arising out of any action properly taken by the Fund in accordance with the Agreement.

13 DURATION AND TERMINATION OF THIS AGREEMENT

13.1 This Agreement is effective as of [____________] 201[__] and is of no fixed duration and will last until terminated as provided herein.

13.2 This Agreement may be terminated upon ninety (90) days written notice by either the Fund or the Management Company giving notice to the other party.

13.3 When terminated by the Management Company, the termination of this Agreement shall not become effective until the appointment of a new management company by the Fund. In addition, the Fund and the Management Company shall cooperate on a best effort basis to ensure that the new management company can promptly take over its functions.

13.4 This Agreement may be terminated by either the Fund or the Management Company with immediate effect by written notice if so required by law or any competent regulatory authority.

13.5 This Agreement may further be terminated by either the Fund or the Management Company forthwith by notice in writing to the other if at any time:

(i) the other shall go into liquidation or if a receiver of any of the assets of the other is appointed; or

(ii) the other shall commit any serious breach of law or the provisions hereof and if such breach is capable of remedy, shall not have remedied such breach within thirty (30) days after the service of notice requiring the same to be remedied.

11

13.6 On notice of termination of this Agreement the Management Company shall continue to act in accordance herewith until the termination date unless otherwise instructed by the Fund. The Management Company will complete expeditiously all transactions in progress at termination and is authorised to arrange for the retention and/or realisation of such assets as may be required to settle transactions entered into prior to the actual date of termination. The Management Company shall, in the event of such termination, deliver or cause to be delivered to any successor or to the Fund if so requested by proper instructions, all documents and papers of the Fund then held hereunder, and all moneys or other properties of the Fund deposited with or held by it hereunder.

13.7 Termination will not affect accrued rights, existing commitments or any contractual provision intended to survive termination and will be without penalty or other additional payment. The Fund will pay (i) the Management Fees pro rata to the date of termination; (ii) any additional expenses, costs or disbursements necessarily incurred by the Management Company in terminating the Agreement (only in case of termination at the initiative of the Fund); and (iii) any losses necessarily realised in settling or concluding outstanding obligations, save that the provisions of this sentence shall not be applicable in case the Agreement shall be terminated for reasons relating to non-execution or improper performance by the Management Company of its duties hereunder.

14 CONFIDENTIALITY

14.1 The Management Company shall respect and protect the confidentiality of all information concerning the Fund and its assets and will not without the prior consent of the Fund, disclose any such information to a third party except in the proper performance of its duties, or as required by law or competent authority.

14.2 The Fund shall not disclose to or share with any third party any confidential information concerning the Management Company under this Agreement or its affairs nor any information provided to it by the Management Company under this Agreement except for the purposes of this Agreement or as may be required by the relevant authorities in Luxembourg.

14.3 The Fund understands and agrees that, in order to perform the functions of the Management Company, the Management Company uses, subject to the applicable laws and regulations, information systems and support provided by the Franklin Templeton Investments group and other Service Providers, to process data (which includes that data relating to the Fund) at data centres located outside of the Grand-Duchy of Luxembourg.

15 NOTICES

15.1 Any notice given hereunder shall be given by delivering the same by hand or prepaid first class post, or by facsimile transmission confirmed in writing. Such notice shall be addressed, dispatched or delivered to the Fund and to the Management Company or as the case may be, to the address as written above or to such other address as the Fund or the Management Company may notify from time to time to the other in accordance with this clause. Any notice sent by prepaid first class post shall be deemed to have been delivered seventy-two hours after dispatch and any notice delivered by hand or sent by facsimile transmission shall be deemed to have been delivered upon receipt. Failure to receive any confirmation of any notice duly given by facsimile transmission shall not invalidate such notice.

12

The Management Company shall ensure that the Service Providers to whom one or more functions have been delegated are promptly notified of any Instructions regarding their activities.

16 Right to Receive Advice

16.1 If the Management company shall be in doubt as to any action to be taken or omitted by it, it may request and receive advice, at the expense of the Fund, from legal counsel selected by the Fund and may, but shall not be required to, act thereon, and shall have no liability for any action reasonably taken or omitted pursuant thereto.

17 ASSIGNMENT

17.1 The benefits and obligations under this Agreement between the Fund and the Management Company shall not be assignable provided that either party may, with the prior written consent of the other, assign the benefit and obligations under this Agreement to any of its subsidiaries or holding companies or a subsidiary of any such holding company.

17.2 No provision of this Agreement may be changed, varied, waived, discharged or discontinued, except by an instrument in writing signed by all the Parties hereto.

18 GOVERNING LAW AND JURISDICTION

This Agreement shall be governed by and construed in accordance with the law of the Grand Duchy of Luxembourg. Any dispute arising therefrom shall be subject to the exclusive jurisdiction of the competent courts of Luxembourg-City.

13

IN WITNESS WHEREOF the Parties hereto have executed and delivered this Agreement as of the date first above written.

For and on behalf of [_________________________________________]

By:		By:
Title:	Director	Title:	Director

For and on behalf of Franklin Templeton International Services S.à r.l.

By:
Title:	Conducting Officer

14

EX-10.3

Exhibit 10.3

FRANKLIN RESOURCES, INC.

NON-EMPLOYEE DIRECTOR COMPENSATION

As of March 31, 2014

The following sets forth the fees and other payments that non-employee directors of Franklin Resources, Inc. (“Franklin”) are entitled to receive as members of the Board of Directors (the “Board”), and the fees and other payments that such non-employee Franklin directors who are also members of the Board of Directors of Fiduciary Trust Company International (“Fiduciary”) receive from Fiduciary.  

With respect to service on the Franklin Board, the Franklin Board last approved changes in such compensation structure in December 2013 (effective March 12, 2014). With respect to service on the Fiduciary Board, the Fiduciary Board last approved a change in such compensation structure in December 2006 (effective October 1, 2006).

The non-employee Franklin director designated by the independent directors of the Franklin Board as the lead independent director of the Franklin Board is entitled to receive an annual lead director retainer fee of $20,000 (one-fourth of which is paid quarterly).

Non-employee Franklin directors are entitled to receive an annual Franklin Board retainer fee of $85,000 (one-fourth of which is paid quarterly), plus $5,000 for each Franklin Board meeting attended by such director in excess of the five regularly scheduled Franklin Board meetings per fiscal year, and an annual equity award valued at $125,000 (rounded up to the nearest whole share) for approval on the date of each annual organizational meeting of the Franklin Board.

Non-employee Franklin directors who serve on Franklin Board committees are entitled to be paid $1,500 per committee meeting attended. Additionally, the Chairperson of the Franklin Audit Committee is entitled to receive an annual retainer fee of $15,000 (one-fourth of which is paid quarterly), and the Chairpersons of the Franklin Compensation Committee and the Franklin Corporate Governance Committee are each entitled to receive an annual retainer fee of $10,000 (one-fourth of which is paid quarterly).

The non-employee Franklin directors who are also members of the Board of Directors of Fiduciary receive from Fiduciary an annual board retainer fee of $35,000 (one-fourth of which is paid quarterly), and an annual committee retainer fee of $5,000 (one-fourth of which is paid quarterly) for service on at least one Fiduciary board committee. 

In addition, Franklin and Fiduciary reimburse directors for certain expenses incurred in connection with attending Board and committee meetings as well as other related events, including travel, hotel accommodations, meals and other incidental expenses for the director and his or her spouse accompanying the director in connection with such events. Franklin and Fiduciary may also, from time to time, provide directors and their spouses with token gifts of nominal value.

Franklin and Fiduciary also allow directors to defer payment of their directors’ fees, and to treat the deferred amounts as hypothetical investments in Franklin common stock or Franklin Templeton mutual funds. The terms of any such deferred payment arrangements are set forth in separate documentation between Franklin and the particular directors in accordance with Franklin’s 2006 Directors Deferred Compensation Plan, as amended and restated.

EX-10.4

Exhibit 10.4

NAMED EXECUTIVE OFFICER COMPENSATION

The following table sets forth the current annual base salaries of the Named Executive Officers¹ (the “NEOs”) of Franklin Resources, Inc. (the “Company”) as of March 31, 2014.

Name and Principal Position	Base Salary
Gregory E. Johnson Chairman of the Board, Chief Executive Officer and President	$780,132
Kenneth A. Lewis Executive Vice President and Chief Financial Officer	$525,000
Vijay C. Advani Executive Vice President - Global Advisory Services	$525,000
Jennifer M. Johnson Executive Vice President and Chief Operating Officer	$525,000
John M. Lusk Executive Vice President - Investment Management	$525,000

The Named Executive Officers are also eligible to:

Incentive Compensation

(a) receive an annual cash incentive award pursuant to the 2014 Key Executive Incentive Compensation Plan, as amended and restated, and the Company’s Amended and Restated Annual Incentive Compensation Plan, as amended and restated;

(b) participate in the Company’s equity incentive program, which currently involves restricted stock awards and restricted stock unit awards (including awards and units based on performance), in each case pursuant to the Company’s 2002 Universal Stock Incentive Plan, as amended and restated; and

(c) receive additional cash or equity payments or awards for special recognition of significant contributions or for retention purposes.

Benefit Plans and Other Arrangements

(a) participate in the Company’s broad-based benefit programs generally available to its salaried employees, including health, disability and life insurance programs, the Franklin Templeton 401(k) Retirement Plan and the 1998 Employee Stock Investment Plan, as amended and restated (the “ESIP”); provided that Mr. G. Johnson and Ms. J. Johnson are not eligible to participate in the ESIP; and

(b) receive certain perquisites offered by the Company, including club memberships, and, in certain limited cases, use of the Company’s aircraft for personal use.

¹    The Named Executive Officers are the Company’s principal executive officer, principal financial officer, and each of the three most highly compensated executive officers of the Company for the fiscal year ended September 30, 2013, as set forth in the Company’s proxy statement for its 2014 annual meeting of stockholders and who continue to serve the Company in such capacity as of the date this Exhibit is filed with the Securities and Exchange Commission.

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Gregory E. Johnson, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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:	April 28, 2014	/s/    GREGORY E. JOHNSON
		Gregory E. Johnson
		Chairman of the Board, Chief Executive Officer and President

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Kenneth A. Lewis, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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:	April 28, 2014	/s/    KENNETH A. LEWIS
		Kenneth A. Lewis
		Chief Financial Officer and Executive Vice President

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, Chairman of the Board, Chief Executive Officer and President 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 Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended March 31, 2014 (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:	April 28, 2014	/s/    GREGORY E. JOHNSON
		Gregory E. Johnson
		Chairman of the Board, Chief Executive Officer and President

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, Chief Financial Officer and Executive Vice President 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 Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended March 31, 2014 (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:	April 28, 2014	/s/    KENNETH A. LEWIS
		Kenneth A. Lewis
		Chief Financial Officer and Executive Vice President

XML

Investments - Summary of gross unrealized gains and losses relating to investment securities, available-for-sale (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Investment Holdings [Line Items]
Cost Basis	$ 515.3	$ 609.8
Gross Unrealized Gains	65.8	74.9
Gross Unrealized Losses	(1.8)	(2.5)
Fair Value	579.3	682.2
Sponsored Investment Products [Member]
Investment Holdings [Line Items]
Cost Basis	404.9	465.4
Gross Unrealized Gains	63.3	71.7
Gross Unrealized Losses	(1.7)	(2.5)
Fair Value	466.5	534.6
Securities of U.S. states and political subdivisions [Member]
Investment Holdings [Line Items]
Cost Basis	16.9	22.3
Gross Unrealized Gains	0.5	0.8
Gross Unrealized Losses	0	0
Fair Value	17.4	23.1
Securities of the U.S. Treasury and federal agencies [Member]
Investment Holdings [Line Items]
Cost Basis	2.2	2.3
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	2.2	2.3
Mortgage-backed securities - agency residential [Member]
Investment Holdings [Line Items]
Cost Basis	85.0	108.9
Gross Unrealized Gains	1.7	2.0
Gross Unrealized Losses	(0.1)	0
Fair Value	86.6	110.9
Other equity securities [Member]
Investment Holdings [Line Items]
Cost Basis	6.3	10.9
Gross Unrealized Gains	0.3	0.4
Gross Unrealized Losses	0	0
Fair Value	$ 6.6	$ 11.3

XML

Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of investments of consolidated VIEs and consolidated SIPs (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Variable Interest Entity [Line Items]
Investment securities, trading	$ 1,274.5	$ 1,196.7
Investments	2,610.6	2,439.2
Consolidated variable interest entities [Member]
Variable Interest Entity [Line Items]
Investment securities, trading	0	0
Other debt securities	878.4	941.1
Other equity securities	0	0
Investments	878.4	941.1
Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Investment securities, trading	258.1	244.1
Other debt securities		272.3
Other equity securities	812.7	686.8
Investments	1,339.3	1,203.2
Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Investment securities, trading	258.1	244.1
Other debt securities	1,146.9	1,213.4
Other equity securities	812.7	686.8
Investments	$ 2,217.7	$ 2,144.3

XML

Debt - Outstanding Debt (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Total Debt	$ 1,197.9	$ 1,197.7
Notes Due 2015 [Member]
Effective Interest Rate	3.32%	3.32%
Debt	249.9	249.9
Face value of senior notes	250
Stated interest rate	3.125%
Notes Due 2017 [Member]
Effective Interest Rate	1.66%	1.66%
Debt	298.9	298.7
Face value of senior notes	300
Stated interest rate	1.375%
Notes Due 2020 [Member]
Effective Interest Rate	4.74%	4.74%
Debt	349.7	349.7
Face value of senior notes	350
Stated interest rate	4.625%
Notes Due 2022 [Member]
Effective Interest Rate	2.93%	2.93%
Debt	299.4	299.4
Face value of senior notes	$ 300
Stated interest rate	2.80%

XML

Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of debt of consolidated VIEs and consolidated SIPs (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Variable Interest Entity [Line Items]
Debt of consolidated variable interest entities	$ 886.2	$ 988.5
Debt of consolidated sponsored investment products	145.3	108.9
Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Effective Interest Rate	3.62%	4.08%
Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Debt of consolidated variable interest entities	886.2	988.5
Debt of consolidated sponsored investment products	145.3	108.9
Total Debt	$ 1,031.5	$ 1,097.4
Debt of Consolidated Variable Interest Entities At Fair Value [Member]
Variable Interest Entity [Line Items]
Effective Interest Rate	1.38%	1.32%

XML

Fair Value Measurements - Schedule of financial instruments not measured at fair value (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014		Sep. 30, 2013
Cash and cash equivalents	$ 6,814.7		$ 6,186.0
Loans held for sale	218.3		0
Loans receivable, net	3.8		229.7
Deposits	674.1		586.8
Carrying Value [Member]
Cash and cash equivalents	6,814.7		6,186.0
Other Investments	78.3	[1]	61.1	[1]
Loans held for sale	218.3	[1]	0	[1]
Loans receivable, net	3.8		229.7
Deposits	674.1		586.8
Debt	1,197.9		1,197.7
Estimated Fair Value [Member]
Cash and cash equivalents	6,814.7		6,186.0
Other Investments	86.9	[1]	69.2	[1]
Loans held for sale	218.5		0
Loans receivable, net	3.9		230.1
Deposits	674.1		587.2
Debt	$ 1,230.6		$ 1,221.5
Deposits [Member]
Fair Value Level	2
Debt [Member]
Fair Value Level	2
Cash and Cash Equivalents [Member]
Fair Value Level	1
Loans Held-for-sale [Member]
Fair Value Level	2
Other Investments [Member] | Time Deposits [Member]
Fair Value Level	2
Other Investments [Member] | Cost-method Investments [Member]
Fair Value Level	3
Loans Receivable [Member]
Fair Value Level	2

[1] Primarily consist of Level 3 assets.

XML

Stockholders' Equity and Redeemable Noncontrolling Interests - Narrative (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Stockholders' Equity Note [Abstract]
Number of shares repurchased during period	3.4	0.5	5.9	2.7
Cost of shares repurchased during period	$ 178.8	$ 23.3	$ 315.9	$ 121.3
Additional number of shares authorized to be repurchased					30.0
Remaining number of shares authorized to be repurchased	35.3		35.3

XML

Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of balances of assets and liabilities of consolidated VIEs and consolidated SIPs measured at fair value (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Variable Interest Entity [Line Items]
Cash and cash equivalents	$ 6,814.7	$ 6,186.0
Investments	2,610.6	2,439.2
Total Assets Measured at Fair Value	1,867.4	1,892.7
Debt of consolidated variable interest entities	886.2	988.5
Consolidated variable interest entities [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	56.8	44.0
Investments	878.4	941.1
Debt Securities	878.4	941.1
Equity Securities	0	0
Other liabilities, at fair value	26.3	10.9
Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	39.4	93.1
Investments	1,339.3	1,203.2
Debt Securities		272.3
Equity Securities	812.7	686.8
Other liabilities, at fair value	3.1
Total [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	56.8	44.0
Receivables of consolidated VIEs	4.0	37.7
Investments	878.4	941.1
Debt Securities	368.4	360.6
Equity Securities	970.9	842.6
Debt of consolidated variable interest entities	886.2	988.5
Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	96.2	137.1
Investments	2,217.7	2,144.3
Debt Securities	1,146.9	1,213.4
Equity Securities	812.7	686.8
Total Assets Measured at Fair Value	2,278.5	2,226.0
Debt of consolidated variable interest entities	886.2	988.5
Total Liabilities Measured at Fair Value	915.6	999.4
Level 1 [Member]
Variable Interest Entity [Line Items]
Total Assets Measured at Fair Value	1,661.9	1,667.4
Level 1 [Member] | Consolidated variable interest entities [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	56.8	44.0
Receivables of consolidated VIEs	0	0
Investments	0	0
Debt of consolidated variable interest entities	0	0
Other liabilities, at fair value	0	0
Level 1 [Member] | Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Debt Securities	0.8	4.5
Equity Securities	158.4	158.1
Other liabilities, at fair value	3.1
Level 1 [Member] | Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Total Assets Measured at Fair Value	216.0	206.6
Total Liabilities Measured at Fair Value	3.1	0
Level 2 [Member]
Variable Interest Entity [Line Items]
Total Assets Measured at Fair Value	191.9	211.5
Level 2 [Member] | Consolidated variable interest entities [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	0	0
Receivables of consolidated VIEs	4.0	37.7
Investments	877.9	940.6
Debt of consolidated variable interest entities	835.1	928.8
Other liabilities, at fair value	26.3	10.9
Level 2 [Member] | Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Debt Securities	99.1	83.8
Equity Securities	260.4	213.6
Other liabilities, at fair value	0
Level 2 [Member] | Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Total Assets Measured at Fair Value	1,241.4	1,275.7
Total Liabilities Measured at Fair Value	861.4	939.7
Level 3 [Member]
Variable Interest Entity [Line Items]
Total Assets Measured at Fair Value	13.6	13.8
Level 3 [Member] | Consolidated variable interest entities [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	0	0
Receivables of consolidated VIEs	0	0
Investments	0.5	0.5
Debt of consolidated variable interest entities	51.1	59.7
Other liabilities, at fair value	0	0
Level 3 [Member] | Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Debt Securities	268.5	272.3
Equity Securities	552.1	470.9
Other liabilities, at fair value	0
Level 3 [Member] | Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Total Assets Measured at Fair Value	821.1	743.7
Total Liabilities Measured at Fair Value	$ 51.1	$ 59.7

XML

Investments (Tables)

6 Months Ended

Mar. 31, 2014

Investments [Abstract]

Summary of Investments

Investments consisted of the following:

(in millions)	March 31, 2014		September 30, 2013
Investment securities, trading	$	1,274.5	$	1,196.7
Investment securities, available-for-sale
SIPs	466.5		534.6
Securities of U.S. states and political subdivisions	17.4		23.1
Securities of the U.S. Treasury and federal agencies	2.2		2.3
Mortgage-backed securities – agency residential1	86.6		110.9
Other equity securities	6.6		11.3
Total investment securities, available-for-sale	579.3		682.2
Investments in equity method investees	664.9		485.4
Other investments	91.9		74.9
Total	$	2,610.6	$	2,439.2

^{__________________} 

¹  Consist 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 March 31, 2014	Cost Basis		Gains		Losses			Fair Value
SIPs	$	404.9	$	63.3	$	(1.7	)	$	466.5
Securities of U.S. states and political subdivisions	16.9		0.5		—			17.4
Securities of the U.S. Treasury and federal agencies	2.2		—		—			2.2
Mortgage-backed securities – agency residential	85.0		1.7		(0.1		)	86.6
Other equity securities	6.3		0.3		—			6.6
Total	$	515.3	$	65.8	$	(1.8	)	$	579.3

(in millions)			Gross Unrealized
as of September 30, 2013	Cost Basis		Gains		Losses			Fair Value
SIPs	$	465.4	$	71.7	$	(2.5	)	$	534.6
Securities of U.S. states and political subdivisions	22.3		0.8		—			23.1
Securities of the U.S. Treasury and federal agencies	2.3		—		—			2.3
Mortgage-backed securities – agency residential	108.9		2.0		—			110.9
Other equity securities	10.9		0.4		—			11.3
Total	$	609.8	$	74.9	$	(2.5	)	$	682.2

Summary of gross unrealized losses and fair values of investment securities in a continuous unrealized loss position

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

	Less Than 12 Months					12 Months or Greater					Total
(in millions)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
as of March 31, 2014
SIPs	$	15.0	$	(0.8	)	$	1.8	$	(0.9	)	$	16.8	$	(1.7	)
Mortgage-backed securities – agency residential	17.0		(0.1		)	—		—			17.0		(0.1		)
Total	$	32.0	$	(0.9	)	$	1.8	$	(0.9	)	$	33.8	$	(1.8	)

	Less Than 12 Months					12 Months or Greater					Total
(in millions)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
as of September 30, 2013
SIPs	$	50.3	$	(2.4	)	$	1.4	$	(0.1	)	$	51.7	$	(2.5	)

Schedule of contractual maturities of available-for-sale debt securities

At March 31, 2014, contractual maturities of available-for-sale debt securities were as follows:

(in millions)	Cost Basis		Fair Value
Due in one year or less	$	5.1	$	5.2
Due after one year through five years	12.4		12.8
Due after five years through ten years	—		—
Due after ten years	1.6		1.6
Total	$	19.1	$	19.6

XML

Variable Interest Entities and Consolidated Sponsored Investment Products - Narrative (Details) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013	Sep. 30, 2013
Number of sponsored investment products consolidated	31		31		36
Liquidation period in certain funds			4 years 2 months 0 days		4 years 8 months 0 days
Consolidated SIPs' unfunded commitments	$ 170,100,000		$ 170,100,000		$ 135,500,000
Unfunded commitments company contractually obligated to fund	3,900,000		3,900,000		2,800,000
Transfers into Level 2 from Level 1 - assets	0	0	0	0
Transfers into Level 1 from Level 2 - assets	0	0	0	0
Transfers into Level 1 from Level 2 - liabilities	0	0	0	0
Transfers into Level 2 from Level 1 - Liabilities	0	0	0	0
Number of countries impacted by price changes		16		16
Debt of consolidated variable interest entities	886,200,000		886,200,000		988,500,000
Investments in various funds held by consolidated SIPs for which fair value was estimated using NAV	575,200,000		575,200,000		442,000,000
AUM of non-consolidated VIEs	40,000,000,000		40,000,000,000		37,300,000,000
Collateralized Loan Obligations [Member]
Floating interest rate, minimum			0.47%		0.50%
Floating interest rate, maximum			9.74%		9.77%
Consolidated sponsored investment products [Member]
Interest Rate, Minimum			2.19%		2.45%
Interest Rate, Maximum			5.83%		5.83%
Transfers into Level 2 from Level 1 quarter to date	100,000	0
Transfers into Level 2 from Level 1 - assets	100,000	47,000,000	100,000	47,000,000
Transfers into Level 1 from Level 2 - assets	0	53,800,000
Transfers into Level 1 from Level 2 - assets	100,000	53,800,000	100,000	53,800,000
Transfers into Level 1 from Level 2 - liabilities	0	0	0	0
Transfers into Level 2 from Level 1 - Liabilities		0		0
Transfers into or out of Level 3 - assets	0	0	0	0
Transfers into or out of Level 3 - liabilities	0	0	0	0
Investments in various funds held by consolidated SIPs for which fair value was estimated using NAV	316,400,000		316,400,000		243,600,000
Level 3 [Member] | Consolidated variable interest entities [Member]
Debt of consolidated variable interest entities	$ 51,100,000		$ 51,100,000		$ 59,700,000

XML

Fair Value Measurements - Narrative (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Fair Value Disclosures [Abstract]
Transfers into Level 1 from Level 2 - assets	$ 0	$ 0	$ 0	$ 0
Transfers into Level 2 from Level 1 - assets	0	0	0	0
Transfers into Level 1 from Level 2 - liabilities	0	0	0	0
Transfers into Level 2 from Level 1 - Liabilities	0	0	0	0
Transfers into Level 3 - assets	0	0	0	0
Transfers into Level 3 - liabilities	0	0	0	0
Transfers out of Level 3 - assets	0	0	0	0
Transfers out of Level 3 - liabilities	$ 0	$ 0	$ 0	$ 0

XML

Investments - Narrative (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013	Sep. 30, 2013
Investments [Abstract]
Aggregate carrying values of investment securities pledged as collateral for the ability to borrow from the Federal Reserve Bank	$ 66.7		$ 66.7		$ 82.5
Aggregate carrying values of investment securities pledged as collateral for amounts available in secured FHLB short-term borrowing capacity	15.6		15.6		28.4
Aggregate carrying values of investment securities pledged as collateral for ability to borrow from uncommitted short-term bank lines of credit	6.5		6.5		7.1
Other-than-temporary impairment of available-for-sale SIPs			(0.4)	(0.3)
Other-than-temporary impairment of investments	$ 0	$ (0.7)	$ (0.6)	$ (1.0)

XML

Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of changes in fair values of underlying assets and liabilities of the Collateralized Loan Obligations (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Variable Interest Entities and Consolidated Sponsored Investment Products [Abstract]
Net gains from changes in fair value of assets	$ 11.0	$ 18.9	$ 24.4	$ 41.1
Net losses from changes in fair value of liabilities	(8.8)	(26.6)	(16.5)	(67.9)
Total Net Gains (Losses)	$ 2.2	$ (7.7)	$ 7.9	$ (26.8)

XML

Other Income (Expenses) - Schedule of Other Nonoperating Income and Expense by Component (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Other Income and Expenses [Abstract]
Dividend income	$ 2.2	$ 2.7	$ 5.3	$ 5.5
Interest income	2.4	2.4	4.7	5.5
Gains on trading investment securities, net	3.7	8.3	7.1	13.6
Realized gains on sale of investment securities, available-for-sale	11.0	6.6	30.6	27.8
Realized losses on sale of investment securities, available-for-sale	(0.2)	0	(0.8)	0
Income from investments in equity method investees	9.7	20.4	34.6	42.2
Other-than-temporary impairment of investments	0	(0.7)	(0.6)	(1.0)
Gains (losses) on investments of consolidated SIPs, net	(15.4)	41.5	(20.7)	62.4
Gains (losses) on assets and liabilities of consolidated VIEs, net	2.2	(7.7)	7.9	(26.8)
Foreign currency exchange gains (losses), net	(2.1)	18.6	(12.6)	7.3
Other, net	3.5	4.4	9.7	5.5
Total	17.0	96.5	65.2	142.0
Interest expense	(11.4)	(10.9)	(24.0)	(25.4)
Other Income, Net	$ 5.6	$ 85.6	$ 41.2	$ 116.6

XML

Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of financial instruments of consolidated VIEs and consolidated SIPs not measured at fair value (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Variable Interest Entity [Line Items]
Cash and cash equivalents of consolidated SIPs	$ 6,814.7	$ 6,186.0
Debt of consolidated SIPs	145.3	108.9
Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents of consolidated SIPs	39.4	93.1
Cash and Cash Equivalents [Member]
Variable Interest Entity [Line Items]
Fair Value Level	1
Cash and Cash Equivalents [Member] | Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Fair Value Level	1
Debt of consolidated SIPs [Member] | Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Fair Value Level	3
Estimated Fair Value [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents of consolidated SIPs	6,814.7	6,186.0
Estimated Fair Value [Member] | Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents of consolidated SIPs	39.4	93.1
Debt of consolidated SIPs	$ 145.4	$ 110.4

XML

Debt - Narrative (Details) (USD $)	Mar. 31, 2014
Debt Disclosure [Abstract]
Face value of senior notes	$ 1,200,000,000
Commercial paper available for issuance under an uncommitted private placement program	500,000,000
Uncommitted short-term bank lines of credit under the Federal Reserve system	260,000,000
Uncommitted short-term bank lines of credit available through the secured Federal Reserve short-term discount window	65,300,000
Secured FHLB short-term borrowing capacity	14,800,000
Uncommitted short-term bank lines of credit	$ 13,600,000

XML

Stockholders' Equity and Redeemable Noncontrolling Interests

6 Months Ended

Mar. 31, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity and Redeemable Noncontrolling Interests

Stockholders' Equity and Redeemable Noncontrolling Interests

The changes in total stockholders’ equity and redeemable noncontrolling interests were as follows:

(in millions)	Franklin Resources, Inc. Stockholders’ Equity			Nonredeemable Noncontrolling Interests			Total Stockholders’ Equity			Redeemable Noncontrolling Interests
for the six months ended March 31, 2014
Balance at October 1, 2013	$	10,073.1		$	612.4		$	10,685.5		$	121.8
Net income (loss)	1,164.8			(24.4		)	1,140.4			8.4
Net income reclassified to appropriated retained earnings	5.6			(5.6		)	—
Other comprehensive loss	(1.7		)				(1.7		)
Cash dividends on common stock	(151.4		)				(151.4		)
Repurchase of common stock	(315.9		)				(315.9		)
Noncontrolling interests
Net subscriptions				25.6			25.6			341.9
Net deconsolidation of sponsored investment products				—			—			(298.9		)
Other1	90.7						90.7
Balance at March 31, 2014	$	10,865.2		$	608.0		$	11,473.2		$	173.2

^{__________________} 

¹  Primarily relates to stock-based compensation plans.

(in millions)	Franklin Resources, Inc. Stockholders’ Equity			Nonredeemable Noncontrolling Interests		Total Stockholders’ Equity			Redeemable Noncontrolling Interests
for the six months ended March 31, 2013
Balance at October 1, 2012	$	9,201.3		$	559.2	$	9,760.5		$	26.7
Net income	1,088.9			5.1		1,094.0			4.1
Net loss reclassified to appropriated retained earnings	(28.2		)	28.2		—
Other comprehensive loss	(53.3		)			(53.3		)
Cash dividends on common stock	(763.6		)			(763.6		)
Repurchase of common stock	(121.3		)			(121.3		)
Noncontrolling interests
Net subscriptions				55.6		55.6			32.0
Net consolidation (deconsolidation) of sponsored investment products				4.4		4.4			(15.1		)
Acquisition				5.4		5.4			32.8
Other1	96.2					96.2
Balance at March 31, 2013	$	9,420.0		$	657.9	$	10,077.9		$	80.5

^{__________________} 

¹  Primarily relates to stock-based compensation plans.

During the three and six months ended March 31, 2014, the Company repurchased 3.4 million and 5.9 million shares of its common stock at a cost of $178.8 million and $315.9 million under its stock repurchase program. In December 2013, the Company's Board of Directors authorized the repurchase of up to 30.0 million additional shares of its common stock under the stock repurchase program. At March 31, 2014, 35.3 million shares remained available for repurchase under the program, which is not subject to an expiration date. During the three and six months ended March 31, 2013, the Company repurchased 0.5 million and 2.7 million shares of its common stock at a cost of $23.3 million and $121.3 million.

XML

Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of Maximum Exposure to Loss on non-consolidated VIEs (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Non-consolidated VIEs carrying value	$ 276.0	$ 244.8
Receivables [Member]
Non-consolidated VIEs carrying value	62.9	46.3
Investments [Member]
Non-consolidated VIEs carrying value	$ 213.1	$ 198.5

XML

Fair Value Measurements - Fair Value, by Balance Sheet Grouping (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014		Sep. 30, 2013		Sep. 30, 2012
Investment securities, trading	$ 1,274.5		$ 1,196.7
Investment securities, available-for-sale	579.3		682.2
Life settlement contracts	13.6		13.8		13.8
Total Assets Measured at Fair Value	1,867.4		1,892.7
Contingent consideration liabilities	104.2		97.7
Level 1 [Member]
Investment securities, trading	1,193.4		1,121.5
Life settlement contracts	0		0
Total Assets Measured at Fair Value	1,661.9		1,667.4
Contingent consideration liabilities	0		0
Level 2 [Member]
Investment securities, trading	81.1		75.2
Life settlement contracts	0		0
Total Assets Measured at Fair Value	191.9		211.5
Contingent consideration liabilities	0		0
Level 3 [Member]
Investment securities, trading	0		0
Life settlement contracts	13.6		13.8
Total Assets Measured at Fair Value	13.6		13.8
Contingent consideration liabilities	104.2		97.7
Sponsored Investment Products [Member]
Investment securities, available-for-sale	466.5		534.6
Sponsored Investment Products [Member] | Level 1 [Member]
Investment securities, available-for-sale	466.5		534.6
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	17.4		23.1
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	17.4		23.1
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	2.2		2.3
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	2.2		2.3
Securities of the U.S. Treasury and federal agencies [Member] | Level 3 [Member]
Investment securities, available-for-sale	0		0
Mortgage-backed securities - agency residential [Member]
Investment securities, available-for-sale	86.6	[1]	110.9	[1]
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	86.6		110.9
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	6.6		11.3
Other Equity Securities [Member] | Level 1 [Member]
Investment securities, available-for-sale	2.0		11.3
Other Equity Securities [Member] | Level 2 [Member]
Investment securities, available-for-sale	4.6		0
Other Equity Securities [Member] | Level 3 [Member]
Investment securities, available-for-sale	$ 0		$ 0

[1] Consist of U.S. government-sponsored enterprise obligations.

XML

Stock-Based Compensation (Tables)

6 Months Ended

Mar. 31, 2014

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, 2013	3,732		$	40.61
Granted	2,624		53.87
Vested	(488	)	39.49
Forfeited/canceled	(116	)	44.53
Nonvested Balance at March 31, 2014	5,752		$	46.67

XML

Variable Interest Entities and Consolidated Sponsored Investment Products (Tables)

6 Months Ended

Mar. 31, 2014

Variable Interest Entities and Consolidated Sponsored Investment Products [Abstract]

Schedule of balances of consolidated VIEs and consolidated SIPs

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

	March 31, 2014						September 30, 2013
	Consolidated						Consolidated
(in millions)	VIEs		SIPs		Total		VIEs		SIPs		Total
Assets
Cash and cash equivalents	$	56.8	$	39.4	$	96.2	$	44.0	$	93.1	$	137.1
Receivables	4.0		24.9		28.9		37.7		19.1		56.8
Investments, at fair value	878.4		1,339.3		2,217.7		941.1		1,203.2		2,144.3
Other assets	—		0.7		0.7		—		0.7		0.7
Total Assets	$	939.2	$	1,404.3	$	2,343.5	$	1,022.8	$	1,316.1	$	2,338.9
Liabilities
Accounts payable and accrued expenses	$	—	$	31.9	$	31.9	$	—	$	25.2	$	25.2
Debt, at fair value	886.2		—		886.2		988.5		—		988.5
Debt	—		145.3		145.3		—		108.9		108.9
Other liabilities	26.3		10.9		37.2		10.9		8.5		19.4
Total liabilities	912.5		188.1		1,100.6		999.4		142.6		1,142.0
Redeemable Noncontrolling Interests	—		173.2		173.2		—		121.8		121.8
Stockholders' Equity
Franklin Resources, Inc.'s interests	26.7		449.2		475.9		23.4		454.8		478.2
Nonredeemable noncontrolling interests	—		593.8		593.8		—		596.9		596.9
Total stockholders' equity	26.7		1,043.0		1,069.7		23.4		1,051.7		1,075.1
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	$	939.2	$	1,404.3	$	2,343.5	$	1,022.8	$	1,316.1	$	2,338.9

Schedule of assets and liabilities of the CLOs carried at fair value

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

	Three Months Ended March 31,						Six Months Ended March 31,
(in millions)	2014			2013			2014			2013
Net gains from changes in fair value of assets	$	11.0		$	18.9		$	24.4		$	41.1
Net losses from changes in fair value of liabilities	(8.8		)	(26.6		)	(16.5		)	(67.9		)
Total Net Gains (Losses)	$	2.2		$	(7.7	)	$	7.9		$	(26.8	)

Unpaid principal balance and fair value of investments and debt of CLOs

The following tables present the unpaid principal balance and fair value 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			Debt
as of March 31, 2014
Unpaid principal balance	$	872.4	$	8.1		$	918.8
Difference between unpaid principal balance and fair value	6.0		(7.9		)	(32.6		)
Fair Value	$	878.4	$	0.2		$	886.2

(in millions)	Total Investments			Investments 90 Days or More Past Due			Debt
as of September 30, 2013
Unpaid principal balance	$	943.6		$	7.9		$	1,017.8
Difference between unpaid principal balance and fair value	(2.5		)	(7.7		)	(29.3		)
Fair Value	$	941.1		$	0.2		$	988.5

Schedule of investments of consolidated VIEs and consolidated SIPs

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

	March 31, 2014						September 30, 2013
	Consolidated						Consolidated
(in millions)	VIEs		SIPs		Total		VIEs		SIPs		Total
Investment securities, trading	$	—	$	258.1	$	258.1	$	—	$	244.1	$	244.1
Other debt securities	878.4		268.5		1,146.9		941.1		272.3		1,213.4
Other equity securities	—		812.7		812.7		—		686.8		686.8
Total Investments	$	878.4	$	1,339.3	$	2,217.7	$	941.1	$	1,203.2	$	2,144.3

Schedule of debt of consolidated VIEs and consolidated SIPs

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

	March 31, 2014		Effective Interest Rate		September 30, 2013		Effective Interest Rate
(dollars in millions)
Debt of consolidated VIEs, at fair value, due fiscal years 2018-2024	$	886.2	1.38	%	$	988.5	1.32	%
Debt of consolidated SIPs due fiscal years 2014-2019	145.3		3.62	%	108.9		4.08	%
Total Debt	$	1,031.5			$	1,097.4

Schedule of contractual maturities for debt of consolidated VIEs and consolidated SIPs

At March 31, 2014, contractual maturities for debt of consolidated VIEs and consolidated SIPs were as follows:

(in millions)
for the fiscal years ending September 30,
2014	$	71.9
2015	—
2016	—
2017	28.1
2018	288.7
Thereafter	642.8
Total	$	1,031.5

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.See Note 6 – Fair Value Measurements for information related to the three levels of fair value hierarchy.

(in millions)	Level 1		Level 2		Level 3		Total
as of March 31, 2014
Assets
Cash and cash equivalents of consolidated VIEs	$	56.8	$	—	$	—	$	56.8
Receivables of consolidated VIEs	—		4.0		—		4.0
Investments of consolidated VIEs	—		877.9		0.5		878.4
Investments of consolidated SIPs
Debt securities	0.8		99.1		268.5		368.4
Equity securities	158.4		260.4		552.1		970.9
Total Assets Measured at Fair Value	$	216.0	$	1,241.4	$	821.1	$	2,278.5
Liabilities
Debt of consolidated VIEs	$	—	$	835.1	$	51.1	$	886.2
Other liabilities of consolidated VIEs	—		26.3		—		26.3
Other liabilities of consolidated SIPs	3.1		—		—		3.1
Total Liabilities Measured at Fair Value	$	3.1	$	861.4	$	51.1	$	915.6

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2013
Assets
Cash and cash equivalents of consolidated VIEs	$	44.0	$	—	$	—	$	44.0
Receivables of consolidated VIEs	—		37.7		—		37.7
Investments of consolidated VIEs	—		940.6		0.5		941.1
Investments of consolidated SIPs
Debt securities	4.5		83.8		272.3		360.6
Equity securities	158.1		213.6		470.9		842.6
Total Assets Measured at Fair Value	$	206.6	$	1,275.7	$	743.7	$	2,226.0
Liabilities
Debt of consolidated VIEs	$	—	$	928.8	$	59.7	$	988.5
Other liabilities of consolidated VIEs	—		10.9		—		10.9
Total Liabilities Measured at Fair Value	$	—	$	939.7	$	59.7	$	999.4

Schedule of investments in fund products for which fair value was estimated using NAV as a practical expedient

The investments in fund products for which fair value was estimated using NAV as a practical expedient consisted of the following:

(in millions)	Redemption Frequency	Fair Value Level	March 31, 2014		September 30, 2013
Global fixed-income fund	Monthly	2	$	234.8	$	191.8
Hedge funds	Monthly or quarterly	2	24.0		6.6
Real estate and private equity funds	Nonredeemable	3	314.2		242.1
Hedge funds	Annually or triennially	3	2.2		1.5
Total			$	575.2	$	442.0

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 were as follows:

(in millions)	Investments of Consolidated VIEs		Investments of Consolidated SIPs						Total  Level 3 Assets			Debt of Consolidated VIEs
for the three months ended March 31, 2014			Debt			Equity
Balance at January 1, 2014	$	0.5	$	254.4		$	502.6		$	757.5		$	(52.2	)
Realized and unrealized gains (losses) included in investment and other income, net	—		6.3			(15.8		)	(9.5		)	1.1
Purchases	—		16.5			76.3			92.8			—
Sales	—		(8.7		)	(11.1		)	(19.8		)	—
Effect of exchange rate changes	—		—			0.1			0.1			—
Balance at March 31, 2014	$	0.5	$	268.5		$	552.1		$	821.1		$	(51.1	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at March 31, 2014	$	—	$	11.0		$	(14.6	)	$	(3.6	)	$	1.1

(in millions)	Investments of Consolidated VIEs		Investments of Consolidated SIPs						Total  Level 3 Assets			Debt of Consolidated VIEs
for the six months ended March 31, 2014			Debt			Equity
Balance at October 1, 2013	$	0.5	$	272.3		$	470.9		$	743.7		$	(59.7	)
Realized and unrealized gains (losses) included in investment and other income, net	—		(21.4		)	(19.5		)	(40.9		)	8.6
Purchases	—		38.7			126.5			165.2			—
Sales	—		(22.6		)	(26.7		)	(49.3		)	—
Effect of exchange rate changes	—		1.5			0.9			2.4			—
Balance at March 31, 2014	$	0.5	$	268.5		$	552.1		$	821.1		$	(51.1	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at March 31, 2014	$	—	$	(22.5	)	$	(18.6	)	$	(41.1	)	$	8.6

(in millions)	Investments of Consolidated SIPs						Total  Level 3 Assets			Debt of Consolidated VIEs
for the three months ended March 31, 2013	Debt			Equity
Balance at January 1, 2013	$	326.2		$	537.6		$	863.8		$	(78.3	)
Realized and unrealized gains (losses) included in investment and other income, net	(2.7		)	40.2			37.5			2.5
Purchases	30.1			66.5			96.6			—
Sales	(19.4		)	(18.4		)	(37.8		)	—
Effect of exchange rate changes	(4.0		)	(1.4		)	(5.4		)	—
Balance at March 31, 2013	$	330.2		$	624.5		$	954.7		$	(75.8	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at March 31, 2013	$	(2.2	)	$	40.1		$	37.9		$	2.5

(in millions)	Investments of Consolidated SIPs						Total  Level 3 Assets			Debt of Consolidated VIEs
for the six months ended March 31, 2013	Debt			Equity
Balance at October 1, 2012	$	317.5		$	527.0		$	844.5		$	(67.9	)
Realized and unrealized gains (losses) included in investment and other income, net	5.8			50.0			55.8			(7.9		)
Purchases	53.4			85.9			139.3			—
Sales	(46.0		)	(39.1		)	(85.1		)	—
Acquisition	—			0.8			0.8			—
Effect of exchange rate changes	(0.5		)	(0.1		)	(0.6		)	—
Balance at March 31, 2013	$	330.2		$	624.5		$	954.7		$	(75.8	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at March 31, 2013	$	6.7		$	51.4		$	58.1		$	(7.9	)

Schedule of valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements were as follows:

(in millions)
as of March 31, 2014	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Debt securities	$	268.5	Discounted cash flow	Discount rate	3.6%–18.0% (11.5%)
				Risk premium	0.0%–18.0% (2.3%)
Equity securities	176.6		Market comparable companies	EBITDA multiple	1.0–14.0 (7.5)
				Discount for lack of marketability	20.0%-50.0% (41.4%)
	29.8		Market pricing	Price to book value ratio	1.8–2.8 (2.1)
	29.3		Discounted cash flow	Discount rate	6.0%–18.0% (16.3%)

(in millions)
as of September 30, 2013	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Debt securities	$	272.3	Discounted cash flow	Discount rate	5.7%–25.6% (8.3%)
				Risk premium	0.0%–19.3% (2.2%)
Equity securities	137.4		Market comparable companies	EBITDA multiple	5.0–10.2 (8.0)
				Discount for lack of marketability	20.0%–30.0% (23.7%)
	70.8		Discounted cash flow	Discount rate	12.0%–18.0% (16.2%)
				Discount for lack of marketability	0.0%–50.0% (20.6%)
	19.1		Market pricing	Price to book value ratio	1.7

Schedule of financial instruments of consolidated SIPs not measured at fair value

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

(in millions)		March 31, 2014				September 30, 2013
	Fair Value Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents of consolidated SIPs	1	$	39.4	$	39.4	$	93.1	$	93.1
Financial Liabilities
Debt of consolidated SIPs	3	145.3		145.4		108.9		110.4

Schedule of maximum exposure to non-consolidated VIEs

The carrying values of the investment management fees receivable from and the equity ownership interests in these VIEs included in the Company’s condensed consolidated balance sheets are set forth below. These amounts represent the Company’s maximum exposure to loss from these investment products.

(in millions)	March 31, 2014		September 30, 2013
Receivables	$	62.9	$	46.3
Investments	213.1		198.5
Total	$	276.0	$	244.8

XML

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	Mar. 31, 2014	Sep. 30, 2013
Variable Interest Entity [Line Items]
2014	$ 0
2015	249.9
2016	0
2017	298.9
2018	0
Thereafter	649.1
Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
2014	71.9
2015	0
2016	0
2017	28.1
2018	288.7
Thereafter	642.8
Total Debt	$ 1,031.5	$ 1,097.4

XML

Fair Value Measurements - Schedule of Changes in Level 3 assets and liabilities (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Balance at beginning of period - assets	$ 13.9	$ 13.0	$ 13.8	$ 14.8
Balance at beginning of period - liabilities	(101.2)	(90.3)	(97.7)	0
Acquisition - assets			0	0
Acquisition - liabilities			0	(90.6)
Purchases - assets	0	0.1	0.1	0.7
Purchases - liabilities	0	0	0	0
Sales - assets			(0.7)	(1.6)
Sales - liabilities			0	0
Settlements - assets	(1.3)	(0.2)	(1.3)	(1.4)
Settlements - liabilities	0.1	0	2.8	3.0
Balance at end of period - assets	13.6	13.4	13.6	13.4
Balance at end of period - liabilities	(104.2)	(90.0)	(104.2)	(90.0)
Investments [Member]
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	0.3	0.3	0.6	0.7
Contingent Consideration Liability [Member]
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	(3.1)	0.3	(9.3)	(2.4)
Level 3 [Member]
Balance at beginning of period - assets	757.5	863.8	743.7	844.5
Total realized and unrealized gains (losses) - assets	(9.5)	37.5	(40.9)	55.8
Purchases - assets	92.8	96.6	165.2	139.3
Sales - assets	(19.8)	(37.8)	(49.3)	(85.1)
Balance at end of period - assets	821.1	954.7	821.1	954.7
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	(3.6)	37.9	(41.1)	58.1
Investment and other income [Member]
Total realized and unrealized gains (losses) - assets	1.0	0.5	1.7	0.9
Total realized and unrealized gains (losses) - liabilities	0	0	0	0
General, administrative and other expense [Member]
Total realized and unrealized gains (losses) - assets	0	0	0	0
Total realized and unrealized gains (losses) - liabilities	(3.0)	0.2	(8.9)	(2.2)
Other Income [Member]
Total realized and unrealized gains (losses) - assets	0	0	0	0
Total realized and unrealized gains (losses) - liabilities	$ (0.1)	$ 0.1	$ (0.4)	$ (0.2)

XML

Other Income (Expenses) (Tables)

6 Months Ended

Mar. 31, 2014

Other Income and Expenses [Abstract]

Schedule of other income (expenses)

Other income (expenses) consisted of the following:

	Three Months Ended March 31,						Six Months Ended March 31,
(in millions)	2014			2013			2014			2013
Investment and Other Income, Net
Dividend income	$	2.2		$	2.7		$	5.3		$	5.5
Interest income	2.4			2.4			4.7			5.5
Gains on trading investment securities, net	3.7			8.3			7.1			13.6
Realized gains on sale of investment securities, available-for-sale	11.0			6.6			30.6			27.8
Realized losses on sale of investment securities, available-for-sale	(0.2		)	—			(0.8		)	—
Income from investments in equity method investees	9.7			20.4			34.6			42.2
Other-than-temporary impairment of investments	—			(0.7		)	(0.6		)	(1.0		)
Gains (losses) on investments of consolidated SIPs, net	(15.4		)	41.5			(20.7		)	62.4
Gains (losses) on assets and liabilities of consolidated VIEs, net	2.2			(7.7		)	7.9			(26.8		)
Foreign currency exchange gains (losses), net	(2.1		)	18.6			(12.6		)	7.3
Other, net	3.5			4.4			9.7			5.5
Total	17.0			96.5			65.2			142.0
Interest Expense	(11.4		)	(10.9		)	(24.0		)	(25.4		)
Other Income, Net	$	5.6		$	85.6		$	41.2		$	116.6

XML

Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Mar. 31, 2014

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income by component were as follows:

(in millions)	Unrealized Gains (Losses) on Investments			Currency Translation Adjustments			Unrealized Gains (Losses) on Defined Benefit Plans			Total
for the three months ended March 31, 2014
Balance at January 1, 2014	$	61.9		$	(55.1	)	$	(3.9	)	$	2.9
Other comprehensive income (loss) before reclassifications, net of tax	4.1			(0.1		)	0.1			4.1
Reclassifications to investment and other income, net, net of tax	(2.6		)	—			—			(2.6		)
Total other comprehensive income (loss)	1.5			(0.1		)	0.1			1.5
Balance at March 31, 2014	$	63.4		$	(55.2	)	$	(3.8	)	$	4.4

(in millions)	Unrealized Gains (Losses) on Investments			Currency Translation Adjustments			Unrealized Losses on Defined Benefit Plans			Total
for the six months ended March 31, 2014
Balance at October 1, 2013	$	71.9		$	(63.2	)	$	(2.6	)	$	6.1
Other comprehensive income (loss) before reclassifications, net of tax	5.0			8.0			(1.2		)	11.8
Reclassifications to investment and other income, net, net of tax	(13.5		)	—			—			(13.5		)
Total other comprehensive income (loss)	(8.5		)	8.0			(1.2		)	(1.7		)
Balance at March 31, 2014	$	63.4		$	(55.2	)	$	(3.8	)	$	4.4

XML

New Accounting Guidance

6 Months Ended

Mar. 31, 2014

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Guidance

New Accounting Guidance

On October 1, 2013, the Company adopted new Financial Accounting Standards Board guidance that requires an entity to report significant reclassifications out of accumulated other comprehensive income by component either on the face of the financial statements or in the notes. See Note 12–Accumulated Other Comprehensive Income for the expanded disclosures.

XML

Banking Regulatory Ratios (Tables)

6 Months Ended

Mar. 31, 2014

Banking and Thrift [Abstract]

Schedule of capital adequacy requirements

Based on the Company's calculations, it exceeded the applicable capital adequacy requirements as listed below.

(dollar amounts in millions)	March 31, 2014			September 30, 2013			Capital Adequacy Minimum
Tier 1 capital	$	8,255.4		$	7,449.2		N/A
Total risk-based capital	8,294.3			7,482.6			N/A
Tier 1 leverage ratio	62		%	58		%	4	%
Tier 1 risk-based capital ratio	60		%	58		%	4	%
Total risk-based capital ratio	61		%	58		%	8	%

XML

Investments - Continuous Loss Position (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended	12 Months Ended
	Mar. 31, 2014	Sep. 30, 2013
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 32.0
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Gross Unrealized Losses	(0.9)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	1.8
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Gross Unrealized Losses	(0.9)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	33.8
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses	(1.8)
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	15.0	50.3
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Gross Unrealized Losses	(0.8)	(2.4)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	1.8	1.4
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Gross Unrealized Losses	(0.9)	(0.1)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	16.8	51.7
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses	(1.7)	(2.5)
Mortgage-backed securities - agency residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	17.0
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Gross Unrealized Losses	(0.1)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Gross Unrealized Losses	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	17.0
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses	$ (0.1)

XML

Variable Interest Entities and Consolidated Sponsored Investment Products - Unpaid Principal Balance and Fair Value of Investments and Long-Term Debt of Consolidated CLOs (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Total investments, unpaid principal balance	$ 2,610.6	$ 2,439.2
Total investments, fair value	1,867.4	1,892.7
Debt, unpaid principal balance	1,197.9	1,197.7
Collateralized Loan Obligations [Member]
Total investments, unpaid principal balance	872.4	943.6
Total investments, difference between unpaid principal and fair value	6.0	(2.5)
Total investments, fair value	878.4	941.1
Investments - 90 days or more past due, unpaid principal balance	8.1	7.9
Investments - 90 days or more past due, difference between unpaid principal and fair value	(7.9)	(7.7)
Investments - 90 days or more past due, fair value	0.2	0.2
Debt, unpaid principal balance	918.8	1,017.8
Debt, difference between unpaid principal and fair value	(32.6)	(29.3)
Debt, fair value	886.2	988.5
Consolidated variable interest entities [Member]
Total investments, unpaid principal balance	$ 878.4	$ 941.1

XML

Condensed Consolidated Statements of Income (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Operating Revenues
Investment management fees	$ 1,368.0	$ 1,267.5	$ 2,741.8	$ 2,467.4
Sales and distribution fees	638.6	642.7	1,275.3	1,246.8
Shareholder servicing fees	67.7	76.6	143.8	151.0
Other, net	21.6	26.8	44.5	50.2
Total operating revenues	2,095.9	2,013.6	4,205.4	3,915.4
Operating Expenses
Sales, distribution and marketing	766.3	780.8	1,543.0	1,511.7
Compensation and benefits	372.3	355.1	721.3	690.2
Information systems and technology	51.0	44.8	101.2	88.4
Occupancy	33.8	31.9	66.9	65.3
General, administrative and other	86.5	71.6	173.9	145.3
Total operating expenses	1,309.9	1,284.2	2,606.3	2,500.9
Operating Income	786.0	729.4	1,599.1	1,414.5
Other Income (Expenses)
Investment and other income, net	17.0	96.5	65.2	142.0
Interest expense	(11.4)	(10.9)	(24.0)	(25.4)
Other income, net	5.6	85.6	41.2	116.6
Income before taxes	791.6	815.0	1,640.3	1,531.1
Taxes on income	238.8	221.6	491.5	433.0
Net income	552.8	593.4	1,148.8	1,098.1
Net Income Attributable to Franklin Resources, Inc.	561.0	572.8	1,164.8	1,088.9
Earnings per Share
Basic	$ 0.89	$ 0.90	$ 1.85	$ 1.71
Diluted	$ 0.89	$ 0.90	$ 1.84	$ 1.70
Dividends per Share	$ 0.120	$ 0.097	$ 0.24	$ 1.19
Nonredeemable Noncontrolling Interests [Member]
Other Income (Expenses)
Net income (loss) attributable to noncontrolling interests	(7.2)	17.8	(24.4)	5.1
Redeemable Noncontrolling Interests [Member]
Other Income (Expenses)
Net income (loss) attributable to noncontrolling interests	$ (1.0)	$ 2.8	$ 8.4	$ 4.1

XML

Fair Value Measurements - Quantitative Information about Level 3 (Details) (USD $) In Millions, unless otherwise specified				6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended
	Mar. 31, 2014	Sep. 30, 2013	Sep. 30, 2012	Mar. 31, 2014 Contingent Consideration Liability [Member] Maximum [Member] Income Approach Valuation Technique [Member]	Sep. 30, 2013 Contingent Consideration Liability [Member] Maximum [Member] Income Approach Valuation Technique [Member]	Mar. 31, 2014 Contingent Consideration Liability [Member] Minimum [Member] Income Approach Valuation Technique [Member]	Sep. 30, 2013 Contingent Consideration Liability [Member] Minimum [Member] Income Approach Valuation Technique [Member]	Mar. 31, 2014 Contingent Consideration Liability [Member] Weighted Average [Member] Income Approach Valuation Technique [Member]	Sep. 30, 2013 Contingent Consideration Liability [Member] Weighted Average [Member] Income Approach Valuation Technique [Member]	Mar. 31, 2014 Life settlement contracts [Member] Maximum [Member] Income Approach Valuation Technique [Member]	Sep. 30, 2013 Life settlement contracts [Member] Maximum [Member] Income Approach Valuation Technique [Member]	Mar. 31, 2014 Life settlement contracts [Member] Minimum [Member] Income Approach Valuation Technique [Member]	Sep. 30, 2013 Life settlement contracts [Member] Minimum [Member] Income Approach Valuation Technique [Member]	Mar. 31, 2014 Life settlement contracts [Member] Weighted Average [Member] Income Approach Valuation Technique [Member]	Sep. 30, 2013 Life settlement contracts [Member] Weighted Average [Member] Income Approach Valuation Technique [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Life settlement contracts	$ 13.6	$ 13.8	$ 13.8
Life Expectancy (in months)										155	160	24	25	74	76
Contingent consideration liabilities	$ 104.2	$ 97.7
AUM growth rate				22.80%	25.00%	6.00%	6.00%	13.00%	14.60%
EBITDA margin				39.90%	38.90%	26.80%	26.40%	35.70%	34.40%
Discount Rate								14.00%	14.00%	21.70%	21.70%	3.30%	3.30%	11.70%	11.70%

XML

Condensed Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Net Income	$ 1,148.8	$ 1,098.1
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred sales commissions	66.3	67.8
Depreciation and other amortization	50.8	46.8
Stock-based compensation	64.3	57.1
Excess tax benefit from stock-based compensation	(5.0)	(11.7)
Gains on sale of assets	(32.0)	(27.8)
Income from investments in equity method investees	(34.6)	(42.2)
Net (gains) losses on other investments of consolidated sponsored investment products	33.8	(46.0)
Net (gains) losses of consolidated variable interest entities	(8.3)	26.5
Other	(1.6)	3.9
Changes in operating assets and liabilities:
Increase in receivables, prepaid expenses and other	(112.0)	(201.7)
Increase in trading securities, net	(75.4)	(83.9)
Increase in trading securities of consolidated sponsored investment products, net	(437.8)	(69.3)
Originations of loans held for sale	(37.3)	0
Decrease in accrued compensation and benefits	(113.3)	(89.2)
Increase in commissions payable	9.2	38.9
Increase (decrease) in income taxes payable	(22.7)	16.6
Increase (decrease) in other liabilities	146.2	(12.1)
Net cash provided by operating activities	639.4	771.8
Net cash provided by investing activities
Purchase of investments	(138.3)	(137.4)
Liquidation of investments	287.5	321.3
Purchase of investments by consolidated sponsored investment products	(204.2)	(144.1)
Liquidation of investments by consolidated sponsored investment products	54.1	88.9
Purchase of investments by consolidated variable interest entities	(79.9)	(360.9)
Liquidation of investments by consolidated variable interest entities	215.0	333.4
Decrease in loans receivable, net	36.8	16.5
Decrease in loans held for sale	8.2	0
Additions of property and equipment, net	(28.4)	(28.2)
Acquisition of subsidiary, net of cash acquired	0	5.7
Increase (decrease) in cash from net consolidation (deconsolidation) of sponsored investment products	(148.9)	2.8
Net cash provided by investing activities	1.9	98.0
Net cash provided by (used in) financing activities
Increase in deposits	86.2	2.5
Issuance of common stock	20.4	27.3
Dividends paid on common stock	(139.9)	(759.3)
Repurchase of common stock	(315.9)	(121.3)
Excess tax benefit from stock-based compensation	5.0	11.7
Payments on debt	0	(479.4)
Proceeds from issuance of debt by consolidated sponsored investment products	408.3	301.1
Payments on debt by consolidated sponsored investment products	(372.4)	(324.8)
Payments on debt by consolidated variable interest entities	(119.8)	(95.3)
Payments on contingent consideration liability	(2.8)	0
Noncontrolling interests	367.5	87.6
Net cash used in financing activities	(63.4)	(1,349.9)
Effect of exchange rate changes on cash and cash equivalents	9.9	(15.5)
Increase (decrease) in cash and cash equivalents	587.8	(495.6)
Cash and cash equivalents, beginning of period	6,323.1	6,051.4
Cash and Cash Equivalents, End of Period	6,910.9	5,555.8
Supplemental Disclosure of Non-Cash Activities
Transfer of loans receivable, net to loans held for sale	189.2	0
Contingent consideration liability recognized due to acquisition	0	90.6
Increase in noncontrolling interests due to acquisition	0	38.2
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	537.1	430.1
Cash paid for interest	21.1	26.8
Cash paid for interest by consolidated sponsored investment products and consolidated variable interest entities	$ 23.3	$ 24.7

XML

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 $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Variable Interest Entity [Line Items]
Balance at beginning of period - assets	$ 13.9	$ 13.0	$ 13.8	$ 14.8
Balance at beginning of period - liabilities	(101.2)	(90.3)	(97.7)	0
Purchases - assets	0	0.1	0.1	0.7
Purchases - liabilities	0	0	0	0
Sales - assets			(0.7)	(1.6)
Sales - liabilities			0	0
Balance at end of period - assets	13.6	13.4	13.6	13.4
Balance at end of period - liabilities	(104.2)	(90.0)	(104.2)	(90.0)
Investments of Consolidated VIEs [Member]
Variable Interest Entity [Line Items]
Balance at beginning of period - assets	0.5		0.5
Realized and unrealized gains (losses) included in investment and other income, net - assets	0		0
Purchases - assets	0		0
Sales - assets	0		0
Effect of exchange rate changes	0		0
Balance at end of period - assets	0.5		0.5
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	0		0
Debt Securities [Member]
Variable Interest Entity [Line Items]
Balance at beginning of period - assets	254.4	326.2	272.3	317.5
Realized and unrealized gains (losses) included in investment and other income, net - assets	6.3	(2.7)	(21.4)	5.8
Purchases - assets	16.5	30.1	38.7	53.4
Sales - assets	(8.7)	(19.4)	(22.6)	(46.0)
Acquisition - assets				0
Effect of exchange rate changes	0	(4.0)	1.5	(0.5)
Balance at end of period - assets	268.5	330.2	268.5	330.2
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	11.0	(2.2)	(22.5)	6.7
Other Equity Securities [Member]
Variable Interest Entity [Line Items]
Balance at beginning of period - assets	502.6	537.6	470.9	527.0
Realized and unrealized gains (losses) included in investment and other income, net - assets	(15.8)	40.2	(19.5)	50.0
Purchases - assets	76.3	66.5	126.5	85.9
Sales - assets	(11.1)	(18.4)	(26.7)	(39.1)
Acquisition - assets				0.8
Effect of exchange rate changes	0.1	(1.4)	0.9	(0.1)
Balance at end of period - assets	552.1	624.5	552.1	624.5
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	(14.6)	40.1	(18.6)	51.4
Debt of Consolidated VIEs [Member]
Variable Interest Entity [Line Items]
Balance at beginning of period - liabilities	(52.2)	(78.3)	(59.7)	(67.9)
Realized and unrealized gains (losses) included in investment and other income, net - liabilities	1.1	2.5	8.6	(7.9)
Purchases - liabilities	0	0	0	0
Sales - liabilities	0	0	0	0
Acquisition - liabilities				0
Effect of exchange rate changes	0	0	0	0
Balance at end of period - liabilities	(51.1)	(75.8)	(51.1)	(75.8)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	1.1	2.5	8.6	(7.9)
Level 3 [Member]
Variable Interest Entity [Line Items]
Balance at beginning of period - assets	757.5	863.8	743.7	844.5
Realized and unrealized gains (losses) included in investment and other income, net - assets	(9.5)	37.5	(40.9)	55.8
Purchases - assets	92.8	96.6	165.2	139.3
Sales - assets	(19.8)	(37.8)	(49.3)	(85.1)
Acquisition - assets				0.8
Effect of exchange rate changes	0.1	(5.4)	2.4	(0.6)
Balance at end of period - assets	821.1	954.7	821.1	954.7
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	$ (3.6)	$ 37.9	$ (41.1)	$ 58.1

XML

Earnings per Share - Narrative (Details) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Mar. 31, 2014	Mar. 31, 2014
Earnings Per Share [Abstract]
Shares of non participating nonvested stock unit awards excluded from the calculation of diluted EPS	0.1	0.1

XML

Stock-Based Compensation (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended
	Mar. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Nonvested beginning balance shares	3,732
Nonvested beginning balance, Weighted Average Grant Date Fair Value	$ 40.61
Shares granted	2,624
Weighted Average Grant Date Fair Value of shares granted	$ 53.87
Shares vested	(488)
Weighted Average Grant Date Fair Value of shares vested	$ 39.49
Shares forfeited/canceled	(116)
Weighted Average Grant Date Fair Value of shares forfeited/canceled	$ 44.53
Nonvested ending balance shares	5,752
Nonvested ending balance, Weighted Average Grant Date Fair Value	$ 46.67

XML

Variable Interest Entities and Consolidated Sponsored Investment Products (Policies)

6 Months Ended

Mar. 31, 2014

Variable Interest Entities and Consolidated Sponsored Investment Products [Abstract]

Consolidation

The Company sponsors and manages various types of investment products, which consist of both VIEs and non-VIEs. The Company consolidates the VIE products for which it is the primary beneficiary and the non-VIE products which it controls. The Company has no right to the consolidated products' assets, other than its direct equity investment in them, and/or investment 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 other risks associated with the entities' liabilities.

Other assets and liabilities of consolidated VIEs

The fair value of cash and cash equivalents of consolidated VIEs is based on quoted market prices. The fair values of the other assets and liabilities of consolidated VIEs are primarily obtained from independent third-party broker or dealer price quotes. The fair value of a portion of the debt of consolidated VIEs is determined using significant unobservable inputs in a market-based approach.

Investments of consolidated SIPs

Investments of consolidated SIPs consist of trading securities and other investments that are not generally traded in active markets. 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.

Investments of fund products fair valued using NAV

The fair value of debt and equity securities not traded in active markets, other than fund products, is determined using significant unobservable inputs in either a market-based or income-based approach. The fair value of fund products not traded in active markets is determined using net asset value (“NAV”) as a practical expedient.

Other liabilities of consolidated SIPs

Other liabilities of consolidated SIPs consist of short positions in debt and equity securities. The fair value of the liabilities is determined based on the fair value of the underlying securities using quoted market prices, or independent third-party broker or dealer price quotes if quoted market prices securities are not available. 

XML

Earnings per Share - Schedule of Earnings per Share Basic and Diluted (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Earnings Per Share Reconciliation [Abstract]
Net Income Attributable to Franklin Resources, Inc.	$ 561.0	$ 572.8	$ 1,164.8	$ 1,088.9
Less: Allocation of earnings to participating nonvested stock and stock unit awards	3.9	4.0	7.3	7.4
Net Income Available to Common Stockholders	$ 557.1	$ 568.8	$ 1,157.5	$ 1,081.5
Weighted-average shares outstanding – basic	626.1	634.0	627.1	634.2
Effect of dilutive common stock options and non-participating nonvested stock unit awards	0.4	0.7	0.4	0.9
Weighted-Average Shares Outstanding – Diluted	626.5	634.7	627.5	635.1
Earnings per Share
Basic	$ 0.89	$ 0.90	$ 1.85	$ 1.71
Diluted	$ 0.89	$ 0.90	$ 1.84	$ 1.70

XML

Earnings per Share (Tables)

6 Months Ended

Mar. 31, 2014

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)	Three Months Ended March 31,				Six Months Ended March 31,
	2014		2013		2014		2013
Net Income Attributable to Franklin Resources, Inc.	$	561.0	$	572.8	$	1,164.8	$	1,088.9
Less: Allocation of earnings to participating nonvested stock and stock unit awards	3.9		4.0		7.3		7.4
Net Income Available to Common Stockholders	$	557.1	$	568.8	$	1,157.5	$	1,081.5
Weighted-average shares outstanding – basic	626.1		634.0		627.1		634.2
Effect of dilutive common stock options and non-participating nonvested stock unit awards	0.4		0.7		0.4		0.9
Weighted-Average Shares Outstanding – Diluted	626.5		634.7		627.5		635.1
Earnings per Share
Basic	$	0.89	$	0.90	$	1.85	$	1.71
Diluted	0.89		0.90		1.84		1.70

XML

Accumulated Other Comprehensive Income - Changes in accumulated other comprehensive income by component (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Balance at beginning of period			$ 6.1
Net unrealized gains (losses) on investments, net of tax	1.5	(16.9)	(8.5)	(19.0)
Currency translation adjustments, net of tax	(0.1)	(38.9)	8.0	(35.0)
Net unrealized gains (losses) on defined benefit plans, net of tax	0.1	0.7	(1.2)	0.7
Balance at end of period	4.4		4.4
Unrealized Gains (Losses) on Investments [Member]
Balance at beginning of period	61.9		71.9
Other comprehensive income (loss) before reclassifications, net of tax	4.1		5.0
Reclassifications to investment and other income, net, net of tax	(2.6)		(13.5)
Net unrealized gains (losses) on investments, net of tax	1.5		(8.5)
Balance at end of period	63.4		63.4
Currency Translation Adjustments [Member]
Balance at beginning of period	(55.1)		(63.2)
Other comprehensive income (loss) before reclassifications, net of tax	(0.1)		8.0
Reclassifications to investment and other income, net, net of tax	0		0
Currency translation adjustments, net of tax	(0.1)		8.0
Balance at end of period	(55.2)		(55.2)
Unrealized Gains (Losses) on Defined Benefit Plans [Member]
Balance at beginning of period	(3.9)		(2.6)
Other comprehensive income (loss) before reclassifications, net of tax	0.1		(1.2)
Reclassifications to investment and other income, net, net of tax	0		0
Net unrealized gains (losses) on defined benefit plans, net of tax	0.1		(1.2)
Balance at end of period	(3.8)		(3.8)
Total [Member]
Balance at beginning of period	2.9		6.1
Other comprehensive income (loss) before reclassifications, net of tax	4.1		11.8
Reclassifications to investment and other income, net, net of tax	(2.6)		(13.5)
Total comprehensive income	1.5		(1.7)
Balance at end of period	$ 4.4		$ 4.4

XML

Basis of Presentation

6 Months Ended

Mar. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The unaudited interim financial statements of Franklin Resources, Inc. (“Franklin”) and its consolidated subsidiaries (collectively, the “Company”) included herein have been prepared by the Company in accordance with the instructions to Form 10-Q and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Under these rules and regulations, some information and footnote disclosures normally included in financial statements prepared under accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been shortened or omitted. Management believes that all adjustments necessary for a fair statement of the financial position and the results of operations for the periods shown have been made. All adjustments are normal and recurring. These financial statements should be read together with the Company’s audited financial statements included in its Form 10-K for the fiscal year ended September 30, 2013 (“fiscal year 2013”). Certain amounts for the comparative prior fiscal year period have been reclassified to conform to the financial statement presentation as of and for the period ended March 31, 2014.

XML

Condensed Consolidated Statements of Comprehensive Income (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Net Income	$ 552.8	$ 593.4	$ 1,148.8	$ 1,098.1
Other Comprehensive Income (Loss)
Net unrealized gains (losses) on investments, net of tax	1.5	(16.9)	(8.5)	(19.0)
Currency translation adjustments, net of tax	(0.1)	(38.9)	8.0	(35.0)
Net unrealized gains (losses) on defined benefit plans, net of tax	0.1	0.7	(1.2)	0.7
Total comprehensive income	554.3	538.3	1,147.1	1,044.8
Comprehensive Income Attributable to Franklin Resources, Inc.	562.5	517.7	1,163.1	1,035.6
Nonredeemable Noncontrolling Interests [Member]
Other Comprehensive Income (Loss)
Comprehensive income (loss) attributable to noncontrolling interests	(7.2)	17.8	(24.4)	5.1
Redeemable Noncontrolling Interests [Member]
Other Comprehensive Income (Loss)
Comprehensive income (loss) attributable to noncontrolling interests	$ (1.0)	$ 2.8	$ 8.4	$ 4.1

XML

Other Income (Expenses)

6 Months Ended

Mar. 31, 2014

Other Income and Expenses [Abstract]

Other Income (Expenses)

Other Income (Expenses)

Other income (expenses) consisted of the following:

	Three Months Ended March 31,						Six Months Ended March 31,
(in millions)	2014			2013			2014			2013
Investment and Other Income, Net
Dividend income	$	2.2		$	2.7		$	5.3		$	5.5
Interest income	2.4			2.4			4.7			5.5
Gains on trading investment securities, net	3.7			8.3			7.1			13.6
Realized gains on sale of investment securities, available-for-sale	11.0			6.6			30.6			27.8
Realized losses on sale of investment securities, available-for-sale	(0.2		)	—			(0.8		)	—
Income from investments in equity method investees	9.7			20.4			34.6			42.2
Other-than-temporary impairment of investments	—			(0.7		)	(0.6		)	(1.0		)
Gains (losses) on investments of consolidated SIPs, net	(15.4		)	41.5			(20.7		)	62.4
Gains (losses) on assets and liabilities of consolidated VIEs, net	2.2			(7.7		)	7.9			(26.8		)
Foreign currency exchange gains (losses), net	(2.1		)	18.6			(12.6		)	7.3
Other, net	3.5			4.4			9.7			5.5
Total	17.0			96.5			65.2			142.0
Interest Expense	(11.4		)	(10.9		)	(24.0		)	(25.4		)
Other Income, Net	$	5.6		$	85.6		$	41.2		$	116.6

Substantially all of the dividend income and realized gains and losses on sale of available-for-sale securities were generated by investments in non-consolidated SIPs. Interest income was primarily generated by cash equivalents and investments in trading securities and debt securities of U.S. states and political subdivisions. Proceeds from the sale of available-for-sale securities were $63.0 million and $188.6 million for the three and six months ended March 31, 2014, and $41.0 million and $200.0 million for the three and six months ended March 31, 2013.

The Company recognized net gains on trading investment securities that were held at March 31, 2014 and 2013 of $3.3 million and $5.2 million during the three and six months ended March 31, 2014, and $7.7 million and $9.4 million during the three and six months ended March 31, 2013. Net gains (losses) on trading investment securities of consolidated SIPs that were held at March 31, 2014 and 2013 were $(0.3) million and $7.4 million during the three and six months ended March 31, 2014, and $7.3 million and $13.4 million during the three and six months ended March 31, 2013.

XML

Document and Entity Information	6 Months Ended
	Mar. 31, 2014	Apr. 21, 2014
Documentation and Entity Information [Abstract]
Entity Registrant Name	Franklin Resources Inc
Entity Central Index Key	0000038777
Current Fiscal Year End Date	--09-30
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		627,689,616

XML

Accumulated Other Comprehensive Income

6 Months Ended

Mar. 31, 2014

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

Changes in accumulated other comprehensive income by component were as follows:

(in millions)	Unrealized Gains (Losses) on Investments			Currency Translation Adjustments			Unrealized Gains (Losses) on Defined Benefit Plans			Total
for the three months ended March 31, 2014
Balance at January 1, 2014	$	61.9		$	(55.1	)	$	(3.9	)	$	2.9
Other comprehensive income (loss) before reclassifications, net of tax	4.1			(0.1		)	0.1			4.1
Reclassifications to investment and other income, net, net of tax	(2.6		)	—			—			(2.6		)
Total other comprehensive income (loss)	1.5			(0.1		)	0.1			1.5
Balance at March 31, 2014	$	63.4		$	(55.2	)	$	(3.8	)	$	4.4

(in millions)	Unrealized Gains (Losses) on Investments			Currency Translation Adjustments			Unrealized Losses on Defined Benefit Plans			Total
for the six months ended March 31, 2014
Balance at October 1, 2013	$	71.9		$	(63.2	)	$	(2.6	)	$	6.1
Other comprehensive income (loss) before reclassifications, net of tax	5.0			8.0			(1.2		)	11.8
Reclassifications to investment and other income, net, net of tax	(13.5		)	—			—			(13.5		)
Total other comprehensive income (loss)	(8.5		)	8.0			(1.2		)	(1.7		)
Balance at March 31, 2014	$	63.4		$	(55.2	)	$	(3.8	)	$	4.4

XML

Condensed Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Assets
Cash and cash equivalents	$ 6,814.7	$ 6,186.0
Receivables	987.6	1,038.9
Investments	2,610.6	2,439.2
Loans held for sale	218.3	0
Loans receivable, net	3.8	229.7
Deferred taxes	118.8	112.4
Property and equipment, net	553.5	564.1
Goodwill and other intangible assets, net	2,346.7	2,359.2
Other	169.5	179.4
Total Assets	16,137.4	15,390.3
Liabilities
Compensation and benefits	331.8	444.5
Accounts payable and accrued expenses	261.5	262.8
Commissions	446.9	437.7
Deposits	674.1	586.8
Debt	1,197.9	1,197.7
Debt of consolidated variable interest entities	886.2	988.5
Debt of consolidated sponsored investment products	145.3	108.9
Deferred taxes	266.3	272.5
Other	281.0	283.6
Total liabilities	4,491.0	4,583.0
Commitments and Contingencies (Note 9)
Redeemable Noncontrolling Interests	173.2	121.8
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; 627,803,784 and 630,917,532 shares issued and outstanding at March 31, 2014 and September 30, 2013	62.8	63.1
Retained earnings	10,779.7	9,991.2
Appropriated retained earnings of consolidated variable interest entities	18.3	12.7
Accumulated other comprehensive income	4.4	6.1
Total Franklin Resources, Inc. stockholders’ equity	10,865.2	10,073.1
Nonredeemable noncontrolling interests	608.0	612.4
Total stockholders’ equity	11,473.2	10,685.5
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	16,137.4	15,390.3
Consolidated sponsored investment products [Member]
Assets
Cash and cash equivalents	39.4	93.1
Receivables	24.9	19.1
Investments	1,339.3	1,203.2
Other	0.7	0.7
Total Assets	1,404.3	1,316.1
Liabilities
Accounts payable and accrued expenses	31.9	25.2
Other	10.9	8.5
Total liabilities	188.1	142.6
Redeemable Noncontrolling Interests	173.2	121.8
Stockholders' Equity
Total Franklin Resources, Inc. stockholders’ equity	449.2	454.8
Nonredeemable noncontrolling interests	593.8	596.9
Total stockholders’ equity	1,043.0	1,051.7
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	1,404.3	1,316.1
Consolidated variable interest entities [Member]
Assets
Cash and cash equivalents	56.8	44.0
Receivables	4.0	37.7
Investments	878.4	941.1
Other	0	0
Total Assets	939.2	1,022.8
Liabilities
Accounts payable and accrued expenses	0	0
Total liabilities	912.5	999.4
Redeemable Noncontrolling Interests	0	0
Stockholders' Equity
Total Franklin Resources, Inc. stockholders’ equity	26.7	23.4
Nonredeemable noncontrolling interests	0	0
Total stockholders’ equity	26.7	23.4
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$ 939.2	$ 1,022.8

XML

Fair Value Measurements

6 Months Ended

Mar. 31, 2014

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 8 – Variable Interest Entities and Consolidated Sponsored Investment Products for information related to fair value measurements of the assets and liabilities of these entities.

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 and liabilities measured at fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

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.

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

(in millions)	Level 1		Level 2		Level 3		Total
as of March 31, 2014
Assets
Investment securities, trading	$	1,193.4	$	81.1	$	—	$	1,274.5
Investment securities, available-for-sale
SIPs	466.5		—		—		466.5
Securities of U.S. states and political subdivisions	—		17.4		—		17.4
Securities of the U.S. Treasury and federal agencies	—		2.2		—		2.2
Mortgage-backed securities – agency residential	—		86.6		—		86.6
Other equity securities	2.0		4.6		—		6.6
Life settlement contracts	—		—		13.6		13.6
Total Assets Measured at Fair Value	$	1,661.9	$	191.9	$	13.6	$	1,867.4
Liabilities
Contingent consideration liabilities	$	—	$	—	$	104.2	$	104.2

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2013
Assets
Investment securities, trading	$	1,121.5	$	75.2	$	—	$	1,196.7
Investment securities, available-for-sale
SIPs	534.6		—		—		534.6
Securities of U.S. states and political subdivisions	—		23.1		—		23.1
Securities of the U.S. Treasury and federal agencies	—		2.3		—		2.3
Mortgage-backed securities – agency residential	—		110.9		—		110.9
Other equity securities	11.3		—		—		11.3
Life settlement contracts	—		—		13.8		13.8
Total Assets Measured at Fair Value	$	1,667.4	$	211.5	$	13.8	$	1,892.7
Liabilities
Contingent consideration liabilities	$	—	$	—	$	97.7	$	97.7

The fair values of substantially all trading investments, all available-for-sale SIPs and certain other equity securities are determined based on their published net asset values. The fair values of certain trading investments, all available-for-sale debt securities and certain other equity securities are determined using quoted market prices, if available, or independent third-party broker or dealer price quotes, which are evaluated for reasonableness. The fair value of life settlement contracts is determined using a discounted cash flow valuation technique.

The fair value of contingent consideration liabilities is determined using an income-based method which considers the net present value of anticipated future cash flows. Substantially all of the balance relates to the Company's commitment to acquire the remaining interests in K2 Advisors Holdings, LLC. There were no transfers between Level 1 and Level 2, or into or out of Level 3, during the three and six months ended March 31, 2014 and 2013.

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

	2014						2013
(in millions)	Investments			Contingent Consideration Liabilities			Investments			Contingent Consideration Liabilities
for the three months ended March 31,
Balance at beginning of period	$	13.9		$	(101.2	)	$	13.0		$	(90.3	)
Total realized and unrealized gains (losses)
Included in investment and other income, net	1.0			—			0.5			—
Included in general, administrative and other expense	—			(3.0		)	—			0.2
Other	—			(0.1		)	—			0.1
Purchases	—			—			0.1			—
Settlements	(1.3		)	0.1			(0.2		)	—
Balance at End of Period	$	13.6		$	(104.2	)	$	13.4		$	(90.0	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	$	0.3		$	(3.1	)	$	0.3		$	0.3

	2014						2013
(in millions)	Investments			Contingent Consideration Liabilities			Investments			Contingent Consideration Liabilities
for the six months ended March 31,
Balance at beginning of period	$	13.8		$	(97.7	)	$	14.8		$	—
Acquisition	—			—			—			(90.6		)
Total realized and unrealized gains (losses)
Included in investment and other income, net	1.7			—			0.9			—
Included in general, administrative and other expense	—			(8.9		)	—			(2.2		)
Other	—			(0.4		)	—			(0.2		)
Purchases	0.1			—			0.7			—
Sales	(0.7		)	—			(1.6		)	—
Settlements	(1.3		)	2.8			(1.4		)	3.0
Balance at End of Period	$	13.6		$	(104.2	)	$	13.4		$	(90.0	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	$	0.6		$	(9.3	)	$	0.7		$	(2.4	)

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements were as follows:

(in millions)
as of March 31, 2014	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Life settlement contracts	$	13.6	Discounted cash flow	Life expectancy	24–155 months (74)
				Discount rate	3.3%–21.7% (11.7%)
Contingent consideration liabilities	104.2		Discounted cash flow	AUM growth rate	6.0%–22.8% (13.0%)
				EBITDA margin	26.8% - 39.9% (35.7%)
				Discount rate	14.0%

(in millions)
as of September 30, 2013	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Life settlement contracts	$	13.8	Discounted cash flow	Life expectancy	25–160 months (76)
				Discount rate	3.3%–21.7% (11.7%)
Contingent consideration liabilities	97.7		Discounted cash flow	AUM growth rate	6.0%–25.0% (14.6%)
				EBITDA margin	26.4% - 38.9% (34.4%)
				Discount rate	14.0%

For life settlement contracts, a significant increase (decrease) in the life expectancy or the discount rate in isolation would result in a significantly lower (higher) fair value measurement.

For contingent consideration liabilities, a significant increase (decrease) in the AUM growth rate or EBITDA margin, or decrease (increase) in the discount rate, in isolation would result in a significantly higher (lower) fair value measurement.

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

(in millions)		March 31, 2014				September 30, 2013
	Fair Value Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents	1	$	6,814.7	$	6,814.7	$	6,186.0	$	6,186.0
Other investments1	2 or 3	78.3		86.9		61.1		69.2
Loans held for sale	2	218.3		218.5		—		—
Loans receivable, net	2	3.8		3.9		229.7		230.1
Financial Liabilities
Deposits	2	$	674.1	$	674.1	$	586.8	$	587.2
Debt	2	1,197.9		1,230.6		1,197.7		1,221.5

_________________

¹     Primarily consist of Level 3 assets.

Loans held for sale consist of collateralized private banking loans and are carried at the lower of cost or estimated fair value. The fair value is estimated based on the whole loan market price that was received in the subsequent sale.

XML

Investments

6 Months Ended

Mar. 31, 2014

Investments [Abstract]

Investments

Investments

The disclosures below include details of the Company’s investments, excluding those of consolidated variable interest entities (“VIEs”) and consolidated sponsored investment products (“SIPs”). See Note 8–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)	March 31, 2014		September 30, 2013
Investment securities, trading	$	1,274.5	$	1,196.7
Investment securities, available-for-sale
SIPs	466.5		534.6
Securities of U.S. states and political subdivisions	17.4		23.1
Securities of the U.S. Treasury and federal agencies	2.2		2.3
Mortgage-backed securities – agency residential1	86.6		110.9
Other equity securities	6.6		11.3
Total investment securities, available-for-sale	579.3		682.2
Investments in equity method investees	664.9		485.4
Other investments	91.9		74.9
Total	$	2,610.6	$	2,439.2

^{__________________} 

¹  Consist of U.S. government-sponsored enterprise obligations.

At March 31, 2014 and September 30, 2013, investment securities with aggregate carrying amounts of $66.7 million and $82.5 million were pledged as collateral for the ability to borrow from the Federal Reserve Bank, $15.6 million and $28.4 million were pledged as collateral for amounts available in secured Federal Home Loan Bank (“FHLB”) short-term borrowing capacity, and $6.5 million and $7.1 million were pledged as collateral for the ability to borrow from uncommitted short-term bank lines of credit (see Note 7 - 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 March 31, 2014	Cost Basis		Gains		Losses			Fair Value
SIPs	$	404.9	$	63.3	$	(1.7	)	$	466.5
Securities of U.S. states and political subdivisions	16.9		0.5		—			17.4
Securities of the U.S. Treasury and federal agencies	2.2		—		—			2.2
Mortgage-backed securities – agency residential	85.0		1.7		(0.1		)	86.6
Other equity securities	6.3		0.3		—			6.6
Total	$	515.3	$	65.8	$	(1.8	)	$	579.3

(in millions)			Gross Unrealized
as of September 30, 2013	Cost Basis		Gains		Losses			Fair Value
SIPs	$	465.4	$	71.7	$	(2.5	)	$	534.6
Securities of U.S. states and political subdivisions	22.3		0.8		—			23.1
Securities of the U.S. Treasury and federal agencies	2.3		—		—			2.3
Mortgage-backed securities – agency residential	108.9		2.0		—			110.9
Other equity securities	10.9		0.4		—			11.3
Total	$	609.8	$	74.9	$	(2.5	)	$	682.2

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

	Less Than 12 Months					12 Months or Greater					Total
(in millions)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
as of March 31, 2014
SIPs	$	15.0	$	(0.8	)	$	1.8	$	(0.9	)	$	16.8	$	(1.7	)
Mortgage-backed securities – agency residential	17.0		(0.1		)	—		—			17.0		(0.1		)
Total	$	32.0	$	(0.9	)	$	1.8	$	(0.9	)	$	33.8	$	(1.8	)

	Less Than 12 Months					12 Months or Greater					Total
(in millions)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
as of September 30, 2013
SIPs	$	50.3	$	(2.4	)	$	1.4	$	(0.1	)	$	51.7	$	(2.5	)

The Company did not recognize any other-than-temporary impairment of investments during the three months ended March 31, 2014. During the six months ended March 31, 2014, the Company recognized $0.6 million of other-than-temporary impairment, of which $0.4 million related to available-for-sale SIPs. The Company recognized $0.7 million and $1.0 million of other-than-temporary impairment during the three and six months ended March 31, 2013, including $0.3 million in the six-month period related to available-for-sale SIPs.

At March 31, 2014, contractual maturities of available-for-sale debt securities were as follows:

(in millions)	Cost Basis		Fair Value
Due in one year or less	$	5.1	$	5.2
Due after one year through five years	12.4		12.8
Due after five years through ten years	—		—
Due after ten years	1.6		1.6
Total	$	19.1	$	19.6

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.

XML

Stockholders' Equity and Redeemable Noncontrolling Interests (Tables)

6 Months Ended

Mar. 31, 2014

Stockholders' Equity Note [Abstract]

Changes in total stockholders' equity and redeemable noncontrolling interests

The changes in total stockholders’ equity and redeemable noncontrolling interests were as follows:

(in millions)	Franklin Resources, Inc. Stockholders’ Equity			Nonredeemable Noncontrolling Interests			Total Stockholders’ Equity			Redeemable Noncontrolling Interests
for the six months ended March 31, 2014
Balance at October 1, 2013	$	10,073.1		$	612.4		$	10,685.5		$	121.8
Net income (loss)	1,164.8			(24.4		)	1,140.4			8.4
Net income reclassified to appropriated retained earnings	5.6			(5.6		)	—
Other comprehensive loss	(1.7		)				(1.7		)
Cash dividends on common stock	(151.4		)				(151.4		)
Repurchase of common stock	(315.9		)				(315.9		)
Noncontrolling interests
Net subscriptions				25.6			25.6			341.9
Net deconsolidation of sponsored investment products				—			—			(298.9		)
Other1	90.7						90.7
Balance at March 31, 2014	$	10,865.2		$	608.0		$	11,473.2		$	173.2

^{__________________} 

¹  Primarily relates to stock-based compensation plans.

(in millions)	Franklin Resources, Inc. Stockholders’ Equity			Nonredeemable Noncontrolling Interests		Total Stockholders’ Equity			Redeemable Noncontrolling Interests
for the six months ended March 31, 2013
Balance at October 1, 2012	$	9,201.3		$	559.2	$	9,760.5		$	26.7
Net income	1,088.9			5.1		1,094.0			4.1
Net loss reclassified to appropriated retained earnings	(28.2		)	28.2		—
Other comprehensive loss	(53.3		)			(53.3		)
Cash dividends on common stock	(763.6		)			(763.6		)
Repurchase of common stock	(121.3		)			(121.3		)
Noncontrolling interests
Net subscriptions				55.6		55.6			32.0
Net consolidation (deconsolidation) of sponsored investment products				4.4		4.4			(15.1		)
Acquisition				5.4		5.4			32.8
Other1	96.2					96.2
Balance at March 31, 2013	$	9,420.0		$	657.9	$	10,077.9		$	80.5

^{__________________} 

¹  Primarily relates to stock-based compensation plans.

XML

Banking Regulatory Ratios

6 Months Ended

Mar. 31, 2014

Banking and Thrift [Abstract]

Banking Regulatory Ratios

Banking Regulatory Ratios

Franklin is a bank holding company and a financial holding company subject to various U.S. regulatory capital requirements. Based on the Company's calculations, it exceeded the applicable capital adequacy requirements as listed below.

(dollar amounts in millions)	March 31, 2014			September 30, 2013			Capital Adequacy Minimum
Tier 1 capital	$	8,255.4		$	7,449.2		N/A
Total risk-based capital	8,294.3			7,482.6			N/A
Tier 1 leverage ratio	62		%	58		%	4	%
Tier 1 risk-based capital ratio	60		%	58		%	4	%
Total risk-based capital ratio	61		%	58		%	8	%

XML

Commitments and Contingencies

6 Months Ended

Mar. 31, 2014

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 March 31, 2014 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, 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 March 31, 2014 and September 30, 2013, the Company held cash of $157.2 million and $236.4 million off-balance sheet in agency or trust for investors and the affiliated mutual funds.

At March 31, 2014, there were no changes that would have a material effect on the other commitments and contingencies reported in the Company’s Form 10-K for fiscal year 2013.

XML

Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	6 Months Ended	12 Months Ended
	Mar. 31, 2014	Sep. 30, 2013
Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities	$ 268.5	$ 272.3
Market Approach Valuation Technique [Member] | Common Stock [Member] | Other Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Equity Securities	176.6	137.4
Market Approach Valuation Technique [Member] | Preferred Stock [Member] | Other Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Equity Securities	29.8	19.1
Price to book value ratio		$ 1.7
Income Approach Valuation Technique [Member] | Other Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Equity Securities	$ 29.3	$ 70.8
Minimum [Member] | Market Approach Valuation Technique [Member] | Other Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Discount for lack of marketability	20.00%	20.00%
EBITDA multiple	1.0	5.0
Price to book value ratio	$ 1.8
Minimum [Member] | Income Approach Valuation Technique [Member] | Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Discount Rate	3.60%	5.70%
Risk premium	0.00%	0.00%
Minimum [Member] | Income Approach Valuation Technique [Member] | Other Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Discount Rate	6.00%	12.00%
Discount for lack of marketability		0.00%
Maximum [Member] | Market Approach Valuation Technique [Member] | Other Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Discount for lack of marketability	50.00%	30.00%
EBITDA multiple	14.0	10.2
Price to book value ratio	$ 2.8
Maximum [Member] | Income Approach Valuation Technique [Member] | Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Discount Rate	18.00%	25.60%
Risk premium	18.00%	19.30%
Maximum [Member] | Income Approach Valuation Technique [Member] | Other Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Discount Rate	18.00%	18.00%
Discount for lack of marketability		50.00%
Weighted Average [Member] | Market Approach Valuation Technique [Member] | Other Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Discount for lack of marketability	41.40%	23.70%
EBITDA multiple	7.5	8.0
Price to book value ratio	$ 2.1
Weighted Average [Member] | Income Approach Valuation Technique [Member] | Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Discount Rate	11.50%	8.30%
Risk premium	2.30%	2.20%
Weighted Average [Member] | Income Approach Valuation Technique [Member] | Other Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Discount Rate	16.30%	16.20%
Discount for lack of marketability		20.60%

XML

Debt

6 Months Ended

Mar. 31, 2014

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 8 – 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)	March 31, 2014		September 30, 2013		Effective Interest Rate
$250 million 3.125% notes due May 2015	$	249.9	$	249.9	3.32	%
$300 million 1.375% notes due September 2017	298.9		298.7		1.66	%
$350 million 4.625% notes due May 2020	349.7		349.7		4.74	%
$300 million 2.800% notes due September 2022	299.4		299.4		2.93	%
Total Debt	$	1,197.9	$	1,197.7

At March 31, 2014, the Company’s outstanding senior unsecured and unsubordinated notes had an aggregate face value of $1.2 billion. The notes have fixed interest rates with interest payable semi-annually and 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. At March 31, 2014, the Company was in compliance with the covenants of the notes.

At March 31, 2014, maturities for debt were as follows:

(in millions)	Amount
for the fiscal years ending September 30,
2014	$	—
2015	249.9
2016	—
2017	298.9
2018	—
Thereafter	649.1
Total	$	1,197.9

At March 31, 2014, 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, $260.0 million available in uncommitted short-term bank lines of credit under the Federal Reserve system, $65.3 million available through the secured Federal Reserve Bank short-term discount window, $14.8 million available in secured FHLB short-term borrowing capacity and $13.6 million available in uncommitted short-term bank lines of credit.

XML

Variable Interest Entities and Consolidated Sponsored Investment Products

6 Months Ended

Mar. 31, 2014

Variable Interest Entities and Consolidated Sponsored Investment Products [Abstract]

Variable Interest Entities and Consolidated Sponsored Investment Products

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. The Company consolidates the VIE products for which it is the primary beneficiary and the non-VIE products which it controls. The Company has no right to the consolidated products' assets, other than its direct equity investment in them, and/or investment 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 other risks associated with the entities' liabilities.

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

	March 31, 2014						September 30, 2013
	Consolidated						Consolidated
(in millions)	VIEs		SIPs		Total		VIEs		SIPs		Total
Assets
Cash and cash equivalents	$	56.8	$	39.4	$	96.2	$	44.0	$	93.1	$	137.1
Receivables	4.0		24.9		28.9		37.7		19.1		56.8
Investments, at fair value	878.4		1,339.3		2,217.7		941.1		1,203.2		2,144.3
Other assets	—		0.7		0.7		—		0.7		0.7
Total Assets	$	939.2	$	1,404.3	$	2,343.5	$	1,022.8	$	1,316.1	$	2,338.9
Liabilities
Accounts payable and accrued expenses	$	—	$	31.9	$	31.9	$	—	$	25.2	$	25.2
Debt, at fair value	886.2		—		886.2		988.5		—		988.5
Debt	—		145.3		145.3		—		108.9		108.9
Other liabilities	26.3		10.9		37.2		10.9		8.5		19.4
Total liabilities	912.5		188.1		1,100.6		999.4		142.6		1,142.0
Redeemable Noncontrolling Interests	—		173.2		173.2		—		121.8		121.8
Stockholders' Equity
Franklin Resources, Inc.'s interests	26.7		449.2		475.9		23.4		454.8		478.2
Nonredeemable noncontrolling interests	—		593.8		593.8		—		596.9		596.9
Total stockholders' equity	26.7		1,043.0		1,069.7		23.4		1,051.7		1,075.1
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	$	939.2	$	1,404.3	$	2,343.5	$	1,022.8	$	1,316.1	$	2,338.9

The consolidated VIEs and consolidated SIPs did not have a significant impact on net income attributable to the Company during the three and six months ended March 31, 2014 and 2013.

Consolidated VIEs

Consolidated VIEs consist of sponsored collateralized loan obligations (“CLOs”), which are asset-backed financing entities collateralized by a pool of corporate debt securities.

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

	Three Months Ended March 31,						Six Months Ended March 31,
(in millions)	2014			2013			2014			2013
Net gains from changes in fair value of assets	$	11.0		$	18.9		$	24.4		$	41.1
Net losses from changes in fair value of liabilities	(8.8		)	(26.6		)	(16.5		)	(67.9		)
Total Net Gains (Losses)	$	2.2		$	(7.7	)	$	7.9		$	(26.8	)

The following tables present the unpaid principal balance and fair value 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			Debt
as of March 31, 2014
Unpaid principal balance	$	872.4	$	8.1		$	918.8
Difference between unpaid principal balance and fair value	6.0		(7.9		)	(32.6		)
Fair Value	$	878.4	$	0.2		$	886.2

(in millions)	Total Investments			Investments 90 Days or More Past Due			Debt
as of September 30, 2013
Unpaid principal balance	$	943.6		$	7.9		$	1,017.8
Difference between unpaid principal balance and fair value	(2.5		)	(7.7		)	(29.3		)
Fair Value	$	941.1		$	0.2		$	988.5

Consolidated SIPs

Consolidated SIPs 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. The Company consolidated 31 SIPs as of March 31, 2014, and 36 SIPs as of September 30, 2013. SIPs are typically consolidated when the Company makes an initial investment in a newly launched fund or limited partnership entity. They are deconsolidated when the Company redeems its investment in the SIP or its voting interests decrease to a minority percentage. The Company's investments in SIPs subsequent to deconsolidation are accounted for as trading or available-for-sale investment securities, or equity method or cost method investments depending on the nature of the SIP and the Company's level of ownership.

Investments

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

	March 31, 2014						September 30, 2013
	Consolidated						Consolidated
(in millions)	VIEs		SIPs		Total		VIEs		SIPs		Total
Investment securities, trading	$	—	$	258.1	$	258.1	$	—	$	244.1	$	244.1
Other debt securities	878.4		268.5		1,146.9		941.1		272.3		1,213.4
Other equity securities	—		812.7		812.7		—		686.8		686.8
Total Investments	$	878.4	$	1,339.3	$	2,217.7	$	941.1	$	1,203.2	$	2,144.3

Investments of consolidated VIEs consist of corporate debt securities. Investment securities, trading held by consolidated SIPs consist of debt and equity securities that are traded in active markets. Other debt and equity securities held by consolidated SIPs primarily consist of direct investments in secured and unsecured debt securities and equity 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:

	March 31, 2014		Effective Interest Rate		September 30, 2013		Effective Interest Rate
(dollars in millions)
Debt of consolidated VIEs, at fair value, due fiscal years 2018-2024	$	886.2	1.38	%	$	988.5	1.32	%
Debt of consolidated SIPs due fiscal years 2014-2019	145.3		3.62	%	108.9		4.08	%
Total Debt	$	1,031.5			$	1,097.4

The debt of consolidated VIEs had floating interest rates ranging from 0.47% to 9.74% at March 31, 2014, and from 0.50% to 9.77% at September 30, 2013.

The debt of consolidated SIPs had both fixed and floating interest rates ranging from 2.19% to 5.83% at March 31, 2014, and from 2.45% to 5.83% at September 30, 2013. The repayment of amounts outstanding under the debt agreements is secured by the assets of the consolidated SIPs or a pledge of the right to call capital.

At March 31, 2014, contractual maturities for debt of consolidated VIEs and consolidated SIPs were as follows:

(in millions)
for the fiscal years ending September 30,
2014	$	71.9
2015	—
2016	—
2017	28.1
2018	288.7
Thereafter	642.8
Total	$	1,031.5

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.See Note 6 – Fair Value Measurements for information related to the three levels of fair value hierarchy.

(in millions)	Level 1		Level 2		Level 3		Total
as of March 31, 2014
Assets
Cash and cash equivalents of consolidated VIEs	$	56.8	$	—	$	—	$	56.8
Receivables of consolidated VIEs	—		4.0		—		4.0
Investments of consolidated VIEs	—		877.9		0.5		878.4
Investments of consolidated SIPs
Debt securities	0.8		99.1		268.5		368.4
Equity securities	158.4		260.4		552.1		970.9
Total Assets Measured at Fair Value	$	216.0	$	1,241.4	$	821.1	$	2,278.5
Liabilities
Debt of consolidated VIEs	$	—	$	835.1	$	51.1	$	886.2
Other liabilities of consolidated VIEs	—		26.3		—		26.3
Other liabilities of consolidated SIPs	3.1		—		—		3.1
Total Liabilities Measured at Fair Value	$	3.1	$	861.4	$	51.1	$	915.6

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2013
Assets
Cash and cash equivalents of consolidated VIEs	$	44.0	$	—	$	—	$	44.0
Receivables of consolidated VIEs	—		37.7		—		37.7
Investments of consolidated VIEs	—		940.6		0.5		941.1
Investments of consolidated SIPs
Debt securities	4.5		83.8		272.3		360.6
Equity securities	158.1		213.6		470.9		842.6
Total Assets Measured at Fair Value	$	206.6	$	1,275.7	$	743.7	$	2,226.0
Liabilities
Debt of consolidated VIEs	$	—	$	928.8	$	59.7	$	988.5
Other liabilities of consolidated VIEs	—		10.9		—		10.9
Total Liabilities Measured at Fair Value	$	—	$	939.7	$	59.7	$	999.4

The fair value of cash and cash equivalents of consolidated VIEs is based on quoted market prices. The fair values of the other assets and liabilities of consolidated VIEs are primarily obtained from independent third-party broker or dealer price quotes. The fair value of a portion of the debt of consolidated VIEs is determined using significant unobservable inputs in a market-based approach.

Investments of consolidated SIPs consist of trading securities and other investments that are not generally traded in active markets. 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. The fair value of debt and equity securities not traded in active markets, other than fund products, is determined using significant unobservable inputs in either a market-based or income-based approach. The fair value of fund products not traded in active markets is determined using net asset value (“NAV”) as a practical expedient.

Other liabilities of consolidated SIPs consist of short positions in debt and equity securities. The fair value of the liabilities is determined based on the fair value of the underlying securities using quoted market prices, or independent third-party broker or dealer price quotes if quoted market prices securities are not available. 

The investments in fund products for which fair value was estimated using NAV as a practical expedient consisted of the following:

(in millions)	Redemption Frequency	Fair Value Level	March 31, 2014		September 30, 2013
Global fixed-income fund	Monthly	2	$	234.8	$	191.8
Hedge funds	Monthly or quarterly	2	24.0		6.6
Real estate and private equity funds	Nonredeemable	3	314.2		242.1
Hedge funds	Annually or triennially	3	2.2		1.5
Total			$	575.2	$	442.0

The investments in real estate and private equity funds are expected to be returned through distributions as a result of liquidations of the funds' underlying assets over a weighted-average period of 4.2 years and 4.7 years at March 31, 2014 and September 30, 2013. The consolidated SIPs' unfunded commitments to these funds totaled $170.1 million and $135.5 million at March 31, 2014 and September 30, 2013, of which the Company was contractually obligated to fund $3.9 million and $2.8 million based on its ownership percentage in the SIPs.

Transfers into Level 2 from Level 1 were $0.1 million during the three and six months ended March 31, 2014, and transfers into Level 1 from Level 2 were nil and $0.1 million during the same periods. Transfers into Level 2 from Level 1 were nil and $47.0 million during the three and six months ended March 31, 2013, and transfers into Level 1 from Level 2 were $53.8 million during both periods. The transfers into Level 2 from Level 1 during the prior year consisted of securities for which the quoted market prices were adjusted as of December 31, 2012 due to significant price changes in U.S.-traded market proxies resulting from the resolution of U.S. fiscal cliff negotiations. The impacted securities trade in 16 different countries in Europe, Asia and Latin America. The adjustments were made after the close of the foreign markets and were based on third-party factors derived from model-based valuation techniques for which the significant assumptions were observable in the market. The transfers into Level 1 from Level 2 were securities that were valued using unadjusted quoted market prices.

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

(in millions)	Investments of Consolidated VIEs		Investments of Consolidated SIPs						Total  Level 3 Assets			Debt of Consolidated VIEs
for the three months ended March 31, 2014			Debt			Equity
Balance at January 1, 2014	$	0.5	$	254.4		$	502.6		$	757.5		$	(52.2	)
Realized and unrealized gains (losses) included in investment and other income, net	—		6.3			(15.8		)	(9.5		)	1.1
Purchases	—		16.5			76.3			92.8			—
Sales	—		(8.7		)	(11.1		)	(19.8		)	—
Effect of exchange rate changes	—		—			0.1			0.1			—
Balance at March 31, 2014	$	0.5	$	268.5		$	552.1		$	821.1		$	(51.1	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at March 31, 2014	$	—	$	11.0		$	(14.6	)	$	(3.6	)	$	1.1

(in millions)	Investments of Consolidated VIEs		Investments of Consolidated SIPs						Total  Level 3 Assets			Debt of Consolidated VIEs
for the six months ended March 31, 2014			Debt			Equity
Balance at October 1, 2013	$	0.5	$	272.3		$	470.9		$	743.7		$	(59.7	)
Realized and unrealized gains (losses) included in investment and other income, net	—		(21.4		)	(19.5		)	(40.9		)	8.6
Purchases	—		38.7			126.5			165.2			—
Sales	—		(22.6		)	(26.7		)	(49.3		)	—
Effect of exchange rate changes	—		1.5			0.9			2.4			—
Balance at March 31, 2014	$	0.5	$	268.5		$	552.1		$	821.1		$	(51.1	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at March 31, 2014	$	—	$	(22.5	)	$	(18.6	)	$	(41.1	)	$	8.6

(in millions)	Investments of Consolidated SIPs						Total  Level 3 Assets			Debt of Consolidated VIEs
for the three months ended March 31, 2013	Debt			Equity
Balance at January 1, 2013	$	326.2		$	537.6		$	863.8		$	(78.3	)
Realized and unrealized gains (losses) included in investment and other income, net	(2.7		)	40.2			37.5			2.5
Purchases	30.1			66.5			96.6			—
Sales	(19.4		)	(18.4		)	(37.8		)	—
Effect of exchange rate changes	(4.0		)	(1.4		)	(5.4		)	—
Balance at March 31, 2013	$	330.2		$	624.5		$	954.7		$	(75.8	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at March 31, 2013	$	(2.2	)	$	40.1		$	37.9		$	2.5

(in millions)	Investments of Consolidated SIPs						Total  Level 3 Assets			Debt of Consolidated VIEs
for the six months ended March 31, 2013	Debt			Equity
Balance at October 1, 2012	$	317.5		$	527.0		$	844.5		$	(67.9	)
Realized and unrealized gains (losses) included in investment and other income, net	5.8			50.0			55.8			(7.9		)
Purchases	53.4			85.9			139.3			—
Sales	(46.0		)	(39.1		)	(85.1		)	—
Acquisition	—			0.8			0.8			—
Effect of exchange rate changes	(0.5		)	(0.1		)	(0.6		)	—
Balance at March 31, 2013	$	330.2		$	624.5		$	954.7		$	(75.8	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at March 31, 2013	$	6.7		$	51.4		$	58.1		$	(7.9	)

There were no transfers into or out of Level 3 during the three and six months ended March 31, 2014 and 2013.

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements were as follows:

(in millions)
as of March 31, 2014	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Debt securities	$	268.5	Discounted cash flow	Discount rate	3.6%–18.0% (11.5%)
				Risk premium	0.0%–18.0% (2.3%)
Equity securities	176.6		Market comparable companies	EBITDA multiple	1.0–14.0 (7.5)
				Discount for lack of marketability	20.0%-50.0% (41.4%)
	29.8		Market pricing	Price to book value ratio	1.8–2.8 (2.1)
	29.3		Discounted cash flow	Discount rate	6.0%–18.0% (16.3%)

(in millions)
as of September 30, 2013	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Debt securities	$	272.3	Discounted cash flow	Discount rate	5.7%–25.6% (8.3%)
				Risk premium	0.0%–19.3% (2.2%)
Equity securities	137.4		Market comparable companies	EBITDA multiple	5.0–10.2 (8.0)
				Discount for lack of marketability	20.0%–30.0% (23.7%)
	70.8		Discounted cash flow	Discount rate	12.0%–18.0% (16.2%)
				Discount for lack of marketability	0.0%–50.0% (20.6%)
	19.1		Market pricing	Price to book value ratio	1.7

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 at March 31, 2014 and September 30, 2013.

The fair values of Level 3 assets and liabilities that were determined based on third-party pricing information or NAV are excluded from the above two tables. At March 31, 2014 and September 30, 2013, the exclusions consisted of $51.1 million and $59.7 million of debt of consolidated VIEs that was valued using third-party broker or dealer price quotes and $316.4 million and $243.6 million of investments in various funds held by consolidated SIPs for which fair value was estimated using NAV as a practical expedient.

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 tables.

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 SIPs that were not measured at fair value were as follows:

(in millions)		March 31, 2014				September 30, 2013
	Fair Value Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents of consolidated SIPs	1	$	39.4	$	39.4	$	93.1	$	93.1
Financial Liabilities
Debt of consolidated SIPs	3	145.3		145.4		108.9		110.4

Non-consolidated VIEs

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

The carrying values of the investment management fees receivable from and the equity ownership interests in these VIEs included in the Company’s condensed consolidated balance sheets are set forth below. These amounts represent the Company’s maximum exposure to loss from these investment products.

(in millions)	March 31, 2014		September 30, 2013
Receivables	$	62.9	$	46.3
Investments	213.1		198.5
Total	$	276.0	$	244.8

The Company’s total AUM of non-consolidated VIEs was $40.0 billion at March 31, 2014 and $37.3 billion at September 30, 2013.

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 fiscal year 2013 or the six months ended March 31, 2014.

XML

Stock-Based Compensation

6 Months Ended

Mar. 31, 2014

Share-based Compensation [Abstract]

Stock-Based Compensation

Stock-Based Compensation

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 that 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 $189.6 million at March 31, 2014. This cost is expected to be recognized over a remaining weighted-average vesting period of 1.9 years.

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, 2013	3,732		$	40.61
Granted	2,624		53.87
Vested	(488	)	39.49
Forfeited/canceled	(116	)	44.53
Nonvested Balance at March 31, 2014	5,752		$	46.67

XML

Stock-Based Compensation - Narrative (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2014
Share-based Compensation [Abstract]
Unrecognized compensation cost related to nonvested awards net of estimated forfeitures	$ 189.6
Unrecognized compensation cost remaining weighted-average vesting period	1 year 11 months 0 days

XML

Other Income (Expenses) - Narrative (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Other Income and Expenses [Abstract]
Proceeds from the sale of available-for-sale securities	$ 63.0	$ 41.0	$ 188.6	$ 200.0
Recognized net gains on trading investment securities	3.3	7.7	5.2	9.4
Net gains on trading investment securities of consolidated SIPs	$ (0.3)	$ 7.3	$ 7.4	$ 13.4

XML

Commitments and Contingencies Narrative (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Commitments and Contingencies Disclosure [Abstract]
Off-balance sheet cash held in agency or trust	$ 157.2	$ 236.4

XML

Stockholders' Equity and Redeemable Noncontrolling Interests - Changes in Stockholders' Equity and Redeemable Noncontrolling Interests (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014		Mar. 31, 2013
Stockholders' Equity Rollforward
Beginning balance			$ 10,073.1
Beginning balance			612.4
Beginning balance			10,685.5
Beginning balance			121.8
Net Income Attributable to Franklin Resources, Inc.	561.0	572.8	1,164.8		1,088.9
Net Income	552.8	593.4	1,148.8		1,098.1
Noncontrolling Interests
Acquisition			0		38.2
Ending balance	10,865.2		10,865.2
Ending balance	608.0		608.0
Ending balance	11,473.2		11,473.2
Ending balance	173.2		173.2
Franklin Resources, Inc. Stockholders' Equity [Member]
Stockholders' Equity Rollforward
Beginning balance			10,073.1		9,201.3
Net Income Attributable to Franklin Resources, Inc.			1,164.8		1,088.9
Net income (loss) reclassified to appropriated retained earnings			5.6		(28.2)
Other comprehensive income (loss)			(1.7)		(53.3)
Cash dividends on common stock			(151.4)		(763.6)
Repurchase of common stock			(315.9)		(121.3)
Noncontrolling Interests
Other			90.7	[1]	96.2	[1]
Ending balance	10,865.2	9,420.0	10,865.2		9,420.0
Nonredeemable Noncontrolling Interests [Member]
Stockholders' Equity Rollforward
Beginning balance			612.4		559.2
Net income (loss) attributable to noncontrolling interests	(7.2)	17.8	(24.4)		5.1
Net income (loss) reclassified to appropriated retained earnings			(5.6)		28.2
Noncontrolling Interests
Net subscriptions (redemptions)			25.6		55.6
Net consolidation (deconsolidation) of sponsored investment products			0		4.4
Acquisition					5.4
Ending balance	608.0	657.9	608.0		657.9
Total Stockholders' Equity [Member]
Stockholders' Equity Rollforward
Beginning balance			10,685.5		9,760.5
Net Income			1,140.4		1,094.0
Net income (loss) reclassified to appropriated retained earnings			0		0
Other comprehensive income (loss)			(1.7)		(53.3)
Cash dividends on common stock			(151.4)		(763.6)
Repurchase of common stock			(315.9)		(121.3)
Noncontrolling Interests
Net subscriptions (redemptions)			25.6		55.6
Net consolidation (deconsolidation) of sponsored investment products			0		4.4
Acquisition					5.4
Other			90.7	[1]	96.2	[1]
Ending balance	11,473.2	10,077.9	11,473.2		10,077.9
Redeemable Noncontrolling Interests [Member]
Stockholders' Equity Rollforward
Beginning balance			121.8		26.7
Net income (loss) attributable to noncontrolling interests	(1.0)	2.8	8.4		4.1
Noncontrolling Interests
Net subscriptions (redemptions)			341.9		32.0
Net consolidation (deconsolidation) of sponsored investment products			(298.9)		(15.1)
Acquisition					32.8
Ending balance	$ 173.2	$ 80.5	$ 173.2		$ 80.5

[1] Primarily relates to stock-based compensation plans.

XML

Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of balances of consolidated VIEs and consolidated SIPs (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Variable Interest Entity [Line Items]
Cash and cash equivalents	$ 6,814.7	$ 6,186.0
Receivables	987.6	1,038.9
Investments	2,610.6	2,439.2
Other assets	169.5	179.4
Total Assets	16,137.4	15,390.3
Accounts payable and accrued expenses	261.5	262.8
Debt of consolidated variable interest entities	886.2	988.5
Debt	1,197.9	1,197.7
Debt of consolidated sponsored investment products	145.3	108.9
Other liabilities	281.0	283.6
Total liabilities	4,491.0	4,583.0
Redeemable Noncontrolling Interests	173.2	121.8
Franklin Resources, Inc.'s interests	10,865.2	10,073.1
Nonredeemable noncontrolling interests	608.0	612.4
Total stockholders' equity	11,473.2	10,685.5
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	16,137.4	15,390.3
Consolidated variable interest entities [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	56.8	44.0
Receivables	4.0	37.7
Investments	878.4	941.1
Other assets	0	0
Total Assets	939.2	1,022.8
Accounts payable and accrued expenses	0	0
Other liabilities, at fair value	26.3	10.9
Total liabilities	912.5	999.4
Redeemable Noncontrolling Interests	0	0
Franklin Resources, Inc.'s interests	26.7	23.4
Nonredeemable noncontrolling interests	0	0
Total stockholders' equity	26.7	23.4
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	939.2	1,022.8
Consolidated sponsored investment products [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	39.4	93.1
Receivables	24.9	19.1
Investments	1,339.3	1,203.2
Other assets	0.7	0.7
Total Assets	1,404.3	1,316.1
Accounts payable and accrued expenses	31.9	25.2
Other liabilities, at fair value	3.1
Other liabilities	10.9	8.5
Total liabilities	188.1	142.6
Redeemable Noncontrolling Interests	173.2	121.8
Franklin Resources, Inc.'s interests	449.2	454.8
Nonredeemable noncontrolling interests	593.8	596.9
Total stockholders' equity	1,043.0	1,051.7
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	1,404.3	1,316.1
Total VIEs and SIPs [Member]
Variable Interest Entity [Line Items]
Cash and cash equivalents	96.2	137.1
Receivables	28.9	56.8
Investments	2,217.7	2,144.3
Other assets	0.7	0.7
Total Assets	2,343.5	2,338.9
Accounts payable and accrued expenses	31.9	25.2
Debt of consolidated variable interest entities	886.2	988.5
Debt of consolidated sponsored investment products	145.3	108.9
Other liabilities	37.2	19.4
Total liabilities	1,100.6	1,142.0
Redeemable Noncontrolling Interests	173.2	121.8
Franklin Resources, Inc.'s interests	475.9	478.2
Nonredeemable noncontrolling interests	593.8	596.9
Total stockholders' equity	1,069.7	1,075.1
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	2,343.5	2,338.9
Debt of Consolidated Variable Interest Entities [Member] | Consolidated variable interest entities [Member]
Variable Interest Entity [Line Items]
Debt	$ 0	$ 0

XML

Fair Value Measurements (Policies)

6 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

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 and liabilities measured at fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

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.

The fair values of substantially all trading investments, all available-for-sale SIPs and certain other equity securities are determined based on their published net asset values. The fair values of certain trading investments, all available-for-sale debt securities and certain other equity securities are determined using quoted market prices, if available, or independent third-party broker or dealer price quotes, which are evaluated for reasonableness. The fair value of life settlement contracts is determined using a discounted cash flow valuation technique.

The fair value of contingent consideration liabilities is determined using an income-based method which considers the net present value of anticipated future cash flows.

Loans held-for-sale

Loans held for sale consist of collateralized private banking loans and are carried at the lower of cost or estimated fair value. The fair value is estimated based on the whole loan market price that was received in the subsequent sale.

XML

Fair Value Measurements (Tables)

6 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

Schedule of assets and liabilities measured at fair value on a recurring basis

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

(in millions)	Level 1		Level 2		Level 3		Total
as of March 31, 2014
Assets
Investment securities, trading	$	1,193.4	$	81.1	$	—	$	1,274.5
Investment securities, available-for-sale
SIPs	466.5		—		—		466.5
Securities of U.S. states and political subdivisions	—		17.4		—		17.4
Securities of the U.S. Treasury and federal agencies	—		2.2		—		2.2
Mortgage-backed securities – agency residential	—		86.6		—		86.6
Other equity securities	2.0		4.6		—		6.6
Life settlement contracts	—		—		13.6		13.6
Total Assets Measured at Fair Value	$	1,661.9	$	191.9	$	13.6	$	1,867.4
Liabilities
Contingent consideration liabilities	$	—	$	—	$	104.2	$	104.2

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2013
Assets
Investment securities, trading	$	1,121.5	$	75.2	$	—	$	1,196.7
Investment securities, available-for-sale
SIPs	534.6		—		—		534.6
Securities of U.S. states and political subdivisions	—		23.1		—		23.1
Securities of the U.S. Treasury and federal agencies	—		2.3		—		2.3
Mortgage-backed securities – agency residential	—		110.9		—		110.9
Other equity securities	11.3		—		—		11.3
Life settlement contracts	—		—		13.8		13.8
Total Assets Measured at Fair Value	$	1,667.4	$	211.5	$	13.8	$	1,892.7
Liabilities
Contingent consideration liabilities	$	—	$	—	$	97.7	$	97.7

Schedule of changes in Level 3 assets and liabilities measured at fair value on a recurring basis

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

	2014						2013
(in millions)	Investments			Contingent Consideration Liabilities			Investments			Contingent Consideration Liabilities
for the three months ended March 31,
Balance at beginning of period	$	13.9		$	(101.2	)	$	13.0		$	(90.3	)
Total realized and unrealized gains (losses)
Included in investment and other income, net	1.0			—			0.5			—
Included in general, administrative and other expense	—			(3.0		)	—			0.2
Other	—			(0.1		)	—			0.1
Purchases	—			—			0.1			—
Settlements	(1.3		)	0.1			(0.2		)	—
Balance at End of Period	$	13.6		$	(104.2	)	$	13.4		$	(90.0	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	$	0.3		$	(3.1	)	$	0.3		$	0.3

	2014						2013
(in millions)	Investments			Contingent Consideration Liabilities			Investments			Contingent Consideration Liabilities
for the six months ended March 31,
Balance at beginning of period	$	13.8		$	(97.7	)	$	14.8		$	—
Acquisition	—			—			—			(90.6		)
Total realized and unrealized gains (losses)
Included in investment and other income, net	1.7			—			0.9			—
Included in general, administrative and other expense	—			(8.9		)	—			(2.2		)
Other	—			(0.4		)	—			(0.2		)
Purchases	0.1			—			0.7			—
Sales	(0.7		)	—			(1.6		)	—
Settlements	(1.3		)	2.8			(1.4		)	3.0
Balance at End of Period	$	13.6		$	(104.2	)	$	13.4		$	(90.0	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	$	0.6		$	(9.3	)	$	0.7		$	(2.4	)

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 were as follows:

(in millions)
as of March 31, 2014	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Life settlement contracts	$	13.6	Discounted cash flow	Life expectancy	24–155 months (74)
				Discount rate	3.3%–21.7% (11.7%)
Contingent consideration liabilities	104.2		Discounted cash flow	AUM growth rate	6.0%–22.8% (13.0%)
				EBITDA margin	26.8% - 39.9% (35.7%)
				Discount rate	14.0%

(in millions)
as of September 30, 2013	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Life settlement contracts	$	13.8	Discounted cash flow	Life expectancy	25–160 months (76)
				Discount rate	3.3%–21.7% (11.7%)
Contingent consideration liabilities	97.7		Discounted cash flow	AUM growth rate	6.0%–25.0% (14.6%)
				EBITDA margin	26.4% - 38.9% (34.4%)
				Discount rate	14.0%

Schedule of financial instruments not measured at fair value

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

(in millions)		March 31, 2014				September 30, 2013
	Fair Value Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents	1	$	6,814.7	$	6,814.7	$	6,186.0	$	6,186.0
Other investments1	2 or 3	78.3		86.9		61.1		69.2
Loans held for sale	2	218.3		218.5		—		—
Loans receivable, net	2	3.8		3.9		229.7		230.1
Financial Liabilities
Deposits	2	$	674.1	$	674.1	$	586.8	$	587.2
Debt	2	1,197.9		1,230.6		1,197.7		1,221.5

_________________

¹     Primarily consist of Level 3 assets.

XML

Debt - Debt Maturity (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Long-term Debt, Fiscal Year Maturity [Abstract]
2014	$ 0
2015	249.9
2016	0
2017	298.9
2018	0
Thereafter	649.1
Total Debt	$ 1,197.9	$ 1,197.7

XML

Investments - Schedule of Maturities of available-for-sale debt securities (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014
Investments [Abstract]
Available-for-sale Securities, Debt Maturities - Due in one year or less Cost Basis	$ 5.1
Available-for-sale Securities, Debt Maturities - Due in one year or less Fair Value	5.2
Available-for-sale Securities, Debt Maturities - Due after one year through five years Cost Basis	12.4
Available-for-sale Securities, Debt Maturities - Due after one year through five years Fair Value	12.8
Available-for-sale Securities, Debt Maturities - Due after five years through ten years Cost Basis	0
Available-for-sale Securities, Debt Maturities - Due after five years through ten years Fair Value	0
Available-for-sale Securities, Debt Maturities - Due after ten years Cost Basis	1.6
Available-for-sale Securities, Debt Maturities - Due after ten years Fair Value	1.6
Total Available-for-sale Securities, Debt Maturities - Cost Basis	19.1
Total Available-for-sale Securities, Debt Maturities - Fair Value	$ 19.6

XML

Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Investments at fair value	$ 1,867.4	$ 1,892.7
Preferred stock, par value	$ 1.00	$ 1.00
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	627,803,784	630,917,532
Common stock, shares outstanding	627,803,784	630,917,532

XML

Earnings per Share

6 Months Ended

Mar. 31, 2014

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)	Three Months Ended March 31,				Six Months Ended March 31,
	2014		2013		2014		2013
Net Income Attributable to Franklin Resources, Inc.	$	561.0	$	572.8	$	1,164.8	$	1,088.9
Less: Allocation of earnings to participating nonvested stock and stock unit awards	3.9		4.0		7.3		7.4
Net Income Available to Common Stockholders	$	557.1	$	568.8	$	1,157.5	$	1,081.5
Weighted-average shares outstanding – basic	626.1		634.0		627.1		634.2
Effect of dilutive common stock options and non-participating nonvested stock unit awards	0.4		0.7		0.4		0.9
Weighted-Average Shares Outstanding – Diluted	626.5		634.7		627.5		635.1
Earnings per Share
Basic	$	0.89	$	0.90	$	1.85	$	1.71
Diluted	0.89		0.90		1.84		1.70

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 three and six months ended March 31, 2014 and de minimus for the three and six months ended March 31, 2013.

XML

Variable Interest Entities and Consolidated Sponsored Investment Products - Schedule of investments in fund products for which fair value was estimated using NAV as a practical expedient (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Investments in funds products for which fair value was estimated using NAV	$ 575.2	$ 442.0
Hedge Funds [Member] | Level 2 [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Investments in funds products for which fair value was estimated using NAV	24.0	6.6
Hedge Funds [Member] | Level 3 [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Investments in funds products for which fair value was estimated using NAV	2.2	1.5
Global Fixed-Income Funds [Member] | Level 2 [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Investments in funds products for which fair value was estimated using NAV	234.8	191.8
Real Estate and Private Equity Funds [Member] | Level 3 [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Investments in funds products for which fair value was estimated using NAV	$ 314.2	$ 242.1

XML

Banking Regulatory Ratios (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Tier 1 capital	$ 8,255.4	$ 7,449.2
Total risk-based capital	$ 8,294.3	$ 7,482.6
Tier 1 leverage ratio	62.00%	58.00%
Tier 1 risk-based capital ratio	60.00%	58.00%
Total risk-based capital ratio	61.00%	58.00%
Capital Adequacy Minimum [Member]
Tier 1 leverage ratio	4.00%
Tier 1 risk-based capital ratio	4.00%
Total risk-based capital ratio	8.00%

XML

Debt (Tables)

6 Months Ended

Mar. 31, 2014

Debt Disclosure [Abstract]

Schedule of outstanding debt

Debt consisted of the following:

(dollars in millions)	March 31, 2014		September 30, 2013		Effective Interest Rate
$250 million 3.125% notes due May 2015	$	249.9	$	249.9	3.32	%
$300 million 1.375% notes due September 2017	298.9		298.7		1.66	%
$350 million 4.625% notes due May 2020	349.7		349.7		4.74	%
$300 million 2.800% notes due September 2022	299.4		299.4		2.93	%
Total Debt	$	1,197.9	$	1,197.7

Schedule of contractual maturities of debt

At March 31, 2014, maturities for debt were as follows:

(in millions)	Amount
for the fiscal years ending September 30,
2014	$	—
2015	249.9
2016	—
2017	298.9
2018	—
Thereafter	649.1
Total	$	1,197.9

XML

Investments - Summary of Investments (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014		Sep. 30, 2013
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investment securities, trading	$ 1,274.5		$ 1,196.7
Investment securities, available-for-sale	579.3		682.2
Investments in equity method investees	664.9		485.4
Other investments	91.9		74.9
Total Investments	2,610.6		2,439.2
Sponsored Investment Products [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investment securities, available-for-sale	466.5		534.6
Securities of U.S. states and political subdivisions [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investment securities, available-for-sale	17.4		23.1
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	2.2		2.3
Mortgage-backed securities - agency residential [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investment securities, available-for-sale	86.6	[1]	110.9	[1]
Other equity securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investment securities, available-for-sale	$ 6.6		$ 11.3

[1] Consist of U.S. government-sponsored enterprise obligations.

XML

Subsequent Event Subsequent Event

6 Months Ended

Mar. 31, 2014

Subsequent Events [Abstract]

Subsequent Event

Subsequent Event

On April 10, 2014, the Company sold the balance of its loans held for sale for an insignificant gain.