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 December 31, 2016

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: 565,321,260 shares of common stock, par value $0.10 per share, of Franklin Resources, Inc. as of January 20, 2017.

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	6
		Notes to Condensed Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
	Item 4.	Controls and Procedures	42
PART II		Other Information
	Item 1.	Legal Proceedings	42
	Item 1A.	Risk Factors	42
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
	Item 6.	Exhibits	43
Signature			44
Exhibit Index			45

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

FRANKLIN RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Unaudited

	Three Months Ended December 31,
(in millions, except per share data)	2016			2015
Operating Revenues
Investment management fees	$	1,063.2		$	1,186.7
Sales and distribution fees	419.3			478.4
Shareholder servicing fees	56.6			61.9
Other	21.7			31.0
Total operating revenues	1,560.8			1,758.0
Operating Expenses
Sales, distribution and marketing	520.0			588.6
Compensation and benefits	311.5			342.5
Information systems and technology	51.7			51.2
Occupancy	29.1			30.7
General, administrative and other	61.6			91.4
Total operating expenses	973.9			1,104.4
Operating Income	586.9			653.6
Other Income (Expenses)
Investment and other income, net	46.1			30.5
Interest expense	(13.3		)	(12.0		)
Other income, net	32.8			18.5
Income before taxes	619.7			672.1
Taxes on income	200.9			209.7
Net income	418.8			462.4
Less: net income (loss) attributable to
Nonredeemable noncontrolling interests	2.1			13.6
Redeemable noncontrolling interests	(23.5		)	1.0
Net Income Attributable to Franklin Resources, Inc.	$	440.2		$	447.8
Earnings per Share
Basic	$	0.77		$	0.74
Diluted	0.77			0.74
Dividends Declared per Share	$	0.20		$	0.18

See Notes to Condensed Consolidated Financial Statements.

3

FRANKLIN RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Unaudited

(in millions)	Three Months Ended December 31,
	2016			2015
Net Income	$	418.8		$	462.4
Other Comprehensive Income (Loss)
Net unrealized losses on investments, net of tax	(2.4		)	(5.9		)
Currency translation adjustments, net of tax	(60.9		)	(23.6		)
Net unrealized gains on defined benefit plans, net of tax	—			0.6
Total other comprehensive loss	(63.3		)	(28.9		)
Total comprehensive income	355.5			433.5
Less: comprehensive income (loss) attributable to
Nonredeemable noncontrolling interests	2.1			13.6
Redeemable noncontrolling interests	(23.5		)	1.0
Comprehensive Income Attributable to Franklin Resources, Inc.	$	376.9		$	418.9

See Notes to Condensed Consolidated Financial Statements.

4

FRANKLIN RESOURCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(in millions, except share and per share data)	December 31, 2016			September 30, 2016
Assets
Cash and cash equivalents	$	8,223.6		$	8,247.1
Receivables	930.0			794.3
Investments (including $521.6 and $1,437.6 at fair value at December 31, 2016 and September 30, 2016)	1,512.8			2,416.6
Assets of consolidated sponsored investment products
Cash and cash equivalents	231.2			236.2
Investments, at fair value	2,456.1			1,513.4
Property and equipment, net	512.5			523.2
Goodwill and other intangible assets, net	2,200.4			2,211.3
Other	143.7			156.7
Total Assets	$	16,210.3		$	16,098.8
Liabilities
Compensation and benefits	$	191.8		$	357.4
Accounts payable and accrued expenses	214.8			233.3
Dividends	114.6			104.6
Commissions	292.4			302.0
Income taxes	191.7			23.0
Debt	1,394.4			1,401.2
Debt of consolidated sponsored investment products	340.1			682.2
Deferred taxes	151.7			161.5
Other	230.6			244.3
Total liabilities	3,122.1			3,509.5
Commitments and Contingencies (Note 9)
Redeemable Noncontrolling Interests	841.2			61.1
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; 565,683,547 and 570,345,156 shares issued and outstanding at December 31, 2016 and September 30, 2016	56.6			57.0
Retained earnings	12,326.0			12,226.2
Accumulated other comprehensive loss	(417.8		)	(347.4		)
Total Franklin Resources, Inc. stockholders’ equity	11,964.8			11,935.8
Nonredeemable noncontrolling interests	282.2			592.4
Total stockholders’ equity	12,247.0			12,528.2
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$	16,210.3		$	16,098.8

See Notes to Condensed Consolidated Financial Statements.

5

FRANKLIN RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

	Three Months Ended December 31,
(in millions)	2016			2015
Net Income	$	418.8		$	462.4
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred sales commissions	17.1			22.8
Depreciation and other amortization	19.9			22.6
Stock-based compensation	30.4			34.0
Gains on sale of assets	(0.8		)	(7.2		)
Income from investments in equity method investees	(34.2		)	(24.8		)
Net losses (gains) on other investments of consolidated sponsored investment products	(2.0		)	7.6
Deferred income taxes	(6.9		)	(1.8		)
Other	(12.1		)	14.9
Changes in operating assets and liabilities:
Increase in receivables, prepaid expenses and other	(19.3		)	(42.5		)
Decrease in trading securities, net	27.9			1.5
Decrease (increase) in trading securities of consolidated sponsored investment products, net	43.9			(102.5		)
Decrease in accrued compensation and benefits	(161.9		)	(221.5		)
Decrease in commissions payable	(9.6		)	(23.8		)
Increase in income taxes payable	167.1			160.4
Decrease in other liabilities	(32.1		)	(6.9		)
Net cash provided by operating activities	446.2			295.2
Purchase of investments	(28.8		)	(20.9		)
Liquidation of investments	35.2			128.3
Purchase of other investments by consolidated sponsored investment products	(69.4		)	(91.6		)
Liquidation of other investments by consolidated sponsored investment products	72.7			104.7
Additions of property and equipment, net	(12.8		)	(19.1		)
Adoption of new accounting guidance	(49.2		)	—
Net deconsolidation of sponsored investment products	(6.1		)	(12.2		)
Net cash provided by (used in) investing activities	(58.4		)	89.2
Dividends paid on common stock	(103.4		)	(91.5		)
Repurchase of common stock	(256.2		)	(381.5		)
Proceeds from debt of consolidated sponsored investment products	0.4			1.0
Payments on debt by consolidated sponsored investment products	(3.2		)	(27.9		)
Payments on contingent consideration liability	(2.2		)	(2.8		)
Noncontrolling interests	(1.3		)	39.3
Net cash used in financing activities	(365.9		)	(463.4		)
Effect of exchange rate changes on cash and cash equivalents	(50.4		)	(20.1		)
Decrease in cash and cash equivalents	(28.5		)	(99.1		)
Cash and cash equivalents, beginning of period	8,483.3			8,368.1
Cash and Cash Equivalents, End of Period	$	8,454.8		$	8,269.0
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	$	33.1		$	48.1
Cash paid for interest	10.1			8.8
Cash paid for interest by consolidated sponsored investment products	3.3			6.7

See Notes to Condensed Consolidated Financial Statements.

6

FRANKLIN RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2016

(Unaudited)

Note 1 – Basis of Presentation

The unaudited interim financial statements of Franklin Resources, Inc. 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. 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 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, 2016 (“fiscal year 2016”). Certain comparative amounts for the prior fiscal year period have been reclassified to conform to the financial statement presentation as of and for the period ended December 31, 2016.

Note 2 – New Accounting Guidance

Recently Adopted Accounting Guidance

On October 1, 2016, the Company adopted an amendment to the consolidation guidance issued by the Financial Accounting Standards Board (“FASB”) using the modified retrospective approach which did not require the restatement of prior year periods. The amendment modifies the consolidation framework for certain investment entities and all limited partnerships. It also eliminates certain criteria used to determine whether fees paid to a decision maker are a variable interest and results in a lower consolidation threshold for variable interest entities (“VIEs”). The adoption caused the consolidation of 24 sponsored investment products (“SIPs”) that changed from voting interest entities (“VOEs”) to VIEs and three other SIPs that are VIEs. In addition, two collateralized loan obligations (“CLOs”) for which the Company was previously the primary beneficiary and five limited partnerships were deconsolidated. The adoption resulted in net increases in total assets, redeemable noncontrolling interests and retained earnings of $180.9 million, $824.7 million and $5.8 million, and net decreases in total liabilities, nonredeemable noncontrolling interests and other equity of $317.9 million, $324.6 million and $7.1 million as of October 1, 2016.

Accounting Guidance Not Yet Adopted

The FASB issued an amendment to the existing stock-based compensation guidance in March 2016. The amendment requires all income tax effects of stock-based awards to be recognized as income tax expense when the awards vest or settle and clarifies the classification of these transactions within the statement of cash flows. The amendment also provides an election to account for forfeitures as they occur, which the Company expects to take. The amendment is effective for the Company on October 1, 2017 and requires varying transition approaches for the different changes to the guidance. The Company expects the adoption to increase the volatility of income tax expense as a result of fluctuations in its stock price.

The FASB issued new guidance in May 2014 that requires use of a single principles-based model for recognition of revenue from contracts with customers. The core principle of the model is that revenue is recognized upon the transfer of promised goods or services to customers in an amount that reflects the expected consideration to be received for the goods or services. The guidance also changes the accounting for certain contract costs and revises the criteria for determining if an entity is acting as a principal or agent in certain arrangements. The guidance is effective for the Company on October 1, 2018 and allows for either a full retrospective or modified approach at adoption. While the Company’s implementation efforts are ongoing, it does not expect adoption of the guidance to have a significant impact on the timing of recognition for the majority of its operating revenue. The Company is evaluating certain costs to determine if they should be capitalized or expensed based on the criteria in the guidance for costs to obtain or fulfill a contract. Additionally, it is assessing certain arrangements to determine whether it continues to act as a principal and present the related revenue gross of associated expenses. The overall impact upon adoption may differ based on further evaluation and additional facts and circumstances identified during implementation. The Company has not yet determined its transition approach.

7

The FASB issued an amendment to the existing financial instruments guidance in January 2016. The amendment requires substantially all equity investments in nonconsolidated entities to be measured at fair value with changes recognized in earnings, except for those accounted for using the equity method of accounting, which will impact all equity securities currently classified as available-for-sale. The amendment also provides an election to measure equity investments that do not have a readily determinable fair value at cost less impairment, if any, which the Company expects to take. The amendment is effective for the Company on October 1, 2018 and requires a cumulative effect adjustment to retained earnings at adoption. The Company does not expect the adoption to have a material impact on its consolidated financial statements; however, this could be affected by market volatility as well as additional facts and circumstances identified during implementation.

There were no other significant updates to the new accounting guidance not yet adopted by the Company as disclosed in its Form 10-K for fiscal year 2016.

Note 3 – Stockholders’ Equity

Changes in total stockholders’ equity were as follows:

(in millions)	Franklin Resources, Inc. Stockholders’ Equity			Nonredeemable Noncontrolling Interests			Total Stockholders’ Equity
for the three months ended December 31, 2016
Balance at October 1, 2016	$	11,935.8		$	592.4		$	12,528.2
Adoption of new accounting guidance	(1.3		)	(324.6		)	(325.9		)
Net income	440.2			2.1			442.3
Other comprehensive loss	(63.3		)				(63.3		)
Cash dividends declared on common stock	(113.4		)				(113.4		)
Repurchase of common stock	(261.7		)				(261.7		)
Net subscriptions				12.3			12.3
Stock-based compensation	28.5						28.5
Balance at December 31, 2016	$	11,964.8		$	282.2		$	12,247.0

(in millions)	Franklin Resources, Inc. Stockholders’ Equity			Nonredeemable Noncontrolling Interests			Total Stockholders’ Equity
for the three months ended December 31, 2015
Balance at October 1, 2015	$	11,841.0		$	654.8		$	12,495.8
Net income	447.8			13.6			461.4
Other comprehensive loss	(28.9		)				(28.9		)
Cash dividends declared on common stock	(107.6		)				(107.6		)
Repurchase of common stock	(404.1		)				(404.1		)
Net distributions				(28.7		)	(28.7		)
Stock-based compensation	33.0						33.0
Balance at December 31, 2015	$	11,781.2		$	639.7		$	12,420.9

During the three months ended December 31, 2016 and 2015, the Company repurchased 7.1 million and 10.5 million shares of its common stock at a cost of $261.7 million and $404.1 million under its stock repurchase program. At December 31, 2016, 43.6 million shares remained available for repurchase under the program, which is not subject to an expiration date.

8

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 December 31,
	2016		2015
Net income attributable to Franklin Resources, Inc.	$	440.2	$	447.8
Less: allocation of earnings to participating nonvested stock and stock unit awards	3.0		2.7
Net Income Available to Common Stockholders	$	437.2	$	445.1
Weighted-average shares outstanding – basic	565.1		597.6
Dilutive effect of nonparticipating nonvested stock unit awards	0.1		0.1
Weighted-Average Shares Outstanding – Diluted	565.2		597.7
Earnings per Share
Basic	$	0.77	$	0.74
Diluted	0.77		0.74

Nonparticipating nonvested stock unit awards excluded from the calculation of diluted earnings per share because their effect would have been antidilutive were 0.7 million and 1.4 million for the three months ended December 31, 2016 and 2015.

Note 5 – Investments

The disclosures below include details of the Company’s investments, excluding those of consolidated SIPs. See Note 7–Consolidated Sponsored Investment Products for information related to the investments held by these entities.

Investments consisted of the following:

(in millions)	December 31, 2016		September 30, 2016
Investment securities, trading
SIPs	$	138.8	$	844.4
Debt and other equity securities	264.2		277.5
Total investment securities, trading	403.0		1,121.9
Investment securities, available-for-sale
SIPs	102.3		297.7
Debt and other equity securities	3.0		3.7
Total investment securities, available-for-sale	105.3		301.4
Investments in equity method investees	816.0		797.4
Other investments	188.5		195.9
Total	$	1,512.8	$	2,416.6

Debt and other equity trading securities consist primarily of corporate debt.

Investment securities with an aggregate carrying amount of $117.3 million were pledged as collateral at both December 31, 2016 and September 30, 2016.

Gross unrealized gains and losses relating to investment securities, available-for-sale were as follows:

(in millions)			Gross Unrealized
as of December 31, 2016	Cost Basis		Gains		Losses			Fair Value
SIPs	$	103.2	$	1.0	$	(1.9	)	$	102.3
Debt and other equity securities	2.9		0.1		—			3.0
Total	$	106.1	$	1.1	$	(1.9	)	$	105.3

9

(in millions)			Gross Unrealized
as of September 30, 2016	Cost Basis		Gains		Losses			Fair Value
SIPs	$	289.6	$	13.7	$	(5.6	)	$	297.7
Debt and other equity securities	3.6		0.1		—			3.7
Total	$	293.2	$	13.8	$	(5.6	)	$	301.4

Gross unrealized losses relating to investment securities, available-for-sale aggregated by length of time that individual securities have been in a continuous unrealized loss position were as follows:

	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 December 31, 2016
SIPs	$	19.5	$	(1.1	)	$	5.2	$	(0.8	)	$	24.7	$	(1.9	)

	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, 2016
SIPs	$	75.8	$	(4.3	)	$	18.0	$	(1.3	)	$	93.8	$	(5.6	)

The Company recognized $0.3 million and $0.4 million of other-than-temporary impairment during the three months ended December 31, 2016 and 2015.

Note 6 – Fair Value Measurements

The disclosures below include details of the Company’s fair value measurements, excluding those of consolidated SIPs. See Note 7 – Consolidated Sponsored Investment Products for information related to fair value measurements of the assets and liabilities of these entities.

The assets and liability measured at fair value on a recurring basis were as follows:

(in millions)	Level 1		Level 2		Level 3		Total
as of December 31, 2016
Assets
Investment securities, trading
SIPs	$	138.8	$	—	$	—	$	138.8
Debt and other equity securities	3.1		75.7		185.4		264.2
Investment securities, available-for-sale
SIPs	102.3		—		—		102.3
Debt and other equity securities	0.9		2.1		—		3.0
Life settlement contracts	—		—		13.3		13.3
Total Assets Measured at Fair Value	$	245.1	$	77.8	$	198.7	$	521.6
Liability
Contingent consideration liability	$	—	$	—	$	83.7	$	83.7

10

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2016
Assets
Investment securities, trading
SIPs	$	844.4	$	—	$	—	$	844.4
Debt and other equity securities	2.6		84.1		190.8		277.5
Investment securities, available-for-sale
SIPs	297.7		—		—		297.7
Debt and other equity securities	1.6		2.1		—		3.7
Life settlement contracts	—		—		14.3		14.3
Total Assets Measured at Fair Value	$	1,146.3	$	86.2	$	205.1	$	1,437.6
Liability
Contingent consideration liability	$	—	$	—	$	98.1	$	98.1

The fair values of all SIPs and certain other equity securities are determined based on their published net asset values and they are classified as Level 1. The fair values of certain debt and 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, and they are classified as Level 2. The fair values of other debt securities and all life settlement contracts are determined using discounted cash flow valuation techniques using significant unobservable inputs and they are classified as Level 3.

The fair value of the contingent consideration liability, which is classified as Level 3, is determined using an income-based method which considers the net present value of anticipated future cash flows.

There were no transfers between Level 1 and Level 2, or into or out of Level 3, during the three months ended December 31, 2016 and 2015.

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

	2016						2015
(in millions)	Investments			Contingent Consideration Liability			Investments			Contingent Consideration Liability
for the three months ended December 31,
Balance at beginning of period	$	205.1		$	(98.1	)	$	20.7		$	(102.9	)
Total realized and unrealized gains (losses)
Included in investment and other income, net	0.6			—			0.6			—
Included in general, administrative and other expense	—			12.2			—			(16.2		)
Purchases	0.5			—			3.3			—
Sales	(2.4		)	—			—			—
Settlements	(1.7		)	2.2			(0.8		)	3.3
Foreign exchange revaluation	(3.4		)	—			—			—
Balance at End of Period	$	198.7		$	(83.7	)	$	23.8		$	(115.8	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at end of period	$	(0.1	)	$	12.2		$	0.2		$	(16.2	)

11

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

(in millions)
as of December 31, 2016	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Investment securities, trading – debt and other equity securities	$	185.4	Discounted cash flow	Discount rate	6.5%–6.9% (6.8%)
				Risk premium	2.0%–17.9% (16.7%)
				Liquidity discount	0.0%–10.0% (9.7%)
Life settlement contracts	13.3		Discounted cash flow	Life expectancy	21–130 months (65)
				Discount rate	8.0%–20.0% (13.0%)
Contingent consideration liability	83.7		Discounted cash flow	AUM growth rate	(1.9)%–2.8% (0.7%)
				EBITDA margin	6.2%–8.8% (7.9%)
				Discount rate	13.2%

(in millions)
as of September 30, 2016	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Investment securities, trading – debt and other equity securities	$	190.8	Discounted cash flow	Discount rate	3.6%–6.9% (6.7%)
				Risk premium	2.0%–17.9% (16.5%)
				Liquidity discount	0.0%–10.0% (9.6%)
Life settlement contracts	14.3		Discounted cash flow	Life expectancy	20–132 months (65)
				Discount rate	3.3%–18.0% (11.5%)
Contingent consideration liability	98.1		Discounted cash flow	AUM growth rate	2.4%–11.5% (5.9%)
				EBITDA margin	14.3%
				Discount rate	13.2%

For investment securities, trading – debt and other equity securities, a significant increase (decrease) in the discount rate, risk premium or liquidity discount in isolation would result in a significantly lower (higher) fair value measurement.

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 the contingent consideration liability, 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)		December 31, 2016				September 30, 2016
	Fair Value Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents	1	$	8,223.6	$	8,223.6	$	8,247.1	$	8,247.1
Other investments
Time deposits	2	128.0		128.0		131.6		131.6
Cost method investments	3	47.2		59.5		50.0		61.3
Financial Liabilities
Debt
Senior notes	2	1,342.8		1,365.1		1,348.5		1,412.5
Loan	2	51.6		51.5		52.7		52.7

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Note 7 – Consolidated Sponsored Investment Products

The Company consolidates SIPs, which consist of both VOEs and VIEs, when it has a controlling financial interest. The Company has a controlling financial interest when it owns a majority of the voting interest in a VOE or when it is the primary beneficiary of a VIE. A VIE is an entity in which the equity investment holders have not contributed sufficient capital to finance its activities or they do not have defined rights and obligations normally associated with an equity investment. The Company’s VIEs are all investment entities, and its variable interests consist of its equity ownership interest in and certain investment management fees earned from these entities.

The Company adopted new accounting guidance on October 1, 2016 that modifies the consolidation framework for certain investment entities and all limited partnerships. As a result of the modifications, certain SIPs changed from VOEs to VIEs and became subject to a lower threshold for consolidation. Additionally, there is now a single model to determine whether the Company is the primary beneficiary of a VIE. The Company is the primary beneficiary if it has the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses of or right to receive benefits from the VIE that could potentially be significant to the VIE. Investment management fees earned from VIEs are excluded from the primary beneficiary determination if they are deemed to be at market and commensurate with service. The key estimates and assumptions used in the analyses include the amount of assets under management (“AUM”), investment management fee rates, the life of the investment product, prepayment rates and the discount rate. The new guidance did not change the consolidation framework for VOEs.

Consolidated SIPs consist of mutual and other investment funds, limited partnerships and similar structures and CLOs, which are asset-backed financing entities collateralized by a pool of corporate debt securities. The Company consolidated 61 SIPs, including one CLO, as of December 31, 2016 and 40 SIPs, including three CLOs, as of September 30, 2016. Amounts for prior periods have been reclassified to combine amounts previously presented separately as consolidated SIPs and consolidated VIEs.

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

(in millions)	December 31, 2016		September 30, 2016
Assets
Cash and cash equivalents	$	231.2	$	236.2
Receivables	174.1		47.9
Investments, at fair value	2,456.1		1,513.4
Other assets	0.8		1.4
Total Assets	$	2,862.2	$	1,798.9
Liabilities
Accounts payable and accrued expenses	$	67.9	$	65.2
Debt	340.1		682.2
Other liabilities	7.2		8.5
Total liabilities	415.2		755.9
Redeemable Noncontrolling Interests	841.2		61.1
Stockholders’ Equity
Franklin Resources, Inc.’s interests	1,349.3		414.1
Nonredeemable noncontrolling interests	256.5		567.8
Total stockholders’ equity	1,605.8		981.9
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$	2,862.2	$	1,798.9

The consolidated SIPs did not have a significant impact on net income attributable to the Company during the three months ended December 31, 2016 and 2015.

The Company has no right to the consolidated SIPs’ assets, other than its direct equity investments in them and investment management fees earned from them. The debt holders of the consolidated SIPs 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 SIPs’ liabilities.

13

SIPs are typically consolidated when the Company makes an initial investment in a newly launched investment entity. They are typically deconsolidated when the Company no longer has a controlling financial interest due to redemptions of its investment or increases in third-party investments. 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 structure of the SIP and the Company’s role and level of ownership.

Investments

Investments of consolidated SIPs consisted of the following:

(in millions)	December 31, 2016		September 30, 2016
Investment securities, trading	$	1,810.3	$	287.8
Other debt securities	366.9		618.3
Other equity securities	278.9		607.3
Total	$	2,456.1	$	1,513.4

Investment securities, trading consist of equity and debt securities that are traded in active markets. Other debt securities consist of corporate debt securities held by CLOs and debt securities of entities in emerging markets. Other equity securities consist of equity securities of entities in emerging markets and fund products.

Investments in fund products for which fair value was estimated using reported net asset value (“NAV”) as a practical expedient were as follows:

(in millions)	Redemption Frequency	December 31, 2016		September 30, 2016
Real estate and private equity funds	Nonredeemable	$	146.3	$	444.2
Hedge funds	Monthly, quarterly or triennially	—		1.8
Total		$	146.3	$	446.0

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 5.2 years and 3.2 years at December 31, 2016 and September 30, 2016. The consolidated SIPs’ unfunded commitments to these funds totaled $2.0 million and $74.4 million at December 31, 2016 and September 30, 2016, of which the Company was contractually obligated to fund $0.4 million and $2.2 million based on its ownership percentage in the SIPs.

Fair Value Measurements

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

(in millions)	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
as of December 31, 2016
Assets
Cash and cash equivalents of CLO	$	54.8	$	—	$	—	$	—	$	54.8
Receivables of CLO	—		2.0		—		—		2.0
Investments
Equity securities	272.2		93.5		131.6		146.3		643.6
Debt securities	0.2		1,687.9		124.4		—		1,812.5
Total Assets Measured at Fair Value	$	327.2	$	1,783.4	$	256.0	$	146.3	$	2,512.9
Liabilities
Other liabilities	$	0.2	$	7.0	$	—	$	—	$	7.2

14

(in millions)	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
as of September 30, 2016
Assets
Cash and cash equivalents of CLOs	$	146.4	$	—	$	—	$	—	$	146.4
Receivables of CLOs	—		23.6		—		—		23.6
Investments
Equity securities	155.4		0.5		160.3		446.0		762.2
Debt securities	—		618.9		132.3		—		751.2
Total Assets Measured at Fair Value	$	301.8	$	643.0	$	292.6	$	446.0	$	1,683.4
Liabilities
Other liabilities	$	0.1	$	8.4	$	—	$	—	$	8.5

Investments in fund products for which fair value was estimated using NAV as a practical expedient are not classified in the fair value hierarchy. There were no transfers between Level 1 and Level 2, or into or out of Level 3, during the three months ended December 31, 2016 and 2015.

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

	2016									2015
(in millions)	Equity Securities			Debt Securities			Total  Level 3 Assets			Equity Securities			Debt Securities			Total  Level 3 Assets
for the three months ended December 31,
Balance at beginning of period	$	160.3		$	132.3		$	292.6		$	191.6		$	130.2		$	321.8
Adoption of new accounting guidance	(45.4		)	(0.5		)	(45.9		)	—			—			—
Realized and unrealized gains (losses) included in investment and other income, net	(3.3		)	(0.3		)	(3.6		)	(1.1		)	1.1			—
Purchases	21.0			2.2			23.2			—			2.5			2.5
Sales	(0.1		)	(6.4		)	(6.5		)	—			(9.6		)	(9.6		)
Foreign exchange revaluation	(0.9		)	(2.9		)	(3.8		)	(2.4		)	(0.3		)	(2.7		)
Balance at End of Period	$	131.6		$	124.4		$	256.0		$	188.1		$	123.9		$	312.0
Change in unrealized gains (losses) included in net income relating to assets held at end of period	$	(3.4	)	$	(0.2	)	$	(3.6	)	$	(1.1	)	$	0.3		$	(0.8	)

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

(in millions)
as of December 31, 2016	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Equity securities	$	83.9	Market comparable companies	EBITDA multiple	5.0–14.2 (11.0)
				Discount for lack of marketability	50.0%
	24.3		Discounted cash flow	Discount rate	5.0%–19.0% (13.7%)
	23.4		Market pricing	Price to book value ratio	1.8–2.3 (2.0)
Debt securities	112.6		Discounted cash flow	Discount rate	6.0%–50.0% (13.0%)
				Risk premium	0.0%–28.0% (9.5%)
	11.8		Market pricing	Private sale pricing	$57 per $100 of par

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(in millions)
as of September 30, 2016	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Equity securities	$	113.1	Market comparable companies	EBITDA multiple	5.0–14.2 (10.3)
				Discount for lack of marketability	25.0%–50.0% (36.6%)
	24.3		Discounted cash flow	Discount rate	5.0%–19.0% (13.7%)
	22.9		Market pricing	Price to book value ratio	1.8–2.3 (2.0)
Debt securities	119.7		Discounted cash flow	Discount rate	6.0%–15.0% (10.4%)
				Risk premium	0.0%–28.0% (9.7%)
				EBITDA multiple	5.5
	12.6		Market pricing	Private sale pricing	$57 per $100 of par

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 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 the discounted cash flow valuation technique, a significant increase (decrease) in the discount rate or risk premium in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the discount rate is accompanied by a directionally similar change in the risk premium. A significant increase (decrease) in the EBITDA multiple in isolation would result in a significantly higher (lower) fair value measurement.

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)	Fair Value Level	December 31, 2016				September 30, 2016
		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents	1	$	176.4	$	176.4	$	89.8	$	89.8
Financial Liabilities
Debt of CLOs1	2 or 3	285.5		279.4		607.2		594.5
Other debt	3	54.6		54.3		75.0		74.6

_________________

¹    Substantially all is Level 2.

Debt

Debt of consolidated SIPs consisted of the following:

	December 31, 2016			September 30, 2016
(in millions)	Amount		Effective Interest Rate	Amount		Effective Interest Rate
Debt of CLOs	$	285.5	3.18%	$	607.2	2.24%
Other debt	54.6		5.59%	75.0		4.79%
Total	$	340.1		$	682.2

The debt of CLOs had floating interest rates ranging from 2.38% to 10.36% at December 31, 2016, and from 1.02% to 10.16% at September 30, 2016. The debt matures in fiscal year 2024 at December 31, 2016, and from fiscal years 2018 to 2024 at September 30, 2016.

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The other debt had fixed and floating interest rates ranging from 2.36% to 6.38% at December 31, 2016, and from 2.36% to 6.19% at September 30, 2016. The debt maturities ranged from fiscal years 2017 to 2019 at both December 31, 2016 and September 30, 2016.

At December 31, 2016, maturities for debt of consolidated SIPs were as follows:

(in millions)	Carrying Amount
for the fiscal years ending September 30,
2017	$	20.8
2018	5.8
2019	28.0
2020	—
2021	—
Thereafter	285.5
Total	$	340.1

Redeemable Noncontrolling Interests

Changes in redeemable noncontrolling interests of consolidated SIPs were as follows:

(in millions)
for the three months ended December 31,	2016			2015
Balance at beginning of period	$	61.1		$	59.6
Adoption of new accounting guidance	824.7			—
Net income (loss)	(23.5		)	1.0
Net subscriptions (distributions) and other	(13.6		)	68.0
Net deconsolidations	(7.5		)	(75.4		)
Balance at End of Period	$	841.2		$	53.2

Collateralized Loan Obligations

The Company recognized $1.1 million and $0.1 million of net gains related to its own economic interests in the CLOs during the three months ended December 31, 2016 and 2015.

The unpaid principal balance and fair value of the investments of the CLOs were as follows:

(in millions)	December 31, 2016		September 30, 2016
Unpaid principal balance	$	244.3	$	496.0
Difference between unpaid principal balance and fair value	—		(8.2		)
Fair Value	$	244.3	$	487.8

There were no investments 90 days or more past due at December 31, 2016 or September 30, 2016.

The unpaid principal balance of the debt of the CLOs was $274.9 million and $653.8 million at December 31, 2016 and September 30, 2016.

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Note 8 – Nonconsolidated Variable Interest Entities

VIEs for which the Company is not the primary beneficiary consist of SIPs and other investment products in which the Company has an equity ownership interest. The Company’s maximum exposure to loss from these VIEs consists of equity investments and investment management fee receivables as follows:

(in millions)	December 31, 2016		September 30, 2016
Investments	$	229.9	$	77.3
Receivables	100.7		21.4
Total	$	330.6	$	98.7

While the Company has no contractual obligation to do so, it routinely makes cash investments in the course of launching SIPs. The Company also may voluntarily elect to provide its SIPs with additional direct or indirect financial support based on its business objectives. The Company did not provide financial or other support to its SIPs during the three months ended December 31, 2016. During fiscal year 2016, the Company purchased $182.7 million of certain debt securities from six SIPs domiciled in India in order to provide additional liquidity to the SIPs. None of these purchases occurred during the three months ended December 31, 2015.

Note 9 – Commitments and Contingencies

Legal Proceedings

On July 28, 2016, a putative class action lawsuit captioned Cryer v. Franklin Resources, Inc., et al. was filed in the United States District Court for the Northern District of California against Franklin, the Franklin Templeton 401(k) Retirement Plan (“Plan”) Investment Committee, and unnamed Investment Committee members. The plaintiff asserts a claim for breach of fiduciary duty under the Employee Retirement Income Security Act, alleging that the defendants selected mutual funds sponsored and managed by the Company (the “Funds”) as investment options for the Plan when allegedly lower-cost and better performing non-proprietary investment vehicles were available. The plaintiff also claims that the total Plan costs, inclusive of investment management and administrative fees, are excessive. The plaintiff alleges that Plan losses exceed $79.0 million and seeks, among other things, damages, disgorgement, rescission of the Plan’s investments in the Funds, attorneys’ fees and costs, and pre- and post-judgment interest. Franklin’s motion to dismiss and motion for summary adjudication were denied on January 17, 2017. Management strongly believes that the claims made in the lawsuit are without merit and intends to defend against them vigorously. Franklin cannot predict with certainty, however, the eventual outcome of the lawsuit or whether it will have a material negative impact on the Company.

The Company is from time to time involved in other 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 December 31, 2016 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

At December 31, 2016, there were no material changes in the other commitments and contingencies as reported in the Company’s Form 10-K for fiscal year 2016.

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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. Awards generally vest based on the passage of time or 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.

Stock and stock unit award activity was as follows:

(shares in thousands)	Time-Based Shares		Performance- Based Shares		Total Shares		Weighted-Average Grant-Date Fair Value
for the three months ended December 31, 2016
Nonvested balance at October 1, 2016	2,369		1,288		3,657		$	45.67
Granted	2,696		1,110		3,806		34.11
Vested	(26	)	(353	)	(379	)	49.71
Forfeited/canceled	(114	)	(274	)	(388	)	44.18
Nonvested Balance at December 31, 2016	4,925		1,771		6,696		$	38.96

Total unrecognized compensation expense related to nonvested stock and stock unit awards, net of estimated forfeitures, was $197.8 million at December 31, 2016. This expense is expected to be recognized over a remaining weighted-average vesting period of 2.0 years.

Note 11 – Other Income (Expenses)

Other income (expenses) consisted of the following:

	Three Months Ended December 31,
(in millions)	2016			2015
Investment and Other Income, Net
Dividend income	$	2.4		$	2.8
Interest income	13.6			3.6
Gains (losses) on trading investment securities, net	2.0			(7.3		)
Realized gains on sale of investment securities, available-for-sale	0.6			7.8
Realized losses on sale of investment securities, available-for-sale	(0.7		)	(0.8		)
Income from investments in equity method investees	34.2			24.8
Other-than-temporary impairment of investments	(0.3		)	(0.4		)
Losses on investments of consolidated SIPs, net	(29.9		)	(5.7		)
Foreign currency exchange gains, net	19.8			3.5
Other, net	4.4			2.2
Total	46.1			30.5
Interest Expense	(13.3		)	(12.0		)
Other Income, Net	$	32.8		$	18.5

Substantially all of the Company’s dividend income and realized gains and losses on sale of available-for-sale securities were generated by investments in its nonconsolidated SIPs. Interest income was primarily generated by trading investment securities and cash equivalents. Proceeds from the sale of available-for-sale securities were $8.6 million and $106.6 million for the three months ended December 31, 2016 and 2015.

Net gains (losses) recognized on the Company’s trading investment securities that were held at December 31, 2016 and 2015 were $0.2 million and $(5.7) million. Net gains (losses) recognized on trading investment securities of consolidated SIPs that were held at December 31, 2016 and 2015 were $(18.5) million and $2.3 million.

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Note 12 – Accumulated Other Comprehensive Income (Loss)

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

(in millions)	Unrealized Gains (Losses) on Investments			Currency Translation Adjustments			Unrealized Losses on Defined Benefit Plans			Total
for the three months ended December 31, 2016
Balance at October 1, 2016	$	6.8		$	(346.1	)	$	(8.1	)	$	(347.4	)
Adoption of new accounting guidance	(6.8		)	(0.3		)	—			(7.1		)
Other comprehensive loss:
Other comprehensive loss before reclassifications, net of tax	(2.6		)	(60.9		)	—			(63.5		)
Reclassifications to net investment and other income, net of tax	0.2			—			—			0.2
Total other comprehensive loss	(2.4		)	(60.9		)	—			(63.3		)
Balance at December 31, 2016	$	(2.4	)	$	(407.3	)	$	(8.1	)	$	(417.8	)

(in millions)	Unrealized Gains on Investments			Currency Translation Adjustments			Unrealized Losses on Defined Benefit Plans			Total
for the three months ended December 31, 2015
Balance at October 1, 2015	$	19.3		$	(327.8	)	$	(5.7	)	$	(314.2	)
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassifications, net of tax	0.8			(23.6		)	0.6			(22.2		)
Reclassifications to net investment and other income, net of tax	(6.7		)	—			—			(6.7		)
Total other comprehensive income (loss)	(5.9		)	(23.6		)	0.6			(28.9		)
Balance at December 31, 2015	$	13.4		$	(351.4	)	$	(5.1	)	$	(343.1	)

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 and are cautioned against doing so. 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. 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, 2016 (“fiscal year 2016”) filed with the U.S. Securities and Exchange Commission, and the condensed consolidated financial statements and notes thereto included elsewhere in this Form 10-Q.

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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, marketing, shareholder servicing, and other fiduciary services. Our SIPs and investment management and related services are distributed or marketed to investors globally under nine distinct brand names: Franklin^®, Templeton^®, Franklin Mutual Series^®, Franklin Bissett^®, Fiduciary Trust™, Darby^®, Balanced Equity Management^®, K2^® and LibertyShares™. 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 investors 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, the number of mutual fund shareholder accounts and the fee rates charged for our services, which are based on contracts with our SIPs or our clients. These arrangements could change in the future.

The global equity markets continued to provide positive returns during the first three months of our fiscal year, reflecting, among other things, the results of the U.S. presidential election and expectations of fiscal stimulus, evidenced by increases of 2.0% in the MSCI World Index and 3.8% in the S&P 500 Index for the quarter. The global bond markets were negatively impacted by rising interest rates and expectations of higher inflation and the Barclays Global Aggregate Index decreased 7.1% during the quarter.

Our total AUM at December 31, 2016 was $720.0 billion, 2% lower than at September 30, 2016 and 6% lower than at December 31, 2015. Simple monthly average AUM (“average AUM”) for the three months ended December 31, 2016decreased8% from the same period in the prior fiscal year. The decline in AUM negatively affected our fee revenues and operating income for the three months ended December 31, 2016.

Uncertainties regarding the global economy 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. We continuously perform reviews of our business model. While we remain 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.

RESULTS OF OPERATIONS

	Three Months Ended December 31,						Percent Change
(in millions, except per share data)	2016			2015
Operating revenues	$	1,560.8		$	1,758.0		(11	%)
Operating income	586.9			653.6			(10	%)
Net income attributable to Franklin Resources, Inc.	440.2			447.8			(2	%)
Diluted earnings per share	$	0.77		$	0.74		4	%
Operating margin1	37.6		%	37.2		%

^{___________________} 

¹  Defined as operating income divided by total operating revenues.

Operating income decreased$66.7 million for the three months ended December 31, 2016, as compared to the same period in the prior fiscal year, as an 11% decrease in operating revenues was partially offset by a 12% decrease in operating expenses. Net income attributable to Franklin Resources, Inc. decreased$7.6 million as the decrease in operating income was substantially offset by higher investment and other income, net, less the portion attributable to noncontrolling interests.

Diluted earnings per share increased for the three months ended December 31, 2016 despite the decrease in net income due to the impact of a 5% decrease in diluted average common shares outstanding primarily resulting from repurchases of shares of our common stock during the twelve-month period ended December 31, 2016.

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ASSETS UNDER MANAGEMENT

AUM by investment objective was as follows:

(in billions)	December 31, 2016		December 31, 2015		Percent Change
Equity
Global/international	$	196.7	$	211.7	(7	%)
United States	101.6		102.0		0	%
Total equity	298.3		313.7		(5	%)
Hybrid	138.3		134.4		3	%
Fixed Income
Tax-free	71.7		72.4		(1	%)
Taxable
Global/international	153.6		182.0		(16	%)
United States	51.9		54.8		(5	%)
Total fixed income	277.2		309.2		(10	%)
Cash Management	6.2		6.6		(6	%)
Total	$	720.0	$	763.9	(6	%)

AUM at December 31, 2016decreased6% from December 31, 2015 due to $67.9 billion of net outflows partially offset by $24.0 billion of net market change and other, which consists of $48.3 billion of market appreciation and other, net of $24.3 billion of distributions.

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

(in billions)	Average AUM				Percent Change		Mix of Average AUM
for the three months ended December 31,	2016		2015				2016		2015
Equity
Global/international	$	197.0	$	216.6	(9	%)	27	%	28	%
United States	101.3		103.4		(2	%)	14	%	13	%
Total equity	298.3		320.0		(7	%)	41	%	41	%
Hybrid	136.7		139.2		(2	%)	19	%	18	%
Fixed Income
Tax-free	74.1		72.0		3	%	10	%	9	%
Taxable
Global/international	155.0		186.4		(17	%)	22	%	24	%
United States	52.4		57.2		(8	%)	7	%	7	%
Total fixed income	281.5		315.6		(11	%)	39	%	40	%
Cash Management	6.2		6.7		(7	%)	1	%	1	%
Total	$	722.7	$	781.5	(8	%)	100	%	100	%

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Components of the change in AUM are shown below. Net market change and other includes distributions, appreciation (depreciation), foreign exchange revaluation and net cash management.

(in billions)	Three Months Ended December 31,						Percent Change
	2016			2015
Beginning AUM	$	733.3		$	770.9		(5	%)
Long-term sales	24.5			33.1			(26	%)
Long-term redemptions	(46.7		)	(53.3		)	(12	%)
Long-term net exchanges	(0.4		)	(0.2		)	100	%
Reinvested distributions	8.2			11.5			(29	%)
Net flows	(14.4		)	(8.9		)	62	%
Net market change and other	1.1			1.9			(42	%)
Ending AUM	$	720.0		$	763.9		(6	%)

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

(in billions)	Equity						Hybrid			Fixed Income									Cash Management		Total
for the three months ended December 31, 2016	Global/ International			United States						Tax-Free			Taxable Global/ International			Taxable United States
AUM at October 1, 2016	$	200.4		$	103.3		$	137.4		$	76.5		$	156.2		$	53.4		$	6.1	$	733.3
Long-term sales	5.9			3.7			4.0			2.2			6.1			2.6			—		24.5
Long-term redemptions	(10.7		)	(7.5		)	(6.7		)	(3.7		)	(14.2		)	(3.9		)	—		(46.7		)
Long-term net exchanges	(0.2		)	0.2			0.1			(0.5		)	(0.2		)	0.2			—		(0.4		)
Reinvested distributions	2.1			3.1			1.4			0.5			0.8			0.3			—		8.2
Net flows	(2.9		)	(0.5		)	(1.2		)	(1.5		)	(7.5		)	(0.8		)	—		(14.4		)
Net market change and other	(0.8		)	(1.2		)	2.1			(3.3		)	4.9			(0.7		)	0.1		1.1
AUM at December 31, 2016	$	196.7		$	101.6		$	138.3		$	71.7		$	153.6		$	51.9		$	6.2	$	720.0

(in billions)	Equity						Hybrid			Fixed Income									Cash Management			Total
for the three months ended December 31, 2015	Global/ International			United States						Tax-Free			Taxable Global/ International			Taxable United States
AUM at October 1, 2015	$	212.1		$	100.8		$	138.3		$	71.7		$	182.7		$	58.5		$	6.8		$	770.9
Long-term sales	6.6			3.5			4.0			1.7			15.0			2.3			—			33.1
Long-term redemptions	(11.9		)	(7.0		)	(9.2		)	(2.2		)	(18.4		)	(4.6		)	—			(53.3		)
Long-term net exchanges	(0.1		)	0.4			(0.4		)	0.3			(0.2		)	(0.2		)	—			(0.2		)
Reinvested distributions	3.1			4.3			1.9			0.5			1.3			0.4			—			11.5
Net flows	(2.3		)	1.2			(3.7		)	0.3			(2.3		)	(2.1		)	—			(8.9		)
Net market change and other	1.9			—			(0.2		)	0.4			1.6			(1.6		)	(0.2		)	1.9
AUM at December 31, 2015	$	211.7		$	102.0		$	134.4		$	72.4		$	182.0		$	54.8		$	6.6		$	763.9

AUM decreased$13.3 billion or 2% during the three months ended December 31, 2016, primarily due to $14.4 billion of net outflows which occurred in all long-term investment objectives and most significantly in global/international products. Long-term sales decreased26% to $24.5 billion, as compared to the prior-year period, primarily due to lower sales in global/international fixed income products. Long-term redemptions decreased12% to $46.7 billion, primarily due to lower redemptions of global/international fixed income and hybrid products. Net market change and other was $1.1 billion, which primarily consists of $15.2 billion of market appreciation net of $9.4 billion of distributions and a $4.8 billion decrease from foreign exchange revaluation. The market appreciation occurred primarily in global/international and hybrid products and reflected strong performance of our global/international fixed income products despite a 7.1% decrease in the Bloomberg Barclays Global Aggregate Index, and positive returns in global equity markets as evidenced by increases of 3.8% and 2.0% in the S&P 500 Index and MSCI World Index. The foreign exchange revaluation resulted from AUM in products that are not U.S. dollar denominated, which represented approximately 14% of total AUM, and was primarily due to strengthening of the U.S. dollar against the Euro, Japanese yen, Australian dollar and Canadian dollar.

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AUM decreased$7.0 billion or 1% during the three months ended December 31, 2015, primarily due to $8.9 billion of net outflows which primarily occurred in global/international and hybrid products. Net market change and other was $1.9 billion, which consists of $16.6 billion of market appreciation net of $12.9 billion of distributions and a $1.6 billion decrease due to foreign exchange revaluation. The market appreciation occurred in all long-term investment objectives except for taxable U.S. fixed income, and reflected positive returns in global equity markets, with increases in the MSCI World Index of 5.6% and the S&P 500 Index of 7.0%, and mixed results in the global bond markets as the Bloomberg Barclays Global Aggregate Index decreased 0.9%. The foreign exchange revaluation was primarily due to strengthening of the U.S. dollar against the Canadian dollar and Euro.

Average AUM by sales region was as follows:

	Three Months Ended December 31,				Percent Change
(in billions)	2016		2015
United States	$	492.1	$	526.8	(7	%)
International
Europe, the Middle East and Africa	101.1		116.9		(14	%)
Asia-Pacific	82.3		84.1		(2	%)
Canada	30.4		32.2		(6	%)
Latin America1	16.8		21.5		(22	%)
Total international	230.6		254.7		(9	%)
Total	$	722.7	$	781.5	(8	%)

^{__________________} 

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

The mix of average AUM in the United States sales region was 68% and 67% for the three months ended December 31, 2016 and 2015.

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. Our global/international fixed income products generated notable results with at least 85% of AUM exceeding the benchmarks for the one-, five- and ten-year periods ended December 31, 2016, and at least 90% exceeding the peer group median for all periods presented. Strong performance for these products during the three months ended December 31, 2016 resulted in significant improvements from September 30, 2016 to the benchmark and peer group median comparisons for the one-year and three-year periods. Our tax-free fixed income products have performed well with at least 61% of AUM exceeding the peer group medians for all periods presented and the benchmarks for the one-, three- and five-year periods. The performance of our hybrid products has been notable in comparison to the peer group medians for all periods, however the comparisons to the benchmarks for the three-, five- and ten-year periods reflect lower performance by a fund which represents approximately 70% of the category. The performance of our equity and U.S. taxable fixed income products has mostly lagged the benchmarks and peer group medians during the periods presented. 

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

	Benchmark Comparison 1,2								Peer Group Comparison 1,3
	% of AUM Exceeding Benchmark								% of AUM in Top Two Peer Group Quartiles
as of December 31, 2016	1-Year		3-Year		5-Year		10-Year		1-Year		3-Year		5-Year		10-Year
Equity
Global/international	58	%	27	%	28	%	52	%	69	%	39	%	64	%	51	%
United States	45	%	7	%	1	%	32	%	65	%	53	%	28	%	69	%
Total equity	53	%	20	%	18	%	44	%	67	%	44	%	50	%	59	%
Hybrid	91	%	9	%	8	%	8	%	93	%	88	%	91	%	94	%
Fixed Income
Tax-free	90	%	74	%	62	%	27	%	94	%	75	%	61	%	100	%
Taxable
Global/international	85	%	68	%	87	%	88	%	93	%	90	%	91	%	97	%
United States	67	%	27	%	59	%	45	%	60	%	22	%	36	%	60	%
Total fixed income	83	%	62	%	74	%	59	%	87	%	72	%	71	%	91	%

^{__________________} 

¹  AUM measured in the benchmark and peer group rankings represents 90% and 82% of our total AUM as of December 31, 2016.

²  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.

³  The peer group rankings are sourced from either Lipper, a Thomson Reuters Company, Morningstar or eVestment in each fund’s market and were based on an absolute ranking of returns. © 2017 Morningstar, Inc. All rights reserved. The information herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

For products with multiple share classes, rankings for the primary share class are applied to the entire product. Rankings for most institutional separately-managed accounts are as of the prior quarter-end due to timing of availability of information. Private equity funds, certain privately-offered emerging market and real estate funds, cash management funds and certain hedge and other funds are not included. Certain other funds and products were also excluded because of limited benchmark or peer group data. Had this data been available, the results may have been different. These results assume the reinvestment of dividends, are based on data available as of January 19, 2017 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.

(in millions)	Three Months Ended December 31,				Percent Change
	2016		2015
Investment management fees	$	1,063.2	$	1,186.7	(10	%)
Sales and distribution fees	419.3		478.4		(12	%)
Shareholder servicing fees	56.6		61.9		(9	%)
Other	21.7		31.0		(30	%)
Total Operating Revenues	$	1,560.8	$	1,758.0	(11	%)

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 decreased$123.5 million for the three months ended December 31, 2016 primarily due to an 8% decrease in average AUM and the impact of a lower effective fee rate. The decrease in average AUM occurred across all investment objectives except tax-free fixed income, most significantly in the global/international investment objectives, and across all sales regions.

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Our effective investment management fee rate (annualized investment management fees divided by average AUM) decreased to 58.8 basis points for the three months ended December 31, 2016, from 60.7 basis points for the same period in the prior fiscal year. The rate decrease was primarily due to continued higher weightings of AUM in U.S. products and in lower fee products in the global/international investment objectives in the Europe, Middle East and Africa and Asia-Pacific sales regions.

Performance-based investment management fees were $1.6 million and $1.9 million for the three months ended December 31, 2016 and 2015.

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 pay us for marketing, marketing support, advertising, printing and sales promotion services relating to the distribution of their shares, subject to the Rule 12b-1 Plans’ limitations on amounts based on average daily net AUM. Similar arrangements exist for the distribution of our non-U.S. funds.

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

Sales and distribution fees by revenue driver are presented below:

(in millions)	Three Months Ended December 31,				Percent Change
	2016		2015
Asset-based fees	$	338.3	$	377.2	(10	%)
Sales-based fees	78.8		99.1		(20	%)
Contingent sales charges	2.2		2.1		5	%
Sales and Distribution Fees	$	419.3	$	478.4	(12	%)

Asset-based distribution fees decreased$38.9 million for the three months ended December 31, 2016 primarily due to a $35.9 million decrease from an 8% decrease in the related average AUM.

Sales-based fees decreased$20.3 million for the three months ended December 31, 2016 primarily due to a $16.0 million decrease from a 16% decrease in commissionable sales. Commissionable sales represented 10% and 9% of total sales for the three months ended December 31, 2016 and 2015.

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. Accordingly, the level of fees varies with the change in open accounts and the level of closed accounts that remain billable.

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

26

Shareholder servicing fees decreased $5.3 million for the three months ended December 31, 2016 primarily due to decreases of $3.9 million from SIPs in the U.S. resulting from decreases in active accounts and $1.8 million from SIPs in Europe resulting from lower levels of related AUM.

Other

Other revenue decreased$9.3 million for the three months ended December 31, 2016, primarily due to lower interest and dividend income from consolidated SIPs.

OPERATING EXPENSES

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

	Three Months Ended December 31,				Percent Change
(in millions)	2016		2015
Sales, distribution and marketing	$	520.0	$	588.6	(12	%)
Compensation and benefits	311.5		342.5		(9	%)
Information systems and technology	51.7		51.2		1	%
Occupancy	29.1		30.7		(5	%)
General, administrative and other	61.6		91.4		(33	%)
Total Operating Expenses	$	973.9	$	1,104.4	(12	%)

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 AUM, sales 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 December 31,				Percent Change
(in millions)	2016		2015
Asset-based expenses	$	431.8	$	478.6	(10	%)
Sales-based expenses	71.1		87.2		(18	%)
Amortization of deferred sales commissions	17.1		22.8		(25	%)
Sales, Distribution and Marketing	$	520.0	$	588.6	(12	%)

Asset-based expenses decreased$46.8 million for the three months ended December 31, 2016 primarily due to a $47.0 million decrease in distribution expense which mainly resulted from an 8% decrease in the related average AUM. 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$16.1 million for the three months ended December 31, 2016 primarily due to a $13.4 million decrease from a 16% decrease in commissionable sales.

Amortization of deferred sales commissions decreased$5.7 million for the three months ended December 31, 2016 primarily due to lower sales of U.S. shares sold without a front-end sales charge to investors.

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Compensation and Benefits

Compensation and benefit expenses decreased$31.0 million for the three months ended December 31, 2016 due to decreases of $22.5 million in salaries, wages and benefits and $8.5 million in variable compensation. The decrease in salaries, wages and benefits was primarily due to a $12.9 million decrease from lower staffing levels and $9.4 million of special termination benefit expenses incurred in the prior fiscal year period. The variable compensation decrease was primarily due to decreases of $3.8 million in amortization of stock and stock unit awards and $2.3 million in bonus expense based on lower expectations of our annual performance.

Variable compensation as a percentage of compensation and benefits was 34% and 33% for the three months ended December 31, 2016 and 2015. At December 31, 2016, our global workforce had decreased to approximately 9,100 employees from approximately 9,400 at December 31, 2015.

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 $0.5 million for the three months ended December 31, 2016.

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

	Three Months Ended December 31,
(in millions)	2016			2015
Net carrying value at beginning of period	$	88.1		$	89.8
Additions, net of disposals	20.5			11.2
Amortization	(12.5		)	(11.9		)
Net Carrying Value at End of Period	$	96.1		$	89.1

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 decreased$1.6 million for the three months ended December 31, 2016 primarily due to lower rent expense.

General, Administrative and Other

General, administrative and other operating expenses primarily consist of fund-related service fees payable to external parties, corporate travel and entertainment, professional fees, advertising and promotion costs, and other miscellaneous expenses.

General, administrative and other operating expenses decreased$29.8 million for the three months ended December 31, 2016, primarily due to lower contingent consideration and intangible asset amortization expenses, partially offset by higher consolidated SIPs expenses. The change in the fair value of the contingent consideration liability for the K2 Advisors Holdings, LLC (“K2”) acquisition decreased $12.2 million due to revised estimates of K2’s future revenues and profits, as compared to an increase of $16.2 million in the prior-year period. Amortization of definite-lived intangible assets decreased $3.2 million primarily due to prior-year impairment of the assets. These decreases were partially offset by a $3.0 million increase in consolidated SIPs expenses.

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.

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OTHER INCOME (EXPENSES)

Other income (expenses) consisted of the following:

	Three Months Ended December 31,						Percent Change
(in millions)	2016			2015
Investment and other income, net	$	46.1		$	30.5		51	%
Interest expense	(13.3		)	(12.0		)	11	%
Other Income, Net	$	32.8		$	18.5		77	%

Investment and other income, net consists primarily of income (losses) from equity method investees, foreign currency exchange gains (losses), interest and dividend income, and gains (losses) on investments of consolidated SIPs and trading investment securities.

Other income, net increased$14.3 million for the three months ended December 31, 2016 primarily due to favorable impacts from foreign currency exchange, higher market valuations which resulted in net investment income and gains, and higher interest income, partially offset by unfavorable impacts from investments of consolidated SIPs and sales of available-for-sale securities. Net foreign currency exchange gains increased $16.3 million primarily from strengthening of the U.S. dollar against the Euro. Interest income increased $10.0 million primarily due to higher levels of debt securities and interest rates. Income from equity method investees increased by $9.4 million, and trading investment securities generated net gains of $2.0 million as compared to net losses of $7.3 million in the prior year. These increases were partially offset by a $24.2 million increase in net losses of investments held by consolidated SIPs and a $7.1 million decrease in net realized gains on sale of available-for-sale securities.

Significant portions of the net gains (losses) of 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.

The consolidated cash, cash equivalents and investments portfolio by investment objective at December 31, 2016, including assets of consolidated SIPs, was as follows:

(in millions)	Total Portfolio		Percent of Total Portfolio		Trading Securities Included in Portfolio		Percent of Total Trading Securities		Assets of Consolidated SIPs Included in Total Portfolio		Percent of Total
Cash and Cash Equivalents	$	8,454.8	68	%	$	—	0	%	$	231.2	8	%
Investment Securities
Equity
Global/international	364.9		3	%	0.4		0	%	341.7		13	%
United States	4.2		0	%	0.3		0	%	2.6		0	%
Total equity	369.1		3	%	0.7		0	%	344.3		13	%
Hybrid	294.5		2	%	76.4		19	%	205.4		8	%
Fixed Income
Tax-free	1.6		0	%	—		0	%	—		0	%
Taxable
Global/international	1,211.2		10	%	264.3		66	%	903.1		34	%
United States	1,088.0		9	%	61.6		15	%	1,003.3		37	%
Total fixed income	2,300.8		19	%	325.9		81	%	1,906.4		71	%
Total investment securities	2,964.4		24	%	403.0		100	%	2,456.1		92	%
Other Investments	1,004.5		8	%	—		0	%	—		0	%
Total Cash and Cash Equivalents and Investments	$	12,423.7	100	%	$	403.0	100	%	$	2,687.3	100	%

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Investments of consolidated SIPs are generally assigned a classification in the table above based on the investment objective of the consolidated entity holding the securities. Other investments include $727.3 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. Additionally, in certain countries our income is subject to reduced tax rates due to tax rulings. 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 32.4% and 31.2% for the three months ended December 31, 2016 and 2015. The rate increase was primarily due to a net loss attributable to noncontrolling interests, as compared to net income in the prior year, and the prior-year recognition of tax benefits in U.S. and non-U.S. jurisdictions as a result of various adjustments to unrecognized tax benefits including the expiration of statutes of limitations.

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:

	Three Months Ended December 31,
(in millions)	2016			2015
Cash Flow Data
Operating cash flows	$	446.2		$	295.2
Investing cash flows	(58.4		)	89.2
Financing cash flows	(365.9		)	(463.4		)

Net cash provided by operating activities increased during the three months ended December 31, 2016 primarily due to a net decrease in trading securities of consolidated SIPs, as compared to a net increase in the prior year. Net cash used in investing activities, as compared to net cash provided in the prior year, primarily resulted from lower net liquidations of investments and the adoption of new accounting guidance. Net cash used in financing activities decreased primarily due to lower repurchases of common stock, partially offset by net distributions from consolidated SIPs to noncontrolling interests as compared to net subscriptions in the prior year.

The assets and liabilities of our consolidated SIPs attributable to third-party investors do not impact our liquidity and capital resources. We have no right to the consolidated SIPs’ assets, other than our direct equity investment in them and investment management fees earned from them. The debt holders of the consolidated SIPs have no recourse to our assets beyond the level of our direct investment, therefore we bear no other risks associated with the SIPs’ liabilities. Accordingly, the assets and liabilities of our 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)	December 31, 2016		September 30, 2016
Assets
Cash and cash equivalents	$	8,223.6	$	8,247.1
Receivables	755.9		746.4
Investments	1,916.1		1,896.7
Total Liquid Assets	$	10,895.6	$	10,890.2
Liability
Debt	$	1,394.4	$	1,401.2

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Liquidity

Liquid assets consist of cash and cash equivalents, receivables, and certain investments. Cash and cash equivalents primarily consist of debt instruments with original maturities of three months or less at the purchase date, money market funds, time deposits with maturities of three months or less, and deposits with financial institutions. 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 December 31, 2016 was essentially unchanged from September 30, 2016, as net cash used in financing and investing activities and a decrease from the effect of exchange rate changes were offset by net cash provided by operating activities. The percentages of cash and cash equivalents held by our U.S. and non-U.S. operations were 27% and 73% at December 31, 2016, and 28% and 72% at September 30, 2016.

We utilize a significant portion of our liquid assets to satisfy operational and regulatory requirements and fund 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 December 31, 2016, our U.S. and non-U.S. subsidiaries held $885.2 million and $2,301.4 million of liquid assets to satisfy operational and regulatory requirements and capital contributions to our SIPs, as compared to $874.6 million and $2,220.8 million held at September 30, 2016. Included in these amounts were U.S. and non-U.S. liquid assets that were restricted from transfer to Franklin and other subsidiaries of $4.1 million and $315.7 million at December 31, 2016 and $4.7 million and $345.7 million at September 30, 2016.

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 our uncommitted private placement program.

In prior fiscal years, we issued senior unsecured unsubordinated notes for general corporate purposes, to redeem outstanding notes and to finance an acquisition. At December 31, 2016, $1,342.8 million of the notes were outstanding with an aggregate face value of $1,350.0 million. The notes were issued at fixed interest rates and consist of $300.0 million at 1.375% per annum which mature in September 2017, $350.0 million at 4.625% per annum which mature in 2020, $300.0 million at 2.800% per annum which mature in 2022, and $400.0 million at 2.850% per annum which mature in 2025.

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.

In March 2016, we borrowed 6.3 billion Indian Rupees ($93.4 million) at a fixed interest rate of 9.89% to purchase certain securities from SIPs domiciled in India. Interest on the loan is payable monthly, and the loan may be prepaid without penalty. To secure the loan, we concurrently entered into a standby letter of credit for 6.5 billion Indian Rupees ($96.6 million) collateralized by a $116.0 million time deposit. The loan agreement requires that the borrowing entity, a subsidiary located in India, maintain a specified minimum level of capital. The loan had a carrying value of $51.6 million at December 31, 2016.

We were in compliance with all debt covenants at December 31, 2016.

At December 31, 2016, we had $500.0 million of short-term commercial paper available for issuance under an uncommitted private placement program which has been inactive since 2012.

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.

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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 dividends on a quarterly basis. We declared regular cash dividends of $0.20 and $0.18 per share during the three months ended December 31, 2016 and 2015. 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 months ended December 31, 2016 and 2015, we repurchased 7.1 million and 10.5 million shares of our common stock at a cost of $261.7 million and $404.1 million. At December 31, 2016, 43.6 million shares remained available for repurchase under the program, which is not subject to an expiration date.

We invested $36.6 million, net of redemptions, in our SIPs during the three months ended December 31, 2016, and redeemed $49.8 million, net of investments, from our SIPs in the prior-year period.

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. We did not provide financial or other support to our SIPs during the three months ended December 31, 2016. During fiscal year 2016, we purchased $182.7 million of certain debt securities from six SIPs domiciled in India in order to provide additional liquidity to the SIPs. None of these purchases occurred during the three months ended December 31, 2015.

CONTRACTUAL OBLIGATIONS, COMMITMENTS AND CONTINGENT LIABILITIES

At December 31, 2016, there were no material changes in our contractual obligations, commitments and contingent liabilities as reported in our Form 10-K for fiscal year 2016.

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, 2016.

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 a voting interest entity (“VOE”) or are the primary beneficiary of a variable interest entity (“VIE”). A VIE is an entity in which the equity investment holders have not contributed sufficient capital to finance its activities or they do not have defined rights and obligations normally associated with an equity investment. The assessment of whether an entity is a VIE or VOE involves judgment and analysis on a structure-by-structure basis. When performing the assessment we consider factors such as the entity’s legal organization and capital structure, the rights of the equity investment holders and our contractual involvement with and ownership interest in the entity. Our VIEs are all investment entities and our variable interests consist of our equity ownership interest in and certain investment management fees earned from these entities.

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We adopted new accounting guidance on October 1, 2016 that modifies the consolidation framework for certain investment entities and all limited partnerships. As a result of the modifications, certain SIPs changed from VOEs to VIEs and became subject to a lower threshold for consolidation. Additionally, there is now a single model to determine whether we are the primary beneficiary of a VIE. We are the primary beneficiary if we have the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses of or right to receive benefits from the VIE that could potentially be significant to the VIE. Investment management fees earned from VIEs are excluded from the primary beneficiary determination if they are deemed to be at market and commensurate with service. The key estimates and assumptions used in the analyses include the amount of AUM, investment management fee rates, the life of the investment product, prepayment rates and the discount rate.

As of December 31, 2016, we were the primary beneficiary of 39 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 December 31, 2016, Level 3 assets represented 15% of total assets measured at fair value, substantially all of which related to consolidated SIPs’ investments in equity and debt securities and our direct investments in debt securities that are not traded in active markets. There was one Level 3 liability, a contingent consideration liability which represented 92% of total liabilities measured at fair value. There were no transfers into or out of Level 3 during the three months ended December 31, 2016.

Goodwill and Other Intangible Assets

Subsequent to our annual impairment tests as of August 1, 2016, there were no impairments to goodwill or indefinite-lived intangible assets. We monitored market conditions and their potential impact on the assumptions used in the annual calculations of fair value to determine whether circumstances have changed that would more likely than not reduce the fair value of our reporting unit below its carrying value, or indicate that our indefinite-lived intangible assets might be impaired. We considered, among other things, changes in our AUM and weighted-average cost of capital by assessing whether these changes would impact the reasonableness of the assumptions used as of August 1, 2016. Net outflows from our SIPs resulted in a decrease in our AUM as of December 31, 2016. However, this change did not more likely than not reduce the fair value of the reporting unit or the indefinite-lived assets below their carrying values.

We test definite-lived intangible assets for impairment quarterly. As of December 31, 2016, the undiscounted future cash flow projections for $12.3 million, or 68%, of our definite-lived intangible assets exceeded their carrying values by at least 30%. We estimated the future undiscounted cash flows for these assets using AUM growth rates ranging from (7.0%) to 2.0%. As of December 31, 2016, a decline in these assets’ related AUM of 26% could cause us to evaluate whether their fair value is below their carrying value. The undiscounted cash flow projections for substantially all of the remaining assets exceeded their carrying values by at least 8%. There was no impairment of definite-lived intangible assets during the three months ended December 31, 2016.

While we believe that the assumptions used to estimate fair value in our impairment tests are reasonable and appropriate, future changes in the assumptions could result in recognition of impairment.

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 prices are not readily available are internally valued using various methodologies which incorporate unobservable inputs as appropriate for each security type. As of December 31, 2016, our total AUM by fair value hierarchy level was 53% Level 1, 46% Level 2 and 1% Level 3.

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Income Taxes

As a multinational corporation, we operate in various locations outside the U.S. and generate earnings from our non-U.S. subsidiaries. Effective October 1, 2016, we indefinitely reinvest the undistributed earnings of all our non-U.S. subsidiaries, except for income previously taxed in the U.S. or subject to regulatory or legal repatriation restrictions or requirements. Prior to October 1, 2016 we did not indefinitely reinvest the undistributed earnings of our Canadian and U.K. subsidiaries. Further changes to our policy of reinvestment or repatriation of non-U.S. earnings may have a significant effect on our financial condition and results of operations.

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 further 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 substantially all of our operating revenues and net income from providing investment management and related services to investors globally through products that include investment funds and institutional, high net-worth and separately-managed accounts (collectively, our “sponsored investment products” or “SIPs”). 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 SIPs 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, debt and commodity markets. Individual financial, equity, debt and commodity markets may be adversely affected by financial, economic, political, diplomatic 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, debt or commodity marketplaces, changes in currency exchange rates, interest rates, inflation rates, the yield curve, defaults by trading counterparties, bond defaults, revaluation and bond market liquidity risks, geopolitical risks, the imposition of economic sanctions and other factors that are difficult to predict, affect the mix, market values and levels of our AUM. For example, changes in financial market prices, currency exchange rates and/or interest rates have in the past and could in the future cause the value of our AUM to decline, which would result in lower investment management fee revenues. Changing market conditions could also cause an impairment to the value of our goodwill and other intangible assets. The funds we manage may be subject to liquidity risks or an unanticipated large number of redemptions as a result of the events or conditions described above, causing the funds to sell securities they hold, possibly at a loss, or draw on any available lines of credit, to obtain cash to maintain sufficient liquidity or settle these redemptions, or settle in-kind with securities held in the applicable fund. We have in the past, and may in the future, at our discretion, provide financial support to funds we manage to enable them to maintain sufficient liquidity in any such event. Changes in investor preferences regarding our more popular investment products have in the past and could in the future 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 away from equity and hybrid products, and a related decline in our revenues and income, as we generally derive higher fee revenues and income from equity and certain hybrid products than from fixed income products we manage. Further, increases in interest rates, in particular if rapid, as well as any uncertainty in the future direction of interest rates, may have a negative impact on our fixed income products. Although the shorter duration of the bond investments in many of these products may help mitigate the interest rate risk, rising interest rates or interest rate uncertainty typically decrease the total return on many bond investments due to lower market valuations

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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 environments in which we operate. As described below, our business is subject to extensive and complex, overlapping and/or conflicting, and frequently changing and increasing number of rules, regulations, policies and legal interpretations in the countries in which we operate, including those with respect to securities and other financial instruments, investment and advisory matters, accounting, tax, compensation, ethics, data protection, privacy, sanctions programs, and escheatment laws and regulations.

As a U.S. reporting company, 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 U.S. Securities and Exchange Commission (“SEC”) and the New York Stock Exchange. As a global investment management organization, certain of our subsidiaries are also subject to the rules and regulations promulgated by the SEC, the Financial Industry Regulatory Authority, the U.S. Commodity Futures Trading Commission (“CFTC”), the National Futures Association, the U.S. Department of Treasury and the U.S. Department of Labor (“DOL”). Given our global operations, we are also subject to securities laws and other laws of various non-U.S. jurisdictions and to regulation by non-U.S. regulators including, among others, the United Kingdom (“U.K.”) Financial Conduct Authority, the Luxembourg Commission de Surveillance du Secteur Financier, Canadian provincial and territorial securities regulatory authorities, the Monetary Authority of Singapore, the Australian Securities and Investments Commission, the Hong Kong Securities and Futures Commission, the Securities and Exchange Board of India, the Japanese Financial Services Agency and various international stock exchanges. In some cases, our non-U.S. operations may also be subject to regulation by U.S. regulators, such as the Department of Justice, the CFTC and the SEC (for example, with respect to the Foreign Corrupt Practices Act of 1977). We are also subject not only to the sanctions programs administered by the U.S. Department of Treasury's Office of Foreign Assets Control, but also to sanctions programs adopted and administered by non-U.S. jurisdictions where our investment management services and products are offered. Further, 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, the CFTC and/or licensed by various non-U.S. regulators. In addition, many of our funds are registered with the SEC under the Investment Company Act of 1940 (the “Investment Company Act”) or authorized by various European and other non-U.S. regulators pursuant to the European Union’s (“EU”) Undertakings for Collective Investment in Transferable Securities (“UCITS”) Directive, or authorized under other non-U.S. laws in Europe, the Middle East and Africa, Asia-Pacific, Canada and Latin America. These registrations, licenses and authorizations impose numerous obligations, as well as detailed operational requirements, on such subsidiaries and such funds. Our subsidiaries must also comply with complex tax regimes.

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. Political and electoral changes and developments may also introduce additional uncertainty. 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. Moreover, any potential accounting or reporting error, whether financial or otherwise, if material, could damage our reputation and adversely affect our business.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) 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. Similarly, the U.S. and other members of the G-20 group of nations have empowered the Financial Stability Board (“FSB”) to identify and respond, in a coordinated manner, to threats to global financial stability. The FSOC may designate certain non-bank financial companies as systemically important financial institutions (“SIFIs”), which are subject to supervision and regulation by the Board of Governors of the Federal Reserve System. The FSB may designate certain non-bank financial companies as global systemically important financial institutions (“G-SIFIs”); the additional regulatory requirements triggered by any such designation are not yet established. The FSOC and the FSB, as well as other global regulators, are considering what threats to U.S. and 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 or G-SIFIs and/or subjecting them to additional regulation. To the extent that we or any of our funds are designated as a SIFI or G-SIFI, 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. The Dodd-Frank Act, as well as other legislative and

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regulatory changes, impose other 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, 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. The EU and other countries are in the process of implementing similar requirements, and there is some risk that full mutual recognition may not be achieved between the various regimes, and duplication of regulation and transaction costs may result. 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. In addition, the SEC has adopted rules that have changed the structure and operation for certain types of money market funds, and that will require certain registered funds to adopt liquidity management programs. (Full compliance with the latter is required by December 1, 2018.) The SEC has also proposed a rule that would impose restrictions on the use of derivatives by registered funds. We expect that the complex regulatory requirements and developments applicable to us will cause us to incur additional administrative and compliance costs.

Our subsidiary Fiduciary Trust Company International (“Fiduciary Trust”) and its subsidiaries remain subject to additional regulation, supervision and examination by their respective regulators. Certain federal and state anti-takeover laws generally provide that no person may acquire control of Franklin Resources, Inc. (“Franklin”), and gain indirect control of Fiduciary Trust or its subsidiaries, without prior regulatory approval. Such federal and state laws may discourage potential acquisition proposals and may delay, deter or prevent a change of control of Franklin, including through transactions that some shareholders might consider desirable.

The laws and regulations applicable to our business generally involve restrictions and requirements in connection with a variety of technical, specialized, and expanding matters and concerns. For example, compliance with the Bank Secrecy Act of 1970, anti-money laundering and Know Your Customer requirements, and economic, trade and other sanctions, both domestically and internationally, has taken on heightened importance as a result of efforts to, among other things, limit terrorism and actions that undermine the stability, sovereignty and territorial integrity of countries. 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 required timeframes may subject us to sanctions or other restrictions by governments and/or regulators that could adversely impact our broader business objectives.

Global 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. The U.S. federal securities laws have been augmented substantially and made significantly more complex by, among other measures, the Dodd-Frank Act, the Sarbanes-Oxley Act of 2002 and the USA Patriot Act of 2001. Similarly, the securities and related laws outside the U.S. have been augmented substantially and made more complex by measures such as the EU’s Alternative Investment Fund Managers Directive (“AIFMD”) and Markets in Financial Instruments Directive II (“MiFID II”). Further, in June 2016, a narrow majority of voters in a U.K. referendum voted to exit the EU ("Brexit"), but it is still unclear exactly what will be the U.K.'s status in relation to the EU when it ultimately leaves. Ongoing changes in the EU’s regulatory framework applicable to our business, including Brexit and any other changes in the composition of the EU’s member states, may add further complexity to our global risks and operations. Moreover, the adoption of new laws, regulations or standards and changes in the interpretation or enforcement of existing laws, regulations or standards have directly affected, and will 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 and MiFID II 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, MiFID II and other laws. Outlays associated with meeting regulatory complexities have also increased as we expand our business into new jurisdictions.

Further, pursuant to ongoing efforts to encourage global tax compliance, the Organization for Economic Co-operation and Development has adopted a global common reporting standard for the automatic exchange of financial information among participating countries (“CRS”), aimed at ensuring that persons with financial assets located outside of their tax residence country pay required taxes. In many cases, intergovernmental agreements between the participating countries will govern implementation of the new rules. CRS will be implemented over a multi-year period and we will continue to monitor the implementing regulations and corresponding intergovernmental agreements to determine our requirements. CRS may subject us to additional reporting, compliance and administrative costs and burdens in jurisdictions where we operate as a qualifying financial institution.

Compliance activities to address these and other new legal requirements have required, and will continue to require, 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. Finally, any further regulatory and legislative actions and reforms

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affecting the investment management 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 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 jurisdictions where we conduct our business or where our SIPs 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 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 regulatory environments in which we operate have seen significant increased and evolving regulations, which have imposed and may continue to impose additional compliance and operational requirements and costs on us in the applicable jurisdictions. Regulators could also change their policies or laws in a manner that might restrict or otherwise impede our ability to offer our investment products and services in their respective markets, or we may be unable to keep up with, or adapt to, the ever changing, complex regulatory requirements in such jurisdictions or markets, which could further negatively impact our business.

Changes in tax laws or exposure to additional income tax liabilities could have a material impact on our financial condition, results of operations and liquidity. We are subject to income taxes as well as non-income based taxes, and are subject to ongoing tax audits, in various jurisdictions in which we operate. 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 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 could 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 disrupt our business and 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 continuity and 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 and contracted third-party systems. We use technology to, among other things, support our business continuity and operations, store and maintain data, obtain securities pricing information, process client transactions, and provide reports and other customer services to the clients of the products we manage. Any disruptions, inaccuracies, delays, systems failures, data or privacy breaches, or other security breaches (including any cyber security breaches) in these and other processes could subject us to client dissatisfaction and losses and damage our reputation. Although we take protective measures, including measures to effectively secure information through system security technology, the technology systems we use 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 obtain confidential information) or an authorized employee or vendor inadvertently causing us to release confidential information, which could materially harm our operations and reputation. Potential system disruptions, failures or breaches of the technology systems we use, and the costs necessary to address them, could result in: material financial loss or costs; 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 failure or breach; additional security costs to mitigate against future incidents; reputational harm; regulatory actions; and/or legal claims, liability and litigation costs resulting from the incident. Moreover, loss or unauthorized disclosure or transfer 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. Our third-party applications include enterprise cloud storage and cloud computing application services provided 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 that could adversely impact our business. In addition, the failure to properly manage and operate the data centers we use 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 advancements and changes and our competitors

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may from time to time implement more advanced technology platforms for their products, which could adversely affect our business.

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, marketing, shareholder servicing, and other fiduciary 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 the majority of our revenues, are dependent on fees earned under investment management agreements that we have with our SIPs. Our revenues could be adversely affected if such agreements representing a significant portion of our AUM are terminated or significantly altered. Further, certain of our subsidiaries may act as general partner for various investment partnerships, which may subject them to liability for the partnerships’ liabilities. If we fail to properly perform and monitor our operations, our business could suffer and our revenues and income could be adversely affected.

We face risks, and corresponding potential costs and expenses, associated with conducting operations and growing our business in numerous countries. We sell our SIPs 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 in terms of scope, adequacy and sophistication. 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 more internationally focused 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 authorize investment products or maintain their authorizations 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. Certain laws and regulations both inside and 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 typically do not have control. These investments may involve risks, including the risk that the controlling stakeholder or our 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, our 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 EU’s Capital Requirements Directive, those adopted under the AIFMD, those required to be adopted under the Dodd-Frank Act and certain provisions of the EU’s UCITS V Directive, 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. There is no assurance that we will be successful in finding, attracting and retaining qualified individuals, and the departure of key

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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 with real estate investment trusts, hedge funds and other products. 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. Further, although we may offer certain types of strategic beta and actively managed exchange-traded funds, to the extent that there is a trend among existing or potential clients in favor of lower fee passive products such as index and other types of exchange-traded funds, it may favor our competitors who provide those products over active managers like us. Additionally, competing securities broker-dealers, whom we rely upon to distribute and sell certain of our funds and other investment products, may also sell their own proprietary funds and investment products, which could limit the distribution of our 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 could decline. Our ability to attract and retain AUM is also dependent on the relative investment performance of our SIPs, 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, banks, investment advisers and other 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. 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 U.S.-registered funds. 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 April 2016, the DOL issued anew fiduciary rule that will subject financial professionals who provide investment advice to certain U.S. retirement clients to a new fiduciary duty intended to address conflicts of interests. We believe that the rule could significantly impact the ability of financial professionals to provide investment advice and recommendations for retirement accounts about funds for which they receive a fee from the fund or its affiliates. This rule may impact the compensation paid to the financial intermediaries who sell our funds to their retirement clients and may negatively impact our business. Implementation of the rule is scheduled to be phased in beginning in April 2017, and to generally become fully effective in January 2018. In addition, the U.K., the Netherlands, Sweden and the EU in MiFID II have adopted regimes which ban, or may limit, the payment of commissions and other inducements to intermediaries in relation to certain sales to retail customers in those jurisdictions, and similar regimes are under consideration in several other jurisdictions. 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, banks, investment advisers and other financial intermediaries 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 such distributors may also impair our distribution and sales operations. Because we use broker-dealers, banks, investment advisers and other financial intermediaries 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 market-specific political, economic or other risks that may adversely impact 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 Europe, the Middle East and Africa, Asia-Pacific, Canada, The Bahamas and Latin America. As a result, we are subject to foreign currency exchange risk through our non-U.S. operations. Fluctuations in the exchange rates to the U.S. dollar have affected and may in the future 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 has and could continue to moderate revenues from managing investment products internationally, or could affect relative investment performance

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of certain of our SIPs 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 non-U.S. AUM than with U.S. AUM. Consequently, downturns in international markets have in the past and could in the future have a significant effect on our revenues and income. Moreover, our emerging market portfolios and revenues derived from managing these portfolios are subject to significant risks of loss from financial, economic, political 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. As our business continues to grow in non-U.S. markets, any ongoing and future business, economic, political or social 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, and negatively impact 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, our SIPs or our SIPs may terminate their management agreements with us, which could reduce the amount of our 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 service, 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 has in the past and could in the future 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. There is no assurance 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 other things, bonuses, merit increases and severance costs, changes in our employee count and mix, and competitive factors; and/or 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 the existing technology systems we use to meet our internal needs, as well as client needs, industry demands and new regulatory requirements, is also critical for our business. The 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 the technology systems we use, 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 infrastructure, and the proper functioning of our technology, computer, telecommunication and other systems and operations that are critical to our business. While our operational size, the diversity of locations from which we operate, and our redundant back-up systems provide us with an advantage should we experience a local or regional disaster or other business continuity event, we could still experience 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

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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; information, technology or security limitations or breaches; 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.

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. We may also 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 as a party 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/or negatively impact our profitability and 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 cash, financing or access to 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. 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 may have an adverse effect on investors’ willingness to purchase our securities, interest rates, credit spreads and/or the valuation levels of equity markets.

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 fund 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 assets to their parent companies and/or our ability to repatriate assets to the U.S. Our financial condition could be adversely affected if certain of our subsidiaries are unable to distribute assets to us.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

During the three months ended December 31, 2016, there were no material changes from the market risk disclosures in our Form 10-K for the fiscal year ended September 30, 2016.

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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 December 31, 2016. Based on their evaluation, the Company’s principal executive and principal financial officers concluded that the Company’s disclosure controls and procedures as of December 31, 2016 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 December 31, 2016, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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, 2016 filed with the SEC includes a discussion of the risk factors identified by 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, 2016.

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 December 31, 2016.

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
October 2016	2,001,691	$	34.78	2,001,691	48,683,238
November 2016	2,915,300	36.59		2,915,300	45,767,938
December 2016	2,134,718	40.01		2,134,718	43,633,220
Total	7,051,709			7,051,709

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 June 2016, we announced that our Board of Directors authorized the repurchase of up to 50.0 million additional shares of our common stock under the stock repurchase program. At December 31, 2016, 43.6 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.

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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 September 16, 2015) (filed herewith)
10.1	Non-Employee Director Compensation as of October 17, 2016 (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 December 31, 2016, 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

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SIGNATURE

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:	January 27, 2017	By:	/S/ KENNETH A. LEWIS
			Kenneth A. Lewis
			Chief Financial Officer and Executive Vice President
			(Duly Authorized Officer and Principal Financial Officer)

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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 September 16, 2015) (filed herewith)
10.1	Non-Employee Director Compensation as of October 17, 2016 (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 December 31, 2016, 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

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EX-3.(II)

EXHIBIT 3(ii)

AMENDED AND RESTATED

BYLAWS

OF

FRANKLIN RESOURCES, INC.

(As Adopted and Effective September 16, 2015)

ARTICLE I

OFFICES

Section 1.1    Franklin Resources, Inc. (the “Corporation”) may have offices at such places both within and without the State of Delaware as the Board of Directors or the Chairman of the Board may from time to time determine or the business of the Corporation may require.

ARTICLE II

STOCKHOLDERS

Section 2.1    Annual Meeting and Election of Directors; The Annual Meeting of Stockholders. The annual meeting of stockholders shall be held at such place either within or without the State of Delaware and at such time and on such date as may be designated by resolution of the Board of Directors from time to time. The directors shall be elected and any other proper business may be transacted at each annual meeting of stockholders.

Section 2.2    Special Meetings. Special meetings of stockholders for any purpose or purposes may be called at any time by the Board of Directors or the Chairman of the Board of Directors. Each special meeting shall be held at such date and time as is requested by the person or persons calling the meeting within the limits fixed by law.

Section 2.3    Notice of Stockholder Business and Nominations.

(a)    Annual Meetings of Stockholders.

(1)    Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders only (i) pursuant to the Corporation’s notice of meeting (or any supplement thereto), (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record of the Corporation at the time the notice provided for in this Section 2.3 is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.3.

(2)    For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 2.3, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and any such proposed business other than the nomination of persons for election to the Board of Directors must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 120th day nor earlier than the close of business on the 150th day prior to the first anniversary of the date on which the Corporation first (i) mailed its notice of annual meeting, proxy statement and proxy or (ii) sent its notice of annual meeting and notice of internet availability of its proxy materials, whichever is earlier, for the immediately preceding year’s annual meeting (provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 30 days after (other than as a result of adjournment) the first anniversary of the preceding year’s annual meeting, notice by the stockholder must be so delivered not earlier than the close of business on the 150th day prior to such annual meeting and not later than the close of business on the later of the 120th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation). In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. Such stockholder’s notice shall set forth: (i) as to each person whom the stockholder proposes to nominate for election as a director (A) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (B) such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (ii) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for

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consideration and in the event that such business includes a proposal to amend the Bylaws of the Corporation, the language of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (A) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (B) the class and number of shares of capital stock of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner, (C) a description of any agreement, arrangement or understanding with respect to the nomination or proposal between or among such stockholder and/or such beneficial owner, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing, including, in the case of a nomination, the nominee, (D) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the stockholder’s notice by, or on behalf of, such stockholder and such beneficial owners, whether or not such instrument or right shall be subject to settlement in underlying shares of capital stock of the Corporation, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or such beneficial owner, with respect to securities of the Corporation, (E) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, (F) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (I) to deliver a proxy statement and proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (II) otherwise to solicit proxies from stockholders in support of such proposal or nomination, and (G) any other information relating to such stockholder and beneficial owner, if any, required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in an election contest pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder. The foregoing notice requirements of this paragraph (a) of this Section 2.3 shall be deemed satisfied by a stockholder with respect to business other than a nomination if the stockholder has notified the Corporation of his or her intention to present a proposal at an annual meeting in compliance with applicable rules and regulations promulgated under the Exchange Act and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation.

(3)    Notwithstanding anything in the second sentence of paragraph (a)(2) of this Section 2.3 to the contrary, in the event that the number of directors to be elected to the Board of Directors at an annual meeting is increased effective after the time period for which nominations would otherwise be due under paragraph (a)(2) of this Section 2.3 and there is no public announcement by the Corporation specifying the number of directors to be elected or naming the nominees for the additional directorships at least 120 days day prior to the first anniversary of the date on which the Corporation first (i) mailed its notice of annual meeting, proxy statement and proxy or (ii) or sent its notice of annual meeting and notice of internet availability of its proxy materials, whichever is earlier, for the immediately preceding year’s annual meeting, a stockholder’s notice required by this Section 2.3 shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.

(b)    Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board of Directors or (2) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time the notice provided for in this Section 2.3 is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and upon such election and who complies with the notice procedures set forth in this Section 2.3. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by paragraph (a)(2) of this Section 2.3 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 150th day prior to such special meeting and not later than the close of business on the later of the 120th day prior to such special meeting or the 10th day following the day on which public announcement is first made by the Corporation of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

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(c)    General.

(1)    Except as otherwise expressly provided in any applicable rule or regulation promulgated under the Exchange Act, with respect to stockholder nominations and proposals, only such persons who are nominated in accordance with the procedures set forth in this Section 2.3 shall be eligible to be elected at an annual or special meeting of stockholders of the Corporation to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.3. Except as otherwise provided by law, the chairman of the meeting shall have the power and duty (i) to determine whether a stockholder nomination or any business proposed by a stockholder to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 2.3 (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination or proposal is made solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by clause (a)(2)(iii)(F) of this Section 2.3) and (ii) if any such proposed nomination or business was not made or proposed in compliance with this Section 2.3, to declare that such nomination shall be disregarded or that such proposed business shall not be transacted. Notwithstanding the foregoing provisions of this Section 2.3, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 2.3, to be considered a qualified representative of the stockholder, a person must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

(2)    For purposes of this Section 2.3, “public announcement” shall include disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.

(3)    Notwithstanding the foregoing provisions of this Section 2.3, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.3; provided however, that any references in these Bylaws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to nominations or proposals as to any other business to be considered pursuant to this Section 2.3 (including paragraphs (a)(1)(iii) and (b) hereof), and compliance with paragraphs (a)(1)(iii) and (b) of this Section 2.3 shall be the exclusive means for a stockholder to make nominations or submit other business (other than, as provided in the penultimate sentence of (a)(2), business other than nominations brought properly under and in compliance with Rule 14a-8 of the Exchange Act, as may be amended from time to time). Nothing in this Section 2.3 shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals or nominations in the Corporation’s proxy statement pursuant to the rules and regulations promulgated under the Exchange Act or (ii) of the holders of any series of preferred stock to elect directors pursuant to any applicable provisions of the Corporation’s Certificate of Incorporation (the “Certificate”).

Section 2.4    Place of Meetings. Each annual or special meeting of stockholders shall be held at such location, if any, either within or without the State of Delaware as may be determined by the Board of Directors, or if no such determination is made, at such place as may be determined by the Chairman of the Board of Directors. If no location is so determined, any annual or special meeting shall be held at the principal executive office of the Corporation.

Section 2.5    Notice of Meetings. Notice of each annual or special meeting of stockholders shall contain such information, and shall be given to such persons at such time, and in such manner, including without limitation whether by electronic transmission or otherwise, as the Board of Directors shall determine, or if no such determination is made, as the Chairman of the Board shall determine, subject to the requirements of applicable law.

Section 2.6    Adjournments. Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board of Directors shall fix as the record date for determining stockholders entitled to notice of such adjourned meeting the same or

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an earlier date as that fixed for determination of stockholders entitled to vote at the adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record as of the record date so fixed for notice of such adjourned meeting.

Section 2.7    Conduct of Meetings.

(a)    Subject to the requirements of applicable law, all annual and special meetings of stockholders shall be conducted in accordance with such rules and procedures as the Board of Directors may determine and, as to matters not governed by such rules and procedures, as the chairman of such meeting or such other person presiding over such meeting shall determine.

(b)    Except to the extent inconsistent with any rules and regulations as may be adopted by the Board of Directors, the presiding person at any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the presiding person of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board of Directors or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

Section 2.8    Quorum. The holders of a majority in voting power of the shares issued and outstanding and entitled to vote at a meeting of the stockholders shall constitute a quorum thereat for the transaction of business, except as otherwise provided by statute, by the Certificate or by these Bylaws. If a quorum is not present or represented at a meeting of the stockholders, the stockholders so present and entitled to vote may, by a majority in voting power, adjourn the meeting from time to time in the manner provided in Section 2.6 of these Bylaws until a quorum is present or represented. At any rescheduled meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally notified.

Section 2.9    Action Without Meeting. Any action required by statute to be taken at a meeting of the stockholders, or any action that may be taken at a meeting of the stockholders, may be taken without a meeting, without prior written notice and without a vote if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of the outstanding stock having not less than the minimum number of votes that would be necessary to authorize to take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered (by hand or by certified or registered mail, return receipt requested) to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. The signed consent or a signed copy shall be placed in the minute book of the Corporation and prompt notice of the taking of the corporate action shall be given to those stockholders who have not consented in writing.

Section 2.10    Meetings by Remote Communication. If authorized by the Board in its sole discretion, and in accordance with applicable law and subject to such guidelines and procedures as the Board may adopt, stockholders not physically present at a meeting of stockholders may participate in a meeting of stockholders by means of remote communication and be deemed present in person and vote at a meeting of stockholders, whether such meeting is to be held at a designated place or solely by means of remote communication.

Section 2.11    Voting; Proxies.

(a)    One Vote.

Except as otherwise provided by the Certificate, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by him which has voting power upon the matter in question.

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(b)    Proxies.

Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy pursuant to the previous sentence, a writing signed by the stockholder, a facsimile signed by the stockholder or other electronic transmission from which it can be determined that the electronic transmission was authorized by the stockholder shall constitute a valid means by which a stockholder may grant such authority. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by delivering a proxy in accordance with applicable law bearing a later date to the Secretary of the Corporation.

(c)    Voting.

Voting at meetings of stockholders need not be by written ballot and, unless otherwise required by law, need not be conducted by inspectors of election unless so determined by the holders of shares of stock having a majority of the voting power which could be cast by the holders of all outstanding shares of stock entitled to vote thereon which are present in person or by proxy at such meeting. At all meetings of stockholders for the election of directors, each director shall be elected by the vote of the majority of the votes cast; provided, that if as of the record date for such meeting the number of nominees exceeds the number of directors to be elected, the directors shall be elected by a plurality of the votes cast. For purposes of this Section 2.11(c), a majority of the votes cast means that the number of shares voted 'for' a director must exceed the number of shares voted 'against' that director. All other elections and questions shall, unless otherwise provided by law, the Certificate or these Bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities, be decided by the vote of the holders of shares of stock having a majority of the voting power present in person or represented by proxy and entitled to vote on the matter.

Notwithstanding anything to the contrary set forth in these Bylaws, (x) the non-binding advisory vote with respect to executive compensation pursuant to Section 14A(a)(1) of the Exchange Act, and the rules and regulations promulgated thereunder, shall require the affirmative vote of a majority of the votes cast thereon, and (y) the non-binding advisory vote, pursuant to Section 14A(a)(2) of the Exchange Act, and the rules and regulations promulgated thereunder, with respect to the determination as to whether the vote described in the preceding clause (x) shall occur every one (1), two (2) or three (3) years shall be decided by a plurality of the votes cast; provided that for purposes of any vote required pursuant to this sentence, neither abstentions nor broker non-votes shall count as votes cast.

Section 2.12    Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date: (1) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than 60 nor less than ten days before the date of such meeting; (2) in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting, shall not be more than ten days from the date upon which the resolution fixing the record date is adopted by the Board of Directors; and (3) in the case of any other action, shall not be more than 60 days prior to such other action. If no record date is fixed: (1) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (2) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting when no prior action of the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with applicable law, or, if prior action by the Board of Directors is required by law, shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action; and (3) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.

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Section 2.13    Certificates; Direct Registration System. Shares of the Corporation’s stock may be evidenced by certificates for shares of stock or may be issued in uncertificated form in accordance with the General Corporation Law of the State of Delaware. The issuance of shares in uncertificated form shall not affect shares already represented by a certificate until the certificate is surrendered to the Corporation.

Section 2.14    Transfers of Stock; Lost, Stolen or Destroyed Certificates. Transfers of shares of stock of the Corporation shall be made on the books of the Corporation after receipt of a request with proper evidence of succession, assignment, or authority to transfer by the record holder of such stock, or by an attorney lawfully constituted in writing, and in the case of stock represented by a certificate, upon surrender of the certificate. The Board of Directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to indemnify the Corporation in such manner as it shall require and/or to give the Corporation a surety bond in such form and amount as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed. Subject to the foregoing, the Board of Directors shall have power and authority to make such rules and regulations as it shall deem necessary or appropriate concerning the issue, transfer, and registration of shares of stock of the Corporation, and to appoint and remove transfer agents and registrars of transfers.

ARTICLE III

DIRECTORS

Section 3.1    Number. The authorized number of directors on the Board of Directors shall be ten (10) unless changed by a bylaw duly adopted either by the Board of Directors or the stockholders amending this Section 3.1.

Section 3.2    Qualification; Election; Term.

(a)    Except as otherwise provided by Section 3.9 of these Bylaws, the directors shall be elected at the annual meeting of stockholders.

(b)    Each director elected shall hold office until the next annual meeting of stockholders and until his or her successor has been elected and qualified or until his or her death, resignation, retirement, disqualification or removal.

Section 3.3    Powers. Subject to limitations of the Certificate, these Bylaws, and the General Corporation Law of the State of Delaware relating to actions required to be approved by the stockholders or by the outstanding shares, the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised by or under direction of the Board of Directors. The Board of Directors may delegate the management of the day-to-day operation of the business of the Corporation to the officers of the Corporation or other persons provided that the business and affairs of the Corporation shall be managed by and all corporate powers shall be exercised under the ultimate direction of the Board of Directors.

Section 3.4    Meetings of the Board.

(a)    Each meeting of the Board of Directors shall be held at a location determined as follows. The Board of Directors may designate any place, within or without the State of Delaware, for the holding of any meeting. If no such designation is made, the meeting shall be held at the Corporation’s principal executive office. Subject to the requirements of applicable law, all meetings of the Board of Directors shall be conducted in accordance with such rules and procedures as the Board of Directors may approve and, as to matters not governed by such rules and procedures, as the chairman of such meeting shall determine.

(b)    Special meetings of the Board of Directors may be held at any time or place within or without the State of Delaware whenever called by the Chairman of the Board, the Chief Executive Officer, any President or Co-President, any Vice President, the Secretary, or by any member of the Board of Directors. Notice of a special meeting of the Board of Directors shall be given by the person or persons calling the meeting at least 24 hours before the special meeting.

Section 3.5    Quorum: Vote Required for Action. At all meetings of the Board of Directors a majority of the whole Board of Directors shall constitute a quorum for the transaction of business. Except in cases in which the Certificate or these Bylaws otherwise provide, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.

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Section 3.6    Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or of such committee, as the case may be, consent thereto in writing or by electronic transmission, and such writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee. Such consent shall have the same force and effect as a unanimous vote at a meeting of such Board of Directors or committee.

Section 3.7    Committees. The Board of Directors may, by resolution adopted by a majority of the whole Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all of the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have any powers or authority in reference to: (a) amending the Certificate; (b) approving an agreement of merger or consolidation; (c) recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets otherwise than in the usual and regular course of its business; (d) recommending to the stockholders a dissolution of the Corporation or a revocation thereof; (e) amending or repealing the Bylaws of the Corporation or adopting new Bylaws of the Corporation; (f) amending or repealing any resolution of the Board of Directors which by its express terms is not so amendable or repealable; (g) appointing other committees of the Board of Directors or the members thereof; (h) filling new vacancies in or removing members of the Board of Directors or of any committee appointed by the Board of Directors; (i) fixing the compensation of the directors for serving on the Board of Directors or for serving as any member of a committee thereof; or (j) unless the resolution of the Board of Directors expressly so provides, declaring a dividend or authorizing the issuance of stock. Any such committee shall report on its meetings to: (1) the Board of Directors at the next meeting of the Board of Directors, or (2) a committee of the Board of Directors which shall in turn report to the Board of Directors at the next meeting of the Board of Directors.

Section 3.8    Removal. Any or all directors may be removed at any time, with or without cause, by the holders of a majority in voting power of the shares of stock outstanding and entitled to vote for the election of directors.

Section 3.9    Vacancies and Newly-Created Directorships. A vacancy occurring in the Board of Directors (by death, resignation, retirement, disqualification, removal or otherwise) or newly-created directorship may be filled by the affirmative vote of a majority of the remaining directors, although less than a quorum, or by a sole remaining director, or by vote of the stockholders required for the election of directors generally.

Section 3.10    Compensation. Members of the Board of Directors and any committee thereof may, by resolution of the Board of Directors, be allowed compensation for attending meetings of the Board of Directors and committees thereof.

Section 3.11    Telephone and Similar Meetings. Board members or any members of a committee of the Board may participate in and hold a meeting at which all persons participating in the meeting can hear each other. Participation in such a meeting shall constitute presence in person at the meeting, unless a person authorized to participate in such a meeting participates in the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting was not lawfully called or convened.

Section 3.12    Minutes. The Board of Directors shall keep either a record of action taken or minutes of their proceedings. The minutes of the proceedings of any committee of the Board of Directors shall be placed in the minute book of the Corporation.

ARTICLE IV

INDEMNIFICATION OF DIRECTORS,

OFFICERS AND EMPLOYEES

Section 4.1    Indemnification Respecting Third Party Claims. The Corporation, to the fullest extent permitted, and in the manner required, by the laws of the State of Delaware as in effect at the time of the adoption of this Article or as such laws may be amended from time to time shall indemnify any person who was or is made a party to or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (including any appeal thereof), whether civil, criminal, administrative or investigative in nature (other than an action by or in the right of the Corporation), by reason of the fact that such person is or was a director, officer or employee of the Corporation, or, while a director, officer or employee of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, fiduciary or employee (a “Subsidiary Officer”) of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise (an “Affiliated Entity”), against expenses, (including attorneys’ fees and disbursements), costs, judgment, fines, penalties and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding

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if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful; provided, however, that the Corporation shall not be obligated to indemnify against any amount paid in settlement unless the Corporation has consented to such settlement, which consent shall not be unreasonably withheld. The termination of any action, suit or proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, that such person had reasonable cause to believe that his or her conduct was unlawful. Notwithstanding anything to the contrary in the foregoing provisions of this Section 4.1, a person shall not be entitled, as a matter of right, to indemnification pursuant to this Section 4.1 against costs or expenses incurred in connection with any action, suit or proceeding (or part thereof) commenced by such person against any person who is or was a director, officer, fiduciary or employee of the Corporation or a Subsidiary Officer of any Affiliated Entity, but such indemnification may be provided by the Corporation in a specific case as permitted by Section 4.6 of this Article.

Section 4.2    Indemnification Respecting Derivative Claims. The Corporation, to the full extent permitted, and in the manner required, by the laws of the State of Delaware as in effect at the time of the adoption of this Article or as such laws may be amended from time to time, shall indemnify any person who was or is made a party to or is threatened to be made a party to any threatened, pending or completed action or suit (including any appeal thereof) brought in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer or employee of the Corporation or is or was serving at the request of, or to represent the interests of, the Corporation as a Subsidiary Officer of an Affiliated Entity against expenses (including attorneys’ fees and disbursements) and costs actually and reasonably incurred by such person in connection with such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless, and except to the extent that, the Court of Chancery of the State of Delaware or the court in which such judgment was rendered shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses and costs as the Court of Chancery of the State of Delaware or such other court shall deem proper. Notwithstanding anything to the contrary in the foregoing provisions of this Section 4.2, a person shall not be entitled, as a matter of right, to indemnification pursuant to this Section 4.2 against costs and expenses incurred in connection with any action or suit in the right of the Corporation (or part thereof) commenced by such person, but such indemnification may be provided by the Corporation in any specific case as permitted by Section 4.6 of this Article.

Section 4.3    Determination of Entitlement to Indemnification. Any indemnification under Section 4.1 or 4.2 of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer or employee is proper under the circumstances because such person has met the applicable standard of conduct set forth in, Section 4.1 or 4.2 of this Article. Such determination shall be made with respect to a person who is a director or officer at the time of such determination (i) by a majority vote of the Board of Directors who were not parties to the action, suit or proceeding, even though less than a quorum or (ii) by a committee of such directors (each of whom is not a party to such action, suit or proceeding) designated by majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors or if the disinterested directors so direct, by independent legal counsel in a written opinion, or (iv) by the stockholders. In the event a request for indemnification is made by any person referred to in Section 4.1 or Section 4.2 of this Article, the Corporation shall cause such determination to be made not later than 60 days after such request is made.

Section 4.4    Right to Indemnification Upon Successful Defense and For Service as Witness.

(a)    Notwithstanding the other provisions of this Article, to the extent that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 4.1 or 4.2 of this Article, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees and disbursements) and costs actually and reasonably incurred by such person in connection therewith.

(b)    To the extent any person who is or was a director, officer or employee of the Corporation has served or prepared to serve as a witness in any action, suit or proceeding (whether civil, criminal, administrative or investigative in nature) or in any investigation by the Corporation or the Board of Directors thereof or committee thereof or by any securities exchange on which securities of the Corporation are or were listed by reason of his services as a director, officer or employee of the Corporation or as a Subsidiary Officer of any Affiliated Entity (other than in a suit commenced by such person), the Corporation shall indemnify such person against expenses (including attorneys’ fees and disbursements) and costs actually and

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reasonably incurred by such person in connection therewith (following the final disposition of such action, suit or proceeding) within 30 days after receipt by the Corporation from such person of a statement requesting such indemnification, averring such service and reasonably evidencing such expenses and costs.

Section 4.5    Advance of Expenses. Expenses (including attorneys’ fees) and costs incurred by an officer or director of the Corporation in defending a civil, criminal, administrative or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized by this Article. Such expenses (including attorneys’ fees) incurred by other former directors and officers or employees of the Corporation may be so paid upon such terms and conditions, if any, as the Corporation deems appropriate.

Section 4.6    Indemnification Not Exclusive. The provision of indemnification to, or the advancement of expenses and costs to, any person under this Article, or the entitlement of any person to indemnification or advancement of expenses and costs under this Article, shall not limit or restrict in any way the power of the Corporation to indemnify or advance expenses and costs to such person in any other way permitted by law or be deemed exclusive of, or invalidate, any right to which any person seeking indemnification or advancement of expenses and costs may be entitled under any Bylaw, law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s capacity as an officer, director or employee of the Corporation and as to action to any other capacity while holding any such position.

Section 4.7    Accrual of Claims; Successors. The indemnification provided or permitted under this Article shall apply in respect of any expense, cost, judgment, fine, penalty or amount paid in settlement, whether or not the claim or cause of action in respect thereof accrued or arose before or after the effective date of this Article. The right of any person who is or was a director, officer or employee of the Corporation to indemnification under this Article shall continue after he shall have ceased to be a director, officer or employee and shall inure to the benefit of the heirs, distributees, executors, administrators and other legal representatives of such person.

Section 4.8    Corporate Obligations; Reliance. This Article shall be deemed to create a binding obligation on the part of the Corporation to its current and former officers, directors and employees and their heirs, distributes, executors, administrators and other legal representatives, and such persons in acting in such capacities shall be entitled to rely on the provisions of this Article, without giving notice thereof to the Corporation.

Section 4.9    Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Subsidiary Officer of any Affiliated Entity, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article or applicable law.

Section 4.10    Other Sources. The Corporation's obligation, if any, to indemnify or to advance expenses to any Subsidiary Officer of any Affiliated Entity shall be reduced by any amount such person may collect as indemnification or advancement of expenses from such Affiliated Entity.

Section 4.11    Definitions of Certain Terms.

(a)    For purposes of this Article, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its corporate existence had continued, would have been permitted under applicable law to indemnify its directors, officers or employees, so that any person who is or was a director, officer or employee of such constituent corporation, or is or was serving at the request, or to represent the interests of, such constituent corporation as a director, officer or employee of any Affiliated Entity shall stand in the same position under the provisions of this Article with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.

(b)    For purposes of this Article, references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; references to “serving at the request of the Corporation” shall include any service as a director, officer, fiduciary or employee of the Corporation which imposes duties on, or involves services by, such director, officer, fiduciary or employee with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of

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an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interest of the Corporation” as referred to in this Article.

Section 4.12    Amendment or Repeal. Any repeal or modification of the foregoing provisions of this Article IV shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.

ARTICLE V

OFFICERS

Section 5.1    Principal Officers. The principal officers of the Corporation shall be a Chairman of the Board, a Chief Executive Officer, any number of Presidents or Co-Presidents, a Secretary and a Treasurer, each of whom shall have the authority to perform the duties provided in these Bylaws and such other duties, and may have such other authority and powers, as may from time to time be prescribed by the Board of Directors or as the Chief Executive Officer may from time to time delegate. One person may hold two or more offices, except that the Secretary may not also hold the office of President or Co-President.

Section 5.2    Subordinate Officers. The Corporation may also have, at the discretion of the Board of Directors, one or more Vice Chairmen, one or more Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers and such other officers as the business of the Corporation may require, each of whom shall have the authority and perform the duties as may be provided in these Bylaws or as may from time to time be assigned by the Board of Directors.

Section 5.3    Appointment of the Corporation’s Officers. The Board of Directors shall appoint the officers of the Corporation, each such officer to hold his office until the earlier of his death, resignation, retirement, disqualification or removal. Thereafter, the Board of Directors may, from time to time, appoint other officers of the Corporation to fill a vacancy in any office or otherwise, each such officer to hold his office until the earlier of his death, resignation, retirement, disqualification or removal from office.

Section 5.4    Removal and Resignation.

(a)    Any officer may be removed, either with or without cause, by the unanimous written consent of the Board of Directors or by a majority of the directors at the time in office, at any regular or special meeting of the Board of Directors.

(b)    Any officer may resign at any time by giving written notice to the Board of Directors, the Chairman of the Board of Directors, the Chief Executive Officer, any President or Co-President or the Secretary of the Corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 5.5    Chairman of the Board.

(a)    The Chairman of the Board (the “Chairman”) shall lead the Board of Directors in fulfilling its responsibilities as set forth in these Bylaws.

(b)    The Chairman shall preside at all meetings of the Board of Directors and stockholders. In the absence of the Chairman, the Vice Chairman shall preside at meetings of the Board of Directors and stockholders, and in the absence of both the Chairman and the Vice Chairman, the independent director appointed to preside at executive sessions of the non-management and independent directors, shall preside at meetings of the Board of Directors and stockholders.

(c)    The Chairman shall serve as an officer of the Corporation, reporting directly to the Board of Directors, and shall be subject to the Corporation’s policies on the same basis as other senior executives of the Corporation.

(d)    The Chairman shall have the authority to advise the Chief Executive Officer and the Board of Directors on issues related to the Corporation’s strategic plans and material transactions, as well as to act in concert with the Chief Executive Officer as a spokesperson for the Corporation.

(e)    The Chairman shall have such other powers and perform such other duties as may be assigned from time to time by these Bylaws or the Board of Directors.

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Section 5.6    Chief Executive Officer.

(a)    The Chief Executive Officer shall be the principal executive officer of the Corporation.

(b)    The Chief Executive Officer shall, subject to the ultimate direction and supervision of the Board of Directors, have general responsibility for the active management and the conduct of the business and affairs and operations of the Corporation. The Chief Executive Officer shall have authority to direct any President or Co-President in the performance of their duties.

(c)    The Chief Executive Officer shall ensure that all orders and resolutions of the Board of Directors are carried into effect.

(d)    The Chief Executive Officer may execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be delegated by the Board of Directors to some other officer or agent of the Corporation.

(e)    The Chief Executive Officer shall have such other powers and perform such other duties as may be assigned from time to time by these Bylaws or the Board of Directors.

Section 5.7    Presidents; Co-Presidents.

(a)    There may be any number of Presidents or Co-Presidents. Each President and Co-President shall, acting individually and subject to the ultimate direction and supervision of the Board of Directors and the Chief Executive Officer, have general responsibility for the active management and the conduct of the business and affairs and operations of the Corporation.

(b)    The Presidents and Co-Presidents shall work with the Chief Executive Officer to ensure that all orders and resolutions of the Board of Directors are carried into effect.

(c)    Each President and Co-President may execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be delegated by the Board of Directors to some other officer or agent of the Corporation.

(d)    Each President and Co-President shall have such other powers and perform such other duties as may be assigned from time to time by these Bylaws, the Board of Directors or the Chief Executive Officer.

(e)    A President or Co-President may perform, if so designated by the Board of Directors, all of the duties of the Chief Executive Officer and when so acting shall have all of the powers of and be subject to all of the restrictions upon the Chief Executive Officer.

Section 5.8    Secretary.

(a)    The Secretary shall keep, or cause to be kept, the minute book of the Corporation at the principal executive office of the Corporation, or such other place as the Board of Directors may order, of all meetings of stockholders, the Board of Directors and its committees, with the time and place of holding, whether regular or special and if special, how authorized and the notice thereof given, the names of those present at Board of Directors and committee meetings, the number of shares present or represented at stockholders' meetings and the proceedings thereof.

(b)    The Secretary shall keep, or cause to be kept, at the principal executive office of the Corporation or at the office of the Corporation's transfer agent, a share register, or a duplicate share register, showing the names of the stockholders and their addresses; the number and classes of shares held by each; the number and date of certificates issued for the same; and the number and date of cancellation of every certificate surrendered for cancellation.

Section 5.9    Treasurer.

(a)    The Treasurer shall deposit or cause the deposit of all monies and other valuables in the name and to the credit of the Corporation with such depositories as may be designated by the Board of Directors.

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(b)    The Treasurer shall have custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements of the Corporation.

(c)    The Treasurer shall be responsible for effecting the properly authorized disbursement of funds of the Corporation and shall provide appropriate and timely accounting of his transactions as Treasurer to the Chief Executive Officer, to the Chairman of the Board and to the Board of Directors.

(d)    The Treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, additional paid-in capital and retained earnings. Capital and additional paid-in capital shall be classified according to source and shown in separate accounts.

(e)    The Treasurer shall provide appropriate and timely reports on the financial condition of and the results of operations of the Corporation to the Chief Executive Officer, to the Chairman of the Board and to the Board of Directors.

Section 5.10    Vice Presidents. The Vice Presidents, if any, shall exercise and perform such powers and duties with respect to the administration of the business affairs and operations of the Corporation as may from time to time be assigned to each of them by the Chairman of the Board, the Chief Executive Officer, any President or Co-President or the Board of Directors. A Vice President may perform, if so designated by the Board of Directors, all of the duties of any President or Co-President and when so acting shall have all of the powers of and be subject to all of the restrictions upon such officer.

Section 5.11    Assistant Secretaries. The Assistant Secretaries, if any, may, in the absence or disability of the Secretary, perform all of the duties of the Secretary and when so acting shall have all of the powers of and be subject to all of the restrictions upon the Secretary.

Section 5.12    Assistant Treasurers. The Assistant Treasurers, if any, may, in the absence or disability of the Treasurer, perform all of the duties of the Treasurer and when so acting shall have all of the powers of and be subject to all of the restrictions upon the Treasurer.

Section 5.13    Contracts. The officers of the Corporation are generally authorized in the name and on behalf of the Corporation, to enter into or execute and deliver any and all deeds, bonds, mortgages, contracts and other obligations or instruments.

Section 5.14    Proxies; Powers of Attorney; Other Instruments. The officers of the Corporation or any other person designated by any of them shall have the power and authority to execute and deliver proxies, powers of attorney and other instruments on behalf of the Corporation in connection with the rights and powers incident to the ownership of stock by the Corporation. The officers of the Corporation or any other person authorized by proxy or power of attorney executed and delivered by any of them on behalf of the Corporation may attend and vote at any meeting of stockholders of any company in which the Corporation may hold stock, and may exercise on behalf of the Corporation any and all of the rights and powers incident to the ownership of such stock at any such meeting, or otherwise as specified in the proxy or power of attorney so authorizing any such person. The Board of Directors, from time to time, may confer like powers upon any other person.

ARTICLE VI

AMENDMENTS

These Bylaws may be altered or repealed, and new Bylaws adopted by the Board of Directors, but the stockholders may make additional Bylaws and may alter and repeal any Bylaws whether adopted by them or otherwise.

ARTICLE VII

GENERAL PROVISIONS

Section 7.1    Seal. The Board of Directors shall adopt a corporate seal, which shall be in the form of a circle and shall bear the name of the Corporation and words and figures showing that the Corporation was incorporated in the State of Delaware and the date of incorporation.

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Section 7.2    Method. Whenever by statute, the Certificate, these Bylaws, or otherwise notice is required to be given to a director, committee member or stockholder, and no provision is made as to how the notice shall be given, it shall not be construed to mean personal notice, but any such notice may be given: (a) in writing by mail, first-class postage prepaid, addressed to the director, committee member, or stockholder and the address appearing on the books of the Corporation; (b) facsimile transmission; or (c) in any other method permitted by law. Without limiting the foregoing, any notice to a director or committee member may be delivered personally or by telephone, telegram, telex, facsimile, cable or other electronic means if delivered by such means at least 24 hours before the time of the holding of the meeting. Furthermore, without limiting the foregoing with respect to notice to a director or committee member, (i) if the notice is given by electronic mail, the notice shall be deemed given if directed to an electronic mail address at which the director has indicated to the Secretary or other officer of the Corporation that such director may receive information electronically, (ii) if the notice is given by any other form of electronic transmission, the notice shall be deemed given if directed to the director; (iii) if the notice is given personally or by telephone, the notice shall be deemed given if communicated either to the director or to a person at the home or office of the director who the person giving the notice has reason to believe will promptly communicate it to the director. Any notice required or permitted to be given by mail shall be deemed given at the time when the same is deposited, in accordance with the terms of this Section, in the United States mails.

Section 7.3    Waiver of Notice. Whenever notice is required to be given by these Bylaws or the Certificate or by law, a written waiver, signed by the person entitled to such notice, or a waiver by electronic transmission by the person entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to notice and shall constitute a waiver thereof.

Section 7.4    Fiscal Year. The fiscal year of the Corporation shall end on the 30th day of September in each year.

Section 7.5    Construction. Whenever the context so requires, the masculine gender shall include the feminine and neuter genders and the singular shall include the plural, and conversely. If any portion of these Bylaws shall be invalid or inoperative, then, so far as is reasonable and possible: (a) the remainder of these Bylaws shall be considered valid and operative; and (b) effect shall be given to the intent manifested by the portion held invalid or inoperative.

Section 7.6    Headings. The headings set forth in these Bylaws are for organization, convenience and clarity. In interpreting these Bylaws, they shall be subordinated in importance to other written material.

Section 7.7    Relation to the Certificate of Incorporation. These Bylaws are subject to, and governed by the Certificate and any written agreement by a majority in interest of the stockholders filed with the Corporation at its principal place of business.

Section 7.8    Form of Records. Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, diskettes, hard disk drives, photographs, microphotographs, or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time.

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EX-10.1

EXHIBIT 10.1

FRANKLIN RESOURCES, INC.

NON-EMPLOYEE DIRECTOR COMPENSATION

As of October 17, 2016

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 of Franklin (the “Franklin Board”). The Franklin Board last approved changes in such compensation structure on October 17, 2016.

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.

Non-employee Franklin directors are also entitled to receive an annual equity award for approval on the date of each annual organizational meeting of the Franklin Board (“Annual Organizational Meeting”). Effective as of the next Annual Organizational Meeting, scheduled to be held on February 15, 2017, the annual equity award shall be valued at $135,000 (rounded up to the nearest whole share), reflecting an increase in value of $10,000 in the annual equity award.

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).

In addition, Franklin reimburses directors for certain expenses incurred in connection with attending Franklin 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 may also, from time to time, provide directors and their spouses with token gifts of nominal value.

Franklin also allows 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-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:	January 27, 2017	/s/    GREGORY E. JOHNSON
		Gregory E. Johnson
		Chairman of the Board and Chief Executive Officer

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:	January 27, 2017	/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 and Chief Executive Officer of Franklin Resources, Inc. (the “Company”), certify, as of the date hereof and solely for purposes of and pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended December 31, 2016 (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.

Date:	January 27, 2017	/s/    GREGORY E. JOHNSON
		Gregory E. Johnson
		Chairman of the Board and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002 (FURNISHED HEREWITH)

I, Kenneth A. Lewis, 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 December 31, 2016 (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.

Date:	January 27, 2017	/s/    KENNETH A. LEWIS
		Kenneth A. Lewis
		Chief Financial Officer and Executive Vice President

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Document and Entity Information - shares	3 Months Ended
	Dec. 31, 2016	Jan. 20, 2017
Document And Entity Information [Abstract]
Entity Registrant Name	Franklin Resources Inc
Entity Central Index Key	0000038777
Current Fiscal Year End Date	--09-30
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		565,321,260

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Condensed Consolidated Statements of Income - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Operating Revenues
Investment management fees	$ 1,063.2	$ 1,186.7
Sales and distribution fees	419.3	478.4
Shareholder servicing fees	56.6	61.9
Other	21.7	31.0
Total operating revenues	1,560.8	1,758.0
Operating Expenses
Sales, distribution and marketing	520.0	588.6
Compensation and benefits	311.5	342.5
Information systems and technology	51.7	51.2
Occupancy	29.1	30.7
General, administrative and other	61.6	91.4
Total operating expenses	973.9	1,104.4
Operating Income	586.9	653.6
Other Income (Expenses)
Investment and other income, net	46.1	30.5
Interest expense	(13.3)	(12.0)
Other income, net	32.8	18.5
Income before taxes	619.7	672.1
Taxes on income	200.9	209.7
Net income	418.8	462.4
Less: net income (loss) attributable to
Nonredeemable noncontrolling interests	2.1	13.6
Redeemable noncontrolling interests	(23.5)	1.0
Net Income Attributable to Franklin Resources, Inc.	$ 440.2	$ 447.8
Earnings per Share
Basic	$ 0.77	$ 0.74
Diluted	0.77	0.74
Dividends Declared per Share	$ 0.2	$ 0.18

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Statement of Comprehensive Income [Abstract]
Net Income	$ 418.8	$ 462.4
Other Comprehensive Income (Loss)
Net unrealized losses on investments, net of tax	(2.4)	(5.9)
Currency translation adjustments, net of tax	(60.9)	(23.6)
Net unrealized gains on defined benefit plans, net of tax	0.0	0.6
Total other comprehensive income (loss)	(63.3)	(28.9)
Total comprehensive income	355.5	433.5
Less: comprehensive income (loss) attributable to
Nonredeemable noncontrolling interests	2.1	13.6
Redeemable noncontrolling interests	(23.5)	1.0
Comprehensive Income Attributable to Franklin Resources, Inc.	$ 376.9	$ 418.9

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Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Dec. 31, 2016	Sep. 30, 2016
Assets
Cash and cash equivalents	$ 8,454.8	$ 8,483.3
Receivables	930.0	794.3
Investments	1,512.8	2,416.6
Investments, at fair value	521.6	1,437.6
Property and equipment, net	512.5	523.2
Goodwill and other intangible assets, net	2,200.4	2,211.3
Other	143.7	156.7
Total Assets	16,210.3	16,098.8
Liabilities
Compensation and benefits	191.8	357.4
Accounts payable and accrued expenses	214.8	233.3
Dividends	114.6	104.6
Commissions	292.4	302.0
Income taxes	191.7	23.0
Debt	1,394.4	1,401.2
Deferred taxes	151.7	161.5
Other	230.6	244.3
Total liabilities	3,122.1	3,509.5
Commitments and Contingencies (Note 9)
Redeemable Noncontrolling Interests	841.2	61.1
Stockholders' Equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; none issued	0.0	0.0
Common stock, $0.10 par value, 1,000,000,000 shares authorized; 565,683,547 and 570,345,156 shares issued and outstanding at December 31, 2016 and September 30, 2016	56.6	57.0
Retained earnings	12,326.0	12,226.2
Accumulated other comprehensive loss	(417.8)	(347.4)
Total Franklin Resources, Inc. stockholders’ equity	11,964.8	11,935.8
Nonredeemable noncontrolling interests	282.2	592.4
Total stockholders’ equity	12,247.0	12,528.2
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	16,210.3	16,098.8
Franklin Resources, Inc. [Member]
Assets
Cash and cash equivalents	8,223.6	8,247.1
Consolidated sponsored investment products [Member]
Assets
Cash and cash equivalents	231.2	236.2
Receivables	174.1	47.9
Investments, at fair value	2,456.1	1,513.4
Other	0.8	1.4
Total Assets	2,862.2	1,798.9
Liabilities
Accounts payable and accrued expenses	67.9	65.2
Debt	340.1	682.2
Other	7.2	8.5
Total liabilities	415.2	755.9
Redeemable Noncontrolling Interests	841.2	61.1
Stockholders' Equity
Total Franklin Resources, Inc. stockholders’ equity	1,349.3	414.1
Nonredeemable noncontrolling interests	256.5	567.8
Total stockholders’ equity	1,605.8	981.9
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$ 2,862.2	$ 1,798.9

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Dec. 31, 2016	Sep. 30, 2016
Statement of Financial Position [Abstract]
Investments, at fair value	$ 521.6	$ 1,437.6
Preferred stock, par value	$ 1	$ 1
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.1	$ 0.1
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	565,683,547	570,345,156
Common stock, shares outstanding	565,683,547	570,345,156

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Net cash provided by operating activities
Net Income	$ 418.8	$ 462.4
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred sales commissions	17.1	22.8
Depreciation and other amortization	19.9	22.6
Stock-based compensation	30.4	34.0
Gains on sale of assets	(0.8)	(7.2)
Income from investments in equity method investees	(34.2)	(24.8)
Net losses (gains) on other investments of consolidated sponsored investment products	(2.0)	7.6
Deferred income taxes	(6.9)	(1.8)
Other	(12.1)	14.9
Changes in operating assets and liabilities:
Increase in receivables, prepaid expenses and other	(19.3)	(42.5)
Decrease in trading securities, net	27.9	1.5
Decrease (increase) in trading securities of consolidated sponsored investment products, net	43.9	(102.5)
Decrease in accrued compensation and benefits	(161.9)	(221.5)
Decrease in commissions payable	(9.6)	(23.8)
Increase in income taxes payable	167.1	160.4
Decrease in other liabilities	(32.1)	(6.9)
Net cash provided by operating activities	446.2	295.2
Net cash provided by (used in) investing activities
Purchase of investments	(28.8)	(20.9)
Liquidation of investments	35.2	128.3
Purchase of other investments by consolidated sponsored investment products	(69.4)	(91.6)
Liquidation of other investments by consolidated sponsored investment products	72.7	104.7
Additions of property and equipment, net	(12.8)	(19.1)
Adoption of new accounting guidance	(49.2)	0.0
Net deconsolidation of sponsored investment products	(6.1)	(12.2)
Net Cash Provided by (Used in) Investing Activities	(58.4)	89.2
Net cash used in financing activities
Dividends paid on common stock	(103.4)	(91.5)
Repurchase of common stock	(256.2)	(381.5)
Proceeds from debt of consolidated sponsored investment products	0.4	1.0
Payments on debt by consolidated sponsored investment products	(3.2)	(27.9)
Payments on contingent consideration liability	(2.2)	(2.8)
Noncontrolling interests	(1.3)	39.3
Net cash used in financing activities	(365.9)	(463.4)
Effect of exchange rate changes on cash and cash equivalents	(50.4)	(20.1)
Decrease in cash and cash equivalents	(28.5)	(99.1)
Cash and cash equivalents, beginning of period	8,483.3	8,368.1
Cash and Cash Equivalents, End of Period	8,454.8	8,269.0
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	33.1	48.1
Cash paid for interest	10.1	8.8
Cash paid for interest by consolidated sponsored investment products	$ 3.3	$ 6.7

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Basis of Presentation

3 Months Ended

Dec. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The unaudited interim financial statements of Franklin Resources, Inc. 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. 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 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, 2016 (“fiscal year 2016”). Certain comparative amounts for the prior fiscal year period have been reclassified to conform to the financial statement presentation as of and for the period ended December 31, 2016.

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New Accounting Guidance

3 Months Ended

Dec. 31, 2016

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Guidance

New Accounting Guidance

Recently Adopted Accounting Guidance

On October 1, 2016, the Company adopted an amendment to the consolidation guidance issued by the Financial Accounting Standards Board (“FASB”) using the modified retrospective approach which did not require the restatement of prior year periods. The amendment modifies the consolidation framework for certain investment entities and all limited partnerships. It also eliminates certain criteria used to determine whether fees paid to a decision maker are a variable interest and results in a lower consolidation threshold for variable interest entities (“VIEs”). The adoption caused the consolidation of 24 sponsored investment products (“SIPs”) that changed from voting interest entities (“VOEs”) to VIEs and three other SIPs that are VIEs. In addition, two collateralized loan obligations (“CLOs”) for which the Company was previously the primary beneficiary and five limited partnerships were deconsolidated. The adoption resulted in net increases in total assets, redeemable noncontrolling interests and retained earnings of $180.9 million, $824.7 million and $5.8 million, and net decreases in total liabilities, nonredeemable noncontrolling interests and other equity of $317.9 million, $324.6 million and $7.1 million as of October 1, 2016.

Accounting Guidance Not Yet Adopted

The FASB issued an amendment to the existing stock-based compensation guidance in March 2016. The amendment requires all income tax effects of stock-based awards to be recognized as income tax expense when the awards vest or settle and clarifies the classification of these transactions within the statement of cash flows. The amendment also provides an election to account for forfeitures as they occur, which the Company expects to take. The amendment is effective for the Company on October 1, 2017 and requires varying transition approaches for the different changes to the guidance. The Company expects the adoption to increase the volatility of income tax expense as a result of fluctuations in its stock price.

The FASB issued new guidance in May 2014 that requires use of a single principles-based model for recognition of revenue from contracts with customers. The core principle of the model is that revenue is recognized upon the transfer of promised goods or services to customers in an amount that reflects the expected consideration to be received for the goods or services. The guidance also changes the accounting for certain contract costs and revises the criteria for determining if an entity is acting as a principal or agent in certain arrangements. The guidance is effective for the Company on October 1, 2018 and allows for either a full retrospective or modified approach at adoption. While the Company’s implementation efforts are ongoing, it does not expect adoption of the guidance to have a significant impact on the timing of recognition for the majority of its operating revenue. The Company is evaluating certain costs to determine if they should be capitalized or expensed based on the criteria in the guidance for costs to obtain or fulfill a contract. Additionally, it is assessing certain arrangements to determine whether it continues to act as a principal and present the related revenue gross of associated expenses. The overall impact upon adoption may differ based on further evaluation and additional facts and circumstances identified during implementation. The Company has not yet determined its transition approach.

The FASB issued an amendment to the existing financial instruments guidance in January 2016. The amendment requires substantially all equity investments in nonconsolidated entities to be measured at fair value with changes recognized in earnings, except for those accounted for using the equity method of accounting, which will impact all equity securities currently classified as available-for-sale. The amendment also provides an election to measure equity investments that do not have a readily determinable fair value at cost less impairment, if any, which the Company expects to take. The amendment is effective for the Company on October 1, 2018 and requires a cumulative effect adjustment to retained earnings at adoption. The Company does not expect the adoption to have a material impact on its consolidated financial statements; however, this could be affected by market volatility as well as additional facts and circumstances identified during implementation.

There were no other significant updates to the new accounting guidance not yet adopted by the Company as disclosed in its Form 10-K for fiscal year 2016.

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Stockholders' Equity

3 Months Ended

Dec. 31, 2016

Stockholders' Equity Note [Abstract]

Stockholders’ Equity

Stockholders’ Equity

Changes in total stockholders’ equity were as follows:

(in millions)	Franklin Resources, Inc. Stockholders’ Equity			Nonredeemable Noncontrolling Interests			Total Stockholders’ Equity
for the three months ended December 31, 2016
Balance at October 1, 2016	$	11,935.8		$	592.4		$	12,528.2
Adoption of new accounting guidance	(1.3		)	(324.6		)	(325.9		)
Net income	440.2			2.1			442.3
Other comprehensive loss	(63.3		)				(63.3		)
Cash dividends declared on common stock	(113.4		)				(113.4		)
Repurchase of common stock	(261.7		)				(261.7		)
Net subscriptions				12.3			12.3
Stock-based compensation	28.5						28.5
Balance at December 31, 2016	$	11,964.8		$	282.2		$	12,247.0

(in millions)	Franklin Resources, Inc. Stockholders’ Equity			Nonredeemable Noncontrolling Interests			Total Stockholders’ Equity
for the three months ended December 31, 2015
Balance at October 1, 2015	$	11,841.0		$	654.8		$	12,495.8
Net income	447.8			13.6			461.4
Other comprehensive loss	(28.9		)				(28.9		)
Cash dividends declared on common stock	(107.6		)				(107.6		)
Repurchase of common stock	(404.1		)				(404.1		)
Net distributions				(28.7		)	(28.7		)
Stock-based compensation	33.0						33.0
Balance at December 31, 2015	$	11,781.2		$	639.7		$	12,420.9

During the three months ended December 31, 2016 and 2015, the Company repurchased 7.1 million and 10.5 million shares of its common stock at a cost of $261.7 million and $404.1 million under its stock repurchase program. At December 31, 2016, 43.6 million shares remained available for repurchase under the program, which is not subject to an expiration date.

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Earnings per Share

3 Months Ended

Dec. 31, 2016

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 December 31,
	2016		2015
Net income attributable to Franklin Resources, Inc.	$	440.2	$	447.8
Less: allocation of earnings to participating nonvested stock and stock unit awards	3.0		2.7
Net Income Available to Common Stockholders	$	437.2	$	445.1
Weighted-average shares outstanding – basic	565.1		597.6
Dilutive effect of nonparticipating nonvested stock unit awards	0.1		0.1
Weighted-Average Shares Outstanding – Diluted	565.2		597.7
Earnings per Share
Basic	$	0.77	$	0.74
Diluted	0.77		0.74

Nonparticipating nonvested stock unit awards excluded from the calculation of diluted earnings per share because their effect would have been antidilutive were 0.7 million and 1.4 million for the three months ended December 31, 2016 and 2015.

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Investments

3 Months Ended

Dec. 31, 2016

Investments [Abstract]

Investments

Investments

The disclosures below include details of the Company’s investments, excluding those of consolidated SIPs. See Note 7–Consolidated Sponsored Investment Products for information related to the investments held by these entities.

Investments consisted of the following:

(in millions)	December 31, 2016		September 30, 2016
Investment securities, trading
SIPs	$	138.8	$	844.4
Debt and other equity securities	264.2		277.5
Total investment securities, trading	403.0		1,121.9
Investment securities, available-for-sale
SIPs	102.3		297.7
Debt and other equity securities	3.0		3.7
Total investment securities, available-for-sale	105.3		301.4
Investments in equity method investees	816.0		797.4
Other investments	188.5		195.9
Total	$	1,512.8	$	2,416.6

Debt and other equity trading securities consist primarily of corporate debt.

Investment securities with an aggregate carrying amount of $117.3 million were pledged as collateral at both December 31, 2016 and September 30, 2016.

Gross unrealized gains and losses relating to investment securities, available-for-sale were as follows:

(in millions)			Gross Unrealized
as of December 31, 2016	Cost Basis		Gains		Losses			Fair Value
SIPs	$	103.2	$	1.0	$	(1.9	)	$	102.3
Debt and other equity securities	2.9		0.1		—			3.0
Total	$	106.1	$	1.1	$	(1.9	)	$	105.3

(in millions)			Gross Unrealized
as of September 30, 2016	Cost Basis		Gains		Losses			Fair Value
SIPs	$	289.6	$	13.7	$	(5.6	)	$	297.7
Debt and other equity securities	3.6		0.1		—			3.7
Total	$	293.2	$	13.8	$	(5.6	)	$	301.4

Gross unrealized losses relating to investment securities, available-for-sale aggregated by length of time that individual securities have been in a continuous unrealized loss position were as follows:

	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 December 31, 2016
SIPs	$	19.5	$	(1.1	)	$	5.2	$	(0.8	)	$	24.7	$	(1.9	)

	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, 2016
SIPs	$	75.8	$	(4.3	)	$	18.0	$	(1.3	)	$	93.8	$	(5.6	)

The Company recognized $0.3 million and $0.4 million of other-than-temporary impairment during the three months ended December 31, 2016 and 2015.

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Fair Value Measurements

3 Months Ended

Dec. 31, 2016

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 SIPs. See Note 7 – Consolidated Sponsored Investment Products for information related to fair value measurements of the assets and liabilities of these entities.

The assets and liability measured at fair value on a recurring basis were as follows:

(in millions)	Level 1		Level 2		Level 3		Total
as of December 31, 2016
Assets
Investment securities, trading
SIPs	$	138.8	$	—	$	—	$	138.8
Debt and other equity securities	3.1		75.7		185.4		264.2
Investment securities, available-for-sale
SIPs	102.3		—		—		102.3
Debt and other equity securities	0.9		2.1		—		3.0
Life settlement contracts	—		—		13.3		13.3
Total Assets Measured at Fair Value	$	245.1	$	77.8	$	198.7	$	521.6
Liability
Contingent consideration liability	$	—	$	—	$	83.7	$	83.7

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2016
Assets
Investment securities, trading
SIPs	$	844.4	$	—	$	—	$	844.4
Debt and other equity securities	2.6		84.1		190.8		277.5
Investment securities, available-for-sale
SIPs	297.7		—		—		297.7
Debt and other equity securities	1.6		2.1		—		3.7
Life settlement contracts	—		—		14.3		14.3
Total Assets Measured at Fair Value	$	1,146.3	$	86.2	$	205.1	$	1,437.6
Liability
Contingent consideration liability	$	—	$	—	$	98.1	$	98.1

The fair values of all SIPs and certain other equity securities are determined based on their published net asset values and they are classified as Level 1. The fair values of certain debt and 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, and they are classified as Level 2. The fair values of other debt securities and all life settlement contracts are determined using discounted cash flow valuation techniques using significant unobservable inputs and they are classified as Level 3.

The fair value of the contingent consideration liability, which is classified as Level 3, is determined using an income-based method which considers the net present value of anticipated future cash flows.

There were no transfers between Level 1 and Level 2, or into or out of Level 3, during the three months ended December 31, 2016 and 2015.

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

	2016						2015
(in millions)	Investments			Contingent Consideration Liability			Investments			Contingent Consideration Liability
for the three months ended December 31,
Balance at beginning of period	$	205.1		$	(98.1	)	$	20.7		$	(102.9	)
Total realized and unrealized gains (losses)
Included in investment and other income, net	0.6			—			0.6			—
Included in general, administrative and other expense	—			12.2			—			(16.2		)
Purchases	0.5			—			3.3			—
Sales	(2.4		)	—			—			—
Settlements	(1.7		)	2.2			(0.8		)	3.3
Foreign exchange revaluation	(3.4		)	—			—			—
Balance at End of Period	$	198.7		$	(83.7	)	$	23.8		$	(115.8	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at end of period	$	(0.1	)	$	12.2		$	0.2		$	(16.2	)

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

(in millions)
as of December 31, 2016	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Investment securities, trading – debt and other equity securities	$	185.4	Discounted cash flow	Discount rate	6.5%–6.9% (6.8%)
				Risk premium	2.0%–17.9% (16.7%)
				Liquidity discount	0.0%–10.0% (9.7%)
Life settlement contracts	13.3		Discounted cash flow	Life expectancy	21–130 months (65)
				Discount rate	8.0%–20.0% (13.0%)
Contingent consideration liability	83.7		Discounted cash flow	AUM growth rate	(1.9)%–2.8% (0.7%)
				EBITDA margin	6.2%–8.8% (7.9%)
				Discount rate	13.2%

(in millions)
as of September 30, 2016	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Investment securities, trading – debt and other equity securities	$	190.8	Discounted cash flow	Discount rate	3.6%–6.9% (6.7%)
				Risk premium	2.0%–17.9% (16.5%)
				Liquidity discount	0.0%–10.0% (9.6%)
Life settlement contracts	14.3		Discounted cash flow	Life expectancy	20–132 months (65)
				Discount rate	3.3%–18.0% (11.5%)
Contingent consideration liability	98.1		Discounted cash flow	AUM growth rate	2.4%–11.5% (5.9%)
				EBITDA margin	14.3%
				Discount rate	13.2%

For investment securities, trading – debt and other equity securities, a significant increase (decrease) in the discount rate, risk premium or liquidity discount in isolation would result in a significantly lower (higher) fair value measurement.

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 the contingent consideration liability, 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)		December 31, 2016				September 30, 2016
	Fair Value Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents	1	$	8,223.6	$	8,223.6	$	8,247.1	$	8,247.1
Other investments
Time deposits	2	128.0		128.0		131.6		131.6
Cost method investments	3	47.2		59.5		50.0		61.3
Financial Liabilities
Debt
Senior notes	2	1,342.8		1,365.1		1,348.5		1,412.5
Loan	2	51.6		51.5		52.7		52.7

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Consolidated Sponsored Investment Products

3 Months Ended

Dec. 31, 2016

Consolidated Sponsored Investment Products [Abstract]

Consolidated Sponsored Investment Products

Consolidated Sponsored Investment Products

The Company consolidates SIPs, which consist of both VOEs and VIEs, when it has a controlling financial interest. The Company has a controlling financial interest when it owns a majority of the voting interest in a VOE or when it is the primary beneficiary of a VIE. A VIE is an entity in which the equity investment holders have not contributed sufficient capital to finance its activities or they do not have defined rights and obligations normally associated with an equity investment. The Company’s VIEs are all investment entities, and its variable interests consist of its equity ownership interest in and certain investment management fees earned from these entities.

The Company adopted new accounting guidance on October 1, 2016 that modifies the consolidation framework for certain investment entities and all limited partnerships. As a result of the modifications, certain SIPs changed from VOEs to VIEs and became subject to a lower threshold for consolidation. Additionally, there is now a single model to determine whether the Company is the primary beneficiary of a VIE. The Company is the primary beneficiary if it has the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses of or right to receive benefits from the VIE that could potentially be significant to the VIE. Investment management fees earned from VIEs are excluded from the primary beneficiary determination if they are deemed to be at market and commensurate with service. The key estimates and assumptions used in the analyses include the amount of assets under management (“AUM”), investment management fee rates, the life of the investment product, prepayment rates and the discount rate. The new guidance did not change the consolidation framework for VOEs.

Consolidated SIPs consist of mutual and other investment funds, limited partnerships and similar structures and CLOs, which are asset-backed financing entities collateralized by a pool of corporate debt securities. The Company consolidated 61 SIPs, including one CLO, as of December 31, 2016 and 40 SIPs, including three CLOs, as of September 30, 2016. Amounts for prior periods have been reclassified to combine amounts previously presented separately as consolidated SIPs and consolidated VIEs.

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

(in millions)	December 31, 2016		September 30, 2016
Assets
Cash and cash equivalents	$	231.2	$	236.2
Receivables	174.1		47.9
Investments, at fair value	2,456.1		1,513.4
Other assets	0.8		1.4
Total Assets	$	2,862.2	$	1,798.9
Liabilities
Accounts payable and accrued expenses	$	67.9	$	65.2
Debt	340.1		682.2
Other liabilities	7.2		8.5
Total liabilities	415.2		755.9
Redeemable Noncontrolling Interests	841.2		61.1
Stockholders’ Equity
Franklin Resources, Inc.’s interests	1,349.3		414.1
Nonredeemable noncontrolling interests	256.5		567.8
Total stockholders’ equity	1,605.8		981.9
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$	2,862.2	$	1,798.9

The consolidated SIPs did not have a significant impact on net income attributable to the Company during the three months ended December 31, 2016 and 2015.

The Company has no right to the consolidated SIPs’ assets, other than its direct equity investments in them and investment management fees earned from them. The debt holders of the consolidated SIPs 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 SIPs’ liabilities.

SIPs are typically consolidated when the Company makes an initial investment in a newly launched investment entity. They are typically deconsolidated when the Company no longer has a controlling financial interest due to redemptions of its investment or increases in third-party investments. 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 structure of the SIP and the Company’s role and level of ownership.

Investments

Investments of consolidated SIPs consisted of the following:

(in millions)	December 31, 2016		September 30, 2016
Investment securities, trading	$	1,810.3	$	287.8
Other debt securities	366.9		618.3
Other equity securities	278.9		607.3
Total	$	2,456.1	$	1,513.4

Investment securities, trading consist of equity and debt securities that are traded in active markets. Other debt securities consist of corporate debt securities held by CLOs and debt securities of entities in emerging markets. Other equity securities consist of equity securities of entities in emerging markets and fund products.

Investments in fund products for which fair value was estimated using reported net asset value (“NAV”) as a practical expedient were as follows:

(in millions)	Redemption Frequency	December 31, 2016		September 30, 2016
Real estate and private equity funds	Nonredeemable	$	146.3	$	444.2
Hedge funds	Monthly, quarterly or triennially	—		1.8
Total		$	146.3	$	446.0

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 5.2 years and 3.2 years at December 31, 2016 and September 30, 2016. The consolidated SIPs’ unfunded commitments to these funds totaled $2.0 million and $74.4 million at December 31, 2016 and September 30, 2016, of which the Company was contractually obligated to fund $0.4 million and $2.2 million based on its ownership percentage in the SIPs.

Fair Value Measurements

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

(in millions)	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
as of December 31, 2016
Assets
Cash and cash equivalents of CLO	$	54.8	$	—	$	—	$	—	$	54.8
Receivables of CLO	—		2.0		—		—		2.0
Investments
Equity securities	272.2		93.5		131.6		146.3		643.6
Debt securities	0.2		1,687.9		124.4		—		1,812.5
Total Assets Measured at Fair Value	$	327.2	$	1,783.4	$	256.0	$	146.3	$	2,512.9
Liabilities
Other liabilities	$	0.2	$	7.0	$	—	$	—	$	7.2

(in millions)	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
as of September 30, 2016
Assets
Cash and cash equivalents of CLOs	$	146.4	$	—	$	—	$	—	$	146.4
Receivables of CLOs	—		23.6		—		—		23.6
Investments
Equity securities	155.4		0.5		160.3		446.0		762.2
Debt securities	—		618.9		132.3		—		751.2
Total Assets Measured at Fair Value	$	301.8	$	643.0	$	292.6	$	446.0	$	1,683.4
Liabilities
Other liabilities	$	0.1	$	8.4	$	—	$	—	$	8.5

Investments in fund products for which fair value was estimated using NAV as a practical expedient are not classified in the fair value hierarchy. There were no transfers between Level 1 and Level 2, or into or out of Level 3, during the three months ended December 31, 2016 and 2015.

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

	2016									2015
(in millions)	Equity Securities			Debt Securities			Total  Level 3 Assets			Equity Securities			Debt Securities			Total  Level 3 Assets
for the three months ended December 31,
Balance at beginning of period	$	160.3		$	132.3		$	292.6		$	191.6		$	130.2		$	321.8
Adoption of new accounting guidance	(45.4		)	(0.5		)	(45.9		)	—			—			—
Realized and unrealized gains (losses) included in investment and other income, net	(3.3		)	(0.3		)	(3.6		)	(1.1		)	1.1			—
Purchases	21.0			2.2			23.2			—			2.5			2.5
Sales	(0.1		)	(6.4		)	(6.5		)	—			(9.6		)	(9.6		)
Foreign exchange revaluation	(0.9		)	(2.9		)	(3.8		)	(2.4		)	(0.3		)	(2.7		)
Balance at End of Period	$	131.6		$	124.4		$	256.0		$	188.1		$	123.9		$	312.0
Change in unrealized gains (losses) included in net income relating to assets held at end of period	$	(3.4	)	$	(0.2	)	$	(3.6	)	$	(1.1	)	$	0.3		$	(0.8	)

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

(in millions)
as of December 31, 2016	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Equity securities	$	83.9	Market comparable companies	EBITDA multiple	5.0–14.2 (11.0)
				Discount for lack of marketability	50.0%
	24.3		Discounted cash flow	Discount rate	5.0%–19.0% (13.7%)
	23.4		Market pricing	Price to book value ratio	1.8–2.3 (2.0)
Debt securities	112.6		Discounted cash flow	Discount rate	6.0%–50.0% (13.0%)
				Risk premium	0.0%–28.0% (9.5%)
	11.8		Market pricing	Private sale pricing	$57 per $100 of par

(in millions)
as of September 30, 2016	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Equity securities	$	113.1	Market comparable companies	EBITDA multiple	5.0–14.2 (10.3)
				Discount for lack of marketability	25.0%–50.0% (36.6%)
	24.3		Discounted cash flow	Discount rate	5.0%–19.0% (13.7%)
	22.9		Market pricing	Price to book value ratio	1.8–2.3 (2.0)
Debt securities	119.7		Discounted cash flow	Discount rate	6.0%–15.0% (10.4%)
				Risk premium	0.0%–28.0% (9.7%)
				EBITDA multiple	5.5
	12.6		Market pricing	Private sale pricing	$57 per $100 of par

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 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 the discounted cash flow valuation technique, a significant increase (decrease) in the discount rate or risk premium in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the discount rate is accompanied by a directionally similar change in the risk premium. A significant increase (decrease) in the EBITDA multiple in isolation would result in a significantly higher (lower) fair value measurement.

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)	Fair Value Level	December 31, 2016				September 30, 2016
		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents	1	$	176.4	$	176.4	$	89.8	$	89.8
Financial Liabilities
Debt of CLOs1	2 or 3	285.5		279.4		607.2		594.5
Other debt	3	54.6		54.3		75.0		74.6

_________________

¹    Substantially all is Level 2.

Debt

Debt of consolidated SIPs consisted of the following:

	December 31, 2016			September 30, 2016
(in millions)	Amount		Effective Interest Rate	Amount		Effective Interest Rate
Debt of CLOs	$	285.5	3.18%	$	607.2	2.24%
Other debt	54.6		5.59%	75.0		4.79%
Total	$	340.1		$	682.2

The debt of CLOs had floating interest rates ranging from 2.38% to 10.36% at December 31, 2016, and from 1.02% to 10.16% at September 30, 2016. The debt matures in fiscal year 2024 at December 31, 2016, and from fiscal years 2018 to 2024 at September 30, 2016.

The other debt had fixed and floating interest rates ranging from 2.36% to 6.38% at December 31, 2016, and from 2.36% to 6.19% at September 30, 2016. The debt maturities ranged from fiscal years 2017 to 2019 at both December 31, 2016 and September 30, 2016.

At December 31, 2016, maturities for debt of consolidated SIPs were as follows:

(in millions)	Carrying Amount
for the fiscal years ending September 30,
2017	$	20.8
2018	5.8
2019	28.0
2020	—
2021	—
Thereafter	285.5
Total	$	340.1

Redeemable Noncontrolling Interests

Changes in redeemable noncontrolling interests of consolidated SIPs were as follows:

(in millions)
for the three months ended December 31,	2016			2015
Balance at beginning of period	$	61.1		$	59.6
Adoption of new accounting guidance	824.7			—
Net income (loss)	(23.5		)	1.0
Net subscriptions (distributions) and other	(13.6		)	68.0
Net deconsolidations	(7.5		)	(75.4		)
Balance at End of Period	$	841.2		$	53.2

Collateralized Loan Obligations

The Company recognized $1.1 million and $0.1 million of net gains related to its own economic interests in the CLOs during the three months ended December 31, 2016 and 2015.

The unpaid principal balance and fair value of the investments of the CLOs were as follows:

(in millions)	December 31, 2016		September 30, 2016
Unpaid principal balance	$	244.3	$	496.0
Difference between unpaid principal balance and fair value	—		(8.2		)
Fair Value	$	244.3	$	487.8

There were no investments 90 days or more past due at December 31, 2016 or September 30, 2016.

The unpaid principal balance of the debt of the CLOs was $274.9 million and $653.8 million at December 31, 2016 and September 30, 2016.

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Nonconsolidated Variable Interest Entities

3 Months Ended

Dec. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nonconsolidated Variable Interest Entities

Nonconsolidated Variable Interest Entities

VIEs for which the Company is not the primary beneficiary consist of SIPs and other investment products in which the Company has an equity ownership interest. The Company’s maximum exposure to loss from these VIEs consists of equity investments and investment management fee receivables as follows:

(in millions)	December 31, 2016		September 30, 2016
Investments	$	229.9	$	77.3
Receivables	100.7		21.4
Total	$	330.6	$	98.7

While the Company has no contractual obligation to do so, it routinely makes cash investments in the course of launching SIPs. The Company also may voluntarily elect to provide its SIPs with additional direct or indirect financial support based on its business objectives. The Company did not provide financial or other support to its SIPs during the three months ended December 31, 2016. During fiscal year 2016, the Company purchased $182.7 million of certain debt securities from six SIPs domiciled in India in order to provide additional liquidity to the SIPs. None of these purchases occurred during the three months ended December 31, 2015.

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Commitments and Contingencies

3 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Proceedings

On July 28, 2016, a putative class action lawsuit captioned Cryer v. Franklin Resources, Inc., et al. was filed in the United States District Court for the Northern District of California against Franklin, the Franklin Templeton 401(k) Retirement Plan (“Plan”) Investment Committee, and unnamed Investment Committee members. The plaintiff asserts a claim for breach of fiduciary duty under the Employee Retirement Income Security Act, alleging that the defendants selected mutual funds sponsored and managed by the Company (the “Funds”) as investment options for the Plan when allegedly lower-cost and better performing non-proprietary investment vehicles were available. The plaintiff also claims that the total Plan costs, inclusive of investment management and administrative fees, are excessive. The plaintiff alleges that Plan losses exceed $79.0 million and seeks, among other things, damages, disgorgement, rescission of the Plan’s investments in the Funds, attorneys’ fees and costs, and pre- and post-judgment interest. Franklin’s motion to dismiss and motion for summary adjudication were denied on January 17, 2017. Management strongly believes that the claims made in the lawsuit are without merit and intends to defend against them vigorously. Franklin cannot predict with certainty, however, the eventual outcome of the lawsuit or whether it will have a material negative impact on the Company.

The Company is from time to time involved in other 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 December 31, 2016 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

At December 31, 2016, there were no material changes in the other commitments and contingencies as reported in the Company’s Form 10-K for fiscal year 2016.

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Stock-Based Compensation

3 Months Ended

Dec. 31, 2016

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. Awards generally vest based on the passage of time or 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.

Stock and stock unit award activity was as follows:

(shares in thousands)	Time-Based Shares		Performance- Based Shares		Total Shares		Weighted-Average Grant-Date Fair Value
for the three months ended December 31, 2016
Nonvested balance at October 1, 2016	2,369		1,288		3,657		$	45.67
Granted	2,696		1,110		3,806		34.11
Vested	(26	)	(353	)	(379	)	49.71
Forfeited/canceled	(114	)	(274	)	(388	)	44.18
Nonvested Balance at December 31, 2016	4,925		1,771		6,696		$	38.96

Total unrecognized compensation expense related to nonvested stock and stock unit awards, net of estimated forfeitures, was $197.8 million at December 31, 2016. This expense is expected to be recognized over a remaining weighted-average vesting period of 2.0 years.

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Other Income (Expenses)

3 Months Ended

Dec. 31, 2016

Other Income and Expenses [Abstract]

Other Income (Expenses)

Other Income (Expenses)

Other income (expenses) consisted of the following:

	Three Months Ended December 31,
(in millions)	2016			2015
Investment and Other Income, Net
Dividend income	$	2.4		$	2.8
Interest income	13.6			3.6
Gains (losses) on trading investment securities, net	2.0			(7.3		)
Realized gains on sale of investment securities, available-for-sale	0.6			7.8
Realized losses on sale of investment securities, available-for-sale	(0.7		)	(0.8		)
Income from investments in equity method investees	34.2			24.8
Other-than-temporary impairment of investments	(0.3		)	(0.4		)
Losses on investments of consolidated SIPs, net	(29.9		)	(5.7		)
Foreign currency exchange gains, net	19.8			3.5
Other, net	4.4			2.2
Total	46.1			30.5
Interest Expense	(13.3		)	(12.0		)
Other Income, Net	$	32.8		$	18.5

Substantially all of the Company’s dividend income and realized gains and losses on sale of available-for-sale securities were generated by investments in its nonconsolidated SIPs. Interest income was primarily generated by trading investment securities and cash equivalents. Proceeds from the sale of available-for-sale securities were $8.6 million and $106.6 million for the three months ended December 31, 2016 and 2015.

Net gains (losses) recognized on the Company’s trading investment securities that were held at December 31, 2016 and 2015 were $0.2 million and $(5.7) million. Net gains (losses) recognized on trading investment securities of consolidated SIPs that were held at December 31, 2016 and 2015 were $(18.5) million and $2.3 million.

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Accumulated Other Comprehensive Income (Loss)

3 Months Ended

Dec. 31, 2016

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

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

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

(in millions)	Unrealized Gains (Losses) on Investments			Currency Translation Adjustments			Unrealized Losses on Defined Benefit Plans			Total
for the three months ended December 31, 2016
Balance at October 1, 2016	$	6.8		$	(346.1	)	$	(8.1	)	$	(347.4	)
Adoption of new accounting guidance	(6.8		)	(0.3		)	—			(7.1		)
Other comprehensive loss:
Other comprehensive loss before reclassifications, net of tax	(2.6		)	(60.9		)	—			(63.5		)
Reclassifications to net investment and other income, net of tax	0.2			—			—			0.2
Total other comprehensive loss	(2.4		)	(60.9		)	—			(63.3		)
Balance at December 31, 2016	$	(2.4	)	$	(407.3	)	$	(8.1	)	$	(417.8	)

(in millions)	Unrealized Gains on Investments			Currency Translation Adjustments			Unrealized Losses on Defined Benefit Plans			Total
for the three months ended December 31, 2015
Balance at October 1, 2015	$	19.3		$	(327.8	)	$	(5.7	)	$	(314.2	)
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassifications, net of tax	0.8			(23.6		)	0.6			(22.2		)
Reclassifications to net investment and other income, net of tax	(6.7		)	—			—			(6.7		)
Total other comprehensive income (loss)	(5.9		)	(23.6		)	0.6			(28.9		)
Balance at December 31, 2015	$	13.4		$	(351.4	)	$	(5.1	)	$	(343.1	)

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Fair Value Measurements Accounting Policies (Policies)

3 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Fair Value Measurements

The fair values of all SIPs and certain other equity securities are determined based on their published net asset values and they are classified as Level 1. The fair values of certain debt and 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, and they are classified as Level 2. The fair values of other debt securities and all life settlement contracts are determined using discounted cash flow valuation techniques using significant unobservable inputs and they are classified as Level 3.

The fair value of the contingent consideration liability, which is classified as Level 3, is determined using an income-based method which considers the net present value of anticipated future cash flows.

Consolidation

The Company consolidates SIPs, which consist of both VOEs and VIEs, when it has a controlling financial interest. The Company has a controlling financial interest when it owns a majority of the voting interest in a VOE or when it is the primary beneficiary of a VIE. A VIE is an entity in which the equity investment holders have not contributed sufficient capital to finance its activities or they do not have defined rights and obligations normally associated with an equity investment. The Company’s VIEs are all investment entities, and its variable interests consist of its equity ownership interest in and certain investment management fees earned from these entities.

The Company adopted new accounting guidance on October 1, 2016 that modifies the consolidation framework for certain investment entities and all limited partnerships. As a result of the modifications, certain SIPs changed from VOEs to VIEs and became subject to a lower threshold for consolidation. Additionally, there is now a single model to determine whether the Company is the primary beneficiary of a VIE. The Company is the primary beneficiary if it has the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses of or right to receive benefits from the VIE that could potentially be significant to the VIE. Investment management fees earned from VIEs are excluded from the primary beneficiary determination if they are deemed to be at market and commensurate with service. The key estimates and assumptions used in the analyses include the amount of assets under management (“AUM”), investment management fee rates, the life of the investment product, prepayment rates and the discount rate. The new guidance did not change the consolidation framework for VOEs.

Consolidated SIPs consist of mutual and other investment funds, limited partnerships and similar structures and CLOs, which are asset-backed financing entities collateralized by a pool of corporate debt securities. The Company consolidated 61 SIPs, including one CLO, as of December 31, 2016 and 40 SIPs, including three CLOs, as of September 30, 2016. Amounts for prior periods have been reclassified to combine amounts previously presented separately as consolidated SIPs and consolidated VIEs.

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Stockholders' Equity (Tables)

3 Months Ended

Dec. 31, 2016

Stockholders' Equity Note [Abstract]

Changes in total stockholders' equity

Changes in total stockholders’ equity were as follows:

(in millions)	Franklin Resources, Inc. Stockholders’ Equity			Nonredeemable Noncontrolling Interests			Total Stockholders’ Equity
for the three months ended December 31, 2016
Balance at October 1, 2016	$	11,935.8		$	592.4		$	12,528.2
Adoption of new accounting guidance	(1.3		)	(324.6		)	(325.9		)
Net income	440.2			2.1			442.3
Other comprehensive loss	(63.3		)				(63.3		)
Cash dividends declared on common stock	(113.4		)				(113.4		)
Repurchase of common stock	(261.7		)				(261.7		)
Net subscriptions				12.3			12.3
Stock-based compensation	28.5						28.5
Balance at December 31, 2016	$	11,964.8		$	282.2		$	12,247.0

(in millions)	Franklin Resources, Inc. Stockholders’ Equity			Nonredeemable Noncontrolling Interests			Total Stockholders’ Equity
for the three months ended December 31, 2015
Balance at October 1, 2015	$	11,841.0		$	654.8		$	12,495.8
Net income	447.8			13.6			461.4
Other comprehensive loss	(28.9		)				(28.9		)
Cash dividends declared on common stock	(107.6		)				(107.6		)
Repurchase of common stock	(404.1		)				(404.1		)
Net distributions				(28.7		)	(28.7		)
Stock-based compensation	33.0						33.0
Balance at December 31, 2015	$	11,781.2		$	639.7		$	12,420.9

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Earnings per Share (Tables)

3 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Components of basic and diluted earnings per share

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

(in millions, except per share data)	Three Months Ended December 31,
	2016		2015
Net income attributable to Franklin Resources, Inc.	$	440.2	$	447.8
Less: allocation of earnings to participating nonvested stock and stock unit awards	3.0		2.7
Net Income Available to Common Stockholders	$	437.2	$	445.1
Weighted-average shares outstanding – basic	565.1		597.6
Dilutive effect of nonparticipating nonvested stock unit awards	0.1		0.1
Weighted-Average Shares Outstanding – Diluted	565.2		597.7
Earnings per Share
Basic	$	0.77	$	0.74
Diluted	0.77		0.74

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Investments (Tables)

3 Months Ended

Dec. 31, 2016

Investments [Abstract]

Summary of investments

Investments consisted of the following:

(in millions)	December 31, 2016		September 30, 2016
Investment securities, trading
SIPs	$	138.8	$	844.4
Debt and other equity securities	264.2		277.5
Total investment securities, trading	403.0		1,121.9
Investment securities, available-for-sale
SIPs	102.3		297.7
Debt and other equity securities	3.0		3.7
Total investment securities, available-for-sale	105.3		301.4
Investments in equity method investees	816.0		797.4
Other investments	188.5		195.9
Total	$	1,512.8	$	2,416.6

Summary of the gross unrealized gains and losses relating to investment securities, available-for-sale

Gross unrealized gains and losses relating to investment securities, available-for-sale were as follows:

(in millions)			Gross Unrealized
as of December 31, 2016	Cost Basis		Gains		Losses			Fair Value
SIPs	$	103.2	$	1.0	$	(1.9	)	$	102.3
Debt and other equity securities	2.9		0.1		—			3.0
Total	$	106.1	$	1.1	$	(1.9	)	$	105.3

(in millions)			Gross Unrealized
as of September 30, 2016	Cost Basis		Gains		Losses			Fair Value
SIPs	$	289.6	$	13.7	$	(5.6	)	$	297.7
Debt and other equity securities	3.6		0.1		—			3.7
Total	$	293.2	$	13.8	$	(5.6	)	$	301.4

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

Gross unrealized losses relating to investment securities, available-for-sale aggregated by length of time that individual securities have been in a continuous unrealized loss position were as follows:

	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 December 31, 2016
SIPs	$	19.5	$	(1.1	)	$	5.2	$	(0.8	)	$	24.7	$	(1.9	)

	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, 2016
SIPs	$	75.8	$	(4.3	)	$	18.0	$	(1.3	)	$	93.8	$	(5.6	)

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Fair Value Measurements (Tables)

3 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

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

The assets and liability measured at fair value on a recurring basis were as follows:

(in millions)	Level 1		Level 2		Level 3		Total
as of December 31, 2016
Assets
Investment securities, trading
SIPs	$	138.8	$	—	$	—	$	138.8
Debt and other equity securities	3.1		75.7		185.4		264.2
Investment securities, available-for-sale
SIPs	102.3		—		—		102.3
Debt and other equity securities	0.9		2.1		—		3.0
Life settlement contracts	—		—		13.3		13.3
Total Assets Measured at Fair Value	$	245.1	$	77.8	$	198.7	$	521.6
Liability
Contingent consideration liability	$	—	$	—	$	83.7	$	83.7

(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2016
Assets
Investment securities, trading
SIPs	$	844.4	$	—	$	—	$	844.4
Debt and other equity securities	2.6		84.1		190.8		277.5
Investment securities, available-for-sale
SIPs	297.7		—		—		297.7
Debt and other equity securities	1.6		2.1		—		3.7
Life settlement contracts	—		—		14.3		14.3
Total Assets Measured at Fair Value	$	1,146.3	$	86.2	$	205.1	$	1,437.6
Liability
Contingent consideration liability	$	—	$	—	$	98.1	$	98.1

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

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

	2016						2015
(in millions)	Investments			Contingent Consideration Liability			Investments			Contingent Consideration Liability
for the three months ended December 31,
Balance at beginning of period	$	205.1		$	(98.1	)	$	20.7		$	(102.9	)
Total realized and unrealized gains (losses)
Included in investment and other income, net	0.6			—			0.6			—
Included in general, administrative and other expense	—			12.2			—			(16.2		)
Purchases	0.5			—			3.3			—
Sales	(2.4		)	—			—			—
Settlements	(1.7		)	2.2			(0.8		)	3.3
Foreign exchange revaluation	(3.4		)	—			—			—
Balance at End of Period	$	198.7		$	(83.7	)	$	23.8		$	(115.8	)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at end of period	$	(0.1	)	$	12.2		$	0.2		$	(16.2	)

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

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

(in millions)
as of December 31, 2016	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Investment securities, trading – debt and other equity securities	$	185.4	Discounted cash flow	Discount rate	6.5%–6.9% (6.8%)
				Risk premium	2.0%–17.9% (16.7%)
				Liquidity discount	0.0%–10.0% (9.7%)
Life settlement contracts	13.3		Discounted cash flow	Life expectancy	21–130 months (65)
				Discount rate	8.0%–20.0% (13.0%)
Contingent consideration liability	83.7		Discounted cash flow	AUM growth rate	(1.9)%–2.8% (0.7%)
				EBITDA margin	6.2%–8.8% (7.9%)
				Discount rate	13.2%

(in millions)
as of September 30, 2016	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Investment securities, trading – debt and other equity securities	$	190.8	Discounted cash flow	Discount rate	3.6%–6.9% (6.7%)
				Risk premium	2.0%–17.9% (16.5%)
				Liquidity discount	0.0%–10.0% (9.6%)
Life settlement contracts	14.3		Discounted cash flow	Life expectancy	20–132 months (65)
				Discount rate	3.3%–18.0% (11.5%)
Contingent consideration liability	98.1		Discounted cash flow	AUM growth rate	2.4%–11.5% (5.9%)
				EBITDA margin	14.3%
				Discount rate	13.2%

Schedule of financial instruments not measured at fair value

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

(in millions)		December 31, 2016				September 30, 2016
	Fair Value Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents	1	$	8,223.6	$	8,223.6	$	8,247.1	$	8,247.1
Other investments
Time deposits	2	128.0		128.0		131.6		131.6
Cost method investments	3	47.2		59.5		50.0		61.3
Financial Liabilities
Debt
Senior notes	2	1,342.8		1,365.1		1,348.5		1,412.5
Loan	2	51.6		51.5		52.7		52.7

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Consolidated Sponsored Investment Products (Tables)

3 Months Ended

Dec. 31, 2016

Consolidated Sponsored Investment Products [Abstract]

Schedule of balances of CSIPs

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

(in millions)	December 31, 2016		September 30, 2016
Assets
Cash and cash equivalents	$	231.2	$	236.2
Receivables	174.1		47.9
Investments, at fair value	2,456.1		1,513.4
Other assets	0.8		1.4
Total Assets	$	2,862.2	$	1,798.9
Liabilities
Accounts payable and accrued expenses	$	67.9	$	65.2
Debt	340.1		682.2
Other liabilities	7.2		8.5
Total liabilities	415.2		755.9
Redeemable Noncontrolling Interests	841.2		61.1
Stockholders’ Equity
Franklin Resources, Inc.’s interests	1,349.3		414.1
Nonredeemable noncontrolling interests	256.5		567.8
Total stockholders’ equity	1,605.8		981.9
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$	2,862.2	$	1,798.9

Schedule of investments of CSIPs

Investments of consolidated SIPs consisted of the following:

(in millions)	December 31, 2016		September 30, 2016
Investment securities, trading	$	1,810.3	$	287.8
Other debt securities	366.9		618.3
Other equity securities	278.9		607.3
Total	$	2,456.1	$	1,513.4

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

Investments in fund products for which fair value was estimated using reported net asset value (“NAV”) as a practical expedient were as follows:

(in millions)	Redemption Frequency	December 31, 2016		September 30, 2016
Real estate and private equity funds	Nonredeemable	$	146.3	$	444.2
Hedge funds	Monthly, quarterly or triennially	—		1.8
Total		$	146.3	$	446.0

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

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

(in millions)	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
as of December 31, 2016
Assets
Cash and cash equivalents of CLO	$	54.8	$	—	$	—	$	—	$	54.8
Receivables of CLO	—		2.0		—		—		2.0
Investments
Equity securities	272.2		93.5		131.6		146.3		643.6
Debt securities	0.2		1,687.9		124.4		—		1,812.5
Total Assets Measured at Fair Value	$	327.2	$	1,783.4	$	256.0	$	146.3	$	2,512.9
Liabilities
Other liabilities	$	0.2	$	7.0	$	—	$	—	$	7.2

(in millions)	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
as of September 30, 2016
Assets
Cash and cash equivalents of CLOs	$	146.4	$	—	$	—	$	—	$	146.4
Receivables of CLOs	—		23.6		—		—		23.6
Investments
Equity securities	155.4		0.5		160.3		446.0		762.2
Debt securities	—		618.9		132.3		—		751.2
Total Assets Measured at Fair Value	$	301.8	$	643.0	$	292.6	$	446.0	$	1,683.4
Liabilities
Other liabilities	$	0.1	$	8.4	$	—	$	—	$	8.5

Schedule of changes in Level 3 assets and liabilities of CSIPs on a recurring basis

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

	2016									2015
(in millions)	Equity Securities			Debt Securities			Total  Level 3 Assets			Equity Securities			Debt Securities			Total  Level 3 Assets
for the three months ended December 31,
Balance at beginning of period	$	160.3		$	132.3		$	292.6		$	191.6		$	130.2		$	321.8
Adoption of new accounting guidance	(45.4		)	(0.5		)	(45.9		)	—			—			—
Realized and unrealized gains (losses) included in investment and other income, net	(3.3		)	(0.3		)	(3.6		)	(1.1		)	1.1			—
Purchases	21.0			2.2			23.2			—			2.5			2.5
Sales	(0.1		)	(6.4		)	(6.5		)	—			(9.6		)	(9.6		)
Foreign exchange revaluation	(0.9		)	(2.9		)	(3.8		)	(2.4		)	(0.3		)	(2.7		)
Balance at End of Period	$	131.6		$	124.4		$	256.0		$	188.1		$	123.9		$	312.0
Change in unrealized gains (losses) included in net income relating to assets held at end of period	$	(3.4	)	$	(0.2	)	$	(3.6	)	$	(1.1	)	$	0.3		$	(0.8	)

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

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

(in millions)
as of December 31, 2016	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Equity securities	$	83.9	Market comparable companies	EBITDA multiple	5.0–14.2 (11.0)
				Discount for lack of marketability	50.0%
	24.3		Discounted cash flow	Discount rate	5.0%–19.0% (13.7%)
	23.4		Market pricing	Price to book value ratio	1.8–2.3 (2.0)
Debt securities	112.6		Discounted cash flow	Discount rate	6.0%–50.0% (13.0%)
				Risk premium	0.0%–28.0% (9.5%)
	11.8		Market pricing	Private sale pricing	$57 per $100 of par

(in millions)
as of September 30, 2016	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Equity securities	$	113.1	Market comparable companies	EBITDA multiple	5.0–14.2 (10.3)
				Discount for lack of marketability	25.0%–50.0% (36.6%)
	24.3		Discounted cash flow	Discount rate	5.0%–19.0% (13.7%)
	22.9		Market pricing	Price to book value ratio	1.8–2.3 (2.0)
Debt securities	119.7		Discounted cash flow	Discount rate	6.0%–15.0% (10.4%)
				Risk premium	0.0%–28.0% (9.7%)
				EBITDA multiple	5.5
	12.6		Market pricing	Private sale pricing	$57 per $100 of par

Schedule of financial instruments of CSIPs not measured at fair value

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

(in millions)	Fair Value Level	December 31, 2016				September 30, 2016
		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents	1	$	176.4	$	176.4	$	89.8	$	89.8
Financial Liabilities
Debt of CLOs1	2 or 3	285.5		279.4		607.2		594.5
Other debt	3	54.6		54.3		75.0		74.6

_________________

¹    Substantially all is Level 2.

Schedule of debt

Debt of consolidated SIPs consisted of the following:

	December 31, 2016			September 30, 2016
(in millions)	Amount		Effective Interest Rate	Amount		Effective Interest Rate
Debt of CLOs	$	285.5	3.18%	$	607.2	2.24%
Other debt	54.6		5.59%	75.0		4.79%
Total	$	340.1		$	682.2

Schedule of contractual maturities for debt of CSIPs

At December 31, 2016, maturities for debt of consolidated SIPs were as follows:

(in millions)	Carrying Amount
for the fiscal years ending September 30,
2017	$	20.8
2018	5.8
2019	28.0
2020	—
2021	—
Thereafter	285.5
Total	$	340.1

Schedule of changes in redeemable noncontrolling interests of CSIPs

Changes in redeemable noncontrolling interests of consolidated SIPs were as follows:

(in millions)
for the three months ended December 31,	2016			2015
Balance at beginning of period	$	61.1		$	59.6
Adoption of new accounting guidance	824.7			—
Net income (loss)	(23.5		)	1.0
Net subscriptions (distributions) and other	(13.6		)	68.0
Net deconsolidations	(7.5		)	(75.4		)
Balance at End of Period	$	841.2		$	53.2

Schedule of unpaid principal balance and fair value of investments and debt of CLOs

The unpaid principal balance and fair value of the investments of the CLOs were as follows:

(in millions)	December 31, 2016		September 30, 2016
Unpaid principal balance	$	244.3	$	496.0
Difference between unpaid principal balance and fair value	—		(8.2		)
Fair Value	$	244.3	$	487.8

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Nonconsolidated Variable Interest Entities (Tables)

3 Months Ended

Dec. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of maximum exposure loss from nonconsolidated VIEs

The Company’s maximum exposure to loss from these VIEs consists of equity investments and investment management fee receivables as follows:

(in millions)	December 31, 2016		September 30, 2016
Investments	$	229.9	$	77.3
Receivables	100.7		21.4
Total	$	330.6	$	98.7

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Stock-Based Compensation (Tables)

3 Months Ended

Dec. 31, 2016

Share-based Compensation [Abstract]

Summary of nonvested stock and stock unit award activity

Stock and stock unit award activity was as follows:

(shares in thousands)	Time-Based Shares		Performance- Based Shares		Total Shares		Weighted-Average Grant-Date Fair Value
for the three months ended December 31, 2016
Nonvested balance at October 1, 2016	2,369		1,288		3,657		$	45.67
Granted	2,696		1,110		3,806		34.11
Vested	(26	)	(353	)	(379	)	49.71
Forfeited/canceled	(114	)	(274	)	(388	)	44.18
Nonvested Balance at December 31, 2016	4,925		1,771		6,696		$	38.96

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Other Income (Expenses) (Tables)

3 Months Ended

Dec. 31, 2016

Other Income and Expenses [Abstract]

Schedule of other income (expenses)

Other income (expenses) consisted of the following:

	Three Months Ended December 31,
(in millions)	2016			2015
Investment and Other Income, Net
Dividend income	$	2.4		$	2.8
Interest income	13.6			3.6
Gains (losses) on trading investment securities, net	2.0			(7.3		)
Realized gains on sale of investment securities, available-for-sale	0.6			7.8
Realized losses on sale of investment securities, available-for-sale	(0.7		)	(0.8		)
Income from investments in equity method investees	34.2			24.8
Other-than-temporary impairment of investments	(0.3		)	(0.4		)
Losses on investments of consolidated SIPs, net	(29.9		)	(5.7		)
Foreign currency exchange gains, net	19.8			3.5
Other, net	4.4			2.2
Total	46.1			30.5
Interest Expense	(13.3		)	(12.0		)
Other Income, Net	$	32.8		$	18.5

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Accumulated Other Comprehensive Income (Loss) (Tables)

3 Months Ended

Dec. 31, 2016

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

Changes in accumulated other comprehensive income (loss) by component

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

(in millions)	Unrealized Gains (Losses) on Investments			Currency Translation Adjustments			Unrealized Losses on Defined Benefit Plans			Total
for the three months ended December 31, 2016
Balance at October 1, 2016	$	6.8		$	(346.1	)	$	(8.1	)	$	(347.4	)
Adoption of new accounting guidance	(6.8		)	(0.3		)	—			(7.1		)
Other comprehensive loss:
Other comprehensive loss before reclassifications, net of tax	(2.6		)	(60.9		)	—			(63.5		)
Reclassifications to net investment and other income, net of tax	0.2			—			—			0.2
Total other comprehensive loss	(2.4		)	(60.9		)	—			(63.3		)
Balance at December 31, 2016	$	(2.4	)	$	(407.3	)	$	(8.1	)	$	(417.8	)

(in millions)	Unrealized Gains on Investments			Currency Translation Adjustments			Unrealized Losses on Defined Benefit Plans			Total
for the three months ended December 31, 2015
Balance at October 1, 2015	$	19.3		$	(327.8	)	$	(5.7	)	$	(314.2	)
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassifications, net of tax	0.8			(23.6		)	0.6			(22.2		)
Reclassifications to net investment and other income, net of tax	(6.7		)	—			—			(6.7		)
Total other comprehensive income (loss)	(5.9		)	(23.6		)	0.6			(28.9		)
Balance at December 31, 2015	$	13.4		$	(351.4	)	$	(5.1	)	$	(343.1	)

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New Accounting Guidance - Narrative (Details) $ in Millions	Dec. 31, 2016	Oct. 01, 2016 USD ($)	Sep. 30, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of consolidated sponsored investment products	61		40
Number of deconsolidated collateralized loan obligations (“CLOs”)	1		3
ASU 2015-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of consolidated sponsored investment products		24
Number of other SIPs that are consolidated VIEs		3
Number of deconsolidated collateralized loan obligations (“CLOs”)		2
Number of deconsolidated limited partnerships		5
Adoption of new accounting guidance		$ (325.9)
Liability [Member] | ASU 2015-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Adoption of new accounting guidance		(317.9)
Redeemable noncontrolling interest [Member] | ASU 2015-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Adoption of new accounting guidance		824.7
Retained earnings [Member] | ASU 2015-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Adoption of new accounting guidance		5.8
Nonredeemable noncontrolling interests [Member] | ASU 2015-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Adoption of new accounting guidance		(324.6)
Other equity [Member] | ASU 2015-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Adoption of new accounting guidance		(7.1)
Assets [Member] | ASU 2015-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Adoption of new accounting guidance		$ 180.9

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Stockholders' Equity - Narrative (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Stockholders' Equity Note [Abstract]
Number of shares repurchased during period	7.1	10.5
Cost of shares repurchased during period	$ 261.7	$ 404.1
Remaining number of shares authorized to be repurchased	43.6

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Stockholders' Equity - Changes in Stockholders' Equity (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Oct. 01, 2016
Stockholders' Equity Rollforward
Beginning balance - Franklin Resources, Inc. Stockholders' Equity	$ 11,935.8
Beginning balance - Nonredeemable Noncontrolling Interests	592.4
Beginning balance - Total Stockholders' Equity	12,528.2	$ 12,495.8
Net income attributable to Franklin Resources, Inc.	440.2	447.8
Nonredeemable noncontrolling interests	2.1	13.6
Net Income	442.3	461.4
Other comprehensive loss	(63.3)	(28.9)
Cash dividends declared on common stock	(113.4)	(107.6)
Repurchase of common stock	(261.7)	(404.1)
Net subscriptions (distribution)	12.3	(28.7)
Stock-based compensation	28.5	33.0
Ending balance - Franklin Resources, Inc. Stockholders' Equity	11,964.8
Ending balance - Nonredeemable Noncontrolling Interests	282.2
Ending balance - Total Stockholders' Equity	12,247.0	12,420.9
ASU 2015-02 [Member]
Stockholders' Equity Rollforward
Adoption of new accounting guidance			$ (325.9)
Franklin Resources, Inc. Stockholders' Equity [Member]
Stockholders' Equity Rollforward
Beginning balance - Franklin Resources, Inc. Stockholders' Equity	11,935.8	11,841.0
Net income attributable to Franklin Resources, Inc.	440.2	447.8
Other comprehensive loss	(63.3)	(28.9)
Cash dividends declared on common stock	(113.4)	(107.6)
Repurchase of common stock	(261.7)	(404.1)
Stock-based compensation	28.5	33.0
Ending balance - Franklin Resources, Inc. Stockholders' Equity	11,964.8	11,781.2
Franklin Resources, Inc. Stockholders' Equity [Member] | ASU 2015-02 [Member]
Stockholders' Equity Rollforward
Adoption of new accounting guidance			(1.3)
Nonredeemable noncontrolling interests [Member]
Stockholders' Equity Rollforward
Beginning balance - Nonredeemable Noncontrolling Interests	592.4	654.8
Nonredeemable noncontrolling interests	2.1	13.6
Net subscriptions (distribution)	12.3	(28.7)
Ending balance - Nonredeemable Noncontrolling Interests	$ 282.2	$ 639.7
Nonredeemable noncontrolling interests [Member] | ASU 2015-02 [Member]
Stockholders' Equity Rollforward
Adoption of new accounting guidance			$ (324.6)

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Earnings per Share - Narrative (Details) - shares shares in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Earnings Per Share [Abstract]
Shares of nonparticipating nonvested stock unit awards excluded from the calculation of diluted EPS	0.7	1.4

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Earnings per Share - Components of Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Earnings Per Share Reconciliation [Abstract]
Net income attributable to Franklin Resources, Inc.	$ 440.2	$ 447.8
Less: allocation of earnings to participating nonvested stock and stock unit awards - basic	3.0	2.7
Less: allocation of earnings to participating nonvested stock and stock unit awards - diluted	3.0	2.7
Net Income Available to Common Stockholders - basic	437.2	445.1
Net Income Available to Common Stockholders - diluted	$ 437.2	$ 445.1
Weighted-average shares outstanding – basic	565.1	597.6
Dilutive effect of nonparticipating nonvested stock unit awards	0.1	0.1
Weighted-Average Shares Outstanding – Diluted	565.2	597.7
Earnings per Share [Abstract]
Basic	$ 0.77	$ 0.74
Diluted	$ 0.77	$ 0.74

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Investments - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Sep. 30, 2016
Investments [Abstract]
Aggregate carrying values of investment securities pledged as collateral	$ 117.3		$ 117.3
Other-than-temporary impairment of investments	$ 0.3	$ 0.4

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Investments - Summary of Investments (Details) - USD ($) $ in Millions	Dec. 31, 2016	Sep. 30, 2016
Investment Holdings [Line Items]
Investment securities, trading	$ 403.0	$ 1,121.9
Investment securities, available-for-sale	105.3	301.4
Investments in equity method investees	816.0	797.4
Other investments	188.5	195.9
Total	1,512.8	2,416.6
SIPs [Member]
Investment Holdings [Line Items]
Investment securities, trading	138.8	844.4
Investment securities, available-for-sale	102.3	297.7
Debt and Other Equity Securities [Member]
Investment Holdings [Line Items]
Investment securities, trading	264.2	277.5
Investment securities, available-for-sale	$ 3.0	$ 3.7

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Investments - Summary of Gross Unrealized Gains and Losses Relating to Investment Securities, Available-for-Sale (Details) - USD ($) $ in Millions	Dec. 31, 2016	Sep. 30, 2016
Investment Holdings [Line Items]
Cost Basis	$ 106.1	$ 293.2
Gross Unrealized Gains	1.1	13.8
Gross Unrealized Losses	(1.9)	(5.6)
Fair Value	105.3	301.4
SIPs [Member]
Investment Holdings [Line Items]
Cost Basis	103.2	289.6
Gross Unrealized Gains	1.0	13.7
Gross Unrealized Losses	(1.9)	(5.6)
Fair Value	102.3	297.7
Debt and Other Equity Securities [Member]
Investment Holdings [Line Items]
Cost Basis	2.9	3.6
Gross Unrealized Gains	0.1	0.1
Gross Unrealized Losses	0.0	0.0
Fair Value	$ 3.0	$ 3.7

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Investments - Summary of Gross Unrealized Losses, AFS, Continuous Loss Position (Details) - SIPs [Member] - USD ($) $ in Millions	Dec. 31, 2016	Sep. 30, 2016
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 19.5	$ 75.8
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Gross Unrealized Losses	(1.1)	(4.3)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Greater, Fair Value	5.2	18.0
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Greater, Gross Unrealized Losses	(0.8)	(1.3)
Available-for-sale Securities, Continuous Unrealized Loss Position, Total Fair Value	24.7	93.8
Available-for-sale Securities, Continuous Unrealized Loss Position, Total Gross Unrealized Losses	$ (1.9)	$ (5.6)

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Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
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

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Fair Value Measurements - Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Millions	Dec. 31, 2016	Sep. 30, 2016
Assets [Abstract]
Investment securities, trading	$ 403.0	$ 1,121.9
Investment securities, available-for-sale	105.3	301.4
Life settlement contracts	13.3	14.3
Total Assets Measured at Fair Value	521.6	1,437.6
Liability [Abstract]
Contingent consideration liability	83.7	98.1
Level 1 [Member]
Assets [Abstract]
Life settlement contracts	0.0	0.0
Total Assets Measured at Fair Value	245.1	1,146.3
Liability [Abstract]
Contingent consideration liability	0.0	0.0
Level 2 [Member]
Assets [Abstract]
Life settlement contracts	0.0	0.0
Total Assets Measured at Fair Value	77.8	86.2
Liability [Abstract]
Contingent consideration liability	0.0	0.0
Level 3 [Member]
Assets [Abstract]
Life settlement contracts	13.3	14.3
Total Assets Measured at Fair Value	198.7	205.1
Liability [Abstract]
Contingent consideration liability	83.7	98.1
SIPs [Member]
Assets [Abstract]
Investment securities, trading	138.8	844.4
Investment securities, available-for-sale	102.3	297.7
SIPs [Member] | Level 1 [Member]
Assets [Abstract]
Investment securities, trading	138.8	844.4
Investment securities, available-for-sale	102.3	297.7
SIPs [Member] | Level 2 [Member]
Assets [Abstract]
Investment securities, trading	0.0	0.0
Investment securities, available-for-sale	0.0	0.0
SIPs [Member] | Level 3 [Member]
Assets [Abstract]
Investment securities, trading	0.0	0.0
Investment securities, available-for-sale	0.0	0.0
Debt and Other Equity Securities [Member]
Assets [Abstract]
Investment securities, trading	264.2	277.5
Investment securities, available-for-sale	3.0	3.7
Debt and Other Equity Securities [Member] | Level 1 [Member]
Assets [Abstract]
Investment securities, trading	3.1	2.6
Investment securities, available-for-sale	0.9	1.6
Debt and Other Equity Securities [Member] | Level 2 [Member]
Assets [Abstract]
Investment securities, trading	75.7	84.1
Investment securities, available-for-sale	2.1	2.1
Debt and Other Equity Securities [Member] | Level 3 [Member]
Assets [Abstract]
Investment securities, trading	185.4	190.8
Investment securities, available-for-sale	$ 0.0	$ 0.0

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Fair Value Measurements - Schedule of Changes in Level 3 Assets and Liabilities (Details) - Level 3 [Member] - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at beginning of period - assets	$ 292.6	$ 321.8
Total realized and unrealized gains (losses) - assets	(3.6)	0.0
Purchases - assets	23.2	2.5
Sales - assets	(6.5)	(9.6)
Foreign exchange revaluation	(3.8)	(2.7)
Balance at End of Period - assets	256.0	312.0
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	(3.6)	(0.8)
Investments [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at beginning of period - assets	205.1	20.7
Purchases - assets	0.5	3.3
Sales - assets	(2.4)	0.0
Settlements - assets	(1.7)	(0.8)
Foreign exchange revaluation	(3.4)	0.0
Balance at End of Period - assets	198.7	23.8
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	(0.1)	0.2
Contingent Consideration Liability [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at beginning of period - liabilities	(98.1)	(102.9)
Purchases - liabilities	0.0	0.0
Sales - liabilities	0.0	0.0
Settlements - liabilities	2.2	3.3
Foreign exchange revaluation	0.0	0.0
Balance at End of Period - liabilities	(83.7)	(115.8)
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	12.2	(16.2)
Investment and other income [Member] | Investments [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Total realized and unrealized gains (losses) - assets	0.6	0.6
Investment and other income [Member] | Contingent Consideration Liability [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Total realized and unrealized gains (losses) - liabilities	0.0	0.0
General, administrative and other expense [Member] | Investments [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Total realized and unrealized gains (losses) - assets	0.0	0.0
General, administrative and other expense [Member] | Contingent Consideration Liability [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Total realized and unrealized gains (losses) - liabilities	$ 12.2	$ (16.2)

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Fair Value Measurements - Quantitative Information about Level 3 (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities, trading	$ 403.0	$ 1,121.9
Life settlement contracts	13.3	14.3
Contingent consideration liability	83.7	98.1
Level 3 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Life settlement contracts	13.3	14.3
Contingent consideration liability	83.7	98.1
Discounted cash flow [Member] | Level 3 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Life settlement contracts	13.3	14.3
Contingent consideration liability	$ 83.7	$ 98.1
Contingent Consideration Liability [Member] | Minimum [Member] | Discounted cash flow [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
AUM growth rate	(1.90%)	2.40%
EBITDA margin	6.20%
Contingent Consideration Liability [Member] | Maximum [Member] | Discounted cash flow [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
AUM growth rate	2.80%	11.50%
EBITDA margin	8.80%
Contingent Consideration Liability [Member] | Weighted Average [Member] | Discounted cash flow [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount rate	13.20%	13.20%
AUM growth rate	0.70%	5.90%
EBITDA margin	7.90%	14.30%
Life Settlement Contracts [Member] | Minimum [Member] | Discounted cash flow [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount rate	8.00%	3.30%
Life expectancy (in months)	21 months	20 months
Life Settlement Contracts [Member] | Maximum [Member] | Discounted cash flow [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount rate	20.00%	18.00%
Life expectancy (in months)	130 months	132 months
Life Settlement Contracts [Member] | Weighted Average [Member] | Discounted cash flow [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount rate	13.00%	11.50%
Life expectancy (in months)	65 months	65 months
Debt and Other Equity Securities [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities, trading	$ 264.2	$ 277.5
Debt and Other Equity Securities [Member] | Level 3 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities, trading	185.4	190.8
Debt and Other Equity Securities [Member] | Discounted cash flow [Member] | Level 3 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities, trading	$ 185.4	$ 190.8
Debt and Other Equity Securities [Member] | Minimum [Member] | Discounted cash flow [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount rate	6.50%	3.60%
Risk premium	2.00%	2.00%
Liquidity discount	0.00%	0.00%
Debt and Other Equity Securities [Member] | Maximum [Member] | Discounted cash flow [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount rate	6.90%	6.90%
Risk premium	17.90%	17.90%
Liquidity discount	10.00%	10.00%
Debt and Other Equity Securities [Member] | Weighted Average [Member] | Discounted cash flow [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount rate	6.80%	6.70%
Risk premium	16.70%	16.50%
Liquidity discount	9.70%	9.60%

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Fair Value Measurements - Schedule of Financial Instruments not Measured at Fair Value (Details) - USD ($) $ in Millions	Dec. 31, 2016	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	$ 8,454.8	$ 8,483.3	$ 8,269.0	$ 8,368.1
Carrying Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	8,223.6	8,247.1
Other investments	128.0	131.6
Cost method investments	47.2	50.0
Senior notes	1,342.8	1,348.5
Loan	51.6	52.7
Estimated Fair Value [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	8,223.6	8,247.1
Estimated Fair Value [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments	128.0	131.6
Senior notes	1,365.1	1,412.5
Loan	51.5	52.7
Estimated Fair Value [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cost method investments	$ 59.5	$ 61.3

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Consolidated Sponsored Investment Products - Narrative (Details) $ in Millions	3 Months Ended		12 Months Ended
	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Sep. 30, 2016 USD ($)
Consolidated Sponsored Investment Products [Abstract]
Number of consolidated sponsored investment products	61		40
Number of CLOs	1		3
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Transfers into Level 2 from Level 1 - assets	$ 0.0	$ 0.0
Transfers into Level 2 from Level 1 - liabilities	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 3 - assets	0.0	0.0
Transfers out of Level 3 - assets	0.0	0.0
Transfers into Level 3 - liabilities	0.0	0.0
Transfers out of Level 3 - liabilities	0.0	0.0
Debt, unpaid principal balance	1,394.4		$ 1,401.2
Unfunded commitments company contractually obligated to fund	$ 0.4		$ 2.2
CLOs [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Interest Rate, Minimum	2.38%		1.02%
Interest Rate, Maximum	10.36%		10.16%
Net gains related to its own economic interests	$ 1.1	0.1
Debt, unpaid principal balance	274.9		$ 653.8
Consolidated SIPs [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Consolidated SIPs' unfunded commitments	2.0		$ 74.4
Transfers into Level 2 from Level 1 - assets	0.0	0.0
Transfers into Level 2 from Level 1 - liabilities	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 3 - assets	0.0	0.0
Transfers out of Level 3 - assets	0.0	0.0
Transfers into Level 3 - liabilities	0.0	0.0
Transfers out of Level 3 - liabilities	$ 0.0	$ 0.0
Interest Rate, Minimum	2.36%		2.36%
Interest Rate, Maximum	6.38%		6.19%
Debt, unpaid principal balance	$ 340.1		$ 682.2
Consolidated SIPs [Member] | CLOs [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Debt, unpaid principal balance	$ 285.5		$ 607.2
Real Estate and Private Equity Funds [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Liquidation weighted average period	5 years 2 months		3 years 2 months

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Consolidated Sponsored Investment Products - Schedule of Balances of CSIPs (Details) - USD ($) $ in Millions	Dec. 31, 2016	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Assets [Abstract]
Cash and cash equivalents	$ 8,454.8	$ 8,483.3	$ 8,269.0	$ 8,368.1
Receivables	930.0	794.3
Investments, at fair value	521.6	1,437.6
Other assets	143.7	156.7
Total Assets	16,210.3	16,098.8
Liabilities [Abstract]
Accounts payable and accrued expenses	214.8	233.3
Debt	1,394.4	1,401.2
Other liabilities	230.6	244.3
Total liabilities	3,122.1	3,509.5
Redeemable Noncontrolling Interests	841.2	61.1	53.2	59.6
Stockholders' Equity [Abstract]
Franklin Resources, Inc.’s interests	11,964.8	11,935.8
Nonredeemable noncontrolling interests	282.2	592.4
Total stockholders’ equity	12,247.0	12,528.2	$ 12,420.9	$ 12,495.8
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	16,210.3	16,098.8
Consolidated SIPs [Member]
Assets [Abstract]
Cash and cash equivalents	231.2	236.2
Receivables	174.1	47.9
Investments, at fair value	2,456.1	1,513.4
Other assets	0.8	1.4
Total Assets	2,862.2	1,798.9
Liabilities [Abstract]
Accounts payable and accrued expenses	67.9	65.2
Debt	340.1	682.2
Other liabilities	7.2	8.5
Total liabilities	415.2	755.9
Redeemable Noncontrolling Interests	841.2	61.1
Stockholders' Equity [Abstract]
Franklin Resources, Inc.’s interests	1,349.3	414.1
Nonredeemable noncontrolling interests	256.5	567.8
Total stockholders’ equity	1,605.8	981.9
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$ 2,862.2	$ 1,798.9

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Consolidated Sponsored Investment Products - Schedule of Investments of CSIPs (Details) - USD ($) $ in Millions	Dec. 31, 2016	Sep. 30, 2016
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Investment securities, trading	$ 403.0	$ 1,121.9
Fair value	521.6	1,437.6
Consolidated SIPs [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Investment securities, trading	1,810.3	287.8
Other debt securities	366.9	618.3
Other equity securities	278.9	607.3
Fair value	$ 2,456.1	$ 1,513.4

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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	Dec. 31, 2016	Sep. 30, 2016
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	$ 146.3	$ 446.0
Real Estate and Private Equity Funds [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	146.3	444.2
Hedge Funds [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	$ 0.0	$ 1.8

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Consolidated Sponsored Investment Products - Schedule of Balances of Assets and Liabilities of CSIPs Measured at Fair Value (Details) - USD ($) $ in Millions	Dec. 31, 2016	Sep. 30, 2016
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Total Assets Measured at Fair Value	$ 521.6	$ 1,437.6
NAV as a Practical Expedient	146.3	446.0
Level 1 [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Total Assets Measured at Fair Value	245.1	1,146.3
Level 2 [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Total Assets Measured at Fair Value	77.8	86.2
Level 3 [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Total Assets Measured at Fair Value	198.7	205.1
Consolidated sponsored investment products [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Equity securities	278.9	607.3
Debt securities	366.9	618.3
Fair Value, Measurements, Recurring [Member] | CLOs [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	54.8	146.4
Receivables of consolidated VIEs	2.0	23.6
Fair Value, Measurements, Recurring [Member] | CLOs [Member] | Level 1 [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	54.8	146.4
Receivables of consolidated VIEs	0.0	0.0
Fair Value, Measurements, Recurring [Member] | CLOs [Member] | Level 2 [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	0.0	0.0
Receivables of consolidated VIEs	2.0	23.6
Fair Value, Measurements, Recurring [Member] | CLOs [Member] | Level 3 [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	0.0	0.0
Receivables of consolidated VIEs	0.0	0.0
Fair Value, Measurements, Recurring [Member] | Consolidated sponsored investment products [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Equity securities	643.6	762.2
Debt securities	1,812.5	751.2
Total Assets Measured at Fair Value	2,512.9	1,683.4
Other liabilities of consolidated SIPs	7.2	8.5
NAV as a Practical Expedient	146.3	446.0
Fair Value, Measurements, Recurring [Member] | Consolidated sponsored investment products [Member] | Level 1 [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Equity securities	272.2	155.4
Debt securities	0.2	0.0
Total Assets Measured at Fair Value	327.2	301.8
Other liabilities of consolidated SIPs	0.2	0.1
Fair Value, Measurements, Recurring [Member] | Consolidated sponsored investment products [Member] | Level 2 [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Equity securities	93.5	0.5
Debt securities	1,687.9	618.9
Total Assets Measured at Fair Value	1,783.4	643.0
Other liabilities of consolidated SIPs	7.0	8.4
Fair Value, Measurements, Recurring [Member] | Consolidated sponsored investment products [Member] | Level 3 [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Equity securities	131.6	160.3
Debt securities	124.4	132.3
Total Assets Measured at Fair Value	256.0	292.6
Other liabilities of consolidated SIPs	0.0	0.0
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Consolidated sponsored investment products [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
NAV as a Practical Expedient	$ 146.3	$ 446.0

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Consolidated Sponsored Investment Products - Schedule of Changes in Level 3 Assets and Liabilities of CSIPs (Details) - Level 3 [Member] - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Oct. 01, 2016
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Balance at beginning of period - assets	$ 292.6	$ 321.8
Realized and unrealized gains (losses) included in investment and other income, net - assets	(3.6)	0.0
Purchases - assets	23.2	2.5
Sales - assets	(6.5)	(9.6)
Foreign exchange revaluation	(3.8)	(2.7)
Balance at End of Period - assets	256.0	312.0
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	(3.6)	(0.8)
Equity Securities [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Balance at beginning of period - assets	160.3	191.6
Realized and unrealized gains (losses) included in investment and other income, net - assets	(3.3)	(1.1)
Purchases - assets	21.0	0.0
Sales - assets	(0.1)	0.0
Foreign exchange revaluation	(0.9)	(2.4)
Balance at End of Period - assets	131.6	188.1
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	(3.4)	(1.1)
Debt Securities [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Balance at beginning of period - assets	132.3	130.2
Realized and unrealized gains (losses) included in investment and other income, net - assets	(0.3)	1.1
Purchases - assets	2.2	2.5
Sales - assets	(6.4)	(9.6)
Foreign exchange revaluation	(2.9)	(0.3)
Balance at End of Period - assets	124.4	123.9
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end	$ (0.2)	$ 0.3
ASU 2015-02 [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Adoption of new accounting guidance			$ (45.9)
ASU 2015-02 [Member] | Equity Securities [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Adoption of new accounting guidance			(45.4)
ASU 2015-02 [Member] | Debt Securities [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Adoption of new accounting guidance			$ (0.5)

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Consolidated Sponsored Investment Products - Schedule of Valuation Techniques and Significant Unobservable Inputs used in Recurring Level 3 Fair Value Measurements (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended	12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016
Equity Securities [Member] | Minimum [Member] | Market comparable companies [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
EBITDA multiple	5.0	5.0
Discount for lack of marketability		25.00%
Equity Securities [Member] | Minimum [Member] | Discounted cash flow [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Discount rate	5.00%	5.00%
Equity Securities [Member] | Minimum [Member] | Market Pricing Valuation Approach [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Price to book value ratio	$ 1.8	$ 1.8
Equity Securities [Member] | Maximum [Member] | Market comparable companies [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
EBITDA multiple	14.2	14.2
Discount for lack of marketability		50.00%
Equity Securities [Member] | Maximum [Member] | Discounted cash flow [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Discount rate	19.00%	19.00%
Equity Securities [Member] | Maximum [Member] | Market Pricing Valuation Approach [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Price to book value ratio	$ 2.3	$ 2.3
Equity Securities [Member] | Weighted Average [Member] | Market comparable companies [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
EBITDA multiple	11.0	10.3
Discount for lack of marketability	50.00%	36.60%
Equity Securities [Member] | Weighted Average [Member] | Discounted cash flow [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Discount rate	13.70%	13.70%
Equity Securities [Member] | Weighted Average [Member] | Market Pricing Valuation Approach [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Price to book value ratio	$ 2.0	$ 2.0
Debt Securities [Member] | Minimum [Member] | Discounted cash flow [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Discount rate	6.00%	6.00%
Risk premium	0.00%	0.00%
Debt Securities [Member] | Maximum [Member] | Discounted cash flow [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Discount rate	50.00%	15.00%
Risk premium	28.00%	28.00%
Debt Securities [Member] | Weighted Average [Member] | Discounted cash flow [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
EBITDA multiple		5.5
Discount rate	13.00%	10.40%
Risk premium	9.50%	9.70%
Debt Securities [Member] | Weighted Average [Member] | Market Pricing Valuation Approach [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Private Sales Pricing	$ 0.57	$ 0.57
Consolidated SIPs [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Equity securities	$ 278.9	$ 607.3
Debt securities	366.9	618.3
Consolidated SIPs [Member] | Level 3 [Member] | Market comparable companies [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Equity securities	83.9	113.1
Consolidated SIPs [Member] | Level 3 [Member] | Discounted cash flow [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Equity securities	24.3	24.3
Debt securities	112.6	119.7
Consolidated SIPs [Member] | Level 3 [Member] | Market Pricing Valuation Approach [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Equity securities	23.4	22.9
Debt securities	11.8	12.6
Fair Value, Measurements, Recurring [Member] | Consolidated SIPs [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Equity securities	643.6	762.2
Debt securities	1,812.5	751.2
Fair Value, Measurements, Recurring [Member] | Consolidated SIPs [Member] | Level 3 [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Equity securities	131.6	160.3
Debt securities	$ 124.4	$ 132.3

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Consolidated Sponsored Investment Products - Schedule of Financial Instruments of CSIPs not Measured at Fair Value (Details) - USD ($) $ in Millions		Dec. 31, 2016	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Cash and cash equivalents		$ 8,454.8	$ 8,483.3	$ 8,269.0	$ 8,368.1
Debt		1,394.4	1,401.2
CLOs [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Debt		274.9	653.8
Consolidated sponsored investment products [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Cash and cash equivalents		231.2	236.2
Debt		340.1	682.2
Other debt		54.6	75.0
Consolidated sponsored investment products [Member] | CLOs [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Debt		285.5	607.2
Carrying Value [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Cash and cash equivalents		8,223.6	8,247.1
Carrying Value [Member] | Consolidated sponsored investment products [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Cash and cash equivalents		176.4	89.8
Other debt		54.6	75.0
Carrying Value [Member] | Consolidated sponsored investment products [Member] | CLOs [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Debt	[1]	285.5	607.2
Estimated Fair Value [Member] | Level 1 [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Cash and cash equivalents		8,223.6	8,247.1
Estimated Fair Value [Member] | Consolidated sponsored investment products [Member] | Level 1 [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Cash and cash equivalents		176.4	89.8
Estimated Fair Value [Member] | Consolidated sponsored investment products [Member] | Level 3 [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Other debt		54.3	74.6
Estimated Fair Value [Member] | Consolidated sponsored investment products [Member] | Fair Value Inputs Level 2 and Level 3 [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Debt	[1]	$ 279.4	$ 594.5

[1] Substantially all is Level 2.

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Consolidated Sponsored Investment Products - Schedule of Debt of CSIPs (Details) - USD ($) $ in Millions	Dec. 31, 2016	Sep. 30, 2016
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Debt	$ 1,394.4	$ 1,401.2
CLOs [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Debt	$ 274.9	$ 653.8
Consolidated sponsored investment products [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Effective Interest Rate	5.59%	4.79%
Other debt	$ 54.6	$ 75.0
Debt	$ 340.1	$ 682.2
Consolidated sponsored investment products [Member] | CLOs [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Effective Interest Rate	3.18%	2.24%
Debt	$ 285.5	$ 607.2

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Consolidated Sponsored Investment Products - Schedule of Contractual Maturities for Debt of CSIPs (Details) - USD ($) $ in Millions	Dec. 31, 2016	Sep. 30, 2016
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Debt	$ 1,394.4	$ 1,401.2
Consolidated SIPs [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
2017	20.8
2018	5.8
2019	28.0
2020	0.0
2021	0.0
Thereafter	285.5
Debt	$ 340.1	$ 682.2

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Consolidated Sponsored Investment Products - Schedule of Redeemable Noncontrolling Interest of CSIPs (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Oct. 01, 2016
Temporary Equity [Line Items]
Balance at beginning of period	$ 61.1	$ 59.6
Net income (loss)	(23.5)	1.0
Net subscriptions (distributions) and other	12.3	(28.7)
Balance at End of Period	841.2	53.2
Redeemable noncontrolling interest [Member]
Temporary Equity [Line Items]
Net subscriptions (distributions) and other	(13.6)	68.0
Net deconsolidations	$ (7.5)	$ (75.4)
ASU 2015-02 [Member]
Temporary Equity [Line Items]
Adoption of new accounting guidance			$ (325.9)
ASU 2015-02 [Member] | Redeemable noncontrolling interest [Member]
Temporary Equity [Line Items]
Adoption of new accounting guidance			$ 824.7

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Consolidated Sponsored Investment Products - Schedule of Unpaid Principal Balance and Fair Value of Investments and Debt of CLOs (Details) - USD ($) $ in Millions	Dec. 31, 2016	Sep. 30, 2016
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Unpaid principal balance	$ 1,512.8	$ 2,416.6
Investments, at fair value	521.6	1,437.6
CLOs [Member]
Schedule Of Consolidated Sponsored Investment Products [Line Items]
Unpaid principal balance	244.3	496.0
Difference between unpaid principal balance and fair value	0.0	(8.2)
Investments, at fair value	$ 244.3	$ 487.8

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Nonconsolidated Variable Interest Entities - Narrative (Details) $ in Millions	3 Months Ended	12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016 USD ($)
Debt Securities [Member]
Variable Interest Entity [Line Items]
Purchase of debt securities		$ 182.7
INDIA
Variable Interest Entity [Line Items]
Number of SIPs	6

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Nonconsolidated Variable Interest Entities (Details) - Nonconsolidated VIEs [Member] - USD ($) $ in Millions	Dec. 31, 2016	Sep. 30, 2016
Variable Interest Entity [Line Items]
Maximum exposure to loss	$ 330.6	$ 98.7
Investments [Member]
Variable Interest Entity [Line Items]
Maximum exposure to loss	229.9	77.3
Receivable [Member]
Variable Interest Entity [Line Items]
Maximum exposure to loss	$ 100.7	$ 21.4

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Commitments and Contingencies Commitments and Contingencies - Narrative (Details) $ in Millions	3 Months Ended
	Dec. 31, 2016 USD ($)
Commitments and Contingencies Disclosure [Abstract]
The plaintiff alleges that plan losses exceed	$ 79.0

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Stock-Based Compensation - Narrative (Details) $ in Millions	3 Months Ended
	Dec. 31, 2016 USD ($)
Share-based Compensation [Abstract]
Unrecognized compensation expense related to nonvested stock and stock unit awards, net of estimated forfeitures	$ 197.8
Remaining weighted-average vesting period	2 years

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Stock-Based Compensation (Details) shares in Thousands	3 Months Ended
	Dec. 31, 2016 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Nonvested balance at October 1, 2016	3,657
Granted	3,806
Vested	(379)
Forfeited/canceled	(388)
Nonvested Balance at December 31, 2016	6,696
Nonvested beginning balance, Weighted Average Grant Date Fair Value | $ / shares	$ 45.67
Weighted Average Grant Date Fair Value of shares granted | $ / shares	34.11
Weighted Average Grant Date Fair Value of shares vested | $ / shares	49.71
Weighted Average Grant Date Fair Value of shares forfeited/canceled | $ / shares	44.18
Nonvested ending balance, Weighted Average Grant Date Fair Value | $ / shares	$ 38.96
Time-Based Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Nonvested balance at October 1, 2016	2,369
Granted	2,696
Vested	(26)
Forfeited/canceled	(114)
Nonvested Balance at December 31, 2016	4,925
Performance-Based Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Nonvested balance at October 1, 2016	1,288
Granted	1,110
Vested	(353)
Forfeited/canceled	(274)
Nonvested Balance at December 31, 2016	1,771

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Other Income (Expenses) - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Other Income and Expenses [Abstract]
Proceeds from the sale of available-for-sale securities	$ 8.6	$ 106.6
Net gains (losses) recognized on trading investment securities	0.2	(5.7)
Net gains (losses) recognized on trading investment securities of consolidated SIPs	$ (18.5)	$ 2.3

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Other Income (Expenses) - Schedule of Other Income (Expense) (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Other Income and Expenses [Abstract]
Dividend income	$ 2.4	$ 2.8
Interest income	13.6	3.6
Gains (losses) on trading investment securities, net	2.0	(7.3)
Realized gains on sale of investment securities, available-for-sale	0.6	7.8
Realized losses on sale of investment securities, available-for-sale	(0.7)	(0.8)
Income from investments in equity method investees	34.2	24.8
Other-than-temporary impairment of investments	(0.3)	(0.4)
Losses on investments of consolidated SIPs, net	(29.9)	(5.7)
Foreign currency exchange gains, net	19.8	3.5
Other, net	4.4	2.2
Total	46.1	30.5
Interest expense	(13.3)	(12.0)
Other income, net	$ 32.8	$ 18.5

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Accumulated Other Comprehensive Income (Loss) - Changes in Accumulated Other Comprehensive Income (Loss) by Component (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Oct. 01, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of period	$ (347.4)	$ (314.2)
Other comprehensive loss before reclassifications, net of tax	(63.5)	(22.2)
Reclassifications to net investment and other income, net of tax	0.2	(6.7)
Total other comprehensive income (loss)	(63.3)	(28.9)
Balance at end of period	(417.8)	(343.1)
Unrealized Gains (Losses) on Investments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of period	6.8	19.3
Other comprehensive loss before reclassifications, net of tax	(2.6)	0.8
Reclassifications to net investment and other income, net of tax	0.2	(6.7)
Total other comprehensive income (loss)	(2.4)	(5.9)
Balance at end of period	(2.4)	13.4
Currency Translation Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of period	(346.1)	(327.8)
Other comprehensive loss before reclassifications, net of tax	(60.9)	(23.6)
Reclassifications to net investment and other income, net of tax	0.0	0.0
Total other comprehensive income (loss)	(60.9)	(23.6)
Balance at end of period	(407.3)	(351.4)
Unrealized Losses on Defined Benefit Plans [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of period	(8.1)	(5.7)
Other comprehensive loss before reclassifications, net of tax	0.0	0.6
Reclassifications to net investment and other income, net of tax	0.0	0.0
Total other comprehensive income (loss)	0.0	0.6
Balance at end of period	$ (8.1)	$ (5.1)
ASU 2015-02 [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Adoption of new accounting guidance			$ (325.9)
ASU 2015-02 [Member] | Unrealized Gains (Losses) on Investments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Adoption of new accounting guidance			(6.8)
ASU 2015-02 [Member] | Currency Translation Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Adoption of new accounting guidance			(0.3)
ASU 2015-02 [Member] | Unrealized Losses on Defined Benefit Plans [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Adoption of new accounting guidance			0.0
ASU 2015-02 [Member] | Other equity [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Adoption of new accounting guidance			$ (7.1)