Gregory Eugene Johnson - Chairman, Chief Executive Officer, President and Member of Special Equity Awards Committee Kenneth Allan Lewis - Chief Financial Officer, Principal Accounting officer and Executive Vice President

Welcome to Franklin Resources earnings commentary for the quarter ended December 31, 2013. Statements made in this commentary regarding Franklin Resources Inc., which are not historical facts, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from any future results expressed or implied by such forward-looking statements. These and other risks, uncertainties and other important factors are described in more detail in Franklin's recent filings with the Securities and Exchange Commission, including in the Risk Factors and MD&A sections of Franklin's most recent Form 10-K and 10-Q filings. This commentary was prerecorded.

Hello, and thank you for taking the time to join us today. I'm Greg Johnson, CEO, and I'm joined by Ken Lewis, our CFO. Fiscal year started on a positive note for us as assets under management grew to almost $880 billion by quarter end and translated into a very strong quarter of operating results. We reached new highs for revenue, operating income and earnings per share. Importantly, long-term investment performance remained strong across equity and fixed-income strategies, with the majority of our U.S. registered and cross-border mutual funds ranked in the top half of their respected peer groups. We continue to believe that our broad and diversified global investment capabilities position us well for the current environment, and that is evident in our flows this quarter. Equity and hybrid products had their strongest quarter of net new flows since '07, attracting $6.7 billion. This quarter also marked an important milestone for the integration of K2, as we launched our first liquid alternatives mutual fund for U.S. retail investors. Turning to Slide 6, on investment performance. You will notice that we enhanced the disclosure to now include our cross-border mutual funds, which are sold internationally in addition to our U.S. registered mutual funds. Combined, they represent over 2/3 of assets under management and the bulk of our retail business. As you can see from this slide, long-term investment performance remained strong, and I would note that our key global equity hybrid and global fixed-income strategies continue to have outstanding performance. Franklin Income Fund represents 14% of the total and 28% of the equity hybrid assets for the 1-year period. The fund ranked in the 51st percentile at 12/31 for the 1-year period, down from the 45th percentile at 9/30. The fund's traditional weighting in utilities, which have underperformed as of…

Thanks, Greg. I'm happy to report a strong quarter of operating results. To begin, the fiscal year with revenue, operating income and earnings per share once again reaching new highs as a result of the growth of assets under management and our cost-conscious culture. Operating income for the quarter was $813 million, which is up 11% over the prior quarter and 19% from the prior year, outpacing the growth in assets under management over those periods. Net income was $604 million, a 19% increase from the prior year quarter and 17% from the prior year. And earnings per share was $0.96, up 20% since the fourth quarter and 19% from the prior year, outpacing the increase in net income due to our stock repurchase program that has steadily decreased shares outstanding over time. Total revenue for the quarter exceeded $2.1 billion for the first time, an increase of 6% from the prior quarter. The increase in average assets under management was the primary driver of the increase in revenue. However, I would like to quickly remind everybody that last quarter's accounting adjustment obviously impacted the quarter-to-quarter comparisons as well. Investment management fees increased 7%, due mainly to increased average assets under management as well as above-average performance fees of $26 million, with the majority of that coming from K2 products. Sales and distribution fees were about $637 million this quarter, reflecting an increase in the asset base component, which makes up about 2/3 of this line; and increased fees from commissionable sales, which were roughly 12% of long-term sales this quarter. Total operating expenses increased 4% this quarter, with all but the sales, distribution and marketing expense line flat, were down from the fourth quarter. Sales distribution and marketing expense increased 8%, mostly due to last quarter's accounting adjustment, but…