This presentation, and comments made in the associated conference call today may include forward-looking statements. Forward-looking statements include information concerning future results of our operations, expenses, earnings, liquidity, cash flow and capital expenditures, industry and market conditions, AUM, acquisitions and divestitures, debt and our ability to obtain additional financing or make payments, regulatory developments, demand for and pricing of our products and other aspects of our business or general economic conditions. In addition, words such as believes, expects, anticipates, intends, plans, estimates, projects, forecasts and future or conditional verbs such as will, may, could, should and would, as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. There can be no assurance that actual results will not differ materially from our expectations. We caution investors not to rely unduly on any forward-looking statement and urge you to carefully consider the risks described in our most recent Form 10-K and subsequent Forms 10-Q filed with the SEC. You may obtain these reports from the SEC's website at www.sec.gov. We expressly disclaim any obligation to update the information in any public disclosure if any forward-looking statement later turns out to be inaccurate. Welcome to Invesco's Second Quarter Results Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now I would like to turn the call over to the speakers for today, Mr. Martin L. Flanagan, President and CEO of Invesco; and Mr. Loren Starr, Chief Financial Officer. Mr. Flanagan, you may begin.

Thank you very much, and thank you everybody for joining us today. As was just -- I'm here with Loren, and we'll go through the presentation. It's on the website if you're so inclined to follow. I'll review the business results for the second quarter, and Loren will go into greater detail of the financial results. And then we'll go to Q&A and address any questions anybody might have. And before we get into numbers, I want to drive a sense of the macro environmental factors that impacted our business through the second quarter. And as we've seen in the past, it was really a tale of two markets. Some of the gains in April and May were offset by the weakness of June. Global markets stumbled in June as investors reacted to the comments from Federal Reserve Chairman Bernanke and other Fed officials signaling an early retreat from the asset purchases. And further signs of slowing in the Chinese economy added to additional downward pressure. And as a result, the global markets, particularly emerging markets, generated mostly negative performance in the month of June. And we saw many investors heading for the exit in that period. One of the few bright spots with the U.S. economy working, consumer confidence remain strong and the housing market continue to remain strong and getting stronger. Fortunately, markets have improved considerably in July, and we've seen investors return and add to their portfolios. A key question going forward is, what is the impact of rising interest rates in the United States going to have on the economies and markets in the U.S., in particular, and also around the globe? So with that as a backdrop, let me highlight the firm's operating results for the third quarter. I'm on Slide 3. Long-term investment performance…

Thanks, Marty. So quarter-over-quarter, our total AUM fell $2.1 billion or 0.3%. Positive long-term flows of $1.4 billion were more than offset by the negative impact from markets and FX of $3.5 billion. Despite the market decline featured in June, our average AUM for Q2 was still up 4.1% to $719.8 billion. Our net revenue yield came in at 43.9 basis points, of which are the decrease of 1.7 basis points quarter-over-quarter. And that was driven by lower performance fees. And now let's turn to the operating results. Net revenues increased $2.3 million or 0.3% quarter-over-quarter, which included a negative FX rate impact of $4.1 million. Within the net revenue number, you'll see that investment management fees grew by $42.4 million or 4.9% to $905.2 million. This increase was in line with a higher average AUM and also a small improvement in the effective fee rate during the quarter. Foreign exchange reduced investment management fees by $4.9 million. Service and distribution revenues are up by $9.4 million or 4.6%, also roughly in line with the increase in average AUM. FX decreased service and distribution revenues by $0.4 million. Onto performance fees, we saw $9 million in the quarter, but that represented a decrease of $29.6 million from Q1. Performance fees in the second quarter were driven by actually a variety of products, including bank loans, current [ph] equity and as well, institutional mandates in the U.K. Foreign exchange reduced our performance fees slightly by $0.1 million. Performance fees, as we've discussed in the past, are rather difficult to forecast. So I'm providing some guidance on this line item, however -- which is just this about $5 million per quarter other than in Q1, when we tend to see higher levels in the U.K. depending on performance in the U.K. Other…

So we're ready for any questions anybody might have.

[Operator Instructions] The first question comes from Michael Carrier with Merrill Lynch.

Maybe first question, just on the flow outlook. Marty, you gave some color both on the institutional side and on the retail sides in July. I guess just 2 things. Just on the institutional side, x the $2.5 million that you guys noted earlier, just what trends were you seeing during the quarter that led to the outflows? And then you mentioned the pipelines looking pretty good. So where is the interest kind of going forward for the institutional in the channel?

Let me just -- maybe I'll talk about the pipeline and then Loren can follow up. So I think the seasonality is a real thing for us, and I suspect it might be for others. So I think importantly, if you look at where the pipeline -- or if you look at gross sales a year ago, institutionally, and to the gross this quarter, still up year-over-year, that's a good sign. If we look at the pipeline, won but not funded, so it's not hopeful, right? These are won but not funded. It's hitting some of the highest levels that we've seen. So we think that's a very, very good sign. And it's simply a matter of timing, as we've talked in the past.

Yes. In terms of the -- what happened in the quarter, I think there were some outflows, as we saw also in retail just in terms of the equities, largely focused in Asian equities and international equities. So that was sort of another element within the quarter, but I wouldn't say that's a trend that we'd expect to be ongoing.

Okay, that's helpful. And then just as a follow-up, just on the expenses and the margins. So there's a lot of moving pieces with Atlantic Trust being backed out and then you gave guidance on a lot of the expense items. So I just wanted to be clear, for year end, assuming the current environment, in terms of the flow picture, the market picture, you're still targeting that 40% plus margin. I guess, what would make that change, meaning, would it be the -- assuming flat-out markets, but from a flow standpoint, anything that could potentially be more weak, meaning if you saw weakness on the balanced products, could that change that? Or is that fairly certainly based on what you can see at this point?

I don't see us not hitting that. So I mean, you'd have to have a quite appropriate -- quite a pullback in the market. So...

Yes, I would answer that. I think, I mean, in terms of sort of some outflows we may have seen, I think that modest relative to this asset base that's been built up and the product that -- the allocation product and we're seeing other higher fee products in the pipeline. So I honestly think the mix topic isn't one that is going to change our forecast. And as we've said in the past, I think, obviously, the guidance is now 40.5% by year end. And so we do feel pretty good about that. And clearly, if markets improve from the end of the quarter, which they have, that's obviously a very positive element, and you'll see operating leverage provide for their upward lift on margins.

And I just -- adding to that point where -- as we talked numerous times, the risk parity, the multi-asset strategies is a real strength of the firm; it continues to be a strength. We continue to see interest around the world. But we've also said, importantly, if you look at the depth and breadth of the capabilities in a rising equity market, what would you anticipate? We would anticipate a slowdown. And what would you then imagine happen is that you would see flows going to the equity markets. And frankly, that's bit into the equity capabilities. And we're seeing that. We're seeing broadening -- they ought use -- more public. If you look at the U.S. retail market, you're seeing not just international equities now, but you're seeing a broadening of the U.S. value capabilities. And those are things that we anticipated. And again, it's strong, performing capabilities. Our -- they are many and broad. So -- and again, you couple that with a rising interest rate environment, if you believe that in the making, which I think most of us do, we think we're very well positioned for that also.

And the other thing I would just mention, Mike, is Continental Europe, which has been a strong provider of a good sort of flow mix. In terms of fee rates, it's still very, very strong for us and continues on through July. So again, I think the indicators are still quite positive and green about -- so the mix continuing to improve. So I don't want to take that away from the conversation at all.

The next question comes from Michael Kim, Sandler O'Neill. Michael S. Kim - Sandler O'Neill + Partners, L.P., Research Division: Just first, to follow up on the IBRA strategies, obviously, they've been an important flow contributor for the firm. And while the 3-year track records remain strong, some of the shorter-term numbers have lagged a bit. So any recent shifts in terms of redemptions and performance, meaning have you started to see signs that maybe the stickiness of those assets have weakened just given some of the more recent underperformance?

No. So -- let me follow up on the performance element because, again, I think importantly, the public category is very broad and it's made up of many different things. If you look at the risk parity strategies within it, our relative performance is very strong compared to other risk parity strategies. And that's even in that down month of June, which is not how people make investment decisions. But that's an important test for that capability. But if you look at the trailing 12 months, it's very strongly performing and outperforming its peers. So I think that's a very important point to take. And we would have anticipated, as I've said, as equity markets rebound, there will be greater interest and more broadly away from that. That said, we continue to see interest in the risk parity capabilities through different channels in different locations -- different regions in the world.

I'd also just add that we know that the institutional side of the business is actually -- the demand is actually improving and growing for this particular product. So it's definitely a feature in our pipeline doing nicely, Michael. And so even though the retail side may have paused a little bit, maybe the redemption rate is going back to more of a normalized level, I think it was sort of abnormally low because it was sort of low base and not a lot of time frame in terms of people, I mean, held the product. We're seeing that sort of go to a more normal level. Sales may be off a bit, but we absolutely think institutional and retail will provide sort of continued flow opportunities for this product unless -- if equity markets take off in a very solid way, as we've always said, we'd expect that product probably not be quite as much as in demand as some of the equity products. Michael S. Kim - Sandler O'Neill + Partners, L.P., Research Division: Okay, that's helpful. And then just more broadly, as a firm, you've always been forward-looking in terms of trying to optimize the business, either from a strategic standpoint or an operational perspective. So as you look across the franchise today, any color on areas that you might be targeting for further optimization or development?

Yes. I would make the point when we talked about it some in the past. We are strong believers of extending our core investment management capabilities. And where has that moved into? And it's into, more broadly, multi-asset strategies. We're a big believer in that. People are focused on risk parity. But quite frankly, it's quite a bit broader than that. Looking at multi-credit capabilities coming, there will be the U.K. launch of another multi-asset strategy that we'll start there in October, that will end up in different parts of the world, so just much more broadly extending our investment capabilities into what we think is people are calling and different liquid alternatives and the like because we've had teams that have managed them, various capabilities for 10, 12 years in the institutional market. And we continue to pay attention to that. So we continue to look to strengthen what is a very strong part of the organization already.

The next question comes from Bill Katz with Citigroup.

I was wondering if you could maybe go another layer or 2 in the July snapback of flows and maybe answer it by either geography, where you're seeing the recovery and/or by maybe type of product, active versus passive.

Sure, Bill. I think in terms of interest for the snapback in July, we're definitely seeing interest in equities, long-term active equities that's featuring nicely, positive flows showing up. We're also seeing continued interest in our traditional PowerShares product. So that's been a theme that continues to ride. Good strength in Asia Pac and Continental Europe, in particular, are really doing very well for us, not that U.S. is not. But I think the U.S. featured even more strongly in the first quarter, whereas now I think the other regions are actually sort of showing equal strengths. So the interest in the products -- and we have fixed income as well, alternative fixed income, continue to be a very interesting product, real estate. So it's a lot of the things we've talked about. The only thing that sort of different, I'd say, is that instead of asset allocation being the #1 kind of driver of flows in July, that has really been sort of more equity-oriented products and some of the alternative fixed income that has shown up as the greatest demand.

And again, you don't want to extrapolate early days into a quarter. But as Loren started to highlight, basically, every region of the company is in that flows right now. And for the number of years that I've been here, I don't remember that happening to that degree now. But that can change very quickly. But it just showed the relative strength. And as I pointed out, just look at gross flows being up 50% quarter-over-quarter, year-over-year, I mean. And the broadening of the interest throughout a number of capabilities, I think, is the main point of underlying strength.

Okay, that's helpful. And the second question is just going back to Martin for a second. I appreciate your guidance for the next couple of quarters. When you think more thematically as you look out to 2014 and beyond, how do you think about incremental margin? And I guess the underlying question is, are there any pent-up investments that need to be made as you position for further growth into next year?

So I mean when we think about our plan, we plan multiyear. So we have a reasonable sort of look forward into what we plan to do not just this year and kind of year-to-year kind of discussion. We kind of think out multiple years. So we do think we know the big imperatives. We know where the investment is sort of taking place. And my expectation is that there's going to be sort of a continued level of good investment around the business as you'd hope us to be doing, but nothing that's going to sort of step up as sort of being a big surprise or in an area where we've under-invested and suddenly the need is going to have a real impact on margin. So we would expect and hope to see incremental margins, again, not that we manage the business this way but sort of in that 60%, 65% range into 2014 and beyond. And again, we believe that that sort of operating leverage should allow our margin, assuming markets grow and we're able to grow organically, to continue to expand beyond the current guidance that we have given for this year.

The next question comes from Ken Worthington, JPMC. Kenneth B. Worthington - JP Morgan Chase & Co, Research Division: First, I'd like to ask about the halo effect around IBRA. And maybe to what extent has success at IBRA -- or has success at IBRA opened up new distribution or expanded existing distribution relationships? And has it actually allowed you to sell other products that you might not have sold otherwise?

It's a good question. And I think as we've talked in the past, maybe the U.S. retail channel, in particular, because if you go back to handful of years now, as we've said, the Invesco brand was relatively new into the retail channel. And so having something successful creates absolute awareness more broadly across the capabilities. And that coupled with having the capabilities sort of performing well, I think you could clearly make the argument that that has been a very powerful thing in particular. That might be less so in other regions of the world where we've been Invesco and has had a good number of years of success. But it is something I would not discount. I think you're right. Kenneth B. Worthington - JP Morgan Chase & Co, Research Division: Yes. And then, I guess, how much more do you think you can leverage that? And in particular, I'm thinking about the Van Kampen products. The returns and the performance has been very good there. They're in that kind of the rate asset class for the right time. We're seeing sales at something like a comp stock turnaround. But some of the other big flagship funds that are performing great are still in redemption. So I guess it's kind of a combination of, one, can you leverage evermore to get these products into more channels and actually get them sold given the backdrop seems so good for them? Or has the -- have you kind of maxed out the success in IBRA in terms of leveraging it for other products?

So I wouldn't make it so info-centric [ph] I think very, very importantly, what we are seeing is where the focus of net inflows and the values it was really around, right? It is now broadening, right, against the value suite. So that's a really good sign, and really, for 2 years we have been talking to our distribution partners and clients about the obvious, get into the equity market. So it has been more of a lack of interest on clients to be investing on equities. But, do know it is an absolute focus of the firm to continue to broaden the awareness and participation in some really, really strong investment capabilities across the firm. And I think that's happening. And, look, the data point I would -- as I said, a year ago there were 9 funds in the U.S. retail channel worth $50 million or more in a quarter of sales. There's 19 today. So it is -- I'd say we've not seen the success that we would anticipate. Kenneth B. Worthington - JP Morgan Chase & Co, Research Division: Okay. And, lastly, active alt's doing very well. I assume that's real estate, but can you give us some more color there and maybe talk about performance and pipeline for Wilbur, quant and the other active alt areas.

So in active alt, our 2 sort of primary drivers have been the real estate group, as you can imagine, but also bank loans, which has done really, really well. We have seen more and more consultant advocacy for the bank loan products. I think now it's really sort of tick a lot of the boxes with all of the consultants on this product. And we have, in our pipeline, strong showings for both of those areas in particular. In terms of our private equity capability, we still have great opportunities there. But, as you know, it's more centered around a particular fund launch and right now they're working through investing their current products. But we see an opportunity to do other things until the new recovery fund comes up and so there is, certainly, activity and assets that are in the pipeline as a result of some of those elements. But I'd say they're smaller, on the spectrum of what real estate and bank loan is doing.

I would add just, Ken, to the question, and it gets to the broader question you and Bill and others were asking earlier. So the quant team has really been -- again, this is one of the ones that -- team has been together 20 years, great performance and they are natural extensions and they have been very successful the last number of quarters now with multi-assets capabilities. They've been of interest in Germany in particular, and again, those are the type of things that we think there's opportunities in other parts of the world.

The next question comes from Dan Fannon of Jefferies.

One more question on IBRA. If you could maybe talk about the gross sales versus redemption trends, maybe in June and kind of what we're seeing in July, if the growth sales have slowed and you're seeing elevated redemption or kind of what the dynamic is there.

I can do that. So we saw in June certainly a tick down on sales. It wasn't dramatic but maybe 15% to 20% kind of decline in sales. But redemptions really picked up, right? So I think we saw there an unusual spike in redemption in June, filling out one that is carried over into July. So we're seeing in July sales still at a more modest level than we've seen in the past, and we've seen redemption rate, though, sort of subside. So it's not spiking as much. So, still, we're looking at July data, it's sort of just the data points. So we ought to see probably another couple of months before we really decide what is really the trend and where its going to stabilize. But it's moving in the right direction, where the redemption rate is going back to what I would say is more of an industry norm redemption rate, if that's around 20% kind of redemption rate, and then we would see sales, depending on what the market is, at maybe, hopefully more than half the level of where it was before and hopefully somewhere around 3/4 of the level we've seen in the past.

Great, that's helpful. And then I guess a question on the distribution margin, you gave explanations to what happened this quarter. And if I think about what you're saying for your institutional pipeline, with that coming back, should we see that more normalized going forward or any outlook in terms of that expense revenue dynamic?

Yes. No, absolutely. I mean, really, what happens is institutional assets are priced at quarter end, typically, because the quarter we saw a big drop in rates -- sorry, in markets. We just, obviously, kind of didn't have good luck in terms of when the revenues are going to be calculated off of that asset level. We've seen asset levels come back so that's a good sign. And then the other thing, obviously, in terms of the pipeline, our institutional pipeline is probably more than 10% above its 12-month average run rate, and certainly even higher than it was -- much even higher than that than it was relative to the first quarter. So we do think that with the institutional pipeline is, even though didn't present a lot of great results in the second quarter, the fundings are going to happen in the third quarter and fourth quarter, right? So there was really just this pause of fundings that took place in the second quarter because so much of it happened in Q1.

The next question is from Matt Kelley of Morgan Stanley.

Loren, just to kind of follow-up on that last question. When you've given the 40.5% operating margin guidance by year end now, I assume, first of all, that's x Atlantic Trust. And then second of all, is your distribution margin kind of more normalizing, indeed reflected in that 40.5%?

So the answer is yes. Atlantic Trust is excluded, so that's the extra 0.5 percentage point on top of the original guidance of 40%, so that's correct. We do think that the distribution costs, in terms of the margin that you're looking at, which -- again, I just warn you a little bit on looking at those things because they're not exactly comparable -- should be more normalized and our forecast still reflects our expectations for, I think, that normalization to take place, which is based on, I think, fact. So we have not seen anything. Just to clarify, we've not seen that sort of should cause anybody alarm. Our distribution costs have suddenly spiked up, where we have changed our payouts to our distributors. That did not happened in the second quarter.

Okay, great. And then just another question, I know you've been asked a lot of different ways. But, on IBRA, just wanted to ask sort of a different question. Do you think that some of the channels that you've been selling that through really understand the decision makers, the gatekeepers, if you will, really understand the different dynamics of your fund versus something of your peer funds and how they're supposed to behave in certain environments or are they just kind of -- I know they is a broad statement, but that a lot of gatekeepers sell them all as allocation funds and don't really differentiate a lot between them?

So I can only speak to our capability, and I feel quite strongly that it is absolutely understood by, just call them the gatekeepers, into the channel and we spent an awful lot of time on education. And so I think, speaking for the capability that we have, I'd say there's an awful a lot of attention on that educational point and I think it's broadly understood.

The next question comes from Jeff Hopson of Stifel. J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc., Research Division: Two questions. Can you talk about the timing of the sale proceeds and then the effect on share repurchase? And then, Marty, what would you say -- obviously, IBRA and a couple of other products have been the go-to products in the field. But in terms all of wholesaling messages out there, what -- has anything changed in terms of what your guys are focusing on? Any change in messaging, et cetera? And what is Invesco trying to do in terms of making the brand, et cetera, the message unique versus others?

So again, I might be a little repetitive. But, again, the absolute focus is trying to understand client needs and listening very intently to them. And putting forward investment capabilities that meet those needs. So as you would be aware, most all the distribution partners right now have their strategists and they put forward their ideas of what they think is proper asset allocation. We work very hard with them to make sure that we follow along with that and make our capabilities available. And that sort of, point being, is very broad, the range of capabilities of that focus. We, in particular, as I said previously, for the last couple of years have been very, very focused on the merits of a well diversified portfolio and the importance of equity exposure within that. Not just U.S. but all the way to international global capabilities, and we think that is really then under -- people have been underexposed. I mean, it's no question about it and it was clearly, I think, a reflection of people just feeling -- not having a level of confidence coming through the crisis. So it has been a very broad message. We spent an awful lot of time if you just follow -- you can look at the websites and get some sense of the intellectual capabilities that we put forward in education. So those have been the focuses of the firm.

And just in terms of your first question, our expectation is that the deal will close before the end of the year. The reason I can't give you an exact date is because there are some regulatory steps we have to go through in terms of getting approval. But beyond that, there's no reason, at this point in time, to think that that won't happen. The proceeds, when we get them, which will be at the close, we will then execute our buyback around that time. So, hopefully that's consistent with what you have expected. J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then, if I could follow up, the U.K. in particular. I know you've done well, I think, with IBRA being introduced there. But the traditional products, as you point out, are performing extremely well, flows have been okay. But any thought on -- in this environment, could you see some improvement in sales end or flows from the traditional perpetual products?

Sure. Where we're starting to see interest is broadening, right? The international capabilities are performing well. Flows are moving very much into their -- the fixed income capabilities continue to be very, very strong and continue to see flows into those capabilities, so it broadening. And, also, we anticipate that in the fourth quarter will be the introduction of the multi-asset capability, that team has joined us earlier this year. So, that, we think is also a very, very important thing. With introduction of RDR, and the focus will be multi-asset strategists around the broad range of Invesco Perpetual capabilities in the first instance, and then we'll broaden as it moves around world. And so we think we're positioned very well.

And I would just add, in July, we're seeing very nice strong flows coming from Invesco Perpetual across fixed income international equities and U.K. equities, so all products are doing well there.

The next question comes from Luke Montgomery of Sanford Bernstein. Luke Montgomery - Sanford C. Bernstein & Co., LLC., Research Division: It sounds like you answered a little bit of this already. But, coming back to the institutional business, one of your competitors is talking about changing behavior of large international institutional clients including sovereign wealth funds, which have been reducing allocations to long only-U.S. strategies for a variety of reasons. Some of those are investment related and some of them aren't. But when I look at your flows, institutional net outflows, equity net outflows, that seems to confirm the trend. But then, by region, the outflows are concentrated in the U.S., U.K. and Canada, all of the inflows came from Continental Europe. So you highlighted some lumpiness in the quarter, I'm not sure how sure how much you can make from all that, but perhaps you could drill down a little more specifically about institutional demand or behavioral trends by client domicile or client type.

It's a great question. So what you are seeing -- let me try to pick it up sort of regionally in that concept -- the lumpiness in Europe is -- again, this relation, the success we're having with multi-asset strategy that's managed out of Frankfurt. That is a capability that there is interest in other parts of the world. Less so in the United States, but in Asia there is, also, and into United Kingdom. The interest that we see from sovereign wealth funds and the like, it does tend to be more of the multi-strat capabilities. Things like bank loans, things like real estate, so alternative type capabilities, and that has been focus for where we have been seeing a lot of interest. We have also seen less interest in more traditional long-only capabilities and that's where you've seen, even after having many years of relationships with some of these large sovereign wealth funds where they are having less exposure to some long-only capabilities. Is that a permanent trend? Hard to know. But I would confirm what you're hearing. It's been our experience. Luke Montgomery - Sanford C. Bernstein & Co., LLC., Research Division: Okay, great. And then on the ETF business, loan participation ETF, that's been a fairly large driver of your inflows over the last year, as has the emerging margin market debt ETF. Wondering if you can just weigh in on the debate about whether ETFs help or hurt liquidity during times of stress, especially in classes like fixed income where the underlying liquidity is thinner. And what are the risks in ETF market structure that really concern you and what can go wrong here?

Yes, I know it's quite a debate. I think it, personally, gets overplayed. The idea that ETFs drives up oil prices, et cetera, et cetera. I just don't know that I am a big believer in those types of things and so I don't have empirical evidence to support my opinion at the moment, but I just don't really see that to the same degree.

I would just say that -- I mean, because, particularly our product is more retail focus, it's not as rapid motion in terms of people's behavior, in terms of buying and selling. So, again, in terms of us sort of moving markets and having big distortive swings, I don't think PowerShares is certainly providing that.

The next question comes from Robert Lee of KBW. Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division: First question -- and I think I'm a little slow this morning -- but just to make sure, clarify it for me and all -- July. So, July flows generally positive across the board, at least in terms of geography. So I want to make sure I have that.

Yes.

That's correct. Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division: Okay, great. Second question I have is just on kind of capital management. Clearly bought back few more shares this quarter than last quarter. But in general, it does look like kind of return to between that share repurchase and dividend, a little less than cash generation. And just how should we be thinking about it? Is one of the near-term priorities kind of continuing to chip away at short-term debt? I mean, it looks like that may have come down about $100 million or so in the quarter. Is that kind of the pace that we should generally think about?

Rob, I mean, I think our strategy hasn't changed really. So we've increased -- so, I mean, just to back on, we've increased our amount of maturing capital in the form of dividends. We've reduced the amount that we were doing in buybacks, but that we've not turned away from buybacks and you're seeing sort of good run rate on dividends and buybacks, given our operating cash flow generation this year. Excluding, obviously, Atlantic Trust, which would be sort of on top of whatever we would doing, run rate. We did pay down a little bit of the debt. So net debt decreased, I think, about $150 million in the quarter. That's not unusual because it's usually at a high level in the first quarter and sort of comes on down. So we're going to continue to sort of chip away at the debt and sort of increase our cash levels over time to get to that $1 billion in excess of our regulatory requirement. But as we've said in the past, and we'll continue to say, I mean it's sort of a self-regulated pace that we're going on and we're not sort of following that as the first number one priority and sort of reducing the other opportunistic chances to buy any shares if we think that's the right way to. So, over time, it is our hope that we would be able to return even more of our operating cash flow to shareholders as we achieve those objectives. And so where we are today could actually expand. So I would generally guide people to think that our ability to return cash will increase over time and that we will achieve our goals in terms of debt paydown at the same time, and cash. A wall to build, so that we can do all that without anybody feeling slighted. Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. And then one last question, just on Canada. Since you touched on all the other regions, I guess. I mean, can you just kind of touch on what you're seeing there? I know it's obviously not as big a business as it used to be but it tends to be a high-fee type of business and I think relatively high margins. So are you seeing, really, kind of the same improvements there in their traditional products or you're really seeing the momentum more from new products you've introduced there over the last year or 2?

Yes, so, I think it's a combination of all those things. Actually, our traditional products, which historically has the highest fee, we're sort of less in the focus in terms of the distribution that we had in Canada, and they were focused somewhat more on some of the assets allocation products that were introduced there. What we are seeing now is that a lot of those traditional invested Trimark branded products are doing extremely well from an investment performance perspective. And so the level of interest and activity around the core products is much more than they were in the past. And so we're seeing sort of a shift of balance, I think, in terms of focus. Maybe a little bit away from the asset allocation products and back to the core. So that's -- sort of we're in the middle of that right now. We think it going to continue and we would not be surprised to see more focus on the core and maybe a little bit less on the asset allocation, just going forward, given the fact that the core had been largely sort of ignored for a long period of time.

The next question comes from Brennan Hawken of UBS.

So, just generally speaking, given the dynamics you guys laid out in the quarter, with weakness in June and average AUM being higher than beginning and ending AUM, the fact that you have some passive drive in the flows. My assumption is just we should see some downward pressure on the management fee rate here going forward, all else being equal. I mean, is that right or should I be thinking about it in a different way?

Yes. I think you're probably off a little bit on that one. So one of the things we're seeing is that the passive products -- I mean, their fee rate has been growing, right? Because as we've seen, like the bank loan product which has done so well, I mean, that's at 65 or 70 basis points fee. So that has really been helpful in terms of driving up the fee rate. In terms of the mix of flows coming in from Continental Europe, some from Asia now that we've got more balance -- I mean, we're actually -- the products outside of the U.S. tend to have higher fees than ones in the U.S., and so if we're seeing sort of Asia and Continental Europe and U.K. sort of coming back more strongly, that's going to be helpful too. And then, finally -- I mean, as people, and we're hoping this is the case, sort of have more of an appetite for risk and risk-oriented products -- I mean, all those risk-oriented products are going to have a higher fee than sort of the stable value of money market type of products that can grow but definitely don't do much for the fee rate. So we would expect, and it is in our thinking, that we'll continue to see the effective fee rate grow. It did grow some from the second quarter to the first quarter by about 1/2 of a basis point in terms of the core management fee. And, again, we would expect to see continued slow improvement over time. We don't want to give you the wrong idea that it's going to pop up 1/2 a basis point every single quarter, but I mean it could slowly grow over the course of 2013.

And sort of following up on a point that you made there, in the context of that response, and then you have seem to referred to it a few times. You all seem to be saying that you're basically positioned well for a great rotation. But we've heard other asset managers saying that they're not really seeing signs of that great rotation, and certainly not a rotation out of fixed income into equities. I just want to clarify sort of just ask you guys bluntly. Are you seeing something different in your conversations with clients or is it more that you believe that in the course of the coming 12 or so months that you expect that to happen and that will lead you guys to benefit?

So, it's a good question. I would agree with the idea that we are not seeing a great rotation at the moment. But what we are seeing, if you look over the last 12 months, people are great putting more money into risk-type assets. Loren was talking about traditional ETFs. You're seeing just great growth there. And not just bank loans, but into equity capabilities in emerging markets within that. That would be something. I had mentioned earlier, we're actually seeing net flows not those just into international equity capabilities, but actually into U.S. value capabilities. That's relatively new. So I would say that you're starting to see people gain a little more confidence and their broadening, where they are allocating our portfolio to more risk-type capabilities. That said, we're never going to try to guess a market. We know we'll be wrong, so the main point that we were trying to get across today, in many different ways, is that investment performance across the organization just couldn't be stronger. And that's from fixed income through equity capabilities. And if you look at the exposure, and our focus is the United States because we think that's where the rates are going to start going first, the breadth of the product, the performance of the product and our relative client's allocations right now put us in a very good position, if there is money that is strongly moving out of that fixed income market. And we are very well-positioned to serve clients well in the many different asset classes they might choose to go into.

And then last, just a housekeeping item. Just to clarify, does your guidance on comp and property impact get us to ballpark the right run rate we should be thinking about, post all the changes for the European version?

Yes, it does. So everything is off of the second quarter, sort of that's the run rate for the third and fourth quarters.

The next question comes from Greggory Warren of MorningStar.

Just going back to the previous question, and this is just a big, big, big, picture question. As we're looking at fixed income here -- I mean, we've got kind of a sense of what happens when bond investors kind of freak out about rising rates last month. But when we try to categorize who's really invested in fixed income at this point, we've got some institutional clients that really piled into it after the financial crisis, looking for more stability, security, and we also have the starting of the baby boomer retirement class. As we move forward -- again, because my sense has always been that what comes out of fixed income won't be as dramatic as what went it over the last 5 years. Because some of these clients are these baby boomers who are going to have to stay invested to fixed income just for the income needs. And I'm wondering how you guys think about that and how you adjust your business to accommodate that, but also understanding that bringing in equity business really helps your fee rates.

Yes, so we start by a couple of fundamental principles and focus on generating good outcome for clients. And we then have the point of view that clients want a broad, deep set of investment capabilities to meet their needs. That's also what we've done as a firm. Within that, though, a couple of points. Yes, personally, you can see the fixed-income exposures are, frankly, at all-time highs. So you can have a point of view that they will come down, they won't come down to more historic levels because of the baby boomers, and that common sense would tell you that. I do think they're going to come down quite a bit more from where they are right now, because I agree with your long-term view. But, when you get into a rising rate environment, people are starting to lose capital, you're going to see them move. That's just what happens. But I think what we are doing, and other firms are doing are very focused on generating income for clients. And I think that's also why you're seeing things like our premium income product, the dividend-oriented equity capabilities. And, also, this gets into why we believe so strongly in multi-asset strategies, because it's a combination of asset classes that not only can generate income for clients and they can't get the exposure to them. But, also, there is less volatility in it, so to your point of an aging population and the need for income and broadly diversified, that's what we see evolving and that's why we're so focused on it. But, again, I also -- my personal opinion, I think, pension plans and individuals have been underexposed to equities over the last number of years, and that's not a good thing for longer-term needs. But that's my personal opinion.

No, no, it sounds good. On the flows during the quarter. I mean, they tended to be stronger. I was looking at you guys to be sort of in a small net outflow mode. So it was encouraging to see flows being positive. You said that flows through July are on par with what we saw in the second quarter, was I correct in hearing that?

No, they have, through the month of July -- month-to-date, they are exceeding the flows of...

Okay, the entire quarter, yes.

The whole quarter.

The whole quarter.

And it's broad based and its equity and fixed income?

Correct.

The next question comes from Roger Freeman of Barclays.

Just coming back to the growing share in your U.S. retail complex, particularly around the 19 versus 9 funds 1 year ago, with sales over $50 million. Is part of that coming from getting added to model portfolios on any of the distribution platforms? I know that was a focus of yours, I'm just wondering what kind of success you've had there.

It would be. And I'd say, again, when we -- I just want to call it, the initial growth post combination with Van Kampen. I mean, it was 100% focused, because they had to be, because you have to go through those. And we've had great success of getting on platforms throughout -- I wouldn't say we're done. I don't have the numbers in front of me, but we're at a very strong position right now.

Okay. And then one other question. Just coming back to the redemption rate from an earlier question. I mean, I hear your comments about sort of Q3 versus Q2. Just looking at that chart on Slide 9, I mean it just looks like over the last year, the redemption rate relative to the industry has gone up. And I'm just wondering, kind of looking at that slightly longer time frame, what would you say accounts for that?

I think it's a good question. I think some of it has to do, I think, with just the post transaction of the Morgan Stanley transaction, where we had all these investment capabilities that were sort of embedded in certain channels and we were able to cross-fertilize the sale into different channels, right? Where value was really in the Morgan Stanley channel and sort of the Edward Jones channel, and we had our traditional products growth and others factored in our channels. And so, as those things sort of got crossed over, they've built up and so there was an abnormally low redemption rate for a period of time as they sort of built into their equilibrium holdings, and now we're sort of getting to more of a sort of normal run rate. That is sort of a guess as opposed to factually -- I can tell you exactly what is going on, but we knew that something like that would happen, right? That we're sort of at an unusually low rate post that transaction.

The last question comes from Marc Irizarry of Goldman Sachs.

Marty, just one question on IBRA and the fixed-income exposure. Now, it sounds like it's maybe against the category that performed relatively well versus maybe other risk parity strategies, but maybe relative to the asset allocation category. It's positioned differently. Can you give us some perspective on -- have there been any changes to the positioning in the fund and just maybe what the fixed-income exposure of IBRA is?

So, let me take that in different pieces. So they've not change their approach. It continues to be exactly what they put in the market and they continue to manage that way. I don't have the fixed-income exposure here right now within the portfolio. But thirdly and finally, very importantly, if you look at that world allocation category, it is so diverse that it's not very helpful. And I think the relevant point is look at the risk parity capabilities next to one another, and we performed very, very strongly with those.

Okay, great. And just, Loren, just a quick one for you on spending relative to regulatory requirements, if you will, on expenses. Where are you in the build-out? Where are you in the sort of build-out of compliance infrastructure or sort of regulatory required spending on systems, et cetera, how far along are you in that process?

I think we are pretty far along. There's probably, again, based on what the regulators continue to require from us, so it could continue to shift. I mean, it's been a sort of changing landscape in terms of the regulators. I mean, the good news, if there is any, I mean, seems like some of the rate of change and the speed of sort of new regulations coming through is slowed a bit. And so that is helpful and, again, I'd like to say we're sort of seeing the light at the end of the tunnel somewhere, but you never know it if it's another train coming at you. But I think, generally, we're -- I mean, the guidance we gave is sort of down a little bit, we think we sort of hit a high point in the second quarter and we're going to be able to step down just a bit off of that, while we're not assuming a big step down at this point.

Yes, just confirming, Lawrence. It is not just for us. I think it's for any financial services firm. But even money managers, the compliance requirements, it's been a material increase. And, as I've said in the past, it tends to focus on those markets that were hit hardest during the financial crisis. The U.S., the U.K., and Continental Europe, and it has been a material level of investments. Our point of view, that's exactly what we'll do and just making sure that we're in front of all those things, it's just critical to us in the industry. So I think you just have to anticipate it. It's going to be here for a good number of years.

Many good examples. I just heard recently that, I think, the U.K. is planning to do their own form of FATCA.

Now, there you go.

So, I mean, that's just news to me, yesterday, that I heard about that. So, again, we can be surprised. So it's just a little hard for us to say exactly, Mark.

At this time, there are no further questions.

Well, thank you everybody. On behalf of Loren and myself, I appreciate the participation and the interest, and we will talk to you very soon. Have a good rest of the day.

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