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What changed in Franklin Resources's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Franklin Resources's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+296 added−296 removedSource: 10-K (2025-11-10) vs 10-K (2024-11-12)

Top changes in Franklin Resources's 2025 10-K

296 paragraphs added · 296 removed · 246 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

52 edited+16 added−21 removed117 unchanged
Biggest changeWe are also subject to regulation and supervision by, among others, the Securities Commission of The Bahamas, the Central Bank of Brazil and the Comissão de Valores Mobiliários in Brazil, the China Securities Regulatory Commission in the People’s Republic of China, the Financial Services Commission and the Financial Supervisory Service in South Korea, the Securities Commission in Malaysia, the Comision Nacional Bancaria y de Valores in Mexico, the Polish Securities and Exchange Commission, the Romanian Financial Services Authority, the Swiss Federal Banking Commission, the Financial Supervisory Commission in the Republic of China, the Dubai Financial Services Authority in the United Arab Emirates, the Saudi Capital Market Authority, and the State Securities Commission of Vietnam. 14 Table of Contents INTELLECTUAL PROPERTY We have used, registered, and/or applied to register certain trademarks, service marks and trade names to distinguish our sponsored products and services from those of our competitors in the U.S. and in other countries and jurisdictions, including, but not limited to, Alcentra ® , Benefit Street Partners ® , Brandywine Global Investment Management ® , Canvas ® , Clarion Partners ® , ClearBridge Investments ® , Fiduciary Trust International™, Franklin ® , Franklin Mutual Series ® , K2 ® , Legg Mason ® , Lexington Partners ® , Martin Currie ® , O’Shaughnessy ® , Putnam ® , Royce ® , Templeton ® and Western Asset Management Company ® .
Biggest changeWe are also subject to regulation and supervision by, among others, the Securities Commission of The Bahamas, the Comissão de Valores Mobiliários in Brazil, the China Securities Regulatory Commission and the Financial Supervisory Commission in the People’s Republic of China, the Securities Commission in Malaysia, the Comision Nacional Bancaria y de Valores in Mexico, the Romanian Financial Services Authority, the Saudi Capital Market Authority, the Financial Services Commission and the Financial Supervisory Service in South Korea, the Swiss Federal Banking Commission, the Dubai Financial Services Authority in the United Arab Emirates, the National Agency of Perspective Projects in Uzbekistan, and the State Securities Commission of Vietnam. 14 Table of Contents INTELLECTUAL PROPERTY We have used, registered, and/or applied to register certain trademarks, service marks and trade names to distinguish our sponsored products and services from those of our competitors in the U.S. and in other countries and jurisdictions, including, but not limited to, Alcentra ® , Apera ® , Benefit Street Partners ® , Brandywine Global Investment Management ® , Canvas ® , Clarion Partners ® , ClearBridge Investments ® , Fiduciary Trust International™, Franklin ® , Franklin Mutual Series ® , K2 ® , Legg Mason ® , Lexington Partners ® , O’Shaughnessy ® , Putnam ® , Royce ® , Templeton ® and Western Asset Management Company ® .
Our alternative products include private credit funds and structured products, business development companies, hedge funds (such as funds of funds and custom advisory solutions), private equity funds, secondary funds, venture capital funds and real estate funds.
Our alternative products include private credit funds and structured products, business development companies, hedge funds (such as funds of funds and custom advisory solutions), private equity funds, secondary private equity funds, venture capital funds and real estate funds.
Our specialist investment managers include subsidiaries registered with the United States (“U.S.”) Securities and Exchange Commission (the “SEC”) as investment advisers under the Investment Advisers Act of 1940 (the “Advisers Act”), as well as subsidiaries registered as investment adviser equivalents in jurisdictions including Australia, Brazil, Canada, China, Commonwealth of The Bahamas, Hong Kong, Ireland, India, Japan, Luxembourg, Malaysia, Mexico, Saudi Arabia, Singapore, Switzerland, South Korea, the United Arab Emirates and the United Kingdom (“U.K.”).
Our specialist investment managers include subsidiaries registered with the United States (“U.S.”) Securities and Exchange Commission (the “SEC”) as investment advisers under the Investment Advisers Act of 1940 (the “Advisers Act”), as well as subsidiaries registered as investment adviser equivalents in jurisdictions including Australia, Brazil, Canada, China, Commonwealth of The Bahamas, Hong Kong, Ireland, India, Japan, Luxembourg, Malaysia, Mexico, Saudi Arabia, Singapore, Switzerland, South Korea, the United Arab Emirates, the United Kingdom (“U.K.”) and Uzbekistan.
In particular, we are subject to various securities, compliance, corporate governance, disclosure, privacy, anti-bribery and anti-corruption, anti-money laundering, anti-terrorist financing, and economic, trade and sanctions laws and regulations, both domestically and internationally, as well as to various cross-border rules and regulations, such as the anti-bribery and anti-corruption rules under the Foreign Corrupt Practices Act of 1977 (“FCPA”) and the data protection rules under the General Data Protection Regulation (“GDPR”) of the European Union (“EU”).
In particular, we are subject to various securities, compliance, corporate governance, disclosure, privacy, anti-bribery and anti-corruption, anti-money laundering, anti-terrorist financing, and economic, trade and sanctions laws and regulations, both domestically and internationally, as well as to various cross-border rules and regulations, such as the anti-bribery and anti-corruption rules under the Foreign Corrupt Practices Act of 1977 and the data protection rules under the General Data Protection Regulation (“GDPR”) of the European Union (“EU”).
Treasury as to how such funds may in the future also be covered by the Sustainability Disclosure Requirements. 12 Table of Contents In addition, the EU Markets in Financial Instruments Directive, as revised and expanded in 2018 (“MiFID II”), regulates the provision of investment services and conduct of investment activities throughout the European Economic Area (“EEA”).
Treasury as to how such funds may in the future also be covered by the FCA’s Sustainability Disclosure Requirements. 12 Table of Contents In addition, the EU Markets in Financial Instruments Directive, as revised and expanded in 2018 (“MiFID II”), regulates the provision of investment services and conduct of investment activities throughout the European Economic Area (“EEA”).
We outsource various transfer agency and other services for our funds to third-party providers who serve as a sub-agent or delegate, depending on the jurisdiction. Our fees and expenses are routinely benchmarked against applicable industry standards. COMPETITION The financial services industry is a highly competitive global industry.
We outsource various transfer agency and other services for our funds to third-party providers who serve as a sub-agent or delegate, depending on the jurisdiction. Our fees and expenses are routinely benchmarked against applicable industry standards. COMPETITION The financial services industry is a highly competitive global environment.
Substantially all shareholder servicing fees are earned from our funds for providing transfer agency services, which include providing shareholder statements, transaction processing, client service and tax reporting. Shareholder servicing fees are primarily determined based on a contractual margin, or a percentage of AUM and either the number of transactions in shareholder accounts or the number of shareholder accounts.
Substantially all shareholder servicing fees are earned from our funds for providing transfer agency services, which include providing shareholder statements, transaction processing, client service and tax reporting. Shareholder servicing fees are determined based on a contractual margin, or a percentage of AUM and either the number of transactions in shareholder accounts or the number of shareholder accounts.
The amendments require public companies to (i) disclose, on a current basis, any cybersecurity incident it deems to be material within four business days on a Form 8-K; (ii) describe, on an annual basis, the company’s processes, if any, for the assessment, identification and management of material risks from cybersecurity threats, as well as whether any risks from cybersecurity threats have materially affected or are reasonably likely to materially affect their business strategy, results of operations or financial condition; and (iii) describe, on an annual basis, the board’s oversight of risks from cybersecurity threats and management’s role in assessing and managing those risks.
The rules require public companies to (i) disclose, on a current basis, any cybersecurity incident it deems to be material within four business days on a Form 8-K; (ii) describe, on an annual basis, the company’s processes, if any, for the assessment, identification and management of material risks from cybersecurity threats, as well as whether any risks from cybersecurity threats have materially affected or are reasonably likely to materially affect their business strategy, results of operations or financial condition; and (iii) describe, on an annual basis, the board’s oversight of risks from cybersecurity threats and management’s role in assessing and managing those risks.
Across our business, our specialist investment managers generally focus on a portion of the asset management industry in terms of the types of assets managed and each may differ in the types of products and services offered, the investment styles utilized, and the types and geographic locations of its clients.
Across our business, our specialist investment managers generally focus on a portion of the investment management industry in terms of the types of assets managed and each may differ in the types of products and services offered, the investment styles utilized, and the types and geographic locations of its clients.
As investors in the public markets do not have the contractual relationship with issuers to compel them to provide the information required by CSDD, the imposition of CSDD to funds could prove problematic for the industry. Australia.
As investors in the public markets do not have the contractual relationship with issuers to compel them to provide the information required by CSDD, the imposition of CSDD to funds could prove problematic for the industry.
Incorporated herein by reference is certain financial information about our segment and geographic areas contained in Note 19 – Segment and Geographic Information in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report. Company History Since 1947, the Company and its predecessors have been engaged in the investment management and related services business.
Incorporated herein by reference is certain financial information about our segment and geographic areas contained in Note 18 – Segment and Geographic Information in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report. Company History Since 1947, the Company and its predecessors have been engaged in the investment management and related services business.
Item 1. Business. GENERAL Franklin Resources, Inc. (“Franklin”) is a holding company with subsidiaries operating under our Franklin Templeton® and/or subsidiary brand names. Franklin’s common stock is traded on the New York Stock Exchange (the “NYSE”) under the ticker symbol “BEN” and is included in the Standard & Poor’s 500 Index.
Item 1. Business. OVERVIEW Franklin Resources, Inc. (“Franklin”) is a holding company with subsidiaries operating under our Franklin Templeton® and/or subsidiary brand names. Franklin’s common stock is traded on the New York Stock Exchange (the “NYSE”) under the ticker symbol “BEN” and is included in the Standard & Poor’s 500 Index.
We have added, among others: (i) the Templeton global investment firm in 1992, (ii) the Franklin Mutual Series investment firm in 1996, (iii) the Franklin Bissett Canadian investment firm in 2000, (iv) the Fiduciary Trust International investment and trust services firm in 2001, (v) the Benefit Street Partners alternative credit management firm in 2019, (vi) the Athena Capital Advisors investment and wealth management firm in March 2020, (vii) The Pennsylvania Trust Company investment and trust services firm in May 2020, (viii) the Legg Mason global investment firm in July 2020, (ix) the O’Shaughnessy Asset Management quantitative asset management firm in December 2021, (x) the Lexington Partners global alternatives investment firm in April 2022, (xi) the Alcentra alternative credit investment firm in November 2022, and (xii) the Putnam global investment firm in January 2024.
We have added, among others: (i) the Templeton global investment firm in 1992, (ii) the Franklin Mutual Series investment firm in 1996, (iii) the Franklin Bissett Canadian investment firm in 2000, (iv) the Fiduciary Trust International investment and trust services firm in 2001, (v) the Benefit Street Partners alternative credit management firm in 2019, (vi) the Athena Capital Advisors investment and wealth management firm in March 2020, (vii) The Pennsylvania Trust Company investment and trust services firm in May 2020, (viii) the Legg Mason global investment firm in July 2020, (ix) the O’Shaughnessy Asset Management quantitative asset management firm in December 2021, (x) the Lexington Partners global alternatives investment firm in April 2022, (xi) the Alcentra alternative credit investment firm in November 2022, (xii) the Putnam global investment firm in January 2024, and (xiii) the Apera asset management firm in October 2025.
Arrangements with non-independent advisers have also been affected, as narrower rules around the requirement that any commission reflect an enhancement of the service to customers come into effect, along with a prescriptive list of permissible non-monetary benefits.
Arrangements with non-independent advisers have also been affected, as narrower rules around the requirement that any commission reflect an enhancement of the service to customers came into effect, along with a prescriptive list of permissible non-monetary benefits.
We offer our services and products under our various distinct brand names, including, but not limited to, Alcentra ® , Benefit Street Partners ® , Brandywine Global Investment Management ® , Canvas ® , Clarion Partners ® , ClearBridge Investments ® , Fiduciary Trust International™, Franklin ® , Franklin Mutual Series ® , K2 ® , Legg Mason ® , Lexington Partners ® , Martin Currie ® , O’Shaughnessy ® , Putnam ® , Royce ® , Templeton ® and Western Asset Management Company ® .
We offer our services and products under our various distinct brand names, including, but not limited to, Alcentra ® , Apera ® , Benefit Street Partners ® , Brandywine Global Investment Management ® , Canvas ® , Clarion Partners ® , ClearBridge Investments ® , Fiduciary Trust International™, Franklin ® , Franklin Mutual Series ® , K2 ® , Legg Mason ® , Lexington Partners ® , O’Shaughnessy ® , Putnam ® , Royce ® , Templeton ® and Western Asset Management Company ® .
Our international funds include two broad ranges of cross-border UCITS that are domiciled in Luxembourg and Ireland, as applicable, and thereby subject to regulation by the CSSF and the Central Bank of Ireland.
Our international funds include two broad ranges of cross-border UCITS that are domiciled in Luxembourg and Ireland, and thereby subject to regulation by the CSSF and the Central Bank of Ireland.
AUM by asset class and product type was as follows: (in billions) as of September 30, 2024 U.S. Funds Non-U.S.
AUM by asset class and product type was as follows: (in billions) as of September 30, 2025 U.S. Funds Non-U.S.
For example, in addition to international data protection and privacy laws and regulations like the EU’s GDPR, we are, and expect to continue to be, subject to and affected by existing, new and evolving country, federal and state laws, regulations and guidance around the world impacting consumer and personnel privacy, including the California Consumer Privacy Act, as amended by the California Privacy Rights Act, and various other U.S. state consumer privacy laws that provide for enhanced consumer protections for their residents and impose requirements for the handling, disclosure and deletion of personal information of their residents.
For example, in addition to international data protection and privacy laws and regulations like the EU’s GDPR, we are, and expect to continue to be, subject to and affected by existing, new and evolving country, federal and state laws, regulations and guidance around the world impacting consumer and personnel privacy, including various U.S. state consumer privacy laws that provide for enhanced consumer protections for their residents and impose requirements for the handling, disclosure and deletion of personal information of their residents.
The mandate of Canadian securities regulatory authorities is generally to protect investors; to foster fair, efficient and competitive capital markets; to foster capital 13 Table of Contents formation; and to contribute to the stability of the financial system and the reduction of systemic risk.
The mandate of Canadian securities regulatory authorities is generally to protect investors; to foster fair, efficient and competitive capital markets; to foster capital formation; and to contribute to the stability of the financial system and the reduction of systemic risk.
We believe, despite market risks, that we have a competitive advantage as a result of the economic and geographic diversity of our products available to our clients. Our U.S. funds include U.S. mutual funds, closed-end funds, ETFs, private funds, sub-advised funds and other products.
We believe, despite market risks, that we have a competitive advantage as a result of the economic and geographic diversity of our products available to our clients. Our U.S. funds include U.S. mutual funds, closed-end funds, ETFs, private funds, sub-advised funds and other products (including products we sub-advise and those sub-advised by third parties).
Department of Justice (“DOJ”), the U.S. Department of Labor (“DOL”), and the USDT. Our non-U.S. operations also may be subject to regulation by U.S. regulators, including the SEC, the CFTC and the DOJ (for example with respect to the FCPA).
Department of Justice (“DOJ”), the U.S. Department of Labor (“DOL”), and the USDT. Our non-U.S. operations also may be subject to regulation by U.S. regulators, including the SEC, the CFTC and the DOJ.
For example, in October 2023, California enacted a new climate accountability package pursuant to its Climate Corporate Data Accountability Act that requires annual disclosure of certain greenhouse gas emissions and Climate-Related Financial Risk Act that requires biennial disclosure of certain climate-related financial risks and mitigation measures, each beginning in 2026, subject to applicable implementing regulations and rulemaking that may impact final scope and compliance timing.
For example, in October 2023, California enacted a new climate accountability package pursuant to its Climate Corporate Data Accountability Act that requires annual disclosure of certain greenhouse gas emissions and Climate-Related Financial Risk Act that requires biennial disclosure of certain climate-related financial risks and mitigation measures, each beginning in 2026, subject to applicable implementing regulations that the California Air Resources Board is expected to finalize in late 2025 that may impact final scope and compliance timing.
To the extent that we or any of our funds are designated as a SIFI or G-SIFI, such designations would add additional supervision, review, monitoring and/or regulation resulting in increased scrutiny and oversight that could impact our business. Derivatives and Other Financial Products.
To the extent that we or any of our funds are designated as a SIFI or G-SIFI, such designations would add additional supervision, review, monitoring and/or regulation resulting in increased scrutiny and oversight that could impact our business. U.S. DOL Reforms.
In the U.S., the SEC adopted, but subsequently stayed implementation of, climate disclosure rules to require public issuers to include enhanced disclosure and financial metrics regarding corporate climate-related information in their periodic reports and registration statements, and these rules remain subject to applicable legal challenges.
In the U.S., the SEC adopted, but subsequently stayed the implementation of, climate disclosure rules to require public issuers to include enhanced disclosure and financial metrics regarding corporate climate-related information in their periodic reports and registration statements. These rules remain stayed and subject to ongoing legal challenges. In addition, state laws and regulations regarding these topics continue to evolve.
HUMAN CAPITAL RESOURCES As of September 30, 2024, we employed approximately 10,200 employees and operated offices in over 30 countries. We consider our relations with our employees to be satisfactory.
HUMAN CAPITAL RESOURCES As of September 30, 2025, we employed approximately 9,800 employees and operated offices in over 30 countries. We consider our relations with our employees to be satisfactory.
Mutual recognition of central counterparties has been achieved between the EU regulatory authorities and other important jurisdictions including the U.S. In addition, there are rules relating to margin requirements for uncleared over-the-counter derivatives.
The European Market Infrastructure Regulation sets out rules in relation to the central clearing of specified derivatives. Mutual recognition of central counterparties has been achieved between the EU regulatory authorities and other important jurisdictions including the U.S. In addition, there are rules relating to margin requirements for uncleared over-the-counter derivatives.
The amendments require ongoing evaluation and analysis of our applicable processes and procedures, including regarding cyber incident response plans and procedures, disclosure analysis framework, risk management processes, and board oversight structure. Sustainable Investing and ESG, and Climate-Related Disclosure . Sustainable investing and ESG continue to be the focus of increased regulatory and legal scrutiny across jurisdictions.
The rules require ongoing evaluation and analysis of our applicable processes and procedures, including regarding cyber incident response plans and procedures, disclosure analysis framework, risk management processes, and board oversight structure. Sustainability . Sustainable investing and related environmental, social and governance (“ESG”) topics continue to be the focus of increased regulatory and legal scrutiny across jurisdictions.
The availability of such sustainability disclosures may impact the investment decisions of European investors. The EU’s Corporate Sustainability Due Diligence Directive (“CSDD”) will impose due diligence obligations requiring companies to identify, and to prevent or at least mitigate, adverse impacts on human rights and the environment across their value chain, including by their subsidiaries, supply chain partners and clients.
The EU’s Corporate Sustainability Due Diligence Directive (“CSDD”) will impose due diligence obligations requiring companies to identify, and to prevent or at least mitigate, adverse impacts on human rights and the environment across their value chain, including by their subsidiaries, supply chain partners and clients.
We have in place revenue sharing arrangements with certain of our specialist investment managers. 5 Table of Contents Our specialist investment managers include: Benefit Street Partners, Brandywine Global, Clarion Partners, ClearBridge Investments, Fiduciary Trust International, Franklin Equity Group, Franklin Income Investors, Franklin Mutual Series, Franklin Templeton Fixed Income, Franklin Templeton Investment Solutions, Lexington Partners, Martin Currie, O’Shaughnessy Asset Management, Putnam Investments, Royce Investment Partners, Templeton Global Investments, Templeton Global Macro and Western Asset Management.
Our specialist investment managers include: Benefit Street Partners, Brandywine Global, Clarion Partners, ClearBridge Investments, Fiduciary Trust International, Franklin Equity Group, Franklin Income Investors, Franklin Mutual Series, Franklin Templeton Fixed Income, Franklin Templeton Investment Solutions, Lexington Partners, O’Shaughnessy Asset Management, Putnam Investments, Royce Investment Partners, Templeton Global Investments, Templeton Global Macro and Western Asset Management.
A majority of the jurisdictions where we operate are covered, or we expect will be covered, by stringent privacy and data protection laws and regulations. 10 Table of Contents As the regulatory focus on privacy continues to intensify and laws and regulations concerning the management of personal data continue to expand, risks related to the handling of privacy obligations and personal data collection across our business will increase.
As the regulatory focus on privacy continues to intensify and laws and regulations concerning the management of personal 10 Table of Contents data continue to expand, risks related to the handling of privacy obligations and personal data collection across our business will increase.
Obligations would be enforced through administrative sanctions and civil liability, with a defense of having exercised reasonable due diligence. The CSDD remains subject to further secondary rulemaking and guidance around implementation.
Obligations would be enforced through administrative sanctions and civil liability, with a defense of having exercised reasonable due diligence. The CSDD remains subject to further secondary rulemaking and guidance around implementation. While CSDD does not currently apply to investment funds, the European Commission is required to consider the merits of potentially extending the requirements to funds.
Unless otherwise indicated, our “funds” means the funds offered under our various brand names. 3 Table of Contents We are a global investment management organization with over $1.6 trillion in assets under management (“AUM”) as of September 30, 2024. Our mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions.
Unless otherwise indicated, our “funds” means the funds offered under our various brand names, which may include co-branded funds. 3 Table of Contents We are a global investment management organization with over $1.6 trillion in assets under management (“AUM”) as of September 30, 2025.
We also host live forums for leaders to engage directly with employees to help reinforce our culture of open feedback. Our employees have access to a valuable set of equitable and competitive total rewards, which consists of a mix of monetary and non-monetary rewards designed to recognize their time, talents and results.
Our employees have access to a valuable set of equitable and competitive total rewards, which consists of a mix of monetary and non-monetary rewards designed to recognize their time, talents and results.
Our services also include management of our ETF platforms. Our specialist investment managers provide investment management services pursuant to agreements with each of our investment products and/or clients, including products for which we provide sub-advisory services.
Our specialist investment managers provide investment management services pursuant to agreements with each of our investment products and/or clients, including products for which we provide sub-advisory services. Our investment management services include fundamental investment research and valuation analyses, including original economic, political, industry and company research, and analyses of suppliers, customers and competitors.
The SEC did not clearly define these terms and instead is allowing fund managers the flexibility to create their own reasonable definitions. Compliance with the rules is required effective in December 2025. U.S. and Global Tax Compliance.
The SEC did not clearly define these terms and instead is allowing fund managers the flexibility to create their own reasonable definitions. As extended in April 2025, compliance with the rules is required for larger fund complexes by June 2026. Digital Assets.
Each typically markets its products and services under its own brand name, with certain distribution functions provided by our corporate distribution subsidiaries where applicable.
Each typically markets its products and services under its own brand name, with certain distribution functions provided by our corporate distribution 5 Table of Contents subsidiaries where applicable. We have in place revenue sharing arrangements with certain of our specialist investment managers.
In Australia, our subsidiaries are subject to various Australian federal and state laws and are regulated by the Australian Securities and Investments Commission (“ASIC”). ASIC regulates companies, financial markets and financial services in Australia. ASIC imposes certain conditions on licensed financial services organizations that apply to our subsidiaries, including requirements relating to capital resources, operational capability and controls. Canada.
In Australia, our subsidiaries are subject to various Australian federal and state laws and are regulated by the Australian Securities and Investments Commission (“ASIC”). ASIC regulates companies, financial markets and financial services in Australia.
Also, the SEC has increased its focus on disclosure and compliance related to ESG strategies of investment advisers and funds. Globally, the International Sustainability Standards Board and applicable sustainability disclosure standards impact how national regulators and governance bodies approach these and related topics. Privacy and Data Protection.
Globally, the independent International Sustainability Standards Board and other applicable sustainability disclosure standards continue to impact how national regulators and governance bodies approach these and related topics. Privacy and Data Protection.
The new rule changes, scheduled to take effect in January 2025, significantly expand the premerger information and documentation required to be submitted in connection with an HSR filing, which could substantially increase our required disclosure and notification expenses and delay transactions. Cybersecurity Disclosure.
The rules significantly expand the premerger information and documentation required to be submitted in connection with an HSR filing, which could substantially increase our required disclosure and notification expenses and delay transactions. Cybersecurity Disclosure. The SEC’s amended rules require disclosure regarding cybersecurity risk management, strategy, governance and incident reporting by public companies.
In October 2024, the Federal Trade Commission (“FTC”) approved various rule changes under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) that amend certain premerger reporting and notification rules.
Certain key regulatory reforms in the U.S. that impact or relate to our business, and may cause, or continue to cause, us to incur additional obligations, include: Antitrust Rules and Disclosure. The Federal Trade Commission (“FTC”) has approved various rule changes under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) that amend certain premerger reporting and notification rules.
We provide our investment management and related services to retail, institutional and high-net-worth investors in jurisdictions worldwide. We deliver our investment capabilities through a variety of products and vehicles and multiple points of access, including directly to investors and through financial intermediaries.
We deliver our investment capabilities through a variety of products and vehicles and multiple points of access, including directly to investors and through financial intermediaries. Our investment products include our sponsored funds, as well as institutional and high-net-worth separate accounts, retail separately managed account programs, sub-advised products, and other investment vehicles.
Our investment products include mutual funds, closed-end funds, collective investment trusts, interval funds, private funds, institutional separate accounts, retail separately managed accounts, and other products.
Our investment products include mutual funds, closed-end funds, collective investment trusts, interval funds, private funds, institutional separate accounts, retail separately managed accounts, and other products. Our products and capabilities are designed to accommodate a variety of investment goals and preferences, from capital appreciation to capital preservation, as well as other investor preferences.
Funds Institutional Separate Accounts Retail Separately Managed Accounts Other Total Percentage of Total AUM Equity $ 359.1 $ 101.9 $ 60.7 $ 94.4 $ 16.0 $ 632.1 38 % Fixed Income 179.1 63.9 251.3 34.1 28.0 556.4 33 % Alternative 145.9 79.8 23.9 0.2 0.1 249.9 15 % Multi-Asset 99.9 10.9 4.6 16.6 44.2 176.2 10 % Cash Management 33.0 30.0 1.0 — — 64.0 4 % Total $ 817.0 $ 286.5 $ 341.5 $ 145.3 $ 88.3 $ 1,678.6 100 % See “Assets under Management” under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Part II of this Annual Report for additional information about our AUM.
Funds Institutional Separate Accounts Retail Separately Managed Accounts Other Total Percentage of Total AUM Equity $ 391.8 $ 120.7 $ 48.0 $ 107.4 $ 18.3 $ 686.2 41 % Fixed Income 159.2 62.4 162.5 31.6 23.0 438.7 26 % Alternative 152.7 88.7 21.7 0.6 0.2 263.9 16 % Multi-Asset 101.4 14.1 4.8 24.9 48.7 193.9 12 % Cash Management 46.3 31.3 0.9 — — 78.5 5 % Total $ 851.4 $ 317.2 $ 237.9 $ 164.5 $ 90.2 $ 1,661.2 100 % See “Assets under Management” under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Part II of this Annual Report for additional information about our AUM.
We outsource various administration, technology, transfer agency and other services for our funds to third-party providers.
To support the funds’ operations, our subsidiaries either provide or arrange for the investment and other management, shareholder servicing and administrative services required by the funds. We outsource various administration, technology, transfer agency and other services for our funds to third-party providers.
The QPAM amendment makes material changes and imposes additional conditions and affirmative requirements for the ongoing use of such exemption. Private Fund Adviser Reforms. In May 2023, the SEC adopted amendments to Form PF, which is the confidential reporting form that investment advisers to private funds file to provide confidential information to the SEC and the FSOC.
Private Fund Adviser Reforms. In February 2024, the SEC and CFTC jointly adopted amendments to Form PF, which is the confidential reporting form that certain investment advisers to private funds file to provide confidential information to the agencies and the FSOC.
Our investment management services include fundamental investment research and valuation analyses, including original economic, political, industry and company research, and analyses of suppliers, customers and competitors. Our management fees vary with the types of services that we provide, and fees may at times be waived or voluntarily reduced by the parties, among other things.
Our management fees vary with the types of services that we provide, and fees may at times be waived or voluntarily reduced by the parties, among other things. Our Funds Our specialist investment managers manage a fund’s portfolio of securities in accordance with the fund’s stated objectives.
Through our specialist investment managers, we offer specialization on a global scale bringing extensive capabilities in equity, fixed income, alternatives and multi-asset solutions. For over 75 years, we have been committed to providing clients with exceptional investment management services and have developed a globally diversified business, including through strategic acquisitions.
For over 75 years, we have been committed to providing clients with exceptional investment management services and have developed a globally diversified business, including through strategic acquisitions. We provide our investment management and related services to retail, institutional and high-net-worth investors in jurisdictions worldwide.
Our investment products include our sponsored funds, as well as institutional and high-net-worth separate accounts, retail separately managed account programs, sub-advised products, and other investment vehicles. Our funds include registered funds (including exchange-traded funds, or “ETFs”) and unregistered funds. Related services include fund administration, sales and distribution, and shareholder servicing. We may perform services directly or through third parties.
Our funds include registered funds (including exchange-traded funds, or “ETFs”) and unregistered funds. Related services include applicable fund administration, sales and distribution, and shareholder servicing, which we may perform directly or outsource to third parties.
The interpretation of the inducements rules has also resulted in major changes to how fund managers finance investment research with many firms, including ours. The European Market Infrastructure Regulation sets out rules in relation to the central clearing of specified derivatives.
The interpretation of the inducements rules has also resulted in major changes to how fund managers finance investment research with many firms, including ours, though changes to those rules are due to take effect in 2026 and the impact of such changes remains to be seen.
In Canada, our subsidiaries are subject to provincial and territorial laws and are registered with and regulated by provincial and territorial securities regulatory authorities.
ASIC imposes certain conditions on licensed financial services organizations that apply to our subsidiaries, including requirements relating to capital resources, operational capability and controls. 13 Table of Contents Canada. In Canada, our subsidiaries are subject to provincial and territorial laws and are registered with and regulated by provincial and territorial securities regulatory authorities.
The FCA recently established Sustainability Disclosure Requirements and we are reviewing the applicable product, marketing and other disclosure requirements for compliance with the December 2024 deadline. We offer a significant number of EU UCITS to U.K. retail investors which will need to apply for registration under the U.K.’s new Offshore Funds Regime by mid-2025 in order to continue such offerings.
We offer a significant number of EU UCITS to U.K. retail investors which have registered under the U.K.’s new Offshore Funds Regime to continue such offerings. We await a further consultation from the U.K.
In addition, the Form PF was further amended to require additional information regarding the private liquidity funds that an investment manager advises. Fund Names Rule Reforms. In September 2023, the SEC adopted amendments to the fund “Names Rule” impacting regulated investment funds.
The compliance date for the amended reporting requirements has been extended, most recently until October 2026. The SEC has indicated that, during the further extension period, it will continue its substantive review of the amendments and Form PF more generally. Fund Names Rule Reforms. In September 2023, the SEC adopted amendments to the fund “Names Rule” impacting regulated investment funds.
Removed
Our products and capabilities are designed to accommodate a variety of investment goals and preferences, from capital appreciation to capital preservation, as well as other investor preferences, which may include sustainable investing and other environmental, social and governance (“ESG”) preferences.
Added
Our mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through our specialist investment managers, we offer specialization on a global scale, bringing extensive capabilities in equity, fixed income, alternatives and multi-asset solutions.
Removed
Our Funds Our specialist investment managers manage a fund’s portfolio of securities in accordance with the fund’s stated objectives. To support the funds’ operations, our subsidiaries either provide or arrange for the investment and other management, shareholder servicing and administrative services required by the funds.
Added
A majority of the jurisdictions where we operate are covered, or we expect will be covered, by stringent privacy and data protection laws and regulations.
Removed
Certain key regulatory reforms in the U.S. that impact or relate to our business, and may cause, or continue to cause, us to incur additional obligations, include: Antitrust Rules and Disclosure.
Added
The QPAM amendment makes material changes and imposes additional conditions and affirmative requirements for the ongoing use of such exemption. On August 7, 2025, President Trump issued an Executive Order to facilitate the ability of participants in 401(k) and other defined contribution plans to obtain exposure to alternative assets, including private equity, real estate, and digital assets.
Removed
The SEC’s amended rules requiring disclosure regarding cybersecurity risk management, strategy, governance and incident reporting by public companies became effective in December 2023.
Added
The amendments require all private fund advisers to report additional information about themselves and the funds they advise, including assets under management, withdrawal and redemption rights, gross and net asset value, inflows and outflows, borrowings and types of creditors, beneficial ownership, and fund performance.
Removed
In addition, state laws and regulations regarding these topics continue to evolve and impose further requirements.
Added
Hedge fund advisers are subject to additional reporting requirements with respect to the funds they advise, including information about investment strategies, counterparty exposures, and trading and clearing mechanisms.
Removed
Regulators continue to review practices and regulations relating to the use of futures, swaps and other derivatives, which could result in further restrictions and limitations on the use of such products.
Added
Large hedge fund advisers that report on qualifying hedge fund assets are required to report more detailed information about investment exposures, borrowing and counterparty exposure, market factor effects, currency exposure, turnover, country and industry exposure, central clearing counterparty reporting, risk metrics, investment performance, portfolio liquidity, and financing and investor liquidity.
Removed
In October 2020, the SEC adopted new rules governing the use of derivatives by certain registered investment companies, including certain mutual funds, designed to address investor protection concerns, which became effective in August 2022.
Added
Regulatory attention to digital assets—including cryptocurrencies, stablecoins, tokenized securities and other distributed ledger instruments—has continued to intensify across jurisdictions. Current U.S. leadership has 11 Table of Contents shown greater support for financial technology innovation and activity. In July 2025, the U.S. enacted legislation governing the issuance and regulatory oversight of payment stablecoins.
Removed
Key aspects of the new framework include, among other things, value at risk limits on a fund entering into derivatives transactions, required risk management program, and further fund board oversight, reporting and compliance requirements. The EU and other countries have adopted and implemented, or are in the process of adopting or implementing, similar and additional requirements.
Added
Congress is considering legislation that would allocate primary oversight of most other digital asset activities between the SEC and CFTC. Also in July 2025, the President’s Working Group on Digital Asset Markets issued a report that includes numerous legislative and regulatory recommendations. The SEC, CFTC, and other agencies have begun implementing these recommendations.
Removed
There is the risk that full mutual recognition may not be achieved between the various regulators, which may cause us to incur duplicate regulation and transaction costs. U.S. DOL Reforms.
Added
Internationally, the EU’s Markets in Crypto-Assets Regulation became fully applicable in late 2024, and the United Kingdom, Singapore, Hong Kong and Japan have introduced or strengthened licensing, prudential and consumer-protection rules for crypto-asset service providers.
Removed
The amendments require (i) current and quarterly reporting by large hedge fund advisers regarding certain events that may indicate stress at a fund or signal broader systemic risk; and (ii) enhanced reporting by large private equity advisers to allow the FSOC to monitor systemic risk.
Added
Although the expanding regulatory framework raises legal, compliance and operational challenges for firms, the anticipated clarity and predictability around permissible digital asset activities is broadly positive for the market and its participants. U.S. and Global Tax Compliance.
Removed
The amendments also require large private equity fund advisers to report information on general partner and limited partner clawbacks on an annual basis as well as additional information on their strategies and borrowings as a part of their annual filing.
Added
In 2024, we updated the applicable product, marketing and other materials of our U.K. funds in line with the FCA’s new Sustainability Disclosure Requirements and we are preparing the first annual disclosure for funds with sustainability characteristics for compliance with the December 2025 deadline.
Removed
The current and quarterly event reporting requirements became effective in November 2023 and the remaining amendments became effective in May 2024. Money Market Fund Reforms .
Added
The availability of such sustainability disclosures may impact the investment decisions of European investors. The European Commission is currently reviewing SFDR and expected to propose major changes before the end of 2025.
Removed
The regulatory structure governing U.S. money market funds was previously reformed to address perceived systemic risks of money market funds relating to fund stability and investor risks, including allowing certain funds to impose liquidity fees and redemption gates under certain circumstances.
Added
With a fresh political focus on encouraging economic growth and regulatory simplification, a fundamental review of both CSDD and the EU’s Corporate Sustainability Reporting Directive (“CSRD”) began early in 2025 and continues, and the implementation deadlines for both CSDD and CSRD have been pushed back to allow for resolution of that process. Australia.
Removed
In July 2023, the SEC adopted additional rule and form amendments concerning money market funds registered under the Investment Company Act, intended to address problems experienced by certain money market funds in connection with the COVID-19 pandemic.
Added
The retention of our key investment personnel is material to the management of our business. As a global asset manager, we are committed to building and maintaining an inclusive workplace that respects and values all employees, To support our efforts, we have established dedicated resources and a global governance structure.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

43 edited+7 added−6 removed134 unchanged
Biggest changeMany services that we use in our business are delivered from and supported, upgraded and maintained by, third-party providers. A breach, suspension or termination of these services or related support, upgrades and maintenance could cause temporary system delays or interruption that could adversely impact our business.
Biggest changeA breach, suspension or termination of these services or related support, upgrades and maintenance could cause system delays or interruption, and/or unauthorized access to confidential or private data, that could adversely impact our business, including financial losses to us and our clients, legal and regulatory issues, and reputational harm.
While we 16 Table of Contents have no legal or contractual obligation to do so, we have in the past provided, and may in the future at our discretion provide, financial support to our funds to enable them to maintain sufficient liquidity in any such event.
While we have no legal or contractual obligation to do so, we have in the past provided, and may in the future at our discretion 16 Table of Contents provide, financial support to our funds to enable them to maintain sufficient liquidity in any such event.
Arrangements with non-independent advisers will also be affected as narrower rules related to the requirement that commissions reflect an enhancement of the service to customers come into effect, along with a prescriptive list of permissible non-monetary benefits.
Arrangements with non-independent advisers will also continue to be affected as narrower rules related to the requirement that commissions reflect an enhancement of the service to customers continue to come into effect, along with a prescriptive list of permissible non-monetary benefits.
The asset management industry is facing transformative pressures and trends from a variety of different sources including increased fee pressure; a continued shift away from actively managed core equities and fixed income strategies towards alternative, passive and smart beta strategies; increased demands from clients and distributors for client engagement and services; a trend towards institutions developing fewer relationships and partners and reducing the number of investment managers they work with; increased regulatory activity and scrutiny of many aspects of the asset management industry, including ESG practices and related matters, transparency/unbundling of fees, inducements, conflicts of interest, capital, liquidity, solvency, leverage, operational risk management, controls and compensation; addressing the key emerging markets in the world, such as China and India, which often have populations with different needs, preferences and horizons than the U.S. and European markets; advances in technology and digital wealth and distribution tools and increasing client interest in interacting digitally with their investment portfolios; and growing digital asset markets that remain subject to substantial volatility and significant regulatory uncertainty.
The investment management industry is facing transformative pressures and trends from a variety of different sources including increased fee pressure; a continued shift away from actively managed core equities and fixed income strategies towards alternative, passive and smart beta strategies; increased demands from clients and distributors for client engagement and services; a trend towards institutions developing fewer relationships and partners and reducing the number of investment managers they work with; increased regulatory activity and scrutiny of many aspects of the investment management industry, including transparency/unbundling of fees, inducements, conflicts of interest, capital, liquidity, solvency, leverage, operational risk management, controls and compensation; addressing the key emerging markets in the world, such as China and India, which often have populations with different needs, preferences and horizons than the U.S. and European markets; advances in technology and digital wealth and distribution tools and increasing client interest in interacting digitally with their investment portfolios; and growing digital asset markets that remain subject to substantial volatility and significant regulatory uncertainty.
The technology systems we use or rely on, including those provided and/or leveraged by third-party providers, remain vulnerable to denial of service attacks, unauthorized access, computer viruses, human error and other events and circumstances that may have a security impact, such as an external or internal hacker attack by one or more cyber criminals (including through the use of social engineering, phishing attacks, malware, ransomware and other methods and activities maliciously designed to obtain and exploit confidential information and to cause system and service disruption and other damage) and to our personnel or vendors inadvertently or recklessly causing release of confidential information, which could materially harm our operations and reputation.
The technology systems we use or rely on, including those provided and/or leveraged by third-party providers, remain vulnerable to denial of service attacks, unauthorized access, computer viruses, human error and other events and circumstances that may have a security impact, such as an external or internal hacker attack by one or more cyber criminals (including through the use of directive attacks involving impersonation, social engineering, phishing, malware, ransomware and other methods and activities maliciously designed to obtain and exploit confidential information and to cause system and service disruption and other damage), and to our personnel or vendors inadvertently or recklessly causing release of confidential information, which could materially harm our operations and reputation.
For a discussion of certain legal proceedings and regulatory matters in which we are involved, see “Legal Proceedings” in Note 16 - Commitments and Contingencies in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report. Our contractual obligations may subject us to indemnification costs and liability to third parties.
For a discussion of certain legal proceedings and regulatory matters in which we are involved, see “Legal Proceedings” in Note 15 - Commitments and Contingencies in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report. Our contractual obligations may subject us to indemnification costs and liability to third parties.
System disruptions, failures or breaches of the technology we use or the security infrastructure we rely upon, including third-party applications and services, or our failure to properly manage, mitigate, disclose or communicate a cybersecurity incident, could result in: (i) material financial loss or costs, (ii) delays in clients’ ability to access account information or in our ability to process transactions, (iii) the unauthorized disclosure or modification of sensitive or confidential client and business information, (iv) loss of valuable information, (v) breach of client and vendor contracts, (vi) liability for stolen assets, information or identity, (vii) remediation costs to repair damage caused by the failure or breach, (viii) additional security and organizational costs to mitigate against future incidents, (ix) reputational harm, (x) loss of confidence in our business and products, (xi) liability for failure to review and disclose applicable incidents or provide relevant updated disclosure properly and timely, (xii) regulatory investigations or actions, and/or (xiii) legal claims, litigation, and liability costs, any one or more of which may be material.
System disruptions, failures or breaches of the technology we use or the security infrastructure we rely upon, including third-party applications and services, or our failure effectively and timely to identify, detect, manage, mitigate, disclose or communicate a cybersecurity incident, could result in: (i) material financial loss or costs, (ii) delays in clients’ ability to access account information or in our ability to process transactions, (iii) the unauthorized disclosure or 22 Table of Contents modification of sensitive or confidential client and business information, (iv) loss of valuable information, (v) breach of client and vendor contracts, (vi) liability for stolen assets, information or identity, (vii) remediation costs to repair damage caused by the failure or breach, (viii) additional security and organizational costs to mitigate against future incidents, (ix) reputational harm, (x) loss of confidence in our business and products, (xi) liability for failure to review and disclose applicable incidents or provide relevant updated disclosure properly and timely, (xii) regulatory investigations or actions, and/or (xiii) legal claims, litigation, and liability costs, any one or more of which may be material.
We currently, and may in the future, depend on a number of third-party providers to support various operational, administrative, technology, transfer agency, market data, distribution, and other business needs of our company. Further, we outsource various administration, technology, transfer agency and other services for our funds to third-party providers.
We currently, and may in the future, depend on third-party providers to support various operational, administrative, technology, transfer agency, market data, distribution, and other business needs of our company. Further, we outsource various administration, technology, transfer agency and other services for our funds to third-party providers.
Any significant limitation, failure or security breach of our information and cybersecurity infrastructure, software applications, technology or other systems, or those of our third-party providers, that are critical to our operations could disrupt our business and harm our operations and reputation.
Any significant limitation, failure or security breach of our information and cybersecurity infrastructure, software applications, technology or other systems, or those of our third-party providers, that are critical to our operations could disrupt our business and harm our operations, financial condition, and reputation.
Moreover, loss or unauthorized disclosure or transfer of confidential and proprietary data or confidential customer identification information could further harm our 22 Table of Contents reputation and subject us to liability under laws that protect confidential data and personal information, resulting in increased costs or a decline in our revenues or common stock price.
Moreover, loss or unauthorized disclosure or transfer of confidential and proprietary data or confidential customer identification information could further harm our reputation and subject us to liability under laws that protect confidential data and personal information, resulting in increased costs or a decline in our revenues or common stock price.
In addition, Canada, the U.K., the Netherlands and the EU, through MiFID II, have adopted regimes that 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.
In addition, Canada, the U.K., the Netherlands and the EU have adopted regimes that 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.
Moreover, adapting or developing the existing technology systems we use to meet our internal needs, as well as client needs, industry demands and new 21 Table of Contents regulatory requirements, is also critical for our business. The introduction of new technologies presents new challenges to us.
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.
Further, although we take precautions to password protect and encrypt our laptops and sensitive information on our 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, which may require us to incur additional administrative costs and/or take remedial actions.
Moreover, while 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, which may require us to incur additional administrative costs and/or take remedial actions.
For example, the ongoing Ukraine-Russia and Middle East wars and conflicts may continue to expand globally and significantly impact the global economy and financial markets, which may have an adverse effect on our investment performance and flows in certain products.
For example, the Ukraine-Russia and Middle East wars and/or conflicts may continue to develop and/or expand globally and significantly impact the global economy and financial markets, which may have an adverse effect on our investment performance and flows in certain products.
Further, financial markets have currently and in the past experienced and may continue, from time to time, to experience volatility and disruption worldwide. Declines in global economic markets have periodically resulted, and may continue to result, in significant decreases in our AUM, revenues and income, and future declines may further negatively impact our financial results.
Further, financial markets have experienced and may continue, from time to time, to experience volatility and disruption worldwide. Declines in global economic markets have periodically resulted, and may continue to result, in significant decreases in our AUM, revenues and income, and future declines may further negatively impact our financial results.
The impacts of these and other regulatory reforms on us, now and in the future, could be significant. We expect that the regulatory 24 Table of Contents requirements and developments applicable to us will cause us to continue to incur additional compliance and administrative burdens and costs.
The impacts of these and other regulatory reforms on us, now and in the future, could be significant. We expect that the regulatory requirements and developments applicable to us will cause us to continue to incur additional compliance and administrative burdens and costs.
As a result of the trends and pressures discussed above, the asset management industry is facing an increased level of disruption.
As a result of the trends and pressures discussed above, the investment management industry is facing an increased level of disruption.
Any disruptions, inaccuracies, mismanagement, delays, theft, systems failures, data security or privacy breaches, cybersecurity threats, incidents, attacks or other cyber-related fraud, or other security breaches in these and other processes, could subject us to significant client dissatisfaction and losses and damage our reputation.
Any disruptions, inaccuracies, mismanagement, delays, theft, systems failures, data security or privacy breaches, cybersecurity threats, incidents, attacks, individual or brand impersonations, or other cyber-related fraud, or other security breaches in these and other processes, could subject us to significant client dissatisfaction and financial losses and damage our reputation.
For example, as noted in the “Legal Proceedings” section in Note 16 - Commitments and Contingencies, our subsidiary, Western Asset Management Company (“WAM”) is the subject of parallel investigations by the SEC, the CFTC and the DOJ. Further, regulatory or governmental examinations or investigations that have been inactive could become active.
For example, as noted in the “Legal Proceedings” section in Note 15 - Commitments and Contingencies, our subsidiary, Western Asset Management Company (“WAM”) remains the subject of parallel investigations by the SEC and the DOJ. Further, regulatory or governmental examinations or investigations that have been inactive could become active.
The outbreak and spread of contagious diseases such as COVID-19 have had, and may in the future have, adverse effects on our business, financial condition and results of operations. The COVID-19 pandemic resulted in a widespread global public health crisis.
The outbreak and spread of contagious diseases have had, and may in the future have, adverse effects on our business, financial condition and results of operations. For example, the COVID-19 pandemic resulted in a widespread global public health crisis.
Regulatory reforms may add further complexity to our business and operations and could require us to alter our investment management services and related activities, which could be costly, impede our growth and adversely impact our AUM, revenues and income.
Regulatory reforms may add further complexity to our business and operations and could require us to alter our investment management services and related activities, which could be costly, impede our growth and adversely impact our 24 Table of Contents AUM, revenues and income.
Moreover, in order to retain certain key personnel, we may be required to increase compensation to such individuals and increase our key management succession planning, resulting in additional expense without a corresponding increase in potential revenues.
Moreover, in order to retain certain key personnel, we may be required to increase compensation to such individuals and increase our key 23 Table of Contents management succession planning, resulting in additional expense without a corresponding increase in potential revenues.
We derive substantially all of our operating revenues and income from providing investment management and related services to investors in jurisdictions worldwide through our investment products, which include our funds, as well as institutional and high-net-worth separate accounts, retail separately managed account programs, sub-advised products, and other investment vehicles. Related services include fund administration, sales and distribution, and shareholder servicing.
We derive substantially all of our operating revenues and income from providing investment management and related services to investors in jurisdictions worldwide through our investment products, which include our funds, as well as institutional and high-net-worth separate accounts, retail separately managed account programs, sub-advised products, and other investment vehicles.
A failure to maintain our third-party distribution and sales channels, or a failure to 20 Table of Contents maintain strong business relationships with our distributors and other intermediaries, may impair our distribution and sales operations.
A failure to maintain our third-party distribution and sales channels, or a failure to maintain strong business relationships with our distributors and other intermediaries, may impair our distribution and sales operations.
On an ongoing basis, we need to upgrade and improve our technology, including our technology platform, data processing, financial, accounting, shareholder servicing and trading systems.
On an ongoing basis, we need to upgrade and improve our technology, including our technology platform, data 21 Table of Contents processing, financial, accounting, shareholder servicing and trading systems.
Certain key regulatory reforms and proposals in the U.S. and other jurisdictions that may impact or relate to our business, and may cause us to incur additional obligations, include regulatory matters related to antitrust rules and disclosure, cybersecurity disclosure, sustainable investing and ESG, climate-related disclosure, privacy and data protection, SIFIs, derivatives and other financial products, fiduciary and fund-related reforms, tax compliance, and other asset management disclosure and compliance requirements.
Certain key regulatory reforms and proposals in the U.S. and other jurisdictions that may impact or relate to our business, and may cause us to incur additional obligations, include regulatory matters related to antitrust rules and disclosure, cybersecurity disclosure, sustainability, privacy and data protection, SIFIs, financial products, fiduciary and fund-related reforms, digital assets, tax compliance, and other investment management disclosure and compliance requirements.
We and our third-party providers have been, and we expect to continue to be, the subject of these types of risks, breaches and/or attacks, as well as attempts to co-opt our brand. Ongoing advances in technology, including generative artificial intelligence, as well as the malicious use of such technology, could further heighten the risks to our business.
We and our third-party providers have been, and we expect to continue to be, the subject of these types of risks, breaches and/or attacks. Ongoing advances in technology, including generative AI, as well as the malicious use of such technology, further heighten the risks to our business.
However, a disaster on a significant scale or affecting certain of our key operating areas within or across regions, or our inability to recover successfully following a disaster or other business continuity problem, could adversely impact our business and operations.
However, a disaster on a significant scale or affecting certain of our key operating areas within or across regions, or our inability to recover successfully following a disaster or other business continuity problem, could adversely impact our business and operations, and could result in regulatory actions, legal liability and/or reputational harm.
Conversely, while we take efforts to avoid infringement of the intellectual property of third parties, if we are deemed to infringe on a third party’s intellectual property rights it could expose us to litigation risks, license fees, liability and reputational harm.
Conversely, while we take efforts to avoid infringement of the intellectual property of third parties, if we are deemed to infringe on a third party’s intellectual property rights it could expose us to litigation risks, license fees, liability and reputational harm. 26 Table of Contents Item 1B. Unresolved Staff Comments. None.
We may perform services directly or through third parties. The asset management industry continues to experience disruption and challenges, including continued fee pressure, regulatory changes, an increasing and changing role of technology in asset management services, the continuous introduction of new products and services, and the consolidation of financial services firms through mergers and acquisitions.
The investment management industry continues to experience disruption and challenges, including continued fee pressure, regulatory changes, an increasing and changing role of technology in investment management services, the continuous introduction of new products and services, and the consolidation of financial services firms through mergers and acquisitions.
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, also may have a 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. 19 Table of Contents We may not effectively manage risks associated with the replacement of benchmark indices.
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, also may have a 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. 19 Table of Contents COMPETITION AND DISTRIBUTION RISKS Failure to properly address the increased transformative pressures affecting the investment management industry could negatively impact our business.
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.
Local regulatory environments may vary widely and place additional demands on our sales, investment, legal and compliance personnel. 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 services and products 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.
Regulators could also change their policies or laws in a manner that might restrict or otherwise impede our ability to offer our services and products 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. 25 Table of Contents Changes in tax laws or exposure to additional income tax liabilities could have a material impact on our financial condition, revenues and income.
Global regulatory and legislative actions and reforms have made compliance in the regulatory environment in which we operate more costly and future actions and reforms could adversely impact our financial condition and results of operations.
Global regulatory and legislative actions and reforms have made compliance in the regulatory environment in which we operate more costly and future actions and reforms could adversely impact our financial condition and results of operations. As in the U.S., regulatory and legislative actions outside the U.S. have been, and continue to be, augmented substantially and made more complex.
Due to our interconnectivity with and dependency upon third-party providers, including advisors, central agents, exchanges, clearing organizations and other financial institutions, we may be adversely affected if any of them is subject to a successful cyber attack or other privacy or information security event or disruption. Cybersecurity issues affecting third-party providers are a growing concern in the asset management industry.
Due to our interconnectivity with and dependency upon third-party providers, including, for example, advisors, central agents, exchanges, clearing organizations, other financial institutions, and other service providers supporting our business and technology needs, we may be adversely affected if any of them is subject to a successful cyber attack or other privacy or information security event or disruption.
In addition, developments in our use of process automation and artificial intelligence further heighten our dependency on technology.
In addition, developments in our use of process automation and artificial intelligence (“AI”) further heighten our dependency on technology, as such technology may be complex and unpredictable.
Such impacts could materially and adversely affect our profitability, lead to further business and operational disruptions, and expose us to additional costs and increased reputational damage and risk. In addition, reputational harm may prevent us from attracting new clients or developing new business.
Such impacts could materially and adversely affect our profitability, lead to further business and operational disruptions, and expose us to additional costs and increased reputational damage and risk.
In addition, due to the global nature of our business, our key personnel may, from time to time, have reasons to travel to regions susceptible to higher risk of civil unrest, organized crime or terrorism, and we may be unable to ensure the safety of our personnel traveling to such regions. 23 Table of Contents CASH MANAGEMENT RISKS Our ability to meet cash needs depends upon certain factors, including the market value of our assets, our operating cash flows and our perceived creditworthiness.
In addition, due to the global nature of our business, our key personnel may, from time to time, have reasons to travel to regions susceptible to higher risk of civil unrest, organized crime or terrorism, and we may be unable to ensure the safety of our personnel traveling to such regions.
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 25 Table of Contents appropriateness of our tax provision.
We are subject to complex tax regimes, changing tax laws, income taxes, non-income-based taxes, and ongoing tax audits, in the 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.
Moreover, we can provide no assurance that we will continue to have access to the third-party financial intermediaries that currently distribute our products, or that we will continue to have the opportunity to offer all or some of our existing products through them.
Any inability to access and successfully sell our products to clients through such third-party channels could have a negative effect on our level of AUM and adversely impact our business. 20 Table of Contents Moreover, we can provide no assurance that we will continue to have access to the third-party financial intermediaries that currently distribute our products, or that we will continue to have the opportunity to offer all or some of our existing products through them.
While management has focused attention and resources on our compliance policies, procedures and practices, the regulatory environments of the jurisdictions where we conduct our business, or where our products 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.
Moreover, any errors, whether financial or otherwise, if material, could damage our reputation and adversely affect our business. While management has focused attention and resources on our compliance policies, procedures and practices, the regulatory environments of the jurisdictions where we conduct our business, or where our products are organized or sold, are complex, uncertain and subject to change.
In addition, failure to manage and operate properly the data centers and third-party cloud storage and computing application services 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.
In addition, our or our third-party providers’ failure to manage and operate properly the data centers and third-party cloud storage and computing application services we use could have an adverse impact on our business.
Moreover, ESG topics and activities have been the subject of increased focus by certain investors and regulators in the asset management industry, and any inability to meet applicable requirements may adversely impact our reputation and business. GLOBAL OPERATIONAL RISKS Our business and operations are subject to adverse effects from the outbreak and spread of contagious diseases such as COVID-19.
In addition, reputational harm may prevent us from attracting new clients or developing new business, and any inability to meet applicable client, regulatory or other requirements may adversely impact our reputation and business. GLOBAL OPERATIONAL RISKS Our business and operations are subject to adverse effects from the outbreak and spread of contagious diseases.
Removed
The replacement of benchmark indices may impose a number of risks on our business, our clients and the financial services industry more widely. These include financial risks arising from changes in the valuation of financial instruments linked to benchmark indices, pricing and operational risks, and legal implementation and revised documentation.
Added
Related services include fund administration, sales and distribution, and shareholder servicing, which we may perform directly or outsource to third parties.
Removed
We may from time to time face operational challenges implementing successor benchmarks. COMPETITION AND DISTRIBUTION RISKS Failure to properly address the increased transformative pressures affecting the asset management industry could negatively impact our business.
Added
Cybersecurity issues affecting third-party providers are a growing concern in the asset management industry. Many services that we use in our business are delivered from and supported, upgraded and maintained by, third-party providers.
Removed
Any inability to access and successfully sell our products to clients through such third-party channels could have a negative effect on our level of AUM and adversely impact our business.
Added
Developing regulatory treatment of AI, and failure to adequately address AI-related challenges, creates a risk of reputational harm and an impediment to growth. Artificial Intelligence (AI) is used in many areas of our business and we plan to further incorporate AI into additional areas.
Removed
As in the U.S., regulatory and legislative actions outside the U.S. have been augmented substantially and made more complex by measures such as the EU’s AIFMD and MiFID II.
Added
The use of AI offers efficiencies, but also introduces significant challenges related to data security, privacy, intellectual property, regulatory compliance, accuracy and bias concerns, and reputational harm, among others. For example, AI technologies, including generative AI, may create content that appears correct but is factually inaccurate or flawed.
Removed
Moreover, any accounting or reporting errors, whether financial or otherwise, if material, could damage our reputation and adversely affect our business.
Added
AI technologies evolve at a rapid pace and their usage requires integration with other technology applications, data platforms and business processes. Globally, courts and regulatory agencies are developing approaches to dealing with AI-related issues, which creates uncertainty around the use of the technology.
Removed
Changes in tax laws or exposure to additional income tax liabilities could have a material impact on our financial condition, revenues and income. We are subject to complex tax regimes, changing tax laws, income taxes, non-income-based taxes, and ongoing tax audits, in the various jurisdictions in which we operate.
Added
Use of AI technologies requires ongoing operational controls and procedures, and the development and implementation of appropriate protections and safeguards. Failure to successfully integrate AI technologies, respond to client or market demands, identify or address applicable legal or regulatory issues or effectively manage related risks could result in legal and regulatory liabilities and harm our reputation and growth.
Added
CASH MANAGEMENT RISKS Our ability to meet cash needs depends upon certain factors, including the market value of our assets, our operating cash flows and our perceived creditworthiness.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+0 added−0 removed12 unchanged
Biggest changeOnce a cybersecurity incident is identified, including third-party cybersecurity events, our incident response team investigates the incident, determines the nature of the event and assesses the severity of the event and sensitivity of any compromised data. Response and Recovery .
Biggest changeOnce a cybersecurity incident is identified, including third-party cybersecurity events, our incident response team investigates the incident, determines the nature of the event and assesses the severity of the event, including any operational impact and sensitivity of any compromised data. Response and Recovery .
Cybersecurity incidents may be detected through a variety of means, which include, but are not limited to, automated event-detection notifications or similar technologies which are monitored by our security operations team, as well as notifications from employees or third-party providers.
Cybersecurity incidents may be detected through a variety of means, which include, but are not limited to, automated event-detection notifications or similar technologies that are monitored by our security operations team, as well as notifications from employees or third-party providers.
We are not aware of any cybersecurity threats or incidents that have materially impacted us during the fiscal year ended September 30, 2024, or that are reasonably likely to materially affect our business, including our business strategy, results of operations or financial condition.
We are not aware of any cybersecurity threats or incidents that have materially impacted us during the fiscal year ended September 30, 2025, or that are reasonably likely to materially affect our business, including our business strategy, results of operations or financial condition.
Our employees and contractors are required to complete mandatory initial onboarding and annual cybersecurity trainings, supplemented by other periodic cyber-related testing and training. Governance Our Board is responsible for the oversight of our cybersecurity risk management program. The Board has delegated to the Franklin Audit Committee oversight responsibility regarding cybersecurity risks.
Our employees and contractors are required to complete mandatory initial onboarding and annual cybersecurity trainings, supplemented by other periodic cyber-related testing and training. 27 Table of Contents Governance Our Board is responsible for the oversight of our cybersecurity risk management program. The Board has delegated to the Franklin Audit Committee oversight responsibility regarding cybersecurity risks.
Our CSO reports directly to our Chief Risk and Transformation Officer, each of whom has extensive experience in information security and risk 27 Table of Contents management. The Board and/or Audit Committee receive(s) a report on cybersecurity matters, including threats, events and program enhancements, at least annually.
Our CSO reports directly to our Chief Risk and Transformation Officer, each of whom has extensive experience in information security and risk management. The Board and/or Audit Committee receive(s) a report on cybersecurity matters, including threats, events and program enhancements, at least annually.
We routinely face risks of cybersecurity incidents, whether through attempted or actual: cyber-attacks or cyber intrusions, ransomware and other forms of malware, computer viruses, attachments to emails, phishing, extortion or other scams.
We routinely face risks of cybersecurity incidents, whether through attempted or actual: cyber-attacks or cyber intrusions, ransomware and other forms of malware, computer viruses, attachments to emails, individual or brand impersonation, phishing, extortion or other scams.
For additional information regarding our cybersecurity risks, see our risk factors under Item 1A in Part I of this Annual Report.
For additional information regarding our cybersecurity risks, see our risk factors under Item 1A in Part I of this Annual Report. 28 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−0 removed1 unchanged
Biggest changeLauderdale, Florida 102,246 31,705 Edinburgh, Scotland 87,016 24,879 Other 95,883 11,306 Total 2,698,397 1,089,250 We lease office space in 17 states in the U.S. and Washington, D.C., and internationally, including Australia, Brazil, Canada, the People’s Republic of China (including Hong Kong), Germany, India, Japan, Luxembourg, Mexico, Singapore, South Korea, United Arab Emirates and the U.K.
Biggest changeLauderdale, Florida 102,246 31,705 Edinburgh, Scotland 87,016 24,879 Other 75,239 11,350 Total 2,677,753 1,093,776 We lease office space in 16 states in the U.S. and Washington, D.C., and internationally, including Australia, Brazil, Canada, the People’s Republic of China (including Hong Kong), Germany, India, Japan, Luxembourg, Mexico, Singapore, South Korea, United Arab Emirates and the U.K.
We own our San Mateo, California corporate headquarters and various other office buildings in the U.S. and internationally. We lease excess owned space to third parties under leases with terms through 2035. Our owned properties consist of the following: Location Owned Square Footage Owned Square Footage Leased to Third Parties San Mateo, California 743,793 475,183 St.
We own our San Mateo, California corporate headquarters and various other office buildings in the U.S. and internationally. We lease excess owned space to third parties under leases with terms through 2036. Our owned properties consist of the following: Location Owned Square Footage Owned Square Footage Leased to Third Parties San Mateo, California 743,793 475,183 St.
As of September 30, 2024, we leased and occupied approximately 2,514,000 square feet of office space worldwide, and subleased to third parties approximately 177,000 square feet of excess leased space.
As of September 30, 2025, we leased and occupied approximately 2,022,000 square feet of office space worldwide, and subleased to third parties approximately 185,000 square feet of excess leased space.
Petersburg, Florida 560,948 379,762 Rancho Cordova, California 445,023 55,770 Hyderabad, India 379,052 23,088 Poznan, Poland 284,436 87,557 Ft.
Petersburg, Florida 560,948 392,458 Rancho Cordova, California 445,023 47,556 Hyderabad, India 379,052 23,088 Poznan, Poland 284,436 87,557 Ft.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 3. Legal Proceedings. Incorporated herein by reference is information regarding certain legal proceedings and regulatory matters in which we are involved as set forth under “Legal Proceedings” contained in Note 16 – Commitments and Contingencies in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report.
Biggest changeItem 3. Legal Proceedings. Incorporated herein by reference is information regarding certain legal proceedings and regulatory matters in which we are involved as set forth under “Legal Proceedings” contained in Note 15 – Commitments and Contingencies in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

9 edited+1 added−3 removed3 unchanged
Biggest changeFormerly, Chief Operating Officer and Chief Financial Officer of ClearBridge from 2006 to 2011, Chief Financial Officer of Citigroup Asset Management (a financial services firm) from 2005 to 2006 and Director of Planning from 2000 to 2005; and business Controller for various product lines at Citigroup’s Corporate and Investment Bank from 1997 to 2000. 29 Table of Contents Matthew Nicholls Age 52 Executive Vice President and Chief Financial Officer of Franklin since May 2019 and Chief Operating Officer since April 2022; officer and/or director of certain subsidiaries of Franklin.
Biggest changeFormerly, Executive Vice President of Franklin from October 2022 to October 2025, Chief Operating Officer and Chief Financial Officer of ClearBridge from 2006 to 2011, Chief Financial Officer of Citigroup Asset Management a financial services firm from 2005 to 2006 and Director of Planning from 2000 to 2005; and business Controller for various product lines at Citigroup’s Corporate and Investment Bank from 1997 to 2000. 30 Table of Contents Matthew Nicholls Age 53 Co-President of Franklin since October 2025, Chief Financial Officer of Franklin since May 2019 and Chief Operating Officer since April 2022; officer and/or director of certain subsidiaries of Franklin.
Johnson Age 63 Executive Chairman of Franklin since February 2020, Chairman of the Board of Franklin since June 2013 and director of Franklin since January 2007; Chairman of the San Francisco Giants, a professional baseball organization, since November 2019; formerly, Chief Executive Officer of Franklin from July 2005 to February 2020, Co-Chief Executive Officer of Franklin from January 2004 to July 2005, and President of Franklin from December 1999 to September 2015; officer and/or director of certain subsidiaries of Franklin; officer, director and/or trustee of certain funds registered as investment companies managed or advised by subsidiaries of Franklin.
Johnson Age 64 Executive Chairman of Franklin since February 2020, Chairman of the Board of Franklin since June 2013 and director of Franklin since January 2007; Chairman of the San Francisco Giants, a professional baseball organization, since November 2019; formerly, Chief Executive Officer of Franklin from July 2005 to February 2020, Co-Chief Executive Officer of Franklin from January 2004 to July 2005, and President of Franklin from December 1999 to September 2015; officer and/or director of certain subsidiaries of Franklin; officer, director and/or trustee of certain funds registered as investment companies managed or advised by subsidiaries of Franklin.
Item 4. Mine Safety Disclosures. Not applicable. 28 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following description of our executive officers is included as an unnumbered item in this Part I of this Annual Report in lieu of being included in our definitive proxy statement for our annual meeting of stockholders.
Item 4. Mine Safety Disclosures. Not applicable. 29 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following description of our executive officers is included as an unnumbered item in this Part I of this Annual Report in lieu of being included in our definitive proxy statement for our annual meeting of stockholders.
Johnson Age 60 President of Franklin since December 2016, and Chief Executive Officer and director of Franklin since February 2020; formerly, Chief Operating Officer of Franklin from February 2017 to February 2020, Co-President of Franklin from October 2015 to December 2016, Executive Vice President and Chief Operating Officer of Franklin from March 2010 to September 2015, Executive Vice President – Operations and Technology of Franklin from December 2005 to March 2010, and Senior Vice President and Chief Information Officer of Franklin from May 2003 to December 2005; officer and/or director of certain subsidiaries of Franklin; officer, director and/or trustee of certain funds registered as investment companies managed or advised by subsidiaries of Franklin.
Johnson Age 61 Chief Executive Officer and director of Franklin since February 2020; formerly, President of Franklin from December 2016 to October 2025, Chief Operating Officer of Franklin from February 2017 to February 2020, Co-President of Franklin from October 2015 to December 2016, Executive Vice President and Chief Operating Officer of Franklin from March 2010 to September 2015, Executive Vice President – Operations and Technology of Franklin from December 2005 to March 2010, and Senior Vice President and Chief Information Officer of Franklin from May 2003 to December 2005; officer and/or director of certain subsidiaries of Franklin; officer, director and/or trustee of certain funds registered as investment companies managed or advised by subsidiaries of Franklin.
Rupert H. Johnson, Jr. Age 84 Vice Chairman of Franklin since December 1999 and director of Franklin since 1971; officer and/or director of certain subsidiaries of Franklin; officer, director and/or trustee of certain funds registered as investment companies managed or advised by subsidiaries of Franklin. Thomas C.
Rupert H. Johnson, Jr. Age 85 Vice Chairman of Franklin since December 1999 and director of Franklin since 1971; officer and/or director of certain subsidiaries of Franklin; officer, director and/or trustee of certain funds registered as investment companies managed or advised by subsidiaries of Franklin.
Merchant Age 56 Executive Vice President and General Counsel of Franklin since May 2022 and Corporate Secretary since July 2021, and oversaw global regulatory compliance of Franklin as Deputy General Counsel from August 2020 to May 2022; officer and/or director of certain subsidiaries of Franklin.
Thomas C. Merchant Age 57 Executive Vice President and General Counsel of Franklin since May 2022 and Assistant Secretary since December 2024; formerly, Corporate Secretary from July 2021 to December 2024; oversaw global regulatory compliance of Franklin as Deputy General Counsel from August 2020 to May 2022; officer and/or director of certain subsidiaries of Franklin.
(a financial services firm) from 1995 to May 2019, as Managing Director, Global Head of Financial Institutions, Corporate Banking, and Global Head of Asset Management, Corporate and Investment Banking, from 2017 to May 2019, as Managing Director, Co-Head, Financial Institutions Corporate and Investment Banking, North America, and Global Head of Asset Management, Corporate and Investment Banking, from 2014 to 2017, as Managing Director, Co-Head, North America, Financial Institutions Corporate and Investment Banking from 2011 to 2014, as Managing Director and Co-Head, North America, Financial Institutions Corporate Banking from 2007 to 2011, and as Managing Director and Co-Head of Asset Management Banking from 2006 to 2007.
Formerly, Executive Vice President of Franklin from May 2019 to October 2025, and formerly with Citigroup, Inc. a financial services firm from 1995 to May 2019, as Managing Director, Global Head of Financial Institutions, Corporate Banking, and Global Head of Asset Management, Corporate and Investment Banking, from 2017 to May 2019, as Managing Director, Co-Head, Financial Institutions Corporate and Investment Banking, North America, and Global Head of Asset Management, Corporate and Investment Banking, from 2014 to 2017, as Managing Director, Co-Head, North America, Financial Institutions Corporate and Investment Banking from 2011 to 2014, as Managing Director and Co-Head, North America, Financial Institutions Corporate Banking from 2007 to 2011, and as Managing Director and Co-Head of Asset Management Banking from 2006 to 2007.
Murphy Age 57 Executive Vice President and Head of Public Markets of Franklin since February 2023 and executive officer of Franklin since October 2022; Chairman since 2014 and Chief Executive Officer and President since 2012 of ClearBridge Investments, LLC, a subsidiary of Franklin; officer and/or director of certain other subsidiaries of Franklin.
Terrence J. Murphy Age 58 Co-President of Franklin since October 2025 and Head of Public Market Investments of Franklin since October 2022; Chairman since 2014 and Chief Executive Officer and President since 2012 of ClearBridge Investments, LLC, a subsidiary of Franklin; officer and/or director of certain other subsidiaries of Franklin.
Family Relationships Jennifer M. Johnson and Gregory E. Johnson are siblings, and their uncle is Rupert H. Johnson, Jr. Each serves as both a director and an executive officer of Franklin. 30 Table of Contents PART II
Formerly, served as a Corporate Associate at Shearman & Sterling, a law firm, in New York from 1993 to 1998. Family Relationships Jennifer M. Johnson and Gregory E. Johnson are siblings, and their uncle is Rupert H. Johnson, Jr. Each serves as both a director and an executive officer of Franklin. 31 Table of Contents PART II
Removed
Formerly, served as a Corporate Associate at Shearman & Sterling, a law firm, in New York from 1993 to 1998. Terrence J.
Added
Daniel Gamba Age 58 Co-President and Chief Commercial Officer of Franklin since October 2025; formerly, President of Northern Trust Asset Management and Executive Vice President of Northern Trust Corporation financial services firms from April 2023 to September 2025; and formerly spent over two decades at Blackrock, Inc. financial services firm where, among other roles, he served as Co-Head of Fundamental Equities from 2020 to February 2023, Global Head of Active Equity Product Strategy from 2016 to 2020, and Head of Americas Institutional iShares Business and Co-Head iShares U.S. from 2011 to 2016.
Removed
Alok Sethi Age 63 Executive Vice President and Head of Global Operations of Franklin since February 2023; formerly, Executive Vice President, Technology and Operations, of Franklin from October 2021 to February 2023; officer and/or director of various investment adviser, operations, and technology related subsidiaries of Franklin for more than the past five years, including as Senior Vice President of Franklin Advisers, Inc., Franklin Templeton Institutional, LLC and Templeton Investment Counsel, LLC since July 2014, and Vice President of Franklin Templeton Companies, LLC since June 2010.
Removed
Spector Age 56 Executive Vice President and Head of Global Distribution of Franklin since February 2023, responsible for global retail and institutional distribution, including marketing and product strategy; formerly, Managing Partner of Brandywine Global Investment Management, LLC from November 2014 to January 2024, responsible for the overall management of Brandywine including infrastructure, legal and compliance, business strategy, and sales and client service; Executive Vice President of Global Advisory Services of Franklin from October 2020 to February 2023; Managing Director of Brandywine from 2012 to 2014, Head of Marketing, Sales and Client Service of Brandywine from 2003 to 2014, and Senior Vice President of Client Service of Brandywine from 1997 to 2003; officer and/or director of certain other subsidiaries of Franklin.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed1 unchanged
Biggest changeMonth Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs July 2024 766,410 $ 22.88 766,410 34,066,486 August 2024 2,740,416 20.63 2,740,416 31,326,070 September 2024 1,388,446 20.39 1,388,446 29,937,624 Total 4,895,272 4,895,272 Under our stock repurchase program, which is not subject to an expiration date, 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.
Biggest changeMonth Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs July 2025 348,101 $ 24.01 348,101 21,539,529 August 2025 2,283,211 25.65 2,283,211 19,256,318 September 2025 6,629 24.66 6,629 19,249,689 Total 2,637,941 2,637,941 Under our stock repurchase program, which is not subject to an expiration date, 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.
The following table provides information with respect to the shares of our common stock that we repurchased during the three months ended September 30, 2024.
The following table provides information with respect to the shares of our common stock that we repurchased during the three months ended September 30, 2025.
In December 2023, our Board of Directors authorized the repurchase of up to an additional 27.2 million shares of our common stock in either open market or private transactions, for a total of up to 40.0 million shares available for repurchase under the stock repurchase program. Item 6. [ Reserved]
In December 2023, our Board of Directors authorized the repurchase of up to an additional 27.2 million shares of our common stock in either open market or private transactions, for a total of up to 40.0 million shares available for repurchase under the stock repurchase program as of such authorization date. Item 6. [ Reserved]
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is traded on the NYSE under the ticker symbol “BEN.” At October 31, 2024, there were 2,353 stockholders of record of our common stock.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is traded on the NYSE under the ticker symbol “BEN.” At October 31, 2025, there were 2,231 stockholders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

115 edited+25 added−20 removed87 unchanged
Biggest change(in billions) 2024 vs. 2023 2023 vs. 2022 for the fiscal years ended September 30, 2024 2023 2022 Beginning AUM $ 1,374.2 $ 1,297.4 $ 1,530.1 6 % (15 %) Long-term inflows 319.0 254.9 320.4 25 % (20 %) Long-term outflows (351.6) (276.2) (348.2) 27 % (21 %) Long-term net flows (32.6) (21.3) (27.8) 53 % (23 %) Cash management net flows 2.7 4.3 (0.8) (37 %) NM Total net flows (29.9) (17.0) (28.6) 76 % (41 %) Acquisitions 148.3 34.9 64.9 325 % (46 %) Net market change, distributions and other 186.0 58.9 (269.0) 216 % NM Ending AUM $ 1,678.6 $ 1,374.2 $ 1,297.4 22 % 6 % 34 Table of Contents Components of the change in AUM by asset class were as follows: (in billions) for the fiscal year ended September 30, 2024 Equity Fixed Income Alternative Multi-Asset Cash Management Total AUM at October 1, 2023 $ 430.4 $ 483.1 $ 254.9 $ 145.0 $ 60.8 $ 1,374.2 Long-term inflows 123.3 142.5 16.7 36.5 — 319.0 Long-term outflows (129.3) (181.3) (12.5) (28.5) — (351.6) Long-term net flows (6.0) (38.8) 4.2 8.0 — (32.6) Cash management net flows — — — — 2.7 2.7 Total net flows (6.0) (38.8) 4.2 8.0 2.7 (29.9) Acquisition 81.3 59.3 0.7 5.8 1.2 148.3 Net market change, distributions and other 126.4 52.8 (9.9) 17.4 (0.7) 186.0 AUM at September 30, 2024 $ 632.1 $ 556.4 $ 249.9 $ 176.2 $ 64.0 $ 1,678.6 AUM increased $304.4 billion or 22% during fiscal year 2024 due to the positive impact of $186.0 billion of net market change, distributions and other, $148.3 billion from the acquisition of Putnam, and $2.7 billion of cash management net inflows, partially offset by $32.6 billion of long-term net outflows, inclusive of $48.6 billion of long-term net outflows at Western Asset Management (“WAM”), and $20.7 billion of long-term reinvested distributions.
Biggest change(in billions) for the fiscal year ended September 30, 2024 Equity Fixed Income Alternative Multi-Asset Cash Management Total AUM at October 1, 2023 $ 430.4 $ 483.1 $ 254.9 $ 145.0 $ 60.8 $ 1,374.2 Long-term inflows 123.3 142.5 16.7 36.5 — 319.0 Long-term outflows (129.3) (181.3) (12.5) (28.5) — (351.6) Long-term net flows (6.0) (38.8) 4.2 8.0 — (32.6) Cash management net flows — — — — 2.7 2.7 Total net flows (6.0) (38.8) 4.2 8.0 2.7 (29.9) Acquisition 81.3 59.3 0.7 5.8 1.2 148.3 Net market change, distributions and other 126.4 52.8 (9.9) 17.4 (0.7) 186.0 AUM at September 30, 2024 $ 632.1 $ 556.4 $ 249.9 $ 176.2 $ 64.0 $ 1,678.6 AUM by sales region was as follows: (in billions) 2025 vs. 2024 2024 vs. 2023 as of September 30, 2025 2024 2023 United States $ 1,171.5 $ 1,177.1 $ 979.9 0 % 20 % International Europe, Middle East and Africa 215.1 209.1 165.1 3 % 27 % Asia-Pacific 165.8 178.0 117.6 (7 %) 51 % Americas, excl.
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.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES 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.
In assessing whether a valuation allowance should be established against a deferred income tax asset, we consider all positive and negative evidence, which includes timing of expiration, projected sources of taxable income, limitations on utilization under the statute and the effectiveness of prudent and feasible tax planning strategies among other factors.
In assessing whether a valuation allowance should be established against a deferred tax asset, we consider all positive and negative evidence, which includes timing of expiration, projected sources of taxable income, limitations on utilization under the statute and the effectiveness of prudent and feasible tax planning strategies among other factors.
As our AUM is primarily valued based on observable market prices or inputs, market risk is the most significant risk underlying the valuation of our AUM. 52 Table of Contents Income Taxes Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and the reported amounts in the consolidated financial statements using the statutory tax rates in effect for the year when the reported amount of the asset or liability is expected to be recovered or settled, respectively.
As our AUM is primarily valued based on observable market prices or inputs, market risk is the most significant risk underlying the valuation of our AUM. 54 Table of Contents Income Taxes Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and the reported amounts in the consolidated financial statements using the statutory tax rates in effect for the year when the reported amount of the asset or liability is expected to be recovered or settled, respectively.
Adjusted Operating Income We define adjusted operating income as operating income adjusted to exclude the following: • Elimination of operating revenues upon consolidation of investment products. • Acquisition-related items: ◦ Acquisition-related retention compensation. ◦ Other acquisition-related expenses including professional fees, technology costs and fair value adjustments related to contingent consideration assets and liabilities. ◦ Amortization of intangible assets. ◦ Impairment of intangible assets and goodwill, if any. • Special termination benefits related to workforce optimization initiatives related to past acquisitions and certain initiatives undertaken by the Company. • Impact on compensation and benefits expense from gains and losses on investments related to deferred compensation plans, which is offset in investment and other income (losses), net. • Impact on compensation and benefits expense related to minority interests in certain subsidiaries, which is offset in net income (loss) attributable to redeemable noncontrolling interests.
Adjusted Operating Income We define adjusted operating income as operating income adjusted to exclude the following: • Elimination of operating revenues upon consolidation of investment products. • Acquisition-related items: ◦ Acquisition-related retention compensation. 43 Table of Contents ◦ Other acquisition-related expenses including professional fees, technology costs and fair value adjustments related to contingent consideration assets and liabilities. ◦ Amortization of intangible assets. ◦ Impairment of intangible assets and goodwill, if any. • Special termination benefits and other expenses related to workforce optimization initiatives related to past acquisitions and certain initiatives undertaken by the Company. • Impact on compensation and benefits expense from gains and losses on investments related to deferred compensation plans, which is offset in investment and other income (losses), net. • Impact on compensation and benefits expense related to minority interests in certain subsidiaries, which is offset in net income (loss) attributable to redeemable noncontrolling interests.
We deliver our investment capabilities through a variety of investment products, which include our sponsored funds, as well as institutional and high-net-worth separate accounts, retail separately managed account programs, sub-advised products and other investment vehicles. Related services include fund administration, sales and distribution, and shareholder servicing. We may perform services directly or through third parties.
We deliver our investment capabilities through a variety of investment products, which include our sponsored funds, as well as institutional and high-net-worth separate accounts, retail separately managed account programs, sub-advised products and other investment vehicles. Related services include fund administration, sales and distribution, and shareholder servicing, which we may perform directly or outsource to third parties.
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 our impairment assessment as of August 1, 2024. We also monitored fluctuations of our common stock per share price to evaluate our market capitalization relative to the reporting unit as a whole.
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 our impairment assessment as of August 1, 2025. We also monitored fluctuations of our common stock per share price to evaluate our market capitalization relative to the reporting unit as a whole.
We also provide sub-advisory services to certain investment products sponsored by other companies 31 Table of Contents 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”).
We also provide sub-advisory services to certain investment products sponsored by other companies 32 Table of Contents 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”).
The information in this presentation is provided solely for use in connection with this document, and is not directed toward existing or potential clients of Franklin. 36 Table of Contents OPERATING REVENUES The table below presents the percentage change in each operating revenue category.
The information in this presentation is provided solely for use in connection with this document, and is not directed toward existing or potential clients of Franklin. 37 Table of Contents OPERATING REVENUES The table below presents the percentage change in each operating revenue category.
Cash and cash equivalents at September 30, 2024 primarily consist of money market funds and deposits with financial institutions. Liquid investments consist of investments in sponsored and other funds, direct investments in redeemable CIPs, other equity and debt securities, and time deposits with maturities greater than three months.
Cash and cash equivalents at September 30, 2025 primarily consist of money market funds and deposits with financial institutions. Liquid investments consist of investments in sponsored and other funds, direct investments in redeemable CIPs, other equity and debt securities, and time deposits with maturities greater than three months.
The success of these and other strategies may be influenced by the factors discussed in the “Risk Factors” section. The following discussion and analysis includes a comparison of our financial results for fiscal year 2024 to fiscal year 2023.
The success of these and other strategies may be influenced by the factors discussed in the “Risk Factors” section. The following discussion and analysis includes a comparison of our financial results for fiscal year 2025 to fiscal year 2024.
In management’s opinion, an adequate accrual has been made as of September 30, 2024 to provide for any probable losses that may arise from such matters for which we could reasonably estimate an amount.
In management’s opinion, an adequate accrual has been made as of September 30, 2025 to provide for any probable losses that may arise from such matters for which we could reasonably estimate an amount.
We offer our services and products under our various distinct brand names, including, but not limited to, Franklin ® , Templeton ® , Legg Mason ® , Alcentra ® , Benefit Street Partners ® , Brandywine Global Investment Management ® , Canvas ® , Clarion Partners ® , ClearBridge Investments ® , Fiduciary Trust International™, Franklin Mutual Series ® , K2 ® , Lexington Partners ® , Martin Currie ® , O’Shaughnessy ® , Putnam ® , Royce ® and Western Asset Management Company ® .
We offer our services and products under our various distinct brand names, including, but not limited to, Alcentra ® , Apera ® , Benefit Street Partners ® , Brandywine Global Investment Management ® , Canvas ® , Clarion Partners ® , ClearBridge Investments ® , Fiduciary Trust International™, Franklin ® , Franklin Mutual Series ® , K2 ® , Legg Mason ® , Lexington Partners ® , O’Shaughnessy ® , Putnam ® , Royce ® , Templeton ® , and Western Asset Management Company ® .
We subsequently monitored market conditions and their potential impact on the assumptions used in the annual assessment to determine whether circumstances had changed that would more likely than not reduce the fair value of the reporting unit below its carrying value, or indicate that the other indefinite-lived intangible assets might be impaired.
We subsequently monitored market conditions and their potential impact on the assumptions used in the annual assessment to determine whether circumstances had changed that would more likely than not reduce the fair value of the reporting unit below its carrying value, or indicate that the other indefinite-lived intangible assets were more likely than not impaired.
As of September 30, 2024, Level 3 assets represented 4% of total assets measured at fair value, substantially all of which related to CIPs ’ investments in equity and debt securities. There were insignificant transfers into and out of Level 3 during fiscal year 2024.
As of September 30, 2025, Level 3 assets represented 4% of total assets measured at fair value, substantially all of which related to CIPs ’ investments in equity and debt securities. There were insignificant transfers into and $39.3 million transfers out of Level 3 during fiscal year 2025.
Upon the conclusion of the measurement period, any subsequent adjustments are recorded in earnings. 49 Table of Contents Intangible assets acquired in business combinations consist primarily of investment management contracts and trade names.
Upon the conclusion of the measurement period, any subsequent adjustments are recorded in earnings. Intangible assets acquired in business combinations consist primarily of investment management contracts and trade names.
In December 2023, our Board of Directors authorized the repurchase of up to an additional 27.2 million shares of our common stock in either open market or private transactions, for a total of up to 40.0 million shares available for repurchase under the stock repurchase program.
In December 2023, our Board of Directors authorized the repurchase of up to an additional 27.2 million shares of our common stock in either open market or private transactions, for a total of up to 40.0 million shares available for repurchase under the stock repurchase program as of such authorization date.
In prior fiscal years, we issued senior unsecured unsubordinated notes for general corporate purposes and to redeem outstanding notes. At September 30, 2024, Franklin’s outstanding senior notes had an aggregate principal amount due of $1,600.0 million.
In prior fiscal years, we issued senior unsecured unsubordinated notes for general corporate purposes and to redeem outstanding notes. At September 30, 2025, Franklin’s outstanding senior notes had an aggregate principal amount due of $1,200.0 million.
The notes have fixed interest rates from 1.600% to 2.950% with interest paid semi-annually and have an aggregate carrying value, inclusive of unamortized discounts and debt issuance costs, of $1,586.9 million. At September 30, 2024, Legg Mason’s outstanding senior notes had an aggregate principal amount due of $1,000.0 million.
The notes have fixed interest rates from 1.600% to 2.950% with interest paid semi-annually and have an aggregate carrying value, inclusive of unamortized discounts and debt issuance costs, of $1,188.5 million. At September 30, 2025, Legg Mason’s outstanding senior notes had an aggregate principal amount due of $1,000.0 million.
Investments held by the Company generated net gains of $57.6 million, as compared to net gains of $39.5 million in the prior year, primarily from assets invested for deferred compensation plans and investments in nonconsolidated funds and separate accounts, partially offset by net losses from investments measured at cost adjusted for observable price changes.
Investments held by the Company generated net losses of $37.6 million, as compared to net gains of $57.6 million in the prior year. Net losses in the current year were primarily from investments measured at cost adjusted for observable price changes and investments in nonconsolidated funds and separate accounts, partially offset by gains on assets invested for deferred compensation plans.
Alternative and multi-asset AUM represent 15% and 10% of our total AUM at September 30, 2024. Mutual fund performance data includes U.S. and cross-border domiciled mutual funds and exchange-traded funds, excludes cash management and fund of funds, and assumes the reinvestment of dividends. Past performance is not indicative of future results.
Alternative and multi-asset AUM represent 16% and 12% of our total AUM at September 30, 2025. Mutual fund performance data includes U.S. and cross-border domiciled mutual funds and exchange-traded funds, excludes cash management and fund of funds, and assumes the reinvestment of dividends. Past performance is not indicative of future results.
(in millions) 2024 vs. 2023 2023 vs. 2022 for the fiscal years ended September 30, 2024 2023 2022 Salaries, wages and benefits $ 1,686.6 $ 1,499.5 $ 1,426.4 12 % 5 % Incentive compensation 1,613.7 1,532.1 1,500.5 5 % 2 % Acquisition-related retention 1 263.6 164.9 167.2 60 % (1 %) Acquisition-related performance fee pass through 1 97.5 169.7 4.2 (43 %) NM Other 1, 2 169.7 127.8 (8.5) 33 % NM Compensation and Benefits Expenses $ 3,831.1 $ 3,494.0 $ 3,089.8 10 % 13 % _______________ 1 See “Supplemental Non-GAAP Financial Measures” for additional information. 2 Includes impact of gains and losses on investments related to deferred compensation plans, which is offset in investment and other income (losses), net; minority interests in certain subsidiaries, which is offset in net income (loss) attributable to redeemable noncontrolling interests; and special termination benefits.
(in millions) 2025 vs. 2024 2024 vs. 2023 for the fiscal years ended September 30, 2025 2024 2023 Salaries, wages and benefits $ 1,724.0 $ 1,686.6 $ 1,499.5 2 % 12 % Incentive compensation 1,676.6 1,613.7 1,532.1 4 % 5 % Acquisition-related retention 1 162.4 263.6 164.9 (38 %) 60 % Acquisition-related performance fee pass through 1 106.7 97.5 169.7 9 % (43 %) Other 1, 2 148.5 169.7 127.8 (12 %) 33 % Compensation and Benefits Expenses $ 3,818.2 $ 3,831.1 $ 3,494.0 0 % 10 % _______________ 1 See “Supplemental Non-GAAP Financial Measures” for additional information. 2 Includes impact of gains and losses on investments related to deferred compensation plans, which is offset in investment and other income (losses), net; minority interests in certain subsidiaries, which is offset in net income (loss) attributable to redeemable noncontrolling interests; and special termination benefits.
See also Note 16 – Commitments and Contingencies in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report. 53 Table of Contents
See also Note 15 – Commitments and Contingencies in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report. 55 Table of Contents
(in millions) 2024 vs. 2023 2023 vs. 2022 for the fiscal years ended September 30, 2024 2023 2022 Investment management fees $ 6,822.2 $ 6,452.9 $ 6,616.8 6 % (2 %) Sales and distribution fees 1,381.0 1,203.7 1,415.0 15 % (15 %) Shareholder servicing fees 229.3 152.7 193.0 50 % (21 %) Other 45.5 40.1 50.5 13 % (21 %) Total Operating Revenues $ 8,478.0 $ 7,849.4 $ 8,275.3 8 % (5 %) Investment Management Fees Investment management fees are generally calculated under contractual arrangements with our investment products and the products for which we provide sub-advisory services as a percentage of AUM.
(in millions) 2025 vs. 2024 2024 vs. 2023 for the fiscal years ended September 30, 2025 2024 2023 Investment management fees $ 6,981.8 $ 6,822.2 $ 6,452.9 2 % 6 % Sales and distribution fees 1,474.7 1,381.0 1,203.7 7 % 15 % Shareholder servicing fees 264.5 229.3 152.7 15 % 50 % Other 49.7 45.5 40.1 9 % 13 % Total Operating Revenues $ 8,770.7 $ 8,478.0 $ 7,849.4 3 % 8 % Investment Management Fees Investment management fees are generally calculated under contractual arrangements with our investment products and the products for which we provide sub-advisory services as a percentage of AUM.
We typically declare cash dividends on a quarterly basis, subject to approval by our Board of Directors. We declared regular dividends of $1.24 per share ($0.31 per share per quarter) in fiscal year 2024, and of $1.20 per share ($0.30 per share per quarter) in fiscal year 2023.
We typically declare cash dividends on a quarterly basis, subject to approval by our Board of Directors. We declared regular dividends of $1.28 per share ($0.32 per share per quarter) in fiscal year 2025, and of $1.24 per share ($0.31 per share per quarter) in fiscal year 2024.
Purchase obligations include contractual amounts that will be due to purchase goods and services to be used in our operations and are recorded as liabilities in the consolidated financial statements when services are provided. At September 30, 2024, we had $1,080.7 million of purchase obligations.
Purchase obligations include contractual amounts that will be due to purchase goods and services to be used in our operations and are recorded as liabilities in the consolidated financial statements when services are provided. At September 30, 2025, we had $972.8 million of purchase obligations.
Sales and Distribution Fees Sales and distribution fees primarily consist of upfront sales commissions and ongoing distribution fees. Sales commissions are earned from the sale of certain classes of sponsored funds at the time of purchase (“commissionable sales”) and may be reduced or eliminated depending on the amount invested and the type of investor.
Sales commissions are earned from the sale of certain classes of sponsored funds at the time of purchase (“commissionable sales”) and may be reduced or eliminated depending on the amount invested and the type of investor.
The fair values of equity securities, excluding fund products, and debt securities are determined using independent third-party broker or dealer price quotes or based on either a market-based or income-based approach using significant unobservable inputs.
The fair values of equity securities, excluding fund products, and debt securities are determined using independent third-party broker or dealer price quotes or based on either a market-based or income-based approach using significant unobservable inputs. The fair values of fund products are determined based on their published NAV or estimated using NAV as a practical expedient.
For discussion and analysis of the financial results for fiscal year 2023 compared to fiscal year 2022, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, which was filed with the SEC on November 14, 2023. 32 Table of Contents RESULTS OF OPERATIONS (in millions, except per share data) 2024 vs. 2023 2023 vs. 2022 for the fiscal years ended September 30, 2024 2023 2022 Operating revenues $ 8,478.0 $ 7,849.4 $ 8,275.3 8 % (5 %) Operating income 407.6 1,102.3 1,773.9 (63 %) (38 %) Operating margin 1 4.8 % 14.0 % 21.4 % Net income attributable to Franklin Resources, Inc. $ 464.8 $ 882.8 $ 1,291.9 (47 %) (32 %) Diluted earnings per share $ 0.85 $ 1.72 $ 2.53 (51 %) (32 %) As adjusted (non-GAAP): 2 Adjusted operating income $ 1,713.1 $ 1,823.8 $ 2,323.5 (6 %) (22 %) Adjusted operating margin 26.1 % 29.9 % 35.9 % Adjusted net income $ 1,276.7 $ 1,332.2 $ 1,855.6 (4 %) (28 %) Adjusted diluted earnings per share $ 2.39 $ 2.60 $ 3.63 (8 %) (28 %) __________________ 1 Defined as operating income divided by total operating revenues. 2 “Adjusted operating income,” “adjusted operating margin,” “adjusted net income” and “adjusted diluted earnings per share” are based on methodologies other than generally accepted accounting principles.
For discussion and analysis of the financial results for fiscal year 2024 compared to fiscal year 2023, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, which was filed with the SEC on November 12, 2024. 33 Table of Contents RESULTS OF OPERATIONS (in millions, except per share data) 2025 vs. 2024 2024 vs. 2023 for the fiscal years ended September 30, 2025 2024 2023 Operating revenues $ 8,770.7 $ 8,478.0 $ 7,849.4 3 % 8 % Operating income 604.1 407.6 1,102.3 48 % (63 %) Operating margin 1 6.9 % 4.8 % 14.0 % Net income attributable to Franklin Resources, Inc. $ 524.9 $ 464.8 $ 882.8 13 % (47 %) Diluted earnings per share $ 0.91 $ 0.85 $ 1.72 7 % (51 %) As adjusted (non-GAAP): 2 Adjusted operating income $ 1,640.2 $ 1,713.1 $ 1,823.8 (4 %) (6 %) Adjusted operating margin 24.5 % 26.1 % 29.9 % Adjusted net income $ 1,195.8 $ 1,276.7 $ 1,332.2 (6 %) (4 %) Adjusted diluted earnings per share $ 2.22 $ 2.39 $ 2.60 (7 %) (8 %) __________________ 1 Defined as operating income divided by total operating revenues. 2 “Adjusted operating income,” “adjusted operating margin,” “adjusted net income” and “adjusted diluted earnings per share” are based on methodologies other than generally accepted accounting principles.
We are subject to various laws, rules and regulations globally that impose restrictions, limitations, registration, reporting and disclosure requirements on our business, and add complexity to our global compliance operations. Uncertainties regarding the global economy remain for the foreseeable future.
The business and regulatory environments in which we operate globally remain complex, uncertain and subject to change. We are subject to various laws, rules and regulations globally that impose restrictions, limitations, registration, reporting and disclosure requirements on our business, and add complexity to our global compliance operations. Uncertainties regarding the global economy remain for the foreseeable future.
The Rule 12b-1 Plans permit the 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 daily average AUM.
The Rule 12b-1 Plans permit the 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 daily average AUM. We earn distribution fees from our non-U.S. funds based on daily average AUM.
Net cash used in investing activities decreased as compared to the prior year primarily due to lower cash paid for acquisitions in the current year, lower net purchases of investments by collateralized loan obligations (“CLOs”) and net liquidations of our investments as compared to net purchases in the prior year, partially offset by higher payments of deferred consideration liabilities in the current year.
Net cash used in investing activities decreased as compared to the prior year primarily due to lower net purchases of investments by collateralized loan obligations (“CLOs”) and lower payments of deferred consideration liabilities in the current year offset by net purchases of our investments as compared to net liquidations in the prior year and net impact of an acquisition in the prior year.
Net foreign currency exchange losses decreased $6.8 million in fiscal year 2024, primarily due to the U.S. dollar weakening less in the current fiscal year against the Euro, which resulted in lower foreign exchange losses on cash and cash equivalents denominated in U.S. dollars held by our European subsidiaries.
Net foreign currency exchange losses decreased $8.3 million in fiscal year 2025, primarily due to the U.S. dollar weakening less in the current fiscal year against the British Pound, which resulted in lower foreign exchange losses on cash and cash equivalents denominated in U.S. dollars held by certain of our European subsidiaries.
(in millions) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 for the fiscal years ended September 30, Compensation and benefits $ 3,831.1 $ 3,494.0 $ 3,089.8 10 % 13 % Sales, distribution and marketing 1,863.1 1,613.1 1,845.6 15 % (13 %) Information systems and technology 620.1 505.0 500.2 23 % 1 % Occupancy 325.4 228.9 218.9 42 % 5 % Amortization of intangible assets 338.2 341.1 282.0 (1 %) 21 % Impairment of intangible assets 389.2 — — 100 % 0 % General, administrative and other 703.3 565.0 564.9 24 % 0 % Total Operating Expenses $ 8,070.4 $ 6,747.1 $ 6,501.4 20 % 4 % The Putnam acquisition had a significant impact on operating expenses for the fiscal year ended September 30, 2024; however, due to the ongoing integration of the combined businesses, it is not practicable to separately quantify the impact of the legacy Putnam business. 38 Table of Contents Compensation and Benefits The components of compensation and benefits expenses are presented below.
(in millions) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 for the fiscal years ended September 30, Compensation and benefits $ 3,818.2 $ 3,831.1 $ 3,494.0 0 % 10 % Sales, distribution and marketing 2,010.9 1,863.1 1,613.1 8 % 15 % Information systems and technology 643.6 620.1 505.0 4 % 23 % Occupancy 286.3 325.4 228.9 (12 %) 42 % Amortization of intangible assets 406.5 338.2 341.1 20 % (1 %) Impairment of intangible assets 226.6 389.2 — (42 %) 100 % General, administrative and other 774.5 703.3 565.0 10 % 24 % Total Operating Expenses $ 8,166.6 $ 8,070.4 $ 6,747.1 1 % 20 % The acquisition of Putnam on January 1, 2024 had a significant impact on operating expenses for the fiscal years ended September 30, 2025; however, due to the ongoing integration of the combined businesses, it is not practicable to separately quantify the impact of the legacy Putnam business. 39 Table of Contents Compensation and Benefits The components of compensation and benefits expenses are presented below.
Total strategy composite AUM measured for the 1-, 3-, 5- and 10-year periods represents 54%, 54%, 53% and 48% of our total AUM as of September 30, 2024. 3 Total mutual fund AUM includes performance of our alternative and multi-asset funds, and total strategy composite AUM includes performance of our alternative composites.
Total strategy composite AUM measured for the 1-, 3-, 5- and 10-year periods represents 56%, 55%, 55% and 50% of our total AUM as of September 30, 2025. 3 Total mutual fund AUM includes performance of our alternative and multi-asset funds, and total strategy composite AUM includes performance of our alternative composites.
TAXES ON INCOME Our effective income tax rate for fiscal year 2024 was 26.2% as compared to 23.3% in fiscal year 2023.
TAXES ON INCOME Our effective income tax rate for fiscal year 2025 was 30.2% as compared to 26.2% in fiscal year 2024.
There is judgment involved in assessing whether we have the power to direct the activities that most significantly impact VIEs’ economic performance and the obligation to absorb losses of or right to receive benefits from VIEs that could potentially be significant to the VIEs. As of September 30, 2024, we were the primary beneficiary of 68 investment product VIEs.
There is judgment involved in assessing whether we have the power to direct the activities that most significantly impact VIEs’ economic performance and the obligation to absorb losses of or right to receive benefits from VIEs that could potentially be significant to the VIEs.
Our liquid assets and debt consisted of the following: (in millions) as of September 30, 2024 2023 2022 Assets Cash and cash equivalents $ 3,261.1 $ 3,592.8 $ 4,086.8 Receivables 1,261.6 1,181.7 1,130.8 Investments 1,141.7 1,098.8 830.0 Total Liquid Assets $ 5,664.4 $ 5,873.3 $ 6,047.6 Liability Debt $ 2,780.3 $ 3,052.8 $ 3,376.4 Liquidity Liquid assets consist of cash and cash equivalents, receivables and certain investments.
Our liquid assets and debt consisted of the following: (in millions) as of September 30, 2025 2024 2023 Assets Cash and cash equivalents $ 3,050.1 $ 3,261.1 $ 3,592.8 Receivables 1,228.6 1,261.6 1,181.7 Investments 1,367.5 1,141.7 1,098.8 Total Liquid Assets $ 5,646.2 $ 5,664.4 $ 5,873.3 Liability Debt $ 2,362.0 $ 2,780.3 $ 3,052.8 Liquidity Liquid assets consist of cash and cash equivalents, receivables and certain investments.
In addition, the Company will pay up to $375.0 million between the third and seventh anniversaries of the closing date related to revenue growth targets from the strategic partnership with Great-West and its affiliates which will be recognized in operating income.
We will pay up to $375.0 million related to our acquisition of Putnam between the third and seventh anniversaries of the closing date related to revenue growth targets from the strategic partnership with Great-West Lifeco, Inc. which will be recognized in operating income.
ASSETS UNDER MANAGEMENT AUM by asset class was as follows: (in billions) 2024 vs. 2023 2023 vs. 2022 as of September 30, 2024 2023 2022 Equity $ 632.1 $ 430.4 $ 392.3 47 % 10 % Fixed Income 556.4 483.1 490.9 15 % (2 %) Alternative 249.9 254.9 225.1 (2 %) 13 % Multi-Asset 176.2 145.0 131.5 22 % 10 % Cash Management 64.0 60.8 57.6 5 % 6 % Total $ 1,678.6 $ 1,374.2 $ 1,297.4 22 % 6 % 33 Table of Contents Changes in average AUM are generally more indicative of trends in revenue for providing investment management services than the year-over-year change in ending AUM.
ASSETS UNDER MANAGEMENT AUM by asset class was as follows: (in billions) 2025 vs. 2024 2024 vs. 2023 as of September 30, 2025 2024 2023 Equity $ 686.2 $ 632.1 $ 430.4 9 % 47 % Fixed Income 438.7 556.4 483.1 (21 %) 15 % Alternative 263.9 249.9 254.9 6 % (2 %) Multi-Asset 193.9 176.2 145.0 10 % 22 % Cash Management 78.5 64.0 60.8 23 % 5 % Total $ 1,661.2 $ 1,678.6 $ 1,374.2 (1 %) 22 % Changes in average AUM are generally more indicative of trends in revenue for providing investment management services than the year-over-year change in ending AUM.
In addition, when calculating adjusted net income and adjusted diluted earnings per share we exclude unrealized investment gains and losses included in investment and other income (losses) because the related investments are generally expected to be held long term. 44 Table of Contents The calculations of adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted earnings per share are as follows: (in millions) 2024 2023 2022 for the fiscal years ended September 30, Operating income $ 407.6 $ 1,102.3 $ 1,773.9 Add (subtract): Elimination of operating revenues upon consolidation of investment products¹ 47.4 37.5 48.2 Acquisition-related retention 263.6 164.9 167.2 Compensation and benefits expense from gains (losses) on deferred compensation, net 50.5 20.3 (36.7) Other acquisition-related expenses 97.4 50.2 60.7 Amortization of intangible assets 338.2 341.1 282.0 Impairment of intangible assets 389.2 — — Special termination benefits 75.8 63.2 8.2 Compensation and benefits expense related to minority interests in certain subsidiaries 43.4 44.3 20.0 Adjusted operating income $ 1,713.1 $ 1,823.8 $ 2,323.5 Total operating revenues $ 8,478.0 $ 7,849.4 $ 8,275.3 Add (subtract): Acquisition-related pass through performance fees (97.5) (169.7) (4.2) Sales and distribution fees (1,381.2) (1,203.7) (1,415.0) Allocation of investment management fees for sales, distribution and marketing expenses (481.9) (409.4) (430.6) Elimination of operating revenues upon consolidation of investment products¹ 47.4 37.5 48.2 Adjusted operating revenues $ 6,564.8 $ 6,104.1 $ 6,473.7 Operating margin 4.8 % 14.0 % 21.4 % Adjusted operating margin 26.1 % 29.9 % 35.9 % 45 Table of Contents (in millions, except per share data) 2024 2023 2022 for the fiscal years ended September 30, Net income attributable to Franklin Resources, Inc. $ 464.8 $ 882.8 $ 1,291.9 Add (subtract): Net (income) loss of consolidated investment products¹ (3.9) 8.0 (0.2) Acquisition-related retention 263.6 164.9 167.2 Other acquisition-related expenses 107.0 70.4 73.3 Amortization of intangible assets 338.2 341.1 282.0 Impairment of intangible assets 389.2 — — Special termination benefits 75.8 63.2 8.2 Net losses (gains) on deferred compensation plan investments not offset by compensation and benefits expense (13.9) (15.5) 9.0 Unrealized investment losses (gains) (51.5) (2.6) 191.9 Interest expense for amortization of debt premium (24.4) (25.4) (25.2) Net compensation and benefits expense related to minority interests in certain subsidiaries not offset by net income attributable to redeemable noncontrolling interests 3.5 0.1 1.4 Net income tax expense of adjustments (271.7) (154.8) (143.9) Adjusted net income $ 1,276.7 $ 1,332.2 $ 1,855.6 Diluted earnings per share $ 0.85 $ 1.72 $ 2.53 Adjusted diluted earnings per share 2.39 2.60 3.63 __________________ 1 The impact of consolidated investment products is summarized as follows: (in millions) 2024 2023 2022 for the fiscal years ended September 30, Elimination of operating revenues upon consolidation $ (47.4) $ (37.5) $ (48.2) Other income, net 104.5 88.8 24.2 Less: income (loss) attributable to noncontrolling interests 53.2 59.3 (24.2) Net income (loss) $ 3.9 $ (8.0) $ 0.2 LIQUIDITY AND CAPITAL RESOURCES Cash flows were as follows: (in millions) for the fiscal years ended September 30, 2024 2023 2022 Operating cash flows $ 971.3 $ 1,089.2 $ 1,956.7 Investing cash flows (2,423.7) (3,610.3) (3,329.2) Financing cash flows 1,415.6 2,106.7 1,585.0 Net cash provided by operating activities decreased in fiscal year 2024 primarily due to lower net income adjusted for non-cash items, partially offset by lower net purchases of investments by CIPs.
In addition, when calculating adjusted net income and adjusted diluted earnings per share we exclude unrealized investment gains and losses included in investment and other income (losses) because the related investments are generally expected to be held long term. 45 Table of Contents The calculations of adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted earnings per share are as follows: (in millions) 2025 2024 2023 for the fiscal years ended September 30, Operating income $ 604.1 $ 407.6 $ 1,102.3 Add (subtract): Elimination of operating revenues upon consolidation of investment products¹ 50.7 47.4 37.5 Acquisition-related retention 162.4 263.6 164.9 Compensation and benefits expense from gains on deferred compensation, net 23.4 50.5 20.3 Other acquisition-related expenses 41.4 97.4 50.2 Amortization of intangible assets 406.5 338.2 341.1 Impairment of intangible assets 226.6 389.2 — Special termination benefits 69.7 75.8 63.2 Compensation and benefits expense related to minority interests in certain subsidiaries 55.4 43.4 44.3 Adjusted operating income $ 1,640.2 $ 1,713.1 $ 1,823.8 Total operating revenues $ 8,770.7 $ 8,478.0 $ 7,849.4 Add (subtract): Acquisition-related pass through performance fees (109.4) (97.5) (169.7) Sales and distribution fees (1,474.7) (1,381.2) (1,203.7) Allocation of investment management fees for sales, distribution and marketing expenses (536.2) (481.9) (409.4) Elimination of operating revenues upon consolidation of investment products¹ 50.7 47.4 37.5 Adjusted operating revenues $ 6,701.1 $ 6,564.8 $ 6,104.1 Operating margin 6.9 % 4.8 % 14.0 % Adjusted operating margin 24.5 % 26.1 % 29.9 % 46 Table of Contents (in millions, except per share data) 2025 2024 2023 for the fiscal years ended September 30, Net income attributable to Franklin Resources, Inc. $ 524.9 $ 464.8 $ 882.8 Add (subtract): Net (income) loss of consolidated investment products¹ 7.6 (3.9) 8.0 Acquisition-related retention 162.4 263.6 164.9 Other acquisition-related expenses 61.6 107.0 70.4 Amortization of intangible assets 406.5 338.2 341.1 Impairment of intangible assets 226.6 389.2 — Special termination benefits 69.7 75.8 63.2 Net gains on deferred compensation plan investments not offset by compensation and benefits expense (3.3) (13.9) (15.5) Unrealized investment gains (57.7) (51.5) (2.6) Interest expense for amortization of debt premium (19.9) (24.4) (25.4) Net compensation and benefits expense related to minority interests in certain subsidiaries not offset by net income attributable to redeemable noncontrolling interests 26.4 3.5 0.1 Net income tax expense of adjustments (209.0) (271.7) (154.8) Adjusted net income $ 1,195.8 $ 1,276.7 $ 1,332.2 Diluted earnings per share $ 0.91 $ 0.85 $ 1.72 Adjusted diluted earnings per share 2.22 2.39 2.60 __________________ 1 The impact of consolidated investment products is summarized as follows: (in millions) 2025 2024 2023 for the fiscal years ended September 30, Elimination of operating revenues upon consolidation $ (50.7) $ (47.4) $ (37.5) Other income, net 11.0 104.5 88.8 Less: income (loss) attributable to noncontrolling interests (32.1) 53.2 59.3 Net income (loss) $ (7.6) $ 3.9 $ (8.0) LIQUIDITY AND CAPITAL RESOURCES Cash flows were as follows: (in millions) for the fiscal years ended September 30, 2025 2024 2023 Operating cash flows $ 1,066.1 $ 971.3 $ 1,089.2 Investing cash flows (2,342.7) (2,423.7) (3,610.3) Financing cash flows 452.4 1,415.6 2,106.7 Net cash provided by operating activities increased in fiscal year 2025 primarily due to higher net income adjusted for non-cash items and an increase in accounts payable and accrued expenses, partially offset by higher payments for incentive compensation and income taxes.
The market appreciation occurred in all asset classes with the exception of the alternative asset class, most significantly in the equity asset class and reflected positive returns in the global equity markets.
The market appreciation occurred in all asset classes, most significantly in the equity asset class, and reflected positive returns in the global equity and fixed income markets.
Net cash provided by financing activities decreased as compared to the prior year primarily due to net payments on repurchase agreements in the current year as compared to net proceeds in the prior year and lower net subscriptions in CIPs by noncontrolling interest. 46 Table of Contents The assets and liabilities of CIPs attributable to third-party investors do not impact our liquidity and capital resources.
Net cash provided by financing activities decreased as compared to the prior year primarily due to lower net proceeds on debt of CIPs and net repayment of debt, partially offset by net proceeds from repurchase agreements. 47 Table of Contents The assets and liabilities of CIPs attributable to third-party investors do not impact our liquidity and capital resources.
The performance of our mutual fund products against peer group medians and of our strategy composites against benchmarks is presented in the table below.
We compare the relative performance of our mutual funds against peers, and of our strategy composites against benchmarks. 36 Table of Contents The performance of our mutual fund products against peer group medians and of our strategy composites against benchmarks is presented in the table below.
These increases were partially offset by a decrease of $14.4 million in fund-related expenses. 40 Table of Contents OTHER INCOME (EXPENSES) Other income (expenses) consisted of the following: (in millions) 2024 vs. 2023 2023 vs. 2022 for the fiscal years ended September 30, 2024 2023 2022 Investment and other income, net: Dividend and interest income $ 176.9 $ 159.9 $ 37.9 11 % 322 % Gains (losses) on investments, net 57.6 39.5 (75.4) 46 % NM Income from investments in equity method investees 137.5 45.4 36.2 203 % 25 % Gains (losses) on derivatives, net (16.2) (15.1) 20.9 7 % NM Rental income 43.7 46.3 37.9 (6 %) 22 % Foreign currency exchange (losses) gains, net (19.9) (26.7) 40.6 (25 %) NM Other, net 15.9 13.0 (7.0) 22 % NM Investment and other income, net 395.5 262.3 91.1 51 % 188 % Interest expense (97.2) (123.7) (98.2) (21 %) 26 % Investment and other income (losses) of consolidated investment products, net 149.9 115.8 (17.7) 29 % NM Expenses of consolidated investment products (32.6) (18.7) (19.7) 74 % (5 %) Other income (expenses), net $ 415.6 $ 235.7 $ (44.5) 76 % NM Substantially all dividend income was generated by investments in nonconsolidated sponsored funds.
OTHER INCOME (EXPENSES) Other income (expenses) consisted of the following: (in millions) 2025 vs. 2024 2024 vs. 2023 for the fiscal years ended September 30, 2025 2024 2023 Investment and other income, net: Dividend and interest income $ 141.4 $ 176.9 $ 159.9 (20 %) 11 % Gains (losses) on investments, net (37.6) 57.6 39.5 NM 46 % Income from investments in equity method investees 78.0 137.5 45.4 (43 %) 203 % Losses on derivatives, net (7.8) (16.2) (15.1) (52 %) 7 % Rental income 44.1 43.7 46.3 1 % (6 %) Foreign currency exchange losses, net (11.6) (19.9) (26.7) (42 %) (25 %) Other, net 6.3 15.9 13.0 (60 %) 22 % Investment and other income, net 212.8 395.5 262.3 (46 %) 51 % Interest expense (94.9) (97.2) (123.7) (2 %) (21 %) Investment and other income of consolidated investment products, net 108.4 149.9 115.8 (28 %) 29 % Expenses of consolidated investment products (43.6) (32.6) (18.7) 34 % 74 % Other income, net $ 182.7 $ 415.6 $ 235.7 (56 %) 76 % Substantially all dividend income was generated by investments in nonconsolidated sponsored funds.
During fiscal years 2024 and 2023, we repurchased 12.0 million and 9.6 million shares of our common stock at a cost of $274.4 million and $256.3 million.
During fiscal years 2025 and 2024, we repurchased 10.7 million and 12.0 million shares of our common stock at a cost of $240.3 million and $274.4 million.
Consolidation We consolidate our subsidiaries and investment products 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”).
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”).
We define adjusted operating revenues as operating revenues adjusted to exclude the following: • Elimination of operating revenues upon consolidation of investment products. • Acquisition-related performance-based investment management fees which are passed through as compensation and benefits expense. • Sales and distribution fees and a portion of investment management fees allocated to cover sales, distribution and marketing expenses paid to the financial advisers and other intermediaries who sell our funds on our behalf. 43 Table of Contents Adjusted Net Income and Adjusted Diluted Earnings Per Share We define adjusted net income as net income attributable to Franklin Resources, Inc. adjusted to exclude the following: • Activities of CIPs. • Acquisition-related items: ◦ Acquisition-related retention compensation. ◦ Other acquisition-related expenses including professional fees, technology costs and fair value adjustments related to contingent consideration assets and liabilities. ◦ Amortization of intangible assets. ◦ Impairment of intangible assets and goodwill, if any. ◦ Write off of noncontrolling interests related to the wind down of an acquired business. ◦ Interest expense for amortization of Legg Mason debt premium from acquisition-date fair value adjustment. • Special termination benefits related to workforce optimization initiatives related to past acquisitions and certain initiatives undertaken by the Company. • Net gains or losses on investments related to deferred compensation plans which are not offset by compensation and benefits expense. • Net compensation and benefits expense related to minority interests in certain subsidiaries not offset by net income (loss) attributable to redeemable noncontrolling interests. • Unrealized investment gains and losses. • Net income tax expense of the above adjustments based on the respective blended rates applicable to the adjustments.
Adjusted Net Income and Adjusted Diluted Earnings Per Share We define adjusted net income as net income attributable to Franklin Resources, Inc. adjusted to exclude the following: • Activities of CIPs. • Acquisition-related items: ◦ Acquisition-related retention compensation. ◦ Other acquisition-related expenses including professional fees, technology costs and fair value adjustments related to contingent consideration assets and liabilities. ◦ Amortization of intangible assets. ◦ Impairment of intangible assets and goodwill, if any. ◦ Interest expense for amortization of debt premium from acquisition-date fair value adjustment. • Special termination benefits and other expenses related to workforce optimization initiatives related to past acquisitions and certain initiatives undertaken by the Company. • Net gains or losses on investments related to deferred compensation plans which are not offset by compensation and benefits expense. • Net compensation and benefits expense related to minority interests in certain subsidiaries not offset by net income (loss) attributable to redeemable noncontrolling interests. • Unrealized investment gains and losses. • Net income tax expense of the above adjustments based on the respective blended rates applicable to the adjustments. 44 Table of Contents We define adjusted diluted earnings per share as diluted earnings per share adjusted to exclude the per share impacts of the adjustments applied to net income in calculating adjusted net income.
At September 30, 2024, we had $227.0 million of committed capital contributions which relate to commitments to invest in sponsored funds and other investment products and entities, including CIPs. These unfunded commitments are not recorded in the consolidated balance sheet.
We did not provide significant financial or other support to our sponsored funds during fiscal year 2025 or 2024. At September 30, 2025, we had $520.8 million of committed capital contributions which relate to commitments to invest in sponsored funds and other investment products and entities, including CIPs. These unfunded commitments are not recorded in the consolidated balance sheet.
Foreign exchange revaluation from AUM in products that are not U.S. dollar denominated was primarily due to a weaker U.S. dollar compared to the Euro, Australian dollar and British Pound.
Foreign exchange revaluation from AUM in products that are not U.S. dollar denominated was primarily due to a stronger U.S. dollar compared to the Australian dollar, Canadian dollar, Indian Rupee, and Japanese Yen, partially offset by a weaker U.S. dollar compared to the Euro.
Gains (losses) on investments, net consists primarily of realized and unrealized gains (losses) on equity securities measured at fair value. Dividend and interest income increased $17.0 million in fiscal year 2024, primarily due to higher yields.
Gains (losses) on investments, net consists primarily of realized and unrealized gains (losses) on equity securities measured at fair value. Dividend and interest income decreased $35.5 million in fiscal year 2025, primarily due to lower yields and lower average balances.
Changes in our pre-tax income mix, tax rates or tax legislation in such jurisdictions may affect our effective income tax rate and net income. 42 Table of Contents SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES As supplemental information, we are providing performance measures for “adjusted operating income,” “adjusted operating margin,” “adjusted net income” and “adjusted diluted earnings per share,” each of which is based on methodologies other than generally accepted accounting principles (“non-GAAP measures”).
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES As supplemental information, we are providing performance measures for “adjusted operating income,” “adjusted operating margin,” “adjusted net income” and “adjusted diluted earnings per share,” each of which is based on methodologies other than generally accepted accounting principles (“non-GAAP measures”).
We have one reporting unit, investment management and related services, consistent with our single operating segment, to which all goodwill has been assigned. We make significant estimates and assumptions when evaluating goodwill and other intangible assets for impairment.
We have one reporting unit, investment management and related services, consistent with our single operating segment, to which all goodwill has been assigned.
Total mutual fund AUM measured for the 1-, 3-, 5- and 10-year periods represents 38%, 38%, 37% and 35% of our total AUM as of September 30, 2024. Excludes funds scheduled to be closed. 2 Strategy composite performance measures the percent of composite AUM beating its benchmark.
Total mutual fund AUM measured for the 1-, 3-, 5- and 10-year periods represents 40%, 39%, 39% and 36% of our total AUM as of September 30, 2025. 2 Strategy composite performance measures the percent of composite AUM beating its benchmark.
(in millions) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 for the fiscal years ended September 30, Asset-based expenses $ 1,569.6 $ 1,368.1 $ 1,532.6 15 % (11 %) Sales-based expenses 231.5 195.0 248.2 19 % (21 %) Amortization of deferred sales commissions 62.0 50.0 64.8 24 % (23 %) Sales, Distribution and Marketing $ 1,863.1 $ 1,613.1 $ 1,845.6 15 % (13 %) Asset-based expenses increased $201.5 million in fiscal year 2024 primarily due to expenses related to Putnam products subsequent to the acquisition, an increase of 4% in the related average AUM, excluding the impact of Putnam, and higher marketing support fees.
(in millions) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 for the fiscal years ended September 30, Asset-based expenses $ 1,685.3 $ 1,569.6 $ 1,368.1 7 % 15 % Sales-based expenses 245.8 231.5 195.0 6 % 19 % Amortization of deferred sales commissions 79.8 62.0 50.0 29 % 24 % Sales, Distribution and Marketing $ 2,010.9 $ 1,863.1 $ 1,613.1 8 % 15 % Asset-based expenses increased $115.7 million in fiscal year 2025 primarily due to one additional quarter of expenses related to Putnam products, an increase of 3% in the related average AUM and higher marketing support fees.
We performed a sensitivity analysis over the critical assumptions used in the impairment test. An increase or decrease in the AUM growth rate of 100 basis points would result in a change in the impairment charge of approximately $(40) million or $50 million.
We performed a sensitivity analysis over the critical assumptions used in the impairment test. A decrease in the AUM growth rate of 50 basis points would result in an increase in the impairment charge of approximately $21 million. A decrease in the terminal pre-tax profit margin to 30% would increase the impairment charge by approximately $34 million.
Substantially all sales expenses are incurred from the same commissionable sales transactions that generate sales fee revenues and are determined as a percentage of sales. Marketing support expenses are based on AUM, sales or a combination thereof.
Substantially all sales expenses are incurred from the same commissionable sales transactions that generate sales fee revenues and are determined as a percentage of sales. Marketing support expenses are based on AUM, sales or a combination thereof. Also included is the amortization of deferred sales commissions related to upfront commissions on shares sold without a front-end sales charge.
Equity method investees generated income of $137.5 million in fiscal year 2024 and $45.4 million in fiscal year 2023. The current year income was largely related to various global alternative and equity funds, while the prior year income was largely related to various global alternative funds.
Equity method investees generated income of $78.0 million in fiscal year 2025 and $137.5 million in fiscal year 2024, largely related to various global alternative and equity funds.
(in billions) Average AUM 2024 vs. 2023 2023 vs. 2022 for the fiscal years ended September 30, 2024 2023 2022 Equity $ 544.0 $ 436.1 $ 491.3 25 % (11 %) Fixed Income 542.3 499.7 586.5 9 % (15 %) Alternative 254.9 251.9 185.1 1 % 36 % Multi-Asset 161.1 144.4 146.1 12 % (1 %) Cash Management 63.5 68.3 60.2 (7 %) 13 % Total $ 1,565.8 $ 1,400.4 $ 1,469.2 12 % (5 %) Mix of Average AUM for the fiscal years ended September 30, 2024 2023 2022 Equity 35 % 31 % 33 % Fixed Income 35 % 36 % 40 % Alternative 16 % 18 % 13 % Multi-Asset 10 % 10 % 10 % Cash Management 4 % 5 % 4 % Total 100 % 100 % 100 % Components of the change in AUM are shown below.
(in billions) Average AUM 1 2025 vs. 2024 2024 vs. 2023 for the fiscal years ended September 30, 2025 2024 2023 Equity $ 637.0 $ 544.0 $ 436.1 17 % 25 % Fixed Income 466.5 542.3 499.7 (14 %) 9 % Alternative 253.7 254.9 251.9 0 % 1 % Multi-Asset 179.8 161.1 144.4 12 % 12 % Cash Management 69.7 63.5 68.3 10 % (7 %) Total $ 1,606.7 $ 1,565.8 $ 1,400.4 3 % 12 % _______________ 1 Average AUM is calculated as the average of the month-end AUM for the trailing thirteen months. 34 Table of Contents Mix of Average AUM for the fiscal years ended September 30, 2025 2024 2023 Equity 40 % 35 % 31 % Fixed Income 29 % 35 % 36 % Alternative 16 % 16 % 18 % Multi-Asset 11 % 10 % 10 % Cash Management 4 % 4 % 5 % Total 100 % 100 % 100 % Components of the change in AUM are shown below.
Impairment of intangible assets In fiscal year 2024, we impaired our indefinite-lived intangible asset related to certain mutual fund contracts managed by WAM by $389.2 million. See Critical Accounting Policies and Note 9 - Goodwill and Other Intangible Assets in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report for additional information.
During fiscal year 2025, we also recognized impairment charges of $26.6 million related to certain other indefinite-lived intangible assets related to management contracts. See Critical Accounting Policies and Note 8 - Goodwill and Other Intangible Assets in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report for additional information.
Significant portions of the investment and other income of consolidated investment products, net and expenses of consolidated investment products are offset in noncontrolling interests in our consolidated statements of income.
Expenses of consolidated investment products primarily consists of fund-related expenses, including professional fees and other administrative expenses, and interest expense. Significant portions of the investment and other income of consolidated investment products, net and expenses of consolidated investment products are offset in noncontrolling interests in our consolidated statements of income.
Our effective income tax rate reflects the relative contributions of earnings in the jurisdictions in which we operate, which have varying tax rates.
Our effective income tax rate reflects the relative contributions of earnings in the jurisdictions in which we operate, which have varying tax rates. Changes in our pre-tax income mix, tax rates or tax legislation in such jurisdictions may affect our effective income tax rate and net income.
This facility remains undrawn as of the time of this filing. We were in compliance with all debt covenants at September 30, 2024. At September 30, 2024, 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 and is unrated.
At September 30, 2025, 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 and is unrated.
Peer Group Comparison 1 Benchmark Comparison 2 % of Mutual Fund AUM in Top Two Peer Group Quartiles % of Strategy Composite AUM Exceeding Benchmark as of September 30, 2024 1-Year 3-Year 5-Year 10-Year 1-Year 3-Year 5-Year 10-Year Equity 57 % 56 % 43 % 59 % 51 % 40 % 41 % 45 % Fixed Income 77 % 61 % 58 % 64 % 80 % 48 % 72 % 90 % Total AUM 3 55 % 64 % 43 % 53 % 56 % 47 % 55 % 64 % _______________ 1 Mutual fund performance is sourced from Morningstar and measures the percent of ranked AUM in the top two quartiles versus peers.
Peer Group Comparison 1 Benchmark Comparison 2 % of Mutual Fund AUM in Top Two Peer Group Quartiles % of Strategy Composite AUM Exceeding Benchmark as of September 30, 2025 1-Year 3-Year 5-Year 10-Year 1-Year 3-Year 5-Year 10-Year Equity 60 % 62 % 49 % 58 % 37 % 41 % 34 % 44 % Fixed Income 53 % 71 % 71 % 64 % 68 % 76 % 83 % 92 % Total AUM 3 51 % 57 % 62 % 54 % 53 % 55 % 52 % 62 % _______________ 1 Mutual fund performance is sourced from Morningstar and measures the percent of ranked AUM in the top two quartiles versus peers.
Also included is the amortization of deferred sales commissions related to upfront commissions on shares sold without a front- 39 Table of Contents end sales charge. 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.
The deferred sales commissions are amortized over the periods in which commissions are generally recovered from related revenues. 40 Table of Contents Sales, distribution and marketing expenses by cost driver are presented below.
We performed a qualitative annual impairment test for goodwill and all indefinite-lived intangible assets as of August 1, 2024 and concluded it was more likely than not that the fair values of the reporting unit and the indefinite-lived intangible assets exceed their carrying values.
We performed a qualitative assessment of the valuation of goodwill and the majority of our indefinite-lived intangible assets in which we concluded it was more likely than not that the fair values of the reporting unit and the specific indefinite-lived intangible assets exceed their carrying values.
Our cash, cash equivalents and investments portfolio by asset class and accounting classification at September 30, 2024, excluding third-party assets of CIPs, was as follows: Accounting Classification 1 Total (in millions) Cash and Cash Equivalents Investments, at Fair Value Equity Method Investments Other Investments Direct Investments in CIPs Cash and Cash Equivalents $ 3,309.5 $ — $ — $ — $ — $ 3,309.5 Investments Alternative — 223.8 944.2 90.9 529.3 1,788.2 Equity — 410.2 197.0 153.3 163.7 924.2 Fixed Income — 153.9 74.5 36.5 235.2 500.1 Multi-Asset — 50.1 4.0 — 152.6 206.7 Total investments — 838.0 1,219.7 280.7 1,080.8 3,419.2 Total Cash and Cash Equivalents and Investments 2, 3 $ 3,309.5 $ 838.0 $ 1,219.7 $ 280.7 $ 1,080.8 $ 6,728.7 ______________ 1 See Note 1 – Significant Accounting Policies and Note 6 – Investments in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report for information on investment accounting classifications. 2 Total cash and cash equivalents and investments includes $4,261.5 million maintained for operational activities, including investments in sponsored funds and other products, and $453.3 million necessary to comply with regulatory requirements. 3 Total cash and cash equivalents and investments includes approximately $355 million attributable to employee-owned and other third-party investments made through partnerships which are offset in nonredeemable noncontrolling interests, approximately $289 million of investments that are subject to long-term repurchase agreements and other net financing arrangements, and approximately $441 million of cash and investments related to deferred compensation plans.
Our cash, cash equivalents and investments portfolio by asset class and accounting classification at September 30, 2025, excluding third-party assets of CIPs, was as follows: Accounting Classification 1 Total (in millions) Cash and Cash Equivalents Investments, at Fair Value Equity Method Investments Other Investments Direct Investments in CIPs Cash and Cash Equivalents $ 3,088.1 $ — $ — $ — $ — $ 3,088.1 Investments Alternative — 538.9 711.1 97.3 681.3 2,028.6 Equity — 358.0 150.7 167.6 272.7 949.0 Fixed Income — 229.0 20.8 35.7 137.7 423.2 Multi-Asset — 53.6 11.3 — 128.9 193.8 Total investments — 1,179.5 893.9 300.6 1,220.6 3,594.6 Total Cash and Cash Equivalents and Investments 2, 3 $ 3,088.1 $ 1,179.5 $ 893.9 $ 300.6 $ 1,220.6 $ 6,682.7 ______________ 1 See Note 1 – Significant Accounting Policies and Note 5 – Investments in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report for information on investment accounting classifications. 2 Total cash and cash equivalents and investments includes $4,591.8 million maintained for operational activities, including investments in sponsored funds and other products and $458.5 million necessary to comply with regulatory requirements. 3 Total cash and cash equivalents and investments includes approximately $350 million attributable to employee-owned and other third-party investments made through partnerships which are offset in noncontrolling interests, approximately $394 million of investments that are subject to long-term repurchase agreements and other net financing arrangements, and approximately $455 million of cash and investments related to deferred compensation plans.
Distribution expenses are generally not directly correlated with distribution fee revenues due to certain fee structures that do not provide full recovery of distribution costs. Sales-based expenses increased $36.5 million in fiscal year 2024 primarily due to an increase of 12% in commissionable sales and sales-based expenses related to Putnam products subsequent to the acquisition.
Distribution expenses are generally not directly correlated with distribution fee revenues due to certain fee structures that do not provide full recovery of distribution costs. Sales-based expenses increased $14.3 million in fiscal year 2025 primarily due to one additional quarter of expenses related to Putnam products and higher marketing support fees.
The rate increase in fiscal year 2024 was primarily due to the net impact of valuation allowances for capital losses, an increase in foreign earnings, and benefits in the prior year related to the release of tax reserves, partially offset by activity of CIPs for which there is no related tax impact.
The rate increase in fiscal year 2025 was primarily due to a reduction in foreign rate benefits and activity of CIPs for which there is no related tax impact, partially offset by the release of valuation allowances for foreign tax credits and higher federal and state provision to return adjustments in the current year.
We may first assess goodwill and indefinite-lived intangible assets using qualitative factors to determine whether it is necessary to perform a quantitative impairment test. The qualitative analysis considers entity-specific and macroeconomic factors and their potential impact on key assumptions used in the determination of the fair value of the reporting unit or indefinite-lived intangible asset.
The qualitative analysis considers entity-specific and macroeconomic factors and their potential impact on key assumptions used in the determination of the fair value of the reporting unit or indefinite-lived intangible asset.
Increased liquidity risks and redemptions have required, and may continue to require, increased cash in the form of loans or other lines of credit to help settle redemptions and for other related purposes.
Increased liquidity risks and redemptions have required, and may continue to require, increased cash in the form of loans or other lines of credit to help settle redemptions and for other related purposes. We have in certain instances voluntarily elected to provide the funds with direct or indirect financial support based on our business objectives.
(in millions) 2024 vs. 2023 2023 vs. 2022 for the fiscal years ended September 30, 2024 2023 2022 Asset-based fees $ 1,135.1 $ 998.0 $ 1,150.2 14 % (13 %) Sales-based fees 245.9 205.7 264.8 20 % (22 %) Sales and Distribution Fees $ 1,381.0 $ 1,203.7 $ 1,415.0 15 % (15 %) Asset-based distribution fees increased $137.1 million in fiscal year 2024 primarily due to revenue earned from Putnam products subsequent to the acquisition and an increase of 4% in the related average AUM, excluding the impact of Putnam.
(in millions) 2025 vs. 2024 2024 vs. 2023 for the fiscal years ended September 30, 2025 2024 2023 Asset-based fees $ 1,219.5 $ 1,135.1 $ 998.0 7 % 14 % Sales-based fees 255.2 245.9 205.7 4 % 20 % Sales and Distribution Fees $ 1,474.7 $ 1,381.0 $ 1,203.7 7 % 15 % Asset-based distribution fees increased $84.4 million in fiscal year 2025 primarily due to an increase of 4% in the related average AUM, one additional quarter of asset-based revenue related to Putnam products and a higher mix of non-U.S. equity and multi-asset funds, which generate higher fees.
Investment management fees increased $369.3 million in fiscal year 2024 primarily due to a 12% increase in average AUM, partially offset by a decrease in performance fees, certain transaction-related fees received in the prior year, and lower catch-up fees recognized at the closing of fundraising rounds in a secondary private equity fund, which ended in January 2024.
Investment management fees increased $159.6 million in fiscal year 2025 primarily due to one additional quarter of revenue earned by Putnam, which was acquired on January 1, 2024, an increase in average equity AUM, and an increase in performance fees, partially offset by the impact of WAM outflows and catch-up fees recognized in the prior year at the closing of fundraising rounds in a secondary private equity fund.
We also use a royalty rate for trade name intangible assets. The most relevant of these assumptions to determine future cash flows is the AUM growth rate.
Recoverability is evaluated based on estimated undiscounted future cash flows using assumptions about the AUM growth rate, pre-tax profit margin, average effective fee rate, and expected useful life. We also use a royalty rate for trade name intangible assets. The most relevant of these assumptions to determine future cash flows is the AUM growth rate.
Due to accelerated net outflows in certain WAM managed accounts, the Company revised the remaining useful life of the related definite-lived intangible asset, resulting in a cumulative weighted-average remaining useful life of 5.8 years for all definite-lived intangible assets as of September 30, 2024. There were no impairments of definite-lived intangible assets during fiscal year 2024.
Due to accelerated net outflows in certain Brandywine, Martin Currie, and WAM managed accounts, the Company revised the remaining useful life of the related definite-lived intangible asset, resulting in a cumulative weighted-average remaining useful life of 8.6 years for all definite-lived intangible assets as of September 30, 2025. 52 Table of Contents During fiscal year 2025, the Company also reclassified certain indefinite-lived intangible assets to definite lived intangible assets and shortened the useful lives of certain definite-lived intangible assets related to trade names, primarily due to the planned retirement of the related brand names and ongoing integration initiatives.
We expect to make an additional deferred cash payment related to our acquisition of Lexington of $100.0 million during the third quarter of fiscal year 2025 from existing cash and sources of liquidity. 48 Table of Contents 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.
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.
Shareholder servicing fees are primarily determined based on a contractual margin, or a percentage of AUM and either the number of transactions in shareholder accounts or the number of shareholder accounts. Shareholder servicing fees also include fund reimbursements of expenses incurred while providing transfer agency services.
Shareholder Servicing Fees Shareholder servicing fees are earned from our sponsored funds for providing transfer agency services, which include providing shareholder statements, transaction processing, client service and tax reporting. Shareholder servicing fees are determined based on a contractual margin, or a percentage of AUM and either the number of transactions in shareholder accounts or the number of shareholder accounts.
The notes have fixed interest rates from 4.750% to 5.625% with interest paid semi-annually and have an aggregate carrying value, inclusive of unamortized premium, of $1,193.4 million.
The notes have fixed interest rates from 4.750% to 5.625% with interest paid semi-annually and have an aggregate carrying value, inclusive of unamortized premium, of $1,173.5 million. The $400.0 million 2.850% senior notes due March 2025 were repaid on March 31, 2025 using existing cash and borrowings from our revolving credit facility.
Acquisition-related performance fee pass through expenses decreased $72.2 million in fiscal year 2024, due to lower pass through performance fees earned by Lexington. Other compensation and benefits increased $41.9 million in fiscal year 2024, primarily due to higher net market gains on investments related to our deferred compensation plans and an increase in special termination benefits.
Other compensation and benefits decreased $21.2 million in fiscal year 2025, primarily due to lower net market gains on investments related to our deferred compensation plans and a decrease in special termination benefits, partially offset by an increase in compensation related to minority interests.
Net market change, distributions and other primarily consists of $224.2 billion of market appreciation, and a $7.2 billion increase from foreign exchange revaluation, partially offset by $45.4 billion of long-term distributions.
Long-term net outflows include $30.4 billion of long-term reinvested distributions. Net market change, distributions and other primarily consists of $125.8 billion of market appreciation partially offset by $57.7 billion of long-term distributions, primarily from the equity and alternative asset classes, and a $0.5 billion decrease from foreign exchange revaluation,.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeForeign Currency Exchange Risk We are subject to foreign currency exchange risk through our international operations. While the majority of our revenues are earned in the U.S., we also provide services and earn revenue in international jurisdictions.
Biggest changeWhile the majority of our revenues are earned in the U.S., we also provide services and earn revenue in international jurisdictions. Our exposure to foreign currency exchange risk is reduced in relation to our results of operations since a significant portion of these revenues is denominated in U.S. dollars.
As a result, both positive and negative currency fluctuations against the U.S. dollar may affect our results of operations and accumulated other comprehensive income (loss). 54 Table of Contents Market Valuation Risk We are exposed to market valuation risks related to securities we hold that are carried at fair value.
As a result, both positive and negative currency fluctuations against the U.S. dollar may affect our results of operations and accumulated other comprehensive income (loss). 56 Table of Contents Market Valuation Risk We are exposed to market valuation risks related to securities we hold that are carried at fair value.
Our exposure to interest rate risks from these investments is mitigated by the low average duration exposure and a broad range of products in various global jurisdictions. We had no exposure to changes in interest rates from debt obligations at September 30, 2024 as all of our outstanding debt was issued at fixed rates.
Our exposure to interest rate risks from these investments is mitigated by the low average duration exposure and a broad range of products in various global jurisdictions. We had no exposure to changes in interest rates from debt obligations at September 30, 2025 as all of our outstanding debt was issued at fixed rates.
To mitigate the risks we maintain a diversified investment portfolio and, from time to time, we may enter into derivative agreements. The following is a summary of the effect of a 10% increase or decrease in the carrying values of our financial instruments subject to market valuation risks at September 30, 2024.
To mitigate the risks we maintain a diversified investment portfolio and, from time to time, we may enter into derivative agreements. The following is a summary of the effect of a 10% increase or decrease in the carrying values of our financial instruments subject to market valuation risks at September 30, 2025.
If such a 10% increase or decrease in carrying values were to occur, the changes from investments measured at fair value and direct investments in CIPs would result in a $191.9 million increase or decrease in our pre-tax earnings.
If such a 10% increase or decrease in carrying values were to occur, the changes from investments measured at fair value and direct investments in CIPs would result in a $240.1 million increase or decrease in our pre-tax earnings.
The exposure to foreign currency exchange risk in our consolidated balance sheet mostly relates to cash and cash equivalents and investments that are denominated in foreign currencies, primarily in the Indian Rupee, Euro, Pound Sterling and Australian dollar. These assets accounted for 25% of the total cash and cash equivalents and investments at September 30, 2024.
The exposure to foreign currency exchange risk in our consolidated balance sheet mostly relates to cash and cash equivalents and investments that are denominated in foreign currencies, primarily in the Euro, Indian Rupee, Pound Sterling, Chinese Yuan and Australian dollar. These assets accounted for 27% of the total cash and cash equivalents and investments at September 30, 2025.
Such a change for the fiscal year ended September 30, 2024 would have resulted in an increase or decrease in operating revenues of $756.7 million. Interest Rate Risk We are exposed to changes in interest rates primarily through our investments in funds that invest in debt securities, which were $2,495.0 million at September 30, 2024.
Such a change for the fiscal year ended September 30, 2025 would have resulted in an increase or decrease in operating revenues of $772.7 million. Interest Rate Risk We are exposed to changes in interest rates primarily through our investments in funds that invest in debt securities, which were $2,645.6 million at September 30, 2025.
Such a weakening as of September 30, 2024 would result in a $109.1 million decrease in accumulated other comprehensive loss and a $6.6 million increase in pre-tax earnings. We generally do not use derivative financial instruments to manage foreign currency exchange risk exposure.
Such a weakening as of September 30, 2025 would result in a $118.4 million decrease in accumulated other comprehensive loss and a $0.2 million decrease in pre-tax earnings. We generally do not use derivative financial instruments to manage foreign currency exchange risk exposure.
Our exposure to foreign currency exchange risk is reduced in relation to our results of operations since a significant portion of these revenues is denominated in U.S. dollars. This situation may change in the future as our business continues to grow outside the U.S. and expenses incurred denominated in foreign currencies increase.
This situation may change in the future as our business continues to grow outside the U.S. and expenses incurred denominated in foreign currencies increase.
As of September 30, 2024, we have considered the potential impact of a 100 basis point movement in market interest rates on our investments in funds that invest in debt securities. Based on our analysis, we do not expect that such a change would have a material impact on our earnings in the next 12 months.
Any borrowings under the Amended and Restated Credit Agreement would bear interest at variable rates. As of September 30, 2025, we have considered the potential impact of a 100 basis point movement in market interest rates on our investments in funds that invest in debt securities.
(in millions) Carrying Value Carrying Value Assuming a 10% Increase Carrying Value Assuming a 10% Decrease Investments, at fair value $ 838.0 $ 921.8 $ 754.2 Direct investments in CIPs 1,080.8 1,188.9 972.7 Total $ 1,918.8 $ 2,110.7 $ 1,726.9 55 Table of Contents
(in millions) Carrying Value Carrying Value Assuming a 10% Increase Carrying Value Assuming a 10% Decrease Investments, at fair value $ 1,179.5 $ 1,297.5 $ 1,061.6 Direct investments in CIPs 1,220.6 1,342.7 1,098.5 Total $ 2,400.1 $ 2,640.2 $ 2,160.1 57 Table of Contents
Added
Based on our analysis, we do not expect that such a change would have a material impact on our earnings in the next 12 months. Foreign Currency Exchange Risk We are subject to foreign currency exchange risk through our international operations.