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Franklin Resources, Inc. Announces Fourth Quarter Results

October 23, 2008

SAN MATEO, Calif.--(BUSINESS WIRE)--

Franklin Resources, Inc. (Franklin Templeton Investments) (NYSE:BEN) today announced net income of $305.1 million, or $1.30 per share diluted, on revenues of $1,321.5 million for the quarter ended September 30, 2008. For the quarter ended June 30, 2008, net income was $403.3 million, or $1.71 per share diluted, on revenues of $1,521.6 million. For the quarter ended September 30, 2007, net income was $436.9 million, or $1.76 per share diluted, on revenues of $1,629.1 million.

Operating income for the quarter ended September 30, 2008 was $419.5 million, as compared to $532.2 million for the prior quarter and $541.4 million for the quarter ended September 30, 2007. The company's non-operating income for the quarter ended September 30, 2008 included $77.8 million of investment and other income, net, as compared to $34.0 million for the prior quarter and $86.0 million for the quarter ended September 30, 2007.

Total assets under management by the company's subsidiaries were $507.3 billion at September 30, 2008, as compared to $580.2 billion at June 30, 2008 and $645.9 billion at September 30, 2007. Simple monthly average assets under management during the quarter ended September 30, 2008 were $555.4 billion, as compared to $602.9 billion in the prior quarter and $627.3 billion in the same quarter a year ago. Equity assets comprised 52% of total assets under management at September 30, 2008, as compared to 55% of total assets under management at June 30, 2008 and 60% of total assets under management at September 30, 2007. Fixed-income assets comprised 28% of total assets under management at September 30, 2008, as compared to 25% of total assets under management at June 30, 2008 and 21% of total assets under management at September 30, 2007. Hybrid assets accounted for 19% of total assets under management at September 30, 2008 and June 30, 2008, as compared to 18% of total assets under management at September 30, 2007. Net new flows for the quarter ended September 30, 2008 were $(8.6) billion, as compared to $1.2 billion for the prior quarter and $9.8 billion for the same quarter a year ago.

Cash and cash equivalents were $2.5 billion at September 30, 2008, as compared to $3.6 billion at September 30, 2007. Stockholders' equity was $7.1 billion at September 30, 2008, as compared to $7.3 billion at September 30, 2007. The company had 232.8 million shares of common stock outstanding at September 30, 2008, as compared to 245.5 million shares outstanding at September 30, 2007. During the quarter ended September 30, 2008, the company repurchased 2.4 million shares of its common stock for a total cost of $226.1 million. During the fiscal year ended September 30, 2008, the company repurchased 14.2 million shares of its common stock for a total cost of $1.5 billion.

    Fiscal Fourth Quarter 2008 Highlights

    Global Business Developments(1)

(See important footnotes in "Supplemental Information" section at the end of this release.)

    --  Standard & Poor's Rating Services recently raised its
        long-term and short-term ratings of Franklin Resources, Inc.
        to "AA-" and "A-1+" from "A+" and "A-1", respectively.

    --  Franklin Resources, Inc. appointed David E. Smart as Global
        Head of Sovereign Funds and Supranationals, responsible for
        managing existing sovereign fund relationships, as well as
        expanding the company's sovereign funds and supranational
        client base globally.

    --  Franklin Templeton opened a representative office in Ho Chi
        Minh City, Vietnam.

    --  Franklin Templeton introduced the U.S.-registered Templeton
        Global Total Return Fund and retail share classes of the
        Franklin Large Cap Equity Fund.

    --  Franklin Templeton began performing record-keeping services
        for the Franklin Templeton 529 and NJBEST 529 plans, for which
        it is already the distributor and program manager.

    --  Franklin Templeton's annual Investment Outlook and
        Opportunities Forum 2008, held in Toronto, Canada, was
        attended by over 2,300 investment advisors and clients.

    --  Franklin Templeton's financial advisor and institutional web
        sites were recognized in kasina's "Top 10 Web Sites for
        Financial Intermediaries" and "Top 10 Institutional Web Sites"
        for the second consecutive year.

    --  More than 1,000 volunteers participated in the second annual
        Involved Impact Days, a company-sponsored event to encourage
        community involvement.

Lipper Performance Rankings of Franklin Templeton's U.S.-Registered Long-Term Mutual Funds (1,2)

FRANKLIN TEMPLETON(3,4)

 Lipper Quartile            Period Ended September 30, 2008
                  ----------------------------------------------------
                     1-Year       3-Year       5-Year       10-Year
                   Assets (%)   Assets (%)   Assets (%)   Assets (%)
                  ------------ ------------ ------------ -------------
    1st & 2nd         55%          52%          90%           92%
----------------------------------------------------------------------
    3rd & 4th         45%          48%          10%           8%
----------------------------------------------------------------------

FRANKLIN TEMPLETON EQUITY(3,5)

 Lipper Quartile            Period Ended September 30, 2008
                  ----------------------------------------------------
                     1-Year       3-Year       5-Year       10-Year
                   Assets (%)   Assets (%)   Assets (%)   Assets (%)
                  ------------ ------------ ------------ -------------
    1st & 2nd         47%          28%          84%           89%
----------------------------------------------------------------------
    3rd & 4th         53%          72%          16%           11%
----------------------------------------------------------------------

FRANKLIN TEMPLETON FIXED-INCOME(3,6)

 Lipper Quartile            Period Ended September 30, 2008
                  ----------------------------------------------------
                     1-Year       3-Year       5-Year       10-Year
                   Assets (%)   Assets (%)   Assets (%)   Assets (%)
                  ------------ ------------ ------------ -------------
    1st & 2nd         68%          93%          98%           97%
----------------------------------------------------------------------
    3rd & 4th         32%           7%           2%           3%
----------------------------------------------------------------------

FRANKLIN EQUITY(3,7)

 Lipper Quartile            Period Ended September 30, 2008
                  ----------------------------------------------------
                     1-Year       3-Year       5-Year       10-Year
                   Assets (%)   Assets (%)   Assets (%)   Assets (%)
                  ------------ ------------ ------------ -------------
    1st & 2nd         18%          21%          88%           86%
----------------------------------------------------------------------
    3rd & 4th         82%          79%          12%           14%
----------------------------------------------------------------------

TEMPLETON EQUITY(3,8)

 Lipper Quartile            Period Ended September 30, 2008
                  ----------------------------------------------------
                     1-Year       3-Year       5-Year       10-Year
                   Assets (%)   Assets (%)   Assets (%)   Assets (%)
                  ------------ ------------ ------------ -------------
    1st & 2nd         73%           4%          72%           87%
----------------------------------------------------------------------
    3rd & 4th         27%          96%          28%           13%
----------------------------------------------------------------------

MUTUAL SERIES EQUITY(3,9)

 Lipper Quartile            Period Ended September 30, 2008
                  ----------------------------------------------------
                     1-Year       3-Year       5-Year       10-Year
                   Assets (%)   Assets (%)   Assets (%)   Assets (%)
                  ------------ ------------ ------------ -------------
    1st & 2nd         85%          97%          98%          100%
----------------------------------------------------------------------
    3rd & 4th         15%           3%           2%           0%
----------------------------------------------------------------------

FRANKLIN TEMPLETON TAXABLE FIXED-INCOME(3,10)

 Lipper Quartile            Period Ended September 30, 2008
                  ----------------------------------------------------
                     1-Year       3-Year       5-Year       10-Year
                   Assets (%)   Assets (%)   Assets (%)   Assets (%)
                  ------------ ------------ ------------ -------------
    1st & 2nd         82%          95%          97%           95%
----------------------------------------------------------------------
    3rd & 4th         18%           5%           3%           5%
----------------------------------------------------------------------

FRANKLIN TEMPLETON TAX-FREE FIXED-INCOME(3,11)

 Lipper Quartile            Period Ended September 30, 2008
                  ----------------------------------------------------
                     1-Year       3-Year       5-Year       10-Year
                   Assets (%)   Assets (%)   Assets (%)   Assets (%)
                  ------------ ------------ ------------ -------------
    1st & 2nd         63%          92%          99%           98%
----------------------------------------------------------------------
    3rd & 4th         37%           8%           1%           2%
----------------------------------------------------------------------

Performance quoted above represents past performance, which cannot predict or guarantee future results.

Franklin Resources, Inc.
Preliminary Condensed Consolidated Income Statements
Unaudited

(in thousands, except per share data        Three months ended
and assets under management)                   September 30,
                                      --------------------------------
                                         2008        2007     % Change
                                      ----------- ----------- --------
Operating Revenues
Investment management fees            $  822,388  $  963,316     (15%)
Underwriting and distribution fees       424,450     577,762     (27%)
Shareholder servicing fees                69,651      71,035      (2%)
Consolidated sponsored investment
 products income, net                      1,487       2,506     (41%)
Other, net                                 3,478      14,518     (76%)
                                      --------------------------------
 Total operating revenues              1,321,454   1,629,137     (19%)
                                      --------------------------------
Operating Expenses
Underwriting and distribution            406,526     552,729     (26%)
Compensation and benefits                274,065     285,631      (4%)
Information systems, technology and
 occupancy                                83,038      89,187      (7%)
Advertising and promotion                 45,489      56,128     (19%)
Amortization of deferred sales
 commissions                              40,696      45,935     (11%)
Other                                     52,143      58,139     (10%)
                                      --------------------------------
 Total operating expenses                901,957   1,087,749     (17%)
                                      --------------------------------
 Operating income                        419,497     541,388     (23%)
                                      --------------------------------
Other Income (Expenses)
Consolidated sponsored investment
 products (losses) gains, net            (35,507)     (2,719)    N/A
Investment and other income, net          77,763      86,034     (10%)
Interest expense                            (478)     (4,971)    (90%)
                                      --------------------------------
 Other income, net                        41,778      78,344     (47%)
                                      --------------------------------
Income before taxes on income            461,275     619,732     (26%)
Taxes on income                          156,198     182,824     (15%)
                                      --------------------------------
 Net income                           $  305,077  $  436,908     (30%)
                                      ================================

Earnings per Share
   Basic                              $     1.31  $     1.78     (26%)
   Diluted                                  1.30        1.76     (26%)
Dividends per share                   $     0.20  $     0.15      33%
Average Shares Outstanding (in
 thousands)
   Basic                                 232,832     244,807      (5%)
   Diluted                               234,563     247,869      (5%)

Operating Margin (1)                          32%         33%

Assets Under Management (in billions)
Beginning of period                   $    580.2  $    624.0      (7%)
   Sales                                    41.4        52.6     (21%)
   Redemptions                             (50.0)      (42.8)     17%
                                      --------------------------------
    Net new flows                           (8.6)        9.8     N/A
   Reinvested distributions                  3.2         1.6     100%
                                      --------------------------------
    Net flows                               (5.4)       11.4     N/A
   Distributions                            (4.0)       (2.3)     74%
   (Depreciation) appreciation and
    other                                  (63.5)       12.8     N/A
                                      --------------------------------
End of period                         $    507.3  $    645.9     (21%)
                                      ================================
Simple Monthly Average for Period     $    555.4  $    627.3     (11%)


(in thousands, except per share data        Twelve months ended
and assets under management)                   September 30,
                                      --------------------------------
                                         2008        2007     % Change
                                      ----------- ----------- --------
Operating Revenues
Investment management fees            $3,683,390  $3,573,845       3%
Underwriting and distribution fees     2,002,031   2,277,698     (12%)
Shareholder servicing fees               289,370     277,059       4%
Consolidated sponsored investment
 products income, net                     10,923       7,804      40%
Other, net                                46,672      69,363     (33%)
                                     ---------------------------------
 Total operating revenues              6,032,386   6,205,769      (3%)
                                     ---------------------------------
Operating Expenses
Underwriting and distribution          1,937,113   2,160,631     (10%)
Compensation and benefits              1,120,631   1,080,634       4%
Information systems, technology and
 occupancy                               320,986     317,938       1%
Advertising and promotion                184,309     189,382      (3%)
Amortization of deferred sales
 commissions                             170,504     158,114       8%
Other                                    192,315     231,523     (17%)
                                     ---------------------------------
 Total operating expenses              3,925,858   4,138,222      (5%)
                                     ---------------------------------
 Operating income                      2,106,528   2,067,547       2%
                                     ---------------------------------
Other Income (Expenses)
Consolidated sponsored investment
 products (losses) gains, net            (71,553)     57,670     N/A
Investment and other income, net         224,898     363,304     (38%)
Interest expense                         (15,758)    (23,220)    (32%)
                                     ---------------------------------
 Other income, net                       137,587     397,754     (65%)
                                     ---------------------------------
Income before taxes on income          2,244,115   2,465,301      (9%)
Taxes on income                          651,314     692,363      (6%)
                                     ---------------------------------
 Net income                           $1,592,801  $1,772,938     (10%)
                                     =================================

Earnings per Share
   Basic                              $     6.74  $     7.11      (5%)
   Diluted                                  6.68        7.03      (5%)
Dividends per share                   $     0.80  $     0.60      33%
Average Shares Outstanding (in
 thousands)
   Basic                                 236,396     249,197      (5%)
   Diluted                               238,281     252,118      (5%)

Operating Margin (1)                          35%         33%

Assets Under Management (in billions)
Beginning of period                   $    645.9  $    511.3      26%
   Sales                                   181.5       185.5      (2%)
   Redemptions                            (190.4)     (139.0)     37%
                                     ---------------------------------
    Net new flows                           (8.9)       46.5     N/A
   Reinvested distributions                 28.9        20.7      40%
                                     ---------------------------------
    Net flows                               20.0        67.2     (70%)
   Distributions                           (35.2)      (26.0)     35%
   (Depreciation) appreciation and
    other                                 (123.4)       93.4     N/A
                                     ---------------------------------
End of period                         $    507.3  $    645.9     (21%)
                                     =================================
Simple Monthly Average for Period     $    604.9  $    582.0       4%

(1) Operating margin: Operating income divided by total operating revenues.

Franklin Resources, Inc.
Preliminary Condensed Consolidated Income Statements
Unaudited

(in thousands, except per share
 data, employees
and billable shareholder accounts)          Three months ended
                                     ---------------------------------
                                      30-Sep-08   30-Jun-08  % Change
                                     ----------- ----------- --------
Operating Revenues
Investment management fees           $  822,388  $  924,722     (11%)
Underwriting and distribution fees      424,450     504,272     (16%)
Shareholder servicing fees               69,651      73,127      (5%)
Consolidated sponsored investment
 products income, net                     1,487       2,768     (46%)
Other, net                                3,478      16,760     (79%)
                                     ---------------------------------
 Total operating revenues             1,321,454   1,521,649     (13%)
                                     ---------------------------------
Operating Expenses
Underwriting and distribution           406,526     492,385     (17%)
Compensation and benefits               274,065     285,651      (4%)
Information systems, technology and
 occupancy                               83,038      78,477       6%
Advertising and promotion                45,489      44,804       2%
Amortization of deferred sales
 commissions                             40,696      41,935      (3%)
Other                                    52,143      46,182      13%
                                     ---------------------------------
 Total operating expenses               901,957     989,434      (9%)
                                     ---------------------------------
 Operating income                       419,497     532,215     (21%)
                                     ---------------------------------
Other Income (Expenses)
Consolidated sponsored investment
 products losses, net                   (35,507)     (9,005)    294%
Investment and other income, net         77,763      33,969     129%
Interest expense                           (478)     (3,287)    (85%)
                                     ---------------------------------
 Other income, net                       41,778      21,677      93%
                                     ---------------------------------
Income before taxes on income           461,275     553,892     (17%)
Taxes on income                         156,198     150,580       4%
                                     ---------------------------------
 Net income                          $  305,077  $  403,312     (24%)
                                     =================================

Earnings per Share
   Basic                             $     1.31  $     1.72     (24%)
   Diluted                                 1.30        1.71     (24%)

Dividends per share                  $     0.20  $     0.20      --%

Average Shares Outstanding (in
 thousands)
   Basic                                232,832     234,631      (1%)
   Diluted                              234,563     236,485      (1%)

Operating Margin(1)                          32%         35%

Employees                                 8,809       8,958      (2%)
Billable Shareholder Accounts
(in millions)                              20.4        22.4      (9%)


(in thousands, except per share
 data, employees
and billable shareholder
 accounts)                                Three months ended
                                 -------------------------------------
                                    31-Mar-08   31-Dec-07   30-Sep-07
                                   ----------- ----------- -----------
Operating Revenues
Investment management fees         $  915,965  $1,020,315  $  963,316
Underwriting and distribution
 fees                                 499,513     573,796     577,762
Shareholder servicing fees             73,417      73,175      71,035
Consolidated sponsored investment
 products income, net                   3,764       2,904       2,506
Other, net                             11,033      15,401      14,518
                                 -------------------------------------
 Total operating revenues           1,503,692   1,685,591   1,629,137
                                 -------------------------------------
Operating Expenses
Underwriting and distribution         485,612     552,590     552,729
Compensation and benefits             280,625     280,290     285,631
Information systems, technology
 and occupancy                         79,854      79,617      89,187
Advertising and promotion              47,372      46,644      56,128
Amortization of deferred sales
 commissions                           43,322      44,551      45,935
Other                                  47,820      46,170      58,139
                                 -------------------------------------
 Total operating expenses             984,605   1,049,862   1,087,749
                                 -------------------------------------
 Operating income                     519,087     635,729     541,388
                                 -------------------------------------
Other Income (Expenses)
Consolidated sponsored investment
 products losses, net                 (26,064)       (977)     (2,719)
Investment and other income, net       32,393      80,773      86,034
Interest expense                       (5,948)     (6,045)     (4,971)
                                 -------------------------------------
 Other income, net                        381      73,751      78,344
                                 -------------------------------------
Income before taxes on income         519,468     709,480     619,732
Taxes on income                       153,372     191,164     182,824
                                 -------------------------------------
 Net income                        $  366,096  $  518,316  $  436,908
                                 =====================================

Earnings per Share
   Basic                           $     1.55  $     2.15  $     1.78
   Diluted                               1.54        2.12        1.76

Dividends per share                $     0.20  $     0.20  $     0.15

Average Shares Outstanding (in
 thousands)
   Basic                              236,520     241,585     244,807
   Diluted                            238,360     244,147     247,869

Operating Margin(1)                        35%         38%         33%

Employees                               8,916       8,875       8,699
Billable Shareholder Accounts
(in millions)                            22.0        21.2        20.4

(1) Operating margin: Operating income divided by total operating revenues.

ASSETS UNDER MANAGEMENT BY INVESTMENT OBJECTIVE
(in billions)                          Three months ended
                           -------------------------------------------
                            30-    30-             31-    31-    30-
                            Sep-   Jun-            Mar-   Dec-   Sep-
                             08     08   % Change   08     07     07
                           -------------------------------------------
 Equity
    Global/international   $190.3 $233.7    (19%) $243.4 $286.1 $286.7
    Domestic (U.S.)          72.9   82.5    (12%)   84.8   95.8  100.5
                           -------------------------------------------
    Total equity            263.2  316.2    (17%)  328.2  381.9  387.2
                           -------------------------------------------

 Hybrid                      93.9  109.5    (14%)  109.8  116.4  117.2

 Fixed-Income
    Tax-free                 59.7   61.6     (3%)   59.6   59.3   59.0
    Taxable:
     Global/international    52.7   54.3     (3%)   54.5   48.3   44.3
     Domestic (U.S.)         30.5   31.6     (3%)   31.5   31.5   31.8
                           -------------------------------------------
    Total fixed-income      142.9  147.5     (3%)  145.6  139.1  135.1

 Money Market                 7.3    7.0      4%     7.5    6.3    6.4

                           -------------------------------------------
Total Ending Assets        $507.3 $580.2    (13%) $591.1 $643.7 $645.9
                           ===========================================

Simple Monthly Average
 Assets Under Management   $555.4 $602.9     (8%) $610.2 $651.5 $627.3

ASSETS UNDER MANAGEMENT AND FLOWS
(in billions)                           Three months ended
                             -----------------------------------------
                             30-Sep- 30-Jun-          30-Sep-
                                08      08   % Change    07   % Change
                             ------- ------- -------- ------- --------
Beginning Assets Under
 Management                  $580.2  $591.1      (2%) $624.0      (7%)
U.S. retail assets(1)
 Beginning assets            $330.0  $334.8      (1%) $366.5     (10%)
----------------------------------------------------------------------
 Sales                         12.4    14.9     (17%)   17.8     (30%)
 Redemptions                  (17.9)  (14.7)     22%   (16.0)     12%
 Net exchanges                 (0.1)   (0.2)    (50%)   (0.4)    (75%)
                             -----------------------------------------
  Net new flows                (5.6)     --    (100%)    1.4     N/A
 Reinvested distributions       2.6     3.7     (30%)    1.2     117%
                             -----------------------------------------
  Net flows                    (3.0)    3.7     N/A      2.6     N/A
 Distributions                 (3.4)   (4.4)    (23%)   (1.9)     79%
 (Depreciation)/appreciation
  and other                   (31.9)   (4.1)    678%     2.5     N/A
----------------------------------------------------------------------
 Ending assets               $291.7  $330.0     (12%) $369.7     (21%)
----------------------------------------------------------------------
Other assets, including international and institutional
 Beginning assets            $250.2  $256.3      (2%) $257.5      (3%)
----------------------------------------------------------------------
 Sales                         29.0    30.7      (6%)   34.8     (17%)
 Redemptions                  (32.1)  (29.7)      8%   (26.8)     20%
 Net exchanges                  0.1     0.2     (50%)    0.4     (75%)
                             -----------------------------------------
  Net new flows                (3.0)    1.2     N/A      8.4     N/A
 Reinvested distributions       0.6     0.3     100%     0.4      50%
                             -----------------------------------------
  Net flows                    (2.4)    1.5     N/A      8.8     N/A
 Distributions                 (0.6)   (0.3)    100%    (0.4)     50%
 (Depreciation)/appreciation
  and other                   (31.6)   (7.3)    333%    10.3     N/A
----------------------------------------------------------------------
 Ending assets               $215.6  $250.2     (14%) $276.2     (22%)
----------------------------------------------------------------------
 Total Ending Assets         $507.3  $580.2     (13%) $645.9     (21%)
======================================================================
Total Assets Under Management
 Beginning assets            $580.2  $591.1      (2%) $624.0      (7%)
----------------------------------------------------------------------
 Sales                         41.4    45.6      (9%)   52.6     (21%)
 Redemptions                  (50.0)  (44.4)     13%   (42.8)     17%
                             -----------------------------------------
  Net new flows                (8.6)    1.2     N/A      9.8     N/A
 Reinvested distributions       3.2     4.0     (20%)    1.6     100%
                             -----------------------------------------
  Net flows                    (5.4)    5.2     N/A     11.4     N/A
 Distributions                 (4.0)   (4.7)    (15%)   (2.3)     74%
 (Depreciation)/appreciation
  and other                   (63.5)  (11.4)    457%    12.8     N/A
----------------------------------------------------------------------
 Ending assets               $507.3  $580.2     (13%) $645.9     (21%)
======================================================================

(1) U.S. retail assets as of September 30, 2008 included institutional assets totaling approximately $28.3 billion that were invested in U.S. retail fund and annuity products. Total institutional and high net-worth assets at September 30, 2008 were approximately $160.5 billion, of which high net-worth assets comprised $9.7 billion.

ASSETS UNDER MANAGEMENT AND FLOWS BY INVESTMENT OBJECTIVE
(in billions)                                 Three months ended
                                         -----------------------------
                                         30-Sep-08 30-Jun-08 30-Sep-07
                                         --------- --------- ---------
Global/international equity
   Beginning assets                        $233.7    $243.4    $274.4
----------------------------------------------------------------------
   Sales                                      9.9      15.1      21.9
   Redemptions                              (16.4)    (16.8)    (17.8)
   Net exchanges                             (1.0)      0.1       0.2
                                         -----------------------------
    Net new flows                            (7.5)     (1.6)      4.3
   Reinvested distributions                   0.7       1.0       0.1
                                         -----------------------------
    Net flows                                (6.8)     (0.6)      4.4
   Distributions                             (0.8)     (1.1)     (0.1)
   (Depreciation)/appreciation and other    (35.8)     (8.0)      8.0
----------------------------------------------------------------------
   Ending assets                            190.3     233.7     286.7
----------------------------------------------------------------------
Domestic (U.S.) equity
   Beginning assets                          82.5      84.8     101.6
----------------------------------------------------------------------
   Sales                                      3.3       3.3       4.7
   Redemptions                               (5.4)     (3.8)     (4.4)
   Net exchanges                             (0.1)       --      (0.3)
                                         -----------------------------
    Net new flows                            (2.2)     (0.5)       --
   Reinvested distributions                   0.8       0.6        --
                                         -----------------------------
    Net flows                                (1.4)      0.1        --
   Distributions                             (1.0)     (0.6)     (0.1)
   Depreciation and other                    (7.2)     (1.8)     (1.0)
----------------------------------------------------------------------
   Ending assets                             72.9      82.5     100.5
----------------------------------------------------------------------
Hybrid
   Beginning assets                         109.5     109.8     112.7
----------------------------------------------------------------------
   Sales                                      2.8       3.6       4.7
   Redemptions                               (3.9)     (3.4)     (2.9)
   Net exchanges                             (0.3)       --      (0.1)
                                         -----------------------------
    Net new flows                            (1.4)      0.2       1.7
   Reinvested distributions                   0.7       1.3       0.6
                                         -----------------------------
    Net flows                                (0.7)      1.5       2.3
   Distributions                             (1.0)     (1.5)     (0.9)
   (Depreciation)/appreciation and other    (13.9)     (0.3)      3.1
----------------------------------------------------------------------
   Ending assets                             93.9     109.5     117.2
----------------------------------------------------------------------
Tax-free income
   Beginning assets                          61.6      59.6      58.2
----------------------------------------------------------------------
   Sales                                      3.2       3.7       2.2
   Redemptions                               (2.1)     (2.0)     (1.8)
   Net exchanges                               --        --      (0.1)
                                         -----------------------------
    Net new flows                             1.1       1.7       0.3
   Reinvested distributions                   0.4       0.4       0.4
                                         -----------------------------
    Net flows                                 1.5       2.1       0.7
   Distributions                             (0.7)     (0.7)     (0.6)
   (Depreciation)/appreciation and other     (2.7)      0.6       0.7
----------------------------------------------------------------------
   Ending assets                           $ 59.7    $ 61.6    $ 59.0
----------------------------------------------------------------------
Global/international taxable fixed-
 income
   Beginning assets                        $ 54.3    $ 54.5    $ 38.6
----------------------------------------------------------------------
   Sales                                     17.5      15.1      14.9
   Redemptions                              (16.5)    (13.1)    (11.3)
   Net exchanges                              0.2      (0.3)       --
                                         -----------------------------
    Net new flows                             1.2       1.7       3.6
   Reinvested distributions                   0.3       0.3       0.2
                                         -----------------------------
    Net flows                                 1.5       2.0       3.8
   Distributions                             (0.2)     (0.3)     (0.2)
   (Depreciation)/appreciation and other     (2.9)     (1.9)      2.1
----------------------------------------------------------------------
   Ending assets                             52.7      54.3      44.3
----------------------------------------------------------------------
Domestic (U.S.) taxable fixed-income
   Beginning assets                          31.6      31.5      32.8
----------------------------------------------------------------------
   Sales                                      1.8       2.0       1.6
   Redemptions                               (2.3)     (1.9)     (2.5)
   Net exchanges                              0.4       0.2      (0.1)
                                         -----------------------------
    Net new flows                            (0.1)      0.3      (1.0)
   Reinvested distributions                   0.2       0.3       0.2
                                         -----------------------------
    Net flows                                 0.1       0.6      (0.8)
   Distributions                             (0.3)     (0.4)     (0.3)
   (Depreciation)/appreciation and other     (0.9)     (0.1)      0.1
----------------------------------------------------------------------
   Ending assets                             30.5      31.6      31.8
----------------------------------------------------------------------
Money market
   Beginning assets                           7.0       7.5       5.7
----------------------------------------------------------------------
   Sales                                      2.9       2.8       2.6
   Redemptions                               (3.4)     (3.4)     (2.1)
   Net exchanges                              0.8        --       0.4
                                         -----------------------------
    Net new flows                             0.3      (0.6)      0.9
   Reinvested distributions                   0.1       0.1       0.1
                                         -----------------------------
    Net flows                                 0.4      (0.5)      1.0
   Distributions                               --      (0.1)     (0.1)
   (Depreciation)/appreciation and other     (0.1)      0.1      (0.2)
----------------------------------------------------------------------
   Ending assets                              7.3       7.0       6.4
----------------------------------------------------------------------
Ending Assets Under Management             $507.3    $580.2    $645.9
======================================================================

Conference Call Information

President and Chief Executive Officer of Franklin Resources, Inc., Greg Johnson, and Executive Vice President and Chief Financial Officer, Ken Lewis, will lead a live conference call on Thursday, October 23, 2008 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss Franklin Resources' fiscal fourth quarter 2008 financial results and answer analysts' questions.

Access to the teleconference will be available via franklintempleton.com 10 minutes before the start of the call or by dialing (877) 480-6346 in the U.S. or (706) 902-1906 internationally.

A replay of the call will be archived on the "Our Company" page of franklintempleton.com through November 6, 2008. The replay can also be accessed by calling (800) 642-1687 in the U.S. or (706) 645-9291 internationally using access code 64624609, after 5:30 p.m. Eastern Time on October 23, 2008, through 11:59 p.m. Eastern Time on November 6, 2008.

Questions regarding the teleconference call should be directed to Franklin Resources, Inc., Investor Relations at (650) 312-4091 or Corporate Communications at (650) 525-7298.

Franklin Resources, Inc. (NYSE:BEN) is a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management solutions managed by its Franklin, Templeton, Mutual Series, Fiduciary Trust, Darby and Bissett investment teams. The San Mateo, CA-based company has more than 60 years of investment experience and over $507 billion in assets under management as of September 30, 2008. For more information, please call 1-800/DIAL BEN(R) or visit franklintempleton.com.

Supplemental Information

Investors should carefully consider a fund's investment goals, risks, charges and expenses before investing. To obtain a prospectus, which contains this and other information, for any U.S.-registered Franklin Templeton fund, investors should talk to their financial advisors or call Franklin/Templeton Distributors, Inc. at 1-800/DIAL BEN(R) (1-800/342-5236). Please read the prospectus carefully before investing.

 1. Nothing in this section shall be considered a solicitation to buy
     or an offer to sell a security to any person in any jurisdiction
     where such offer, solicitation, purchase or sale would be
     unlawful under the securities laws of such jurisdiction.
     Franklin/Templeton Distributors, Inc., One Franklin Parkway, San
     Mateo, CA, is the funds' principal distributor and a wholly owned
     subsidiary of Franklin Resources, Inc. The information in the
     "Global Business Developments" section above is being provided
     for information purposes only.
 2. Lipper rankings for Franklin Templeton U.S.-registered mutual
     funds are based on Class A shares. Franklin Templeton funds are
     compared against a universe of all share classes.
 3. Lipper calculates averages by taking all the funds and share
     classes in a peer group and averaging their total returns for the
     periods indicated. Lipper tracks 149 peer groups of U.S. retail
     mutual funds, and the groups vary in size from 9 to 918 funds.
     Lipper total return calculations include reinvested dividends and
     capital gains, but do not include sales charges or expense
     subsidization by the manager. Results may have been different if
     these or other factors had been considered.
 4. Source: Lipper(R) Inc., 9/30/08. Of the eligible Franklin
     Templeton long-term mutual funds tracked by Lipper, 26, 31, 41
     and 42 funds ranked in the top quartile and 27, 32, 28 and 19
     funds ranked in the second quartile, for the one-, three-, five-
     and 10-year periods, respectively, for their respective Lipper
     peer groups.
 5. Source: Lipper(R) Inc., 9/30/08. Of the eligible Franklin
     Templeton equity mutual funds tracked by Lipper, 16, 13, 14 and
     16 funds ranked in the top quartile and 12, 12, 14 and 8 funds
     ranked in the second quartile, for the one-, three-, five- and
     10-year periods, respectively, for their respective Lipper peer
     groups.
 6. Source: Lipper(R) Inc., 9/30/08. Of the eligible Franklin
     Templeton non-money market fixed-income mutual funds tracked by
     Lipper, 10, 18, 27 and 26 funds ranked in the top quartile and
     15, 20, 14 and 11 funds ranked in the second quartile, for the
     one-, three-, five- and 10-year periods, respectively, for their
     respective Lipper peer groups.
 7. Source: Lipper(R) Inc., 9/30/08. Of the eligible Franklin equity
     mutual funds tracked by Lipper, 11, 9, 9 and 9 funds ranked in
     the top quartile and 9, 9, 10 and 6 funds ranked in the second
     quartile, for the one-, three-, five- and 10-year periods,
     respectively, for their respective Lipper peer groups.
 8. Source: Lipper(R) Inc., 9/30/08. Of the eligible Templeton equity
     mutual funds tracked by Lipper, 2, 1, 1 and 2 funds ranked in the
     top quartile and 2, 1, 3 and 1 funds ranked in the second
     quartile, for the one-, three-, five- and 10-year periods,
     respectively, for their respective Lipper peer groups.
 9. Source: Lipper(R) Inc., 9/30/08. Of the eligible Mutual Series
     equity mutual funds tracked by Lipper, 3, 3, 4 and 5 funds ranked
     in the top quartile and 1, 2, 1 and 1 funds ranked in the second
     quartile, for the one-, three-, five- and 10-year periods,
     respectively, for their respective Lipper peer groups.
10.  Source: Lipper(R) Inc., 9/30/08. Of the eligible Franklin
      Templeton non-money market taxable fixed- income mutual funds
      tracked by Lipper, 5, 6, 3 and 2 funds ranked in the top
      quartile and 3, 4, 5 and 5 funds ranked in the second quartile,
      for the one-, three-, five- and 10-year periods, respectively,
      for their respective Lipper peer groups.
11.  Source: Lipper(R) Inc., 9/30/08. Of the eligible Franklin
      Templeton non-money market tax-free fixed- income mutual funds
      tracked by Lipper, 5, 12, 24 and 24 funds ranked in the top
      quartile and 12, 16, 9 and 6 funds ranked in the second
      quartile, for the one-, three-, five- and 10-year periods,
      respectively, for their respective Lipper peer groups.

Forward-Looking Statements:

The financial results in this press release are preliminary. Statements in this press release regarding Franklin Resources, Inc. and its subsidiaries, which are not historical facts, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors, some of which are listed below, that could cause the actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements. These and other risks, uncertainties and other important factors are described in more detail in Franklin's recent filings with the U.S. Securities and Exchange Commission, including, without limitation, in Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations in Franklin's Annual Report on Form 10-K for the fiscal year ended September 30, 2007, and Franklin's subsequent Form 10-Q filings.

    --  We are subject to extensive and complex, overlapping and
        frequently changing rules, regulations and legal
        interpretations.

    --  Regulatory and legislative actions and reforms have made the
        regulatory environment in which we operate more costly and
        future actions and reforms could adversely impact our assets
        under management, increase costs and negatively impact our
        profitability and future financial results.

    --  Our ability to maintain the beneficial tax treatment we
        anticipate with respect to non-U.S. earnings we have
        repatriated is based on current interpretations of the
        American Jobs Creation Act of 2004 (the "Jobs Act") and timely
        and permitted use of such amounts in accordance with our
        domestic reinvestment plan and the Jobs Act.

    --  Any significant limitation or failure of our software
        applications and other technology systems that are critical to
        our operations could constrain our operations.

    --  We face risks, and corresponding potential costs and expenses,
        associated with conducting operations and growing our business
        in numerous countries.

    --  We depend on key personnel and our financial performance could
        be negatively affected by the loss of their services.

    --  Strong competition from numerous and sometimes larger
        companies with competing offerings and products could limit or
        reduce sales of our products, potentially resulting in a
        decline in our market share, revenues and net income.

    --  Changes in the distribution and sales channels on which we
        depend could reduce our revenues and hinder our growth.

    --  The amount and mix of our assets under management are subject
        to significant fluctuations and could negatively impact our
        revenues and income.

    --  Our increasing focus on international markets as a source of
        investments and sales of investment products subjects us to
        increased exchange rate and other risks in connection with
        earnings and income generated overseas.

    --  Poor investment performance of our products could affect our
        sales or reduce the level of assets under management,
        potentially negatively impacting our revenues and income.

    --  We could suffer losses in earnings or revenue if our
        reputation is harmed.

    --  Our future results are dependent upon maintaining an
        appropriate level of expenses, which is subject to
        fluctuation.

    --  Our ability to successfully integrate widely varied business
        lines can be impeded by systems and other technological
        limitations.

    --  Our inability to successfully recover should we experience a
        disaster or other business continuity problem could cause
        material financial loss, loss of human capital, regulatory
        actions, reputational harm or legal liability.

    --  Certain of the portfolios we manage, including our emerging
        market portfolios, are vulnerable to significant
        market-specific political, economic or other risks, any of
        which may negatively impact our revenues and income.

    --  Our revenues, earnings and income could be adversely affected
        if the terms of our management agreements are significantly
        altered or these agreements are terminated by the funds we
        advise.

    --  Diverse and strong competition limits the interest rates that
        we can charge on consumer loans.

    --  Civil litigation arising out of or relating to previously
        settled regulatory and governmental investigations, regulatory
        and governmental investigations and/or examinations, and the
        legal risks associated with our business, could adversely
        impact our assets under management, increase costs and
        negatively impact our profitability and/or our future
        financial results.

    --  Our ability to meet cash needs depends upon certain factors,
        including our asset value, credit worthiness and the market
        value of our stock.

    Source: Franklin Resources, Inc.