FRANKLIN TEMPLETON INC
For the period ended Sep 30, 2026. Filed Nov 9, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Nov 9, 2026
BEN$35.87+6.3%Stored close · as of Nov 9, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2025-09-30; filed 2025-11-10.
0000038777-25-000238
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2026-09-30; filed 2026-11-09.
0000038777-26-000289
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 207 previous paragraphs and 209 current paragraphs.
142 unchanged; 54 reworded; 13 added; 11 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 21 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
On October 1, 2025, we acquired Apera Asset Management (“Apera”), a pan-European private credit firm.
Current report
1 Beginning in fiscal year 2026, non-fee generating uncalled capital commitments, which were previously included in net market change, distributions, and other, are reflected in long-term inflows in the period the capital is committed. Prior periods have not been revised to reflect the current presentation.
Current report
1 Beginning in fiscal year 2026, non-fee generating uncalled capital commitments, which were previously included in net market change, distributions, and other, are reflected in long-term inflows in the period the capital is committed. Prior periods have not been revised to reflect the current presentation.
Current report
1 Effective in fiscal year 2026, Cayman-domiciled money market fund assets are included in United States reflecting the underlying investor base. This change resulted in an 11% reduction of AUM in the Americas, excluding U.S.
Current report
2 Effective January 1, 2026, Asia-Pacific includes India. Prior periods have been revised to reflect the current presentation.
Current report
Sales-based fees increased $19.7 million in fiscal year 2026 primarily due to a $10.3 million increase in contingent sales charges, driven by increased redemptions, and an increase of 13% in commissionable sales, partially offset by a higher mix of non-U.S. sales, which generate lower fees.
Current report
Sales-based expenses increased $8.6 million in fiscal year 2026 primarily due to an increase of 13% in commissionable sales, partially offset by a higher mix of non-U.S. sales.
Current report
General, administrative and other operating expenses increased $147.7 million in fiscal year 2026, primarily due to a $100.0 million regulatory settlement, an increase of $33.2 million in the fair value of a contingent consideration liability, and an increase of $21.5 million in fund-related expenses due to higher placement and platform fees. These increases were partially offset by a decrease of $16.7 million in advertising and promotion costs.
Current report
Net foreign currency exchange gains were $5.1 million in fiscal year 2026, as compared to net losses of $11.6 million in the prior year, primarily due to fluctuations in the value of the U.S. dollar against the British Pound and Euro.
Current report
Other, net increased $57.6 million in fiscal year 2026, primarily due to gains recognized on the sale of owned office space.
Current report
•Charges related to significant regulatory settlements.
Current report
•Charges related to significant regulatory settlements.
Current report
On December 11, 2025, we entered into a Joinder and Commitment Increase Agreement (the “Joinder Agreement”) which amended the Amended and Restated Revolving Credit Agreement dated April 30, 2025. Pursuant to the Joinder Agreement, aggregate commitments increased by $400.0 million to $1.5 billion. On July 30, 2026, we entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”), which, among other things, extended the maturity of the revolving credit facility to July 30, 2031. The Credit Agreement provides for a five-year revolving credit facility with $1.5 billion of aggregate commitments and an option to increase the commitments by a maximum of $500.0 million. We expect to utilize the Credit Agreement periodically as part of our normal operations.
Removed paragraphs (11)
Previous report
Sales-based fees increased $9.3 million in fiscal year 2025 primarily due to one additional quarter of sales-based revenue related to Putnam products and a higher mix of equity and multi-asset funds, which generate higher sales fees.
Previous report
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.
Previous report
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.
Previous report
Information Systems and Technology
Previous report
Information systems and technology expenses increased $23.5 million in fiscal year 2025, primarily due to one additional quarter of expenses incurred by Putnam, higher spending related to strategic initiatives, and higher costs for software and external data services, partially offset by lower costs for hardware maintenance and purchases.
Previous report
General, administrative and other operating expenses increased $71.2 million in fiscal year 2025, primarily due to one additional quarter of expenses incurred by Putnam, and increases of $21.2 million in sub-advisory expenses, primarily due to higher payments to third-parties related to performance fees, $17.7 million in transfer agency expenses, $16.0 million in advertising and promotion costs, and $2.9 million in legal and other professional fees, inclusive of $65.6 million of insurance recoveries. These increases were partially offset by an $18.5 million decrease in acquisition-related costs, primarily related to the acquisition of Putnam.
Previous report
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.
Previous report
Interest expense decreased $2.3 million in fiscal year 2025 primarily due to lower accretion on Lexington deferred purchase consideration, partially offset by an increase in interest recognized on tax reserves.
Previous report
The final deferred cash payment related to our acquisition of Lexington of $100.0 million was paid on April 1, 2025 using existing cash and borrowings from our revolving credit facility.
Previous report
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.
Previous report
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. The affected assets were evaluated for impairment immediately prior to reclassification and are being amortized prospectively over their revised estimated remaining useful lives. There were no significant impairments of definite-lived intangible assets during fiscal year 2025.
Reworded paragraphs (54)
Previous wording
The following discussion and analysis of the results of operations and financial condition of Franklin Resources, Inc. (“Franklin”) and its subsidiaries (collectively, the “Company”) should be read in conjunction with the “Forward-looking Statements” disclosure set forth in Part I and the “Risk Factors” set forth in Item 1A of Part I of this Annual Report on Form 10‑K (this “Annual Report”) and in any more recent filings with the U.S. Securities and Exchange Commission (the “SEC”), each of which describe our risks, uncertainties and other important factors in more detail. Words such as “we,” “us,” “our” and similar terms refer to the Company.
Current wording
The following discussion and analysis of the results of operations and financial condition of Franklin Templeton, Inc. (“Franklin”) and its subsidiaries (collectively, the “Company”) should be read in conjunction with the “Forward-looking Statements” disclosure set forth in Part I and the “Risk Factors” set forth in Item 1A of Part I of this Annual Report on Form 10‑K (this “Annual Report”) and in any more recent filings with the U.S. Securities and Exchange Commission (the “SEC”), each of which describe our risks, uncertainties and other important factors in more detail. Words such as “we,” “us,” “our” and similar terms refer to the Company.
Previous wording
Franklin is a holding company with subsidiaries operating under our Franklin Templeton®and/or subsidiary brand names. We are a global investment management organization that derives operating revenues and net income from providing investment management and related services to investors in jurisdictions worldwide. 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 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 offer a broad product mix of equity, fixed income, alternative, multi-asset and cash management asset classes and solutions that meet a wide variety of specific investment goals and needs for individual and institutional investors. We also provide sub-advisory services to certain investment products sponsored by other companies which may be sold to investors under the brand names of those other companies or on a co-branded basis.
Current wording
Franklin is a holding company with subsidiaries operating under our Franklin Templeton®and/or subsidiary brand names. We are a global investment management organization that derives operating revenues and net income from providing investment management and related services to investors in jurisdictions worldwide. 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 offer our services and products under our various distinct brand names, including, but not limited to, Franklin Templeton®, Apera®, Benefit Street Partners®, Benji®, Brandywine Global Investment Management®, Canvas®, Clarion Partners®, ClearBridge Investments®, Fiduciary Trust International™, Franklin®, Franklin Mutual Series®, K2®, Legg Mason®, Lexington Partners®, MosaiQ®, Putnam®, Royce®, Templeton®, and Western Asset Management Company®. We offer a broad product mix of equity, fixed income, alternative, multi-asset and cash management asset classes and solutions that meet a wide variety of specific investment goals and needs for individual and institutional investors. We also provide sub-advisory services to certain investment products sponsored by other companies which may be sold to investors under the brand names of those other companies or on a co-branded basis.
Previous wording
Despite periods of volatility driven by uncertainty regarding U.S. economic and trade policies, during the fiscal year ended September 30, 2025 (“fiscal year 2025”), U.S. and global equity markets provided positive returns, due in part to strong corporate earnings and easing of monetary policy. The S&P 500 Index and MSCI World Index increased 14.8% and 17.8% for the fiscal year. The global bond markets were also positive as the Bloomberg Barclays Global Aggregate Index increased 7.9% for the fiscal year.
Current wording
During the fiscal year ended September 30, 2026 (“fiscal year 2026”), U.S. and global equity markets generated positive returns, supported by resilient economic growth, strong corporate earnings, and continued AI-driven investment despite elevated inflation, higher interest rates, and geopolitical uncertainty. The S&P 500 Index and MSCI World Index each increased 15.7% for the fiscal year. The global bond markets declined as the Bloomberg Global Aggregate Index decreased 2.4% for the fiscal year.
Previous wording
Our total AUM was $1,661.2 billion at September 30, 2025, 1% lower than at September 30, 2024. Simple monthly average AUM (“average AUM”) increased 3% during fiscal year 2025.
Current wording
Our total AUM was $1,795.1 billion at September 30, 2026, 8% higher than at September 30, 2025. Simple monthly average AUM (“average AUM”) increased 8% during fiscal year 2026.
Previous wording
Uncertainties regarding the global economy remain for the foreseeable future. As we continue to confront the challenges of the current economic and regulatory environments, we remain focused on the investment performance of our products and on providing high quality service to our clients. We continuously perform reviews of our business model. While we remain focused on expense management, we will also seek to attract, retain and develop personnel and invest strategically in systems and technology that will provide a secure and stable environment. We will continue to seek to protect and further our brand recognition while developing and maintaining broker-dealer and client relationships. The success of these and other strategies may be influenced by the factors discussed in the “Risk Factors” section.
Current wording
Uncertainties regarding the global economy remain for the foreseeable future. As we continue to confront the challenges of the current economic and regulatory environments, we remain focused on the investment performance of our products and on providing high quality service to our clients. We continuously perform reviews of our business model. While we remain focused on expense management, we will also seek to attract, retain and develop personnel and invest strategically in our business and in systems and technology to support our evolving business. We will continue to seek to protect and further our brand recognition while developing and maintaining broker-dealer and client relationships. The success of these and other strategies may be influenced by the factors discussed in the “Risk Factors” section.
Previous wording
AUM decreased $17.4 billion or 1% during fiscal year 2025 primarily due to $97.4 billion of long-term net outflows, inclusive of $141.9 billion of long-term net outflows at Western Asset Management (“WAM”), partially offset by the positive impact of $67.6 billion of net market change, distributions and other, and $12.6 billion of cash management net inflows. 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,. 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. 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.
Current wording
AUM increased $133.9 billion or 8% during fiscal year 2026 primarily due to $84.1 billion of long-term net inflows, inclusive of $11.7 billion of long-term net outflows at Western Asset Management (“WAM”), the positive impact of $46.4 billion of net market change, distributions and other and $6.2 billion from acquisitions, partially offset by the $2.8 billion of cash management net outflows. Long-term net inflows include $39.5 billion of long-term reinvested distributions. Net market change, distributions and other primarily consists of $126.1 billion of market appreciation partially offset by $75.3 billion of long-term distributions and a $4.4 billion decrease from foreign exchange revaluation. The market appreciation occurred in all asset classes, most significantly in the equity asset class, and reflected positive returns in the global equity markets. 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 Euro, Japanese Yen and Indian Rupee, partially offset by a weaker U.S. dollar compared to the Australian dollar.
Previous wording
Long-term inflows increased 8% to $343.9 billion, as compared to the prior year, driven by higher inflows across equity, fixed income, and alternative strategies, particularly in open-end funds, retail separately managed accounts, private funds, and sub-advised mutual funds. This growth was partially offset by declines in fixed income inflows at WAM, primarily within institutional separate accounts, open-end funds, and sub-advised mutual funds. Long-term outflows increased 26% to $441.3 billion, driven by higher outflows across multiple fixed income vehicles, primarily at WAM, and from equity open-end and sub-advised mutual funds.
Current wording
Long-term inflows increased 38% to $473.5 billion, as compared to the prior year, driven by higher inflows across equity, alternative and multi-asset strategies, particularly in open-end funds, separately managed accounts, exchange traded funds and private funds. Long-term outflows decreased 12% to $389.4 billion, primarily due to lower outflows across multiple fixed income vehicles at WAM, including institutional separate accounts, sub-advised mutual funds, open-end funds, and sub-advised CITs, partially offset by higher outflows in equity open-end funds, separately managed accounts and exchange traded funds.
Previous wording
1 On March 31, 2025, cash management AUM and net flows were updated to include $6.3 billion of AUM and $3.7 billion of net inflows related to two money market mutual fund share classes previously closed to third-party investors.
Current wording
1 Cash management at September 30, 2025 includes $6.3 billion of AUM and $3.7 billion of net inflows related to two money market mutual fund share classes previously closed to third-party investors.
Previous wording
1 Mutual fund performance is sourced from Morningstar and measures the percent of ranked AUM in the top two quartiles versus peers. 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.
Current wording
1 Mutual fund performance is sourced from Morningstar and measures the percent of ranked AUM in the top two quartiles versus peers. Total mutual fund AUM measured for the 1-, 3-, 5- and 10-year periods represents 39%, 39%, 39% and 35% of our total AUM as of September 30, 2026.
Previous wording
2 Strategy composite performance measures the percent of composite AUM beating its benchmark. The benchmark comparisons are based on each account’s/composite’s (strategy composites may include retail separately managed accounts and mutual fund assets managed as part of the same strategy) return as compared to a market index that has been selected to be generally consistent with the asset class of the account/composite. 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.
Current wording
2 Strategy composite performance measures the percent of composite AUM beating its benchmark. The benchmark comparisons are based on each account’s/composite’s (strategy composites may include retail separately managed accounts and mutual fund assets managed as part of the same strategy) return as compared to a market index that has been selected to be generally consistent with the asset class of the account/composite. Total strategy composite AUM measured for the 1-, 3-, 5- and 10-year periods represents 58%, 57%, 57% and 52% of our total AUM as of September 30, 2026.
Previous wording
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. Alternative and multi-asset AUM represent 16% and 12% of our total AUM at September 30, 2025.
Current wording
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. Alternative and multi-asset AUM represent 17% and 12% of our total AUM at September 30, 2026.
Previous wording
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.
Current wording
Investment management fees increased $497.1 million in fiscal year 2026 primarily due to an increase in average equity, multi-asset and alternative AUM and the acquisition of Apera, partially offset by a decrease in performance fees and the impact of WAM outflows.
Previous wording
Our effective investment management fee rate excluding performance fees (investment management fees excluding performance fees divided by average AUM) was 40.5 and 41.1 basis points for fiscal years 2025 and 2024. The rate decrease was primarily due to higher average AUM in lower-fee equity products and catch-up fees recognized in the prior year at the closing of fundraising rounds in a secondary private equity fund, partially offset by the impact of outflows in lower-fee products at WAM.
Current wording
Our effective investment management fee rate excluding performance fees (investment management fees excluding performance fees divided by average AUM) was 40.7 and 40.5 basis points for fiscal years 2026 and 2025.
Previous wording
Performance fees were $474.0 million and $390.7 million for fiscal years 2025 and 2024. The increase was primarily due to changes in the amount of performance fees earned by our alternative specialist investment managers.
Current wording
Performance fees were $414.1 million and $474.0 million for fiscal years 2026 and 2025. The decrease was primarily driven by lower performance fees earned by our alternative investment managers, partially offset by higher performance fees earned by our equity investment managers.
Previous wording
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.
Current wording
Asset-based distribution fees increased $99.3 million in fiscal year 2026 primarily due to an increase of 5% in the related average AUM and a higher mix of equity funds, non-U.S. multi-asset funds and U.S. alternative funds, which generate higher fees.
Previous wording
Shareholder servicing fees increased $35.2 million in fiscal year 2025, primarily due to one additional quarter of fees earned by Putnam and higher levels of related AUM, partially offset by lower fees determined on a contractual margin.
Current wording
Shareholder servicing fees increased $24.9 million in fiscal year 2026, primarily due to higher levels of related AUM and increased revenue related to fees earned on a contractual basis.
Previous wording
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.
Current wording
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 termination benefits.
Previous wording
Salaries, wages and benefits increased $37.4 million in fiscal year 2025 primarily due to annual salary increases and one additional quarter of expenses related to Putnam, partially offset by the impact of headcount reductions resulting from costs savings initiatives.
Current wording
Salaries, wages and benefits increased $23.5 million in fiscal year 2026 primarily due to annual salary increases, higher post-retirement benefit costs and additional compensation expenses associated with the acquisition of Apera, partially offset by savings from cost reduction initiatives.
Previous wording
Incentive compensation increased $62.9 million in fiscal year 2025, primarily due to higher bonus expense based on our annual performance, higher performance fee compensation, one additional quarter of expenses related to Putnam, higher annual acceleration of deferred compensation expense related to retirement-eligible employees and higher sales related commissions, partially offset by lower incentive compensation at certain specialist investment managers.
Current wording
Incentive compensation increased $85.4 million in fiscal year 2026, primarily due to higher bonus expense based on our annual performance, higher deferred compensation expense and higher sales-related commissions.
Previous wording
Acquisition-related retention expenses decreased $101.2 million in fiscal year 2025, primarily due to lower costs associated with recent acquisitions.
Current wording
Acquisition-related retention expenses decreased $87.3 million in fiscal year 2026, primarily due to the reversal of $67.3 million of expense upon forfeiture of certain equity awards and lower costs associated with recent acquisitions.
Previous wording
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. Special termination benefits decreased $6.1 million primarily due to higher costs associated with workforce optimization initiatives in the prior year.
Current wording
Other compensation and benefits increased $153.6 million in fiscal year 2026, primarily due to higher termination benefits and net market gains on investments related to our deferred compensation plans. Termination benefits increased $131.4 million primarily due to higher costs associated with workforce optimization initiatives.
Previous wording
At September 30, 2025, our global workforce decreased to approximately 9,800 employees from approximately 10,200 at September 30, 2024.
Current wording
At September 30, 2026, our global workforce increased to approximately 9,900 employees from approximately 9,800 at September 30, 2025.
Previous wording
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. 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.
Current wording
Asset-based expenses increased $163.8 million in fiscal year 2026 primarily due to an increase of 6% in the related average AUM, a higher mix of equity funds, non-U.S. multi-asset funds and U.S. alternative funds, which incur higher fees, and higher marketing support fees. 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.
Previous wording
Amortization of deferred sales commissions increased $17.8 million in fiscal year 2025 primarily due to higher sales.
Current wording
Amortization of deferred sales commissions increased $17.2 million in fiscal year 2026 primarily due to higher sales.
Previous wording
Occupancy expenses decreased $39.1 million in fiscal year 2025. The prior year included the impairment of the right of use asset related to office space vacated in connection with the consolidation of our office space in New York City, and the current year reflects lower costs due to the office space consolidation. The decrease was partially offset by one additional quarter of expenses incurred by Putnam.
Current wording
Occupancy expenses decreased $9.1 million in fiscal year 2026, primarily due to initiatives to reduce office space, including the consolidation of our office space in New York City.
Previous wording
Amortization of intangible assets increased $68.3 million in fiscal year 2025, primarily due to a reduction in the remaining useful life of definite-lived intangible assets related to WAM, partially offset by the effect of intangible assets which became fully amortized during the fiscal year.
Current wording
Amortization of intangible assets decreased $208.1 million in fiscal year 2026, primarily due to the effect of intangible assets which became fully amortized during fiscal years 2026 and 2025, partially offset by an increase in amortization due to the reclassification of certain indefinite-lived intangible assets to definite-lived intangible assets and a reduction in the useful lives of certain definite-lived intangible assets related to trade names.
Previous wording
Impairment of intangible assets was $226.6 million in fiscal year 2025 and $389.2 million in fiscal year 2024. In fiscal year 2025, we impaired our indefinite-lived intangible asset related to certain contracts managed by WAM by $200.0 million, as compared to $389.2 million in fiscal year 2024. 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.
Current wording
Impairment of intangible assets was $33.0 million in fiscal year 2026 and $226.6 million in fiscal year 2025. In fiscal year 2026, we impaired our indefinite-lived intangible assets by $33.0 million, primarily related to certain acquired mutual fund investment management contracts. In fiscal year 2025, we impaired our indefinite-lived intangible asset related to certain contracts managed by WAM by $200.0 million and 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.
Previous wording
Dividend and interest income decreased $35.5 million in fiscal year 2025, primarily due to lower yields and lower average balances.
Current wording
Dividend and interest income increased $15.9 million in fiscal year 2026, primarily due to higher dividend income, partially offset by lower yields and lower average balances.
Previous wording
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. The net gains in the prior year were primarily from assets invested for deferred compensation plans and investments in nonconsolidated funds and separate accounts, partially offset by losses on investments measured at cost adjusted for observable price changes.
Current wording
Investments held by the Company generated net gains of $13.0 million in fiscal year 2026, as compared to net losses of $37.6 million in the prior year. Net gains in the current year were primarily from assets invested for deferred compensation plans, partially offset by losses on investments measured at cost, adjusted for observable price changes and investments in nonconsolidated funds and separate accounts. Net losses in the prior 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.
Previous wording
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.
Current wording
Equity method investees generated income of $90.8 million in fiscal year 2026 and $78.0 million in the prior year, largely related to various global alternative funds in the current year and global alternative and equity funds in the prior year.
Previous wording
Investments held by CIPs generated investment and other income of $108.4 million in fiscal year 2025, as compared to investment and other income of $149.9 million in fiscal year 2024. The current year income was largely related to various global alternative, fixed income and multi-asset funds, partially offset by losses on global equity funds, while the prior year income was largely related to various equity, fixed income and multi-asset funds.
Current wording
Investments held by CIPs generated investment and other income of $512.4 million in fiscal year 2026, as compared to investment and other income of $108.4 million in the prior year. The current year income was largely related to various global alternative, equity and multi-asset funds, while the prior year income was largely related to various global alternative, fixed income and multi-asset funds, partially offset by losses on global equity funds.
Previous wording
Expenses of consolidated investment products increased $11.0 million in fiscal year 2025, due to activity of the funds.
Current wording
Expenses of consolidated investment products decreased $4.3 million in fiscal year 2026, due to activity of the funds.
Previous wording
Our effective income tax rate for fiscal year 2025 was 30.2% as compared to 26.2% in fiscal year 2024. 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.
Current wording
Our effective income tax rate for fiscal year 2026 was 21.0% as compared to 30.2% in fiscal year 2025. The rate decrease in fiscal year 2026 was primarily due to a reduction in foreign earnings, an increase in net income attributable to noncontrolling interests, and the benefit from the release of a valuation allowance on capital loss carryforwards.
Previous wording
On July 4, 2025, the One Big Beautiful Bill Act (the “Act”) was signed into law. While we are in the process of evaluating the impact of the Act on our consolidated financial statements, we do not expect there to be any material impact thereon.
Current wording
On July 4, 2025, the One Big Beautiful Bill Act (the “Act”) was signed into law. We have evaluated the impact of the Act on our consolidated financial statements, and we have concluded that there is no material impact.
Previous wording
“Adjusted operating income,” “adjusted operating margin,” “adjusted net income” and “adjusted diluted earnings per share” are defined below, followed by reconciliations of operating income, operating margin, net income attributable to Franklin Resources, Inc. and diluted earnings per share on a U.S. GAAP basis to these non-GAAP measures. Non-GAAP measures should not be considered in isolation from, or as substitutes for, any financial information prepared in accordance with U.S. GAAP, and may not be comparable to other similarly titled measures of other companies. Additional reconciling items may be added in the future to these non-GAAP measures if deemed appropriate.
Current wording
“Adjusted operating income,” “adjusted operating margin,” “adjusted net income” and “adjusted diluted earnings per share” are defined below, followed by reconciliations of operating income, operating margin, net income attributable to Franklin Templeton, Inc. and diluted earnings per share on a U.S. GAAP basis to these non-GAAP measures. Non-GAAP measures should not be considered in isolation from, or as substitutes for, any financial information prepared in accordance with U.S. GAAP, and may not be comparable to other similarly titled measures of other companies. Additional reconciling items may be added in the future to these non-GAAP measures if deemed appropriate.
Previous wording
We define adjusted net income as net income attributable to Franklin Resources, Inc. adjusted to exclude the following:
Current wording
We define adjusted net income as net income attributable to Franklin Templeton, Inc. adjusted to exclude the following:
Previous wording
In calculating our non-GAAP measures, we adjust for the impact of CIPs because it is not considered reflective of our underlying results of operations. Acquisition-related items and special termination benefits are excluded to facilitate comparability to other asset management firms. We adjust for compensation and benefits expense related to funded deferred compensation plans because it is partially offset in other income (expense), net. We adjust for compensation and benefits expense and net income (loss) attributable to redeemable noncontrolling interests to reflect the economics of certain profits interest arrangements. Sales and distribution fees and a portion of investment management fees generally cover sales, distribution and marketing expenses and, therefore, are excluded from adjusted operating revenues. 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.
Current wording
In calculating our non-GAAP measures, we adjust for the impact of CIPs because it is not considered reflective of our underlying results of operations. Charges related to significant regulatory settlements are excluded because they are not considered reflective of our underlying results of operations. Acquisition-related items and special termination benefits are excluded to facilitate comparability to other asset management firms. We adjust for compensation and benefits expense related to funded deferred compensation plans because it is partially offset in other income (expense), net. We adjust for compensation and benefits expense and net income (loss) attributable to redeemable noncontrolling interests to reflect the economics of certain profits interest arrangements. Sales and distribution fees and a portion of investment management fees generally cover sales, distribution and marketing expenses and, therefore, are excluded from adjusted operating revenues. 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.
Previous wording
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. 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 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.
Current wording
Net cash provided by operating activities decreased in fiscal year 2026 primarily due to higher net purchases of investments by consolidated investment products partially offset by an increase in accounts payable, accrued expenses and other liabilities. Net cash used in investing activities increased as compared to the prior year primarily due to higher net purchases of investments by collateralized loan obligations partially offset by net consolidation of CIPs as compared to net deconsolidation in the prior year. Net cash provided by financing activities increased as compared to the prior year primarily due to higher net proceeds from debt of CIPs and higher net proceeds from issuance of debt.
Previous wording
The assets and liabilities of CIPs attributable to third-party investors do not impact our liquidity and capital resources. We have no right to the CIPs’ assets, other than our direct equity investment in them and investment management and other fees earned from them. The debt holders of the CIPs have no recourse to our assets beyond the level of our direct investment, therefore we bear no other risks associated with the CIPs’ liabilities. Accordingly, the assets and liabilities of CIPs, other than our direct investments in them, are excluded from the amounts and discussion below.
Current wording
The assets and liabilities of CIPs attributable to third-party investors do not impact our liquidity and capital resources. We have no right to the CIPs’ assets, other than our direct equity investment in them and investment management and other fees earned from them. Certain CIPs utilize revolving credit facilities and other short-term lines of credit to support liquidity, including funding investment activity and managing timing differences associated with investor subscriptions and redemptions. Borrowings under these facilities, to the extent drawn, are generally secured by the assets of the respective CIPs and/or capital commitments from CIP equity investors. These facilities are interest-bearing, typically provided by third-party lenders, and are subject to customary borrowing terms and conditions. The debt holders of the CIPs have no recourse to our assets beyond the level of our direct investment and/or capital commitment, therefore we bear no other risks associated with the CIPs’ liabilities. Accordingly, the assets and liabilities of CIPs, other than our direct investments in them, are excluded from the amounts and discussion below.
Previous wording
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 $1,188.5 million. At September 30, 2025, Legg Mason’s outstanding senior notes had an aggregate principal amount due of $1,000.0 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.
Current wording
On August 10, 2026, we completed the offering of the 5.500% notes due 2036 with an aggregate principal amount of $750.0 million. In prior fiscal years, we issued senior unsecured unsubordinated notes for general corporate purposes and to redeem outstanding notes. At September 30, 2026, Franklin’s outstanding senior notes had an aggregate principal amount due of $1,950.0 million. The notes have fixed interest rates from 1.600% to 5.500% with interest paid semi-annually and have an aggregate carrying value, inclusive of unamortized discounts and debt issuance costs, of $1,927.2 million. At September 30, 2026, Legg Mason’s outstanding senior note had a principal amount due of $550.0 million. The note has a fixed interest rate of 5.625% with interest paid semi-annually and has an aggregate carrying value, inclusive of unamortized premium, of $710.6 million. The $450.0 million 4.750% senior notes due March 2026 were repaid on March 15, 2026 using cash and borrowings from our revolving credit facility.
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