What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-01-30 compared with 2025-08-01 · 145 added, 232 removed, 375 unchanged (50% of the section changed)

22 unchanged sentences

We deliver our investment capabilities through a variety of investment products, which include our sponsored funds, as well as institutional and high-net-worth separate accounts, retail separately managed account programs, sub-advised products and other investment vehicles.

Related services include fund administration, sales and distribution, and shareholder servicing.

We may perform services directly or through third parties.

We offer our services and products under our various distinct brand names, including, but not limited to, Franklin ® , Templeton ® , Legg Mason ® , Alcentra ® , Benefit Street Partners ® , Brandywine Global Investment Management ® , Canvas ® , Clarion Partners ® , ClearBridge Investments ® , Fiduciary Trust International™, Franklin Mutual Series ® , K2 ® , Lexington Partners ® , Martin Currie ® , O’Shaughnessy ® , Putnam ® , Royce ® and Western Asset Management Company ® .

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.

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These arrangements could change in the future.

During our third fiscal quarter, U.S.

and global equity markets rebounded, despite significant volatility driven by uncertainty regarding U.S.

trade tariffs.

The S&P 500 Index and MSCI World Index increased 10.9% and 11.6% for the quarter and 8.8% and 9.7% for the fiscal year to date.

Global bond markets provided positive results and the Bloomberg Global Aggregate Index increased 4.5% during the quarter and 1.8% for the fiscal year to date.

Our total AUM at June 30, 2025 was $1,611.8 billion, 4% lower than at September 30, 2024 and 2% lower than at June 30, 2024.

Monthly average AUM (“average AUM”) for both the three and nine months ended June 30, 2025 decreased 4% from the same periods in the prior fiscal year.

During our first fiscal quarter, U.S.

and global equity markets provided positive returns, reflecting strong earnings growth in multiple sectors, easing inflation, and expectations of continued interest rate reductions.

The S&P 500 Index increased 2.7% and the MSCI World Index increased 3.2% for the quarter.

Global bond markets remained relatively flat as the Bloomberg Global Aggregate Index increased 0.2% during the quarter.

Our total AUM at December 31, 2025 was $1,684.0 billion, 1% higher than at September 30, 2025 and 7% higher than at December 31, 2024.

Monthly average AUM (“average AUM”) for the three months ended December 31, 2025 increased 3% from the same period in the prior fiscal year.

On October 1, 2025, we acquired Apera Asset Management (“Apera”), a pan-European private credit firm.

The business and regulatory environments in which we operate globally remain complex, uncertain and subject to change.

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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.

While we remain focused on expense management, we will also seek to attract, retain and develop personnel and invest strategically 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.

2 unchanged sentences

Three Months Ended

Change Nine Months Ended

(in millions, except per share data) 2025 2024

2 unchanged sentences

Operating margin 1

7.5 % 10.5 % 8.1 % 8.9 %

Net income attributable to Franklin Resources, Inc.

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AUM by asset class was as follows:

(in billions) June 30,

2025 June 30,

(in billions) December 31,

2025 December 31,

$ 697.2 $ 620.0 12 %

7 unchanged sentences

Change Mix of Average AUM

for the three months ended June 30, 2025 2024 2025 2024

for the three months ended December 31, 2025 2024 2025 2024

$ 693.6 $ 629.1 10 % 41 % 38 %

6 unchanged sentences

1 Average AUM is calculated as the average of the month-end AUM for the trailing four months.

(in billions) Average AUM 1

Change Mix of Average AUM

for the nine months ended June 30, 2025 2024 2025 2024

$ 626.0 $ 521.6 20 % 39 % 34 %

Fixed Income 474.3 534.8 (11 %) 30 % 35 %

Alternative 251.3 255.7 (2 %) 16 % 17 %

Multi-Asset 176.9 157.3 12 % 11 % 10 %

Cash Management 67.9 63.7 7 % 4 % 4 %

Total $ 1,596.4 $ 1,533.1 4 % 100 % 100 %

_______________

1 Average AUM is calculated as the average of the month-end AUM for the trailing ten months.

Components of the change in AUM are shown below.

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(in billions) Three Months Ended

Nine Months Ended

Beginning AUM $ 1,661.2 $ 1,678.6

4 unchanged sentences

Total net flows 26.8 (50.0)

(0.2) — (0.2) 148.3

Acquisition 6.1 —

Net market change, distributions and other (10.1) (52.9)

1 unchanged sentence

_______________

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.

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.

2 Long-term inflows and outflows were each revised from previously reported amounts to reflect fund activity of $0.9 billion settling in January 2025.

The revision did not impact net flows or ending AUM.

Components of the change in AUM by asset class were as follows:

(in billions) Equity

Fixed Income Alternative Multi-Asset Cash

for the three months ended

June 30, 2025

AUM at April 1, 2025 $ 598.1 $ 446.0 $ 251.8 $ 175.8 $ 68.9 $ 1,540.6

Long-term inflows 32.0 28.2 5.6 9.8 — 75.6

Long-term outflows (32.6) (41.2) (3.1) (8.0) — (84.9)

Long-term net flows (0.6) (13.0) 2.5 1.8 — (9.3)

Cash management net flows — — — — 2.7 2.7

Total net flows (0.6) (13.0) 2.5 1.8 2.7 (6.6)

— (0.1) (0.1) — — (0.2)

Net market change, distributions and other

59.1 8.8 4.2 5.6 0.3 78.0

AUM at June 30, 2025 $ 656.6 $ 441.7 $ 258.4 $ 183.2 $ 71.9 $ 1,611.8

AUM increased $71.2 billion, or 5%, during the three months ended June 30, 2025 due to the positive impact of $78.0 billion of net market change, distributions and other, and $2.7 billion of cash management net inflows, partially offset by $9.3 billion of long-term net outflows, inclusive of $17.1 billion of long-term net outflows at WAM and $3.9 billion of long-term reinvested distributions, and $0.2 billion from the disposition of funds.

Net market change, distributions and other primarily consists of $76.7 billion of market appreciation, and a $10.9 billion increase from foreign exchange revaluation, partially offset by $9.6 billion of distributions.

The market appreciation occurred in all asset classes, most significantly in the equity asset class, and reflected positive returns in the global equity and bond markets.

Foreign exchange revaluation from AUM in products that are not U.S.

dollar denominated was primarily due to a weaker U.S.

dollar compared to the Euro, Canadian Dollar, Australian Dollar and British Pound.

Long-term inflows decreased 9% to $75.6 billion, compared to the prior year period, driven by lower inflows for WAM institutional separate accounts, partially offset by by higher inflows in alternative and equity private funds and equity exchange traded funds.

Long-term outflows decreased 1% to $84.9 billion, due to lower outflows for fixed income and equity institutional separate accounts, equity separately managed accounts, and equity and multi-asset open end funds, partially offset by higher outflows for multiple fixed income vehicles, equity sub-advised mutual funds and exchange traded funds, alternative private funds, and multi-asset separately managed accounts.

(in billions) Equity

Fixed Income Alternative Multi-Asset Cash

Fixed Income Alternative 1

Multi-Asset Cash

Management Total

for the three months ended

June 30, 2024

AUM at April 1, 2024 $ 592.7 $ 571.4 $ 255.5 $ 163.4 $ 61.7 $ 1,644.7

Long-term inflows 32.0 37.4 3.4 9.9 — 82.7

Long-term outflows (33.6) (42.2) (2.0) (8.1) — (85.9)

Long-term net flows (1.6) (4.8) 1.4 1.8 — (3.2)

Cash management net flows — — — — 3.0 3.0

Total net flows (1.6) (4.8) 1.4 1.8 3.0 (0.2)

Net market change, distributions and other

3.9 (2.1) (2.4) 2.9 (0.2) 2.1

AUM at June 30, 2024 $ 595.0 $ 564.5 $ 254.5 $ 168.1 $ 64.5 $ 1,646.6

(in billions) Equity

Fixed Income Alternative Multi-Asset Cash

for the nine months ended

June 30, 2025

December 31, 2025

AUM at October 1, 2025 $ 686.2 $ 438.7 $ 263.9 $ 193.9 $ 78.5 $ 1,661.2

4 unchanged sentences

Total net flows 19.8 (2.4) 6.6 4.0 (1.2) 26.8

— (0.1) (0.1) — — (0.2)

Acquisition — — 6.1 — — 6.1

Net market change, distributions and other

(8.8) 1.4 (2.8) 0.9 (0.8) (10.1)

AUM at June 30, 2025 $ 656.6 $ 441.7 $ 258.4 $ 183.2 $ 71.9 $ 1,611.8

AUM at December 31, 2025 $ 697.2 $ 437.7 $ 273.8 $ 198.8 $ 76.5 $ 1,684.0

_______________

AUM decreased $66.8 billion, or 4%, during the nine months ended June 30, 2025 due to $85.5 billion of long-term net outflows, inclusive of $118.6 billion of long-term net outflows at WAM and $27.3 billion of long-term reinvested distributions, and $0.2 billion from the disposition of funds, partially offset by the positive impact of $13.5 billion of net market change, distributions and other, and $5.4 billion of cash management net inflows.

Net market change, distributions and other primarily consists of $60.0 billion of market appreciation and a $1.4 billion increase from foreign exchange revaluation, partially offset by $47.9 billion of distributions, primarily from the equity asset class.

AUM increased $22.8 billion, or 1%, during the three months ended December 31, 2025 due to $28.0 billion of long-term net inflows, inclusive of $6.6 billion of long-term net outflows at WAM, and $6.1 billion from the acquisition of Apera, partially offset by the negative impact of $10.1 billion of net market change, distributions and other, and $1.2 billion of cash management net outflows.

Long-term net inflows include $28.9 billion of long-term reinvested distributions.

Net market change, distributions and other primarily consists of $43.2 billion of distributions, primarily from the equity asset class, partially offset by $33.7 billion of market appreciation.

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 weaker U.S.

dollar compared to the Euro, partially offset by a stronger U.S.

dollar compared to the Australian Dollar, Canadian Dollar and Indian Rupee.

Long-term inflows increased 10% to $259.3 billion, as compared to the prior year period, driven by higher inflows in equity, alternative, and multi-asset open end funds, equity sub-advised mutual funds, equity separately managed accounts and exchange traded funds, and equity and alternative private funds, partially offset by lower inflows for WAM institutional separate accounts and sub-advised mutual funds.

Long-term outflows increased 45% to $344.8 billion, substantially due to higher outflows across multiple fixed income vehicles at WAM, and slightly higher outflows in equity open end funds, sub-advised mutual funds, institutional separate accounts, and retail separately managed accounts.

Long-term inflows increased 22% to $118.6 billion, as compared to the prior period, driven by higher inflows in equity open-end funds, alternative private funds, equity and fixed income exchange traded funds, fixed income and multi-asset separately managed accounts, and fixed income institutional separate accounts, partially offset by lower inflows in equity sub-advised mutual funds.

Long-term outflows decreased 38% to $90.6 billion, substantially due to lower outflows across multiple fixed income vehicles at WAM, partially offset by slightly higher outflows in fixed income vehicles across other specialist investment managers and in alternative institutional separate accounts.

(in billions) Equity

Fixed Income Alternative Multi-Asset Cash

Fixed Income Alternative 1

Multi-Asset Cash

Management Total

for the nine months ended

June 30, 2024

for the three months ended

December 31, 2024

AUM at October 1, 2024 $ 632.1 $ 556.4 $ 249.9 $ 176.2 $ 64.0 $ 1,678.6

4 unchanged sentences

Total net flows 12.5 (66.7) 0.8 3.4 — (50.0)

81.3 59.3 0.7 5.8 1.2 148.3

Net market change, distributions and other

(24.6) (20.2) (1.9) (5.6) (0.6) (52.9)

AUM at June 30, 2024 $ 595.0 $ 564.5 $ 254.5 $ 168.1 $ 64.5 $ 1,646.6

AUM at December 31, 2024 $ 620.0 $ 469.5 $ 248.8 $ 174.0 $ 63.4 $ 1,575.7

_______________

1 Long-term inflows and outflows were each revised from previously reported amounts to reflect fund activity of $0.9 billion settling in January 2025.

The revision did not impact net flows or ending AUM.

AUM by sales region was as follows:

(in billions) June 30,

2025 June 30,

(in billions) December 31,

2025 December 31,

United States 1

$ 1,195.7 $ 1,102.5 8 %

International

6 unchanged sentences

Total $ 1,684.0 $ 1,575.7 7 %

_______________

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 a 12% reduction of AUM in the Americas, excluding U.S.

The region in which investment products are sold may differ from the geographic area in which we provide investment management and related services to the products.

Investment Performance Overview

8 unchanged sentences

Exceeding Benchmark

as of June 30, 2025 1-Year 3-Year 5-Year 10-Year 1-Year 3-Year 5-Year 10-Year

as of December 31, 2025 1-Year 3-Year 5-Year 10-Year 1-Year 3-Year 5-Year 10-Year

Equity 49 % 60 % 54 % 55 % 41 % 40 % 36 % 47 %

3 unchanged sentences

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%, 38% and 36% of our total AUM as of June 30, 2025.

Total mutual fund AUM measured for the 1-, 3-, 5- and 10-year periods represents 39%, 39%, 38% and 36% of our total AUM as of December 31, 2025.

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 June 30, 2025.

Total strategy composite AUM measured for the 1-, 3-, 5- and 10-year periods represents 55%, 55%, 55% and 50% of our total AUM as of December 31, 2025.

3 Total mutual fund AUM includes performance of our alternative and multi-asset funds, and total strategy composite AUM includes performance of our alternative composites.

Alternative and multi-asset AUM represent 16% and 11% of our total AUM at June 30, 2025.

Alternative and multi-asset AUM represent 16% and 12% of our total AUM at December 31, 2025.

Mutual fund performance data includes U.S.

9 unchanged sentences

(in millions) Three Months Ended

Change Nine Months Ended

2025 2024 2025 2024

Investment management fees $ 1,847.9 $ 1,799.3 3 %

4 unchanged sentences

Investment Management Fees

Investment management fees decreased $49.1 million for the three months ended June 30, 2025 primarily due to a 4% decrease in average AUM, partially offset by a slight increase in performance fees.

The decrease in average AUM for the three months ended June 30, 2025 primarily occurred in the fixed income asset class, partially offset by increases in the equity and multi-asset asset classes.

Investment management fees increased $57.7 million for the nine months ended June 30, 2025 primarily due to one additional quarter of revenue earned by Putnam, which was acquired on January 1, 2024, and an increase in average equity and multi-asset AUM, partially offset by the impact of WAM outflows, a decrease in performance fees and catch-up fees recognized in the prior year at the closing of fundraising rounds in a secondary private equity fund, which ended in January 2024.

Our effective investment management fee rate excluding performance fees (annualized investment management fees excluding performance fees divided by average AUM) was 40.5 basis points for both the three and nine months ended June 30, 2025, as compared to 40.2 and 41.4 basis points for the same period in the prior fiscal year.

The increase in the fee rate for the three month period was primarily due to the impact of outflows at WAM, partially offset by significant intra-quarter daily volatility in the current year period that caused an unusual dispersion between simple monthly average AUM and daily average AUM, while the decrease for the nine month period was primarily due to higher 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 at WAM.

Performance fees were $60.6 million and $274.1 million for the three and nine months ended June 30, 2025 as compared to $56.6 million and $308.2 million for the same periods in the prior fiscal year.

The increase for the three month period and decrease for the nine month period were primarily due to changes in the amount of performance fees earned by our alternative specialist investment managers.

Investment management fees increased $48.6 million for the three months ended December 31, 2025 primarily due to an increase in average equity, multi-asset, and alternative AUM, and the acquisition of Apera, partially offset by the impact of WAM outflows and a decrease in performance fees.

Our effective investment management fee rate excluding performance fees (annualized investment management fees excluding performance fees divided by average AUM) was 40.6 basis points for the three months ended December 31, 2025, as compared to 40.2 basis points for the three months ended December 31, 2024.

Performance fees were $131.6 million and $141.6 million for the three months ended December 31, 2025 and 2024.

The decrease was primarily due to changes in the amount of performance fees earned by our alternative specialist investment managers.

Sales and Distribution Fees

1 unchanged sentence

(in millions) Three Months Ended

Change Nine Months Ended

2025 2024 2025 2024

Asset-based fees $ 324.6 $ 309.1 5 %

1 unchanged sentence

Sales and Distribution Fees $ 388.7 $ 375.5 4 %

Asset-based distribution fees decreased $0.7 million for the three months ended June 30, 2025, primarily due to a higher mix of lower fee assets, partially offset by a slight increase in the related average AUM.

Asset-based distribution fees increased $68.1 million for the nine months ended June 30, 2025 primarily due to an increase of 6% in the related average AUM and one additional quarter of asset-based revenue related to Putnam products, partially offset by a higher mix of lower fee assets.

Sales-based fees decreased $5.7 million for the three months ended June 30, 2025, primarily due to a decrease of 12% in commissionable sales, and increased $11.2 million for the nine months ended June 30, 2025, primarily due to an increase of 2% in commissionable sales and one additional quarter of sales-based revenue related to Putnam products.

Asset-based distribution fees increased $15.5 million for the three months ended December 31, 2025 primarily due to an increase of 3% in the related average AUM and a higher mix of non-U.S.

equity and multi-asset funds and U.S.

equity and alternative funds, which generate higher fees.

Sales-based fees decreased $2.3 million for the three months ended December 31, 2025, primarily due to a decrease of 6% in commissionable sales.

Shareholder Servicing Fees

Shareholder servicing fees decreased $1.9 million for the three months ended June 30, 2025, primarily due to lower levels of related AUM and increased $23.0 million for the nine months ended June 30, 2025 primarily due to one additional quarter of fees earned by Putnam, partially offset by lower margin-based fees.

Shareholder servicing fees increased $7.4 million for the three months ended December 31, 2025 primarily due to higher levels of related AUM and increased revenue related to fees earned on a contractual basis.

Other revenue increased $6.3 million for the three months ended December 31, 2025 primarily due to higher loan origination fees earned by certain of our alternative asset managers.

OPERATING EXPENSES

1 unchanged sentence

Three Months Ended

Change Nine Months Ended

(in millions) 2025 2024

4 unchanged sentences

Amortization of intangible assets 55.1 112.6 (51 %)

Impairment of intangible assets

— — NM 24.4 — NM

General, administrative and other 195.6 185.2 6 %

Total Operating Expenses $ 2,046.1 $ 2,032.6 1 %

The acquisition of Putnam on January 1, 2024 had a significant impact on operating expenses in the nine months ended June 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.

Compensation and Benefits

1 unchanged sentence

Three Months Ended

Change Nine Months Ended

(in millions) 2025 2024

4 unchanged sentences

Acquisition-related performance fee pass through 1

2.1 — NM 87.4 87.0 0 %

51.8 69.1 (25 %)

43.7 13.5 224 %

Compensation and Benefits Expenses $ 1,030.7 $ 991.4 4 %

4 unchanged sentences

and special termination benefits.

Salaries, wages and benefits increased $3.2 million for the three months ended June 30, 2025, primarily due to annual salary increases and higher employee insurance costs, partially offset by the impact of headcount reductions.

Salaries, wages and benefits increased $48.0 million for the nine months ended June 30, 2025, primarily due to annual salary increases and one additional quarter of expenses related to Putnam, partially offset by the impact of headcount reductions.

Incentive compensation decreased $14.5 million for the three months ended June 30, 2025, primarily due to lower incentive compensation at certain specialist investment managers, partially offset by an increase in expense for deferred compensation awards.

Incentive compensation increased $3.1 million for the nine months ended June 30, 2025, primarily due to one additional quarter of expenses related to Putnam, higher sales-related commissions, and higher annual acceleration of deferred compensation expense related to retirement-eligible employees, partially offset by lower incentive compensation at certain specialist investment managers and lower ongoing deferred compensation expense.

Acquisition-related retention expenses increased $4.2 million for the three months ended June 30, 2025, primarily due to higher compensation associated with performance-based and time-based awards, and decreased $88.9 million for the nine months ended June 30, 2025, primarily due to lower compensation associated with time-based and performance-based awards, and lower costs associated with the acquisition of Putnam.

Other compensation and benefits increased $12.3 million for the three months ended June 30, 2025, primarily due to an increase in special termination benefits and higher compensation expense related to minority interests;

and decreased $40.4 million for the nine months ended June 30, 2025, primarily due to lower net market gains on investments related to our deferred compensation plans and a decrease in special termination benefits.

Special termination benefits increased $10.2 million for the three months ended June 30, 2025 primarily due to higher costs associated with workforce optimization initiatives in the current year period and decreased $19.1 million for the nine months ended June 30, 2025 primarily due to higher costs associated with such initiatives in the prior year period.

At June 30, 2025, our global workforce decreased to approximately 10,100 employees from approximately 10,300 at June 30, 2024.

Salaries, wages and benefits increased $4.9 million for the three months ended December 31, 2025, primarily due to annual salary increases, higher employee insurance costs, and the acquisition of Apera, partially offset by the impact of headcount reductions resulting from cost savings initiatives.

Incentive compensation increased $31.6 million for the three months ended December 31, 2025, primarily due to higher bonus expense based on expectations of our annual performance, higher deferred compensation expense and higher sales-related commissions.

Acquisition-related retention expenses decreased $10.1 million for the three months ended December 31, 2025, primarily due to lower costs associated with recent acquisitions.

Other compensation and benefits increased $30.2 million for the three months ended December 31, 2025, primarily due to a $15.6 million increase in special termination benefits, primarily due to higher costs associated with workforce optimization initiatives, and higher net market gains on investments related to our deferred compensation plans.

At December 31, 2025, our global workforce decreased to approximately 9,900 employees from approximately 10,100 at December 31, 2024.

Sales, Distribution and Marketing

1 unchanged sentence

Three Months Ended

Change Nine Months Ended

(in millions) 2025 2024

3 unchanged sentences

Sales, Distribution and Marketing $ 540.9 $ 512.3 6 %

Asset-based expenses were essentially flat for the three months ended June 30, 2025 and increased $93.1 million for the nine months ended June 30, 2025.

The increase for the nine month period was primarily due to one additional quarter of expenses related to Putnam products, an increase of 4% in the related average AUM and higher marketing support fees.

Asset-based expenses increased $29.6 million for the three months ended December 31, 2025 primarily due to an increase of 4% in the related average AUM, higher marketing support fees, and a higher mix of non-U.S.

equity and multi-asset funds and U.S.

equity and alternative funds, which generate higher 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.

Sales-based expenses decreased $5.0 million for the three months ended June 30, 2025, primarily due to a decrease of 12% in commissionable sales, and increased $16.2 million for the nine months ended June 30, 2025 primarily due to one additional quarter of expenses related to Putnam products, higher marketing support fees and an increase of 2% in commissionable sales.

Occupancy expenses decreased $35.3 million and $33.8 million for the three and nine months ended June 30, 2025.

Both the three and nine month periods in 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 three and nine month periods reflect lower costs due to the office space consolidation.

The decrease for the nine month period was partially offset by one additional quarter of expenses incurred by Putnam.

Sales-based expenses decreased $3.6 million for the three months ended December 31, 2025 primarily due to a decrease of 6% in commissionable sales.

Occupancy expenses decreased $8.3 million for the three months ended December 31, 2025, primarily due to consolidation of our office space in New York City.

Information Systems and Technology

Information systems and technology expenses increased $6.1 million for the three months ended June 30, 2025, primarily due to higher costs for technology consulting and external data services, and increased $34.7 million for the nine months ended June 30, 2025, primarily due to one additional quarter of expenses incurred by Putnam, and higher technology consulting and software costs, partially offset by lower costs for hardware maintenance and purchases.

Information systems and technology expenses increased $1.0 million for the three months ended December 31, 2025, primarily due to higher software costs partially offset by lower technology consulting costs.

Amortization of Intangible Assets

Amortization of intangible assets increased $28.2 million and $82.9 million for the three and nine months ended June 30, 2025, primarily due to a reduction in the remaining useful life of definite-lived intangible assets related to WAM.

Impairment of intangible assets

During the nine months ended June 30, 2025, we recognized an impairment charge of $ 24.4 million related to certain indefinite-lived intangible assets for acquired mutual fund investment management contracts.

See Critical Accounting Policies for additional information.

Amortization of intangible assets decreased $57.5 million for the three months ended December 31, 2025, primarily due to intangible assets which became fully amortized during prior year, 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.

General, Administrative and Other

General, administrative and other operating expenses increased $3.6 million and increased $44.5 million for the three and nine months ended June 30, 2025.

The increase for the three months ended June 30, 2025 was primarily due to increases of $4.8 million in placement and platform fees, $4.0 million in advertising and promotion costs, and $2.3 million in fund-related expenses, and a $2.9 million net credit recognized in the prior year to reduce the fair value of contingent consideration liabilities.

These increases were partially offset by a $10.3 million decrease in legal and other professional fees, inclusive of $18.0 million of insurance recoveries.

The increase for the nine months ended June 30, 2025 was primarily due to one additional quarter of expenses incurred by Putnam, and increases of $15.7 million in advertising and promotion costs, $8.0 million in placement and platform fees, and $6.4 million in fund-related expenses.

These increases were partially offset by a $15.8 million decrease in acquisition-related costs, primarily related to the acquisition of Putnam, and a $2.7 million decrease in legal and other professional fees, inclusive of $45.6 million of insurance recoveries.

General, administrative and other operating expenses increased $10.4 million for the three months ended December 31, 2025, primarily due to an increase of $15.5 million in fund-related expenses, driven by higher transfer agency expenses, higher placement fees, and higher sub-advisory expenses, an increase of $4.3 million in advertising expenses, and a $2.3 million increase in travel and entertainment.

These increases were partially offset by a $13.1 million decrease in legal and other professional fees, inclusive of a $10.0 million increase in insurance recoveries.

OTHER INCOME (EXPENSES)

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Three Months Ended

Change Nine Months Ended

(in millions) 2025 2024

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$ 54.6 $ 43.1 27 %

Gains (losses) on investments, net (31.4) (24.3) 29 % (41.7) 17.3 NM

Income from investments in equity method investees 23.0 41.0 (44 %) 38.5 122.3 (69 %)

Gains (losses) on derivatives, net (8.2) 3.1 NM (2.7) (11.5) (77 %)

Losses on investments, net (8.6) (57.1) (85 %)

Income (losses) from investments in equity method investees 11.5 (7.6) NM

Losses on crypto assets, net (6.4) — NM

Rental income

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Interest expense (20.4) (23.1) (12 %)

Investment and other income (losses) of consolidated investment products, net 35.9 37.6 (5 %) (14.7) 103.7 NM

Investment and other income of consolidated investment products, net 124.9 114.1 9 %

Expenses of consolidated investment products (14.0) (7.3) 92 %

Other Income, Net $ 170.8 $ 94.2 81 %

Dividend and interest income decreased $0.9 million and $31.2 million for the three and nine months ended June 30, 2025.

The decrease for the nine months ended June 30, 2025 was primarily due to lower average balances and lower yields.

Investments held by the Company generated net losses of $31.4 million and $24.3 million for the three months ended June 30, 2025 and 2024.

The net losses in both the current and prior year periods were primarily from investments in nonconsolidated funds and separate accounts and investments measured at cost adjusted for observable price changes.

Investments held by the Company generated net losses of $41.7 million, as compared to net gains of $17.3 million for the nine months ended June 30, 2025 and 2024.

The 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, while the net gains in the prior year were primarily from assets invested for deferred compensation plans, partially offset by losses on investments measured at cost adjusted for observable price changes.

Equity method investees generated income of $23.0 million and $38.5 million for the three and nine months ended June 30, 2025, as compared to income of $41.0 million and $122.3 million in the prior year, largely related to various global alternative funds and global equity funds.

Net foreign currency exchange losses were $14.4 million for the three months ended June 30, 2025, as compared to net gains of $1.2 million in the prior year period.

Dividend and interest income increased $11.5 million for the three months ended December 31, 2025, primarily due to a dividend earned from a strategic investment.

Investments held by the Company generated net losses of $8.6 million and $57.1 million for the three months ended December 31, 2025 and 2024.

The net losses in the current year were primarily from investments in nonconsolidated funds and separate accounts, partially offset by gains from assets invested for deferred compensation plans, while the net losses in the prior year were primarily from investments in nonconsolidated funds and separate accounts and assets invested for deferred compensation plans.

Equity method investees generated income of $11.5 million for the three months ended December 31, 2025, as compared to losses of $7.6 million in the prior year, largely related to various global alternative funds and global equity funds.

Net foreign currency exchange losses were $4.0 million for the three months ended December 31, 2025, as compared to net gains of $14.5 million in the prior year period.

dollar weakened in the current year period against the Euro and British Pound, which resulted in net foreign exchange losses on cash and cash equivalents denominated in U.S.

dollars held by our European subsidiaries, as compared to net gains in the prior year period.

Interest expense decreased $2.5 million for the nine months ended June 30, 2025 primarily due to lower accretion on Lexington deferred purchase consideration, partially offset by an increase in interest recognized on tax reserves.

Investments held by consolidated investment products (“CIPs”) generated gains of $35.9 million for the three months ended June 30, 2025, largely related to gains on holdings of various equity, fixed income, and multi-asset funds, and losses of $14.7 million for the nine months ended June 30, 2025, largely related to losses on holdings of various equity funds, partially offset by gains on holdings of various alternative, fixed income, and multi-asset funds.

Investments held by CIPs generated investment gains and other income of $37.6 million and $103.7 million in the three and nine months ended June 30, 2024, largely related to gains on holdings of various funds.

Expenses of CIPs increased $2.2 million and $9.2 million for the three and nine months ended June 30, 2025, due to activity of the funds.

Our cash, cash equivalents and investments portfolio by asset class and accounting classification at June 30, 2025, excluding third-party assets of CIPs, was as follows:

Accounting Classification 1

(in millions) Cash and

Equivalents Investments

Fair Value Equity

Investments Other Investments Direct

Cash and Cash Equivalents $ 3,253.9 $ — $ — $ — $ — $ 3,253.9

Alternative — 456.8 794.9 199.7 537.5 1,988.9

Equity — 417.9 325.4 145.5 81.6 970.4

Fixed Income — 156.3 26.1 36.7 187.3 406.4

Multi-Asset — 49.6 11.5 — 122.4 183.5

Total investments — 1,080.6 1,157.9 381.9 928.8 3,549.2

Total Cash and Cash Equivalents and Investments 2, 3

$ 3,253.9 $ 1,080.6 $ 1,157.9 $ 381.9 $ 928.8 $ 6,803.1

______________

1 See Note 1 – Significant Accounting Policies in the notes to consolidated financial statements in Item 8 of Part II of our Annual Report on Form 10-K for fiscal year 2024 for information on investment accounting classifications.

2 Total cash and cash equivalents and investments includes $4,514.6 million maintained for operational activities, including investments in sponsored funds and other products, and $449.0 million necessary to comply with regulatory requirements.

3 Total cash and cash equivalents and investments includes approximately $366 million attributable to employee-owned and other third-party investments made through partnerships which are offset in noncontrolling interests, approximately $429 million of investments that are subject to long-term repurchase agreements and other net financing arrangements, and approximately $444 million of cash and investments related to deferred compensation plans.

dollars held by certain of our European subsidiaries, as compared to strengthening against the same currencies, which resulted in net foreign exchange gains, in the prior year period.

Other, net increased $15.5 million for the three months December 31, 2025, primarily due to a gain recognized on the sale of owned office space.

Interest expense decreased $2.7 million for the three months ended December 31, 2025 primarily due to interest recognized in the prior year on the $400 million senior notes which were repaid in March 31, 2025.

Investments held by consolidated investment products (“CIPs”) generated gains and other income of $124.9 million and $114.1 million for the three months ended December 31, 2025 and 2024, largely related to gains on holdings of various alternative, equity, and multi-asset funds, and in the prior year, fixed income funds.

Expenses of CIPs increased $6.7 million for the three months ended December 31, 2025, due to activity of the funds.

TAXES ON INCOME

Our effective income tax rate was 33.9% and 32.3% for the three and nine months ended June 30, 2025, as compared to 22.7% and 23.7% for the three and nine months ended June 30, 2024.

The rate increase for the three month period was primarily due to a reduction in foreign rate benefits, valuation allowance on net capital losses, and lower gains of CIPs for which there is no related tax expense.

The rate increase for the nine month period was primarily due to losses of CIPs for which there are no related tax benefits and a reduction in foreign rate benefits.

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.

Our effective income tax rate was 23.2% and 25.9% for the three months ended December 31, 2025 and 2024.

The rate decrease for the three month period was primarily due to excess tax benefits related to stock-based compensation in the current year, as compared to excess tax expense in the prior year, and a higher proportion of foreign earnings in lower-tax jurisdictions, partially offset by activity of CIPs for which there is no related tax impact.

Our effective income tax rate reflects the relative contributions of earnings in the jurisdictions in which we operate, which have varying tax rates.

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(in millions) Three Months Ended

Nine Months Ended

2025 2024 2025 2024

Operating income $ 281.0 $ 219.0

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Acquisition-related retention

47.9 43.7 128.4 217.3

Compensation and benefits expense from gains on deferred compensation, net 13.6 0.9

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Amortization of intangible assets

112.2 84.0 337.3 254.4

Impairment of intangible assets

Special termination benefits

26.9 16.7 44.7 63.8

Compensation and benefits expense related to minority interests in certain subsidiaries 14.1 12.2

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(in millions, except per share data) Three Months Ended

Nine Months Ended

2025 2024 2025 2024

Net income attributable to Franklin Resources, Inc.

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Add (subtract):

Net (income) loss of consolidated investment products* 3.9 (2.4) (0.2) (1.1)

Net loss of consolidated investment products* 0.7 4.2

Acquisition-related retention

47.9 43.7 128.4 217.3

Other acquisition-related expenses 7.5 12.7

Amortization of intangible assets

112.2 84.0 337.3 254.4

Impairment of intangible assets

Special termination benefits

26.9 16.7 44.7 63.8

Net gains on deferred compensation plan investments not offset by compensation and benefits expense (2.6) (1.1) (2.4) (11.0)

Unrealized investment (gains) losses 11.2 31.0 (0.2) (27.6)

Net losses on deferred compensation plan investments not offset by compensation and benefits expense 3.5 1.3

Unrealized investment losses 20.2 31.5

Interest expense for amortization of debt premium (5.0) (4.9)

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(in millions) Three Months Ended

Nine Months Ended

2025 2024 2025 2024

Elimination of operating revenues upon consolidation $ (16.0) $ (12.5)

Other income (expense), net 19.9 42.0 (48.4) 72.0

income (loss) attributable to noncontrolling interests 11.8 27.3 (86.2) 36.2

Net income (loss) $ (3.9) $ 2.4 $ 0.2 $ 1.1

Other income, net 74.8 61.5

income attributable to noncontrolling interests 59.5 53.2

Net loss $ (0.7) $ (4.2)

LIQUIDITY AND CAPITAL RESOURCES

Cash flows were as follows:

Nine Months Ended

Three Months Ended

(in millions) 2025 2024

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Financing cash flows 487.4 87.9

Net cash provided by operating activities increased during the nine months ended June 30, 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 tax payments.

Net cash used in investing activities increased primarily due to net purchases of investments as compared to liquidations in the prior year and higher net purchases of investments by collateralized loan obligations (“CLOs”).

Net cash provided by financing activities decreased due to lower net proceeds on debt of CIPs and net repayment of debt, partially offset by net proceeds from repurchase agreements.

Net cash used in operating activities increased during the three months ended December 31, 2025 primarily due to timing of cash payments and receipts, reflected in changes in accounts payable and accrued expenses and receivables partially offset by lower payments for incentive compensation and accounts payable and accrued expenses of CIPs.

Net cash used in investing activities decreased primarily due to lower net purchases of investments, proceeds from the sale of property, plant and equipment and lower net purchases of investments by collateralized loan obligations (“CLOs”) partially offset by cash paid for an acquisition in the current year.

Net cash provided by financing activities increased primarily due to higher net proceeds on debt of CIPs partially offset by lower net subscriptions in CIPs by noncontrolling interests.

The assets and liabilities of CIPs attributable to third-party investors do not impact our liquidity and capital resources.

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Our liquid assets and debt consisted of the following:

(in millions) June 30,

(in millions) December 31,

2025 September 30,

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Liquid assets consist of cash and cash equivalents, receivables and certain investments.

Cash and cash equivalents at June 30, 2025 primarily consist of money market funds and deposits with financial institutions.

Cash and cash equivalents at December 31, 2025 primarily consist of money market funds and deposits with financial institutions.

Liquid investments consist of investments in sponsored and other funds, direct investments in redeemable CIPs, other equity and debt securities, and time deposits with maturities greater than three months.

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In prior fiscal years, we issued senior unsecured unsubordinated notes for general corporate purposes and to redeem outstanding notes.

At June 30, 2025, Franklin’s outstanding senior notes had an aggregate principal amount due of $1,200.0 million.

At December 31, 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 $1,188.9 million.

At June 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 $1,178.5 million at June 30, 2025.

At December 31, 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 $1,168.4 million at December 31, 2025.

Franklin unconditionally and irrevocably guarantees all of the outstanding notes issued by Legg Mason.

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.

We intend to repay the $450 million 4.750% senior notes due March 2026 from existing cash and other sources of liquidity.

The senior notes contain an optional redemption feature that allows us to redeem each series of notes prior to maturity in whole or in part at any time, at a make-whole redemption price.

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In addition, the indentures include requirements that must be met if we consolidate or merge with, or sell all of our assets to, another entity.

On April 30, 2025, we entered into an Amended and Restated Revolving Credit Agreement (the “Amended and Restated Credit Agreement”) with a five year term and $1.1 billion of aggregate available borrowings.

As of April 30, 2025, the $300.0 million of borrowings outstanding under our prior credit facility were transferred to the Amended and Restated Credit Agreement.

On December 11, 2025, we entered into a Joinder and Commitment Increase Agreement (the “Joinder Agreement”) which amends the Amended and Restated Credit Agreement (the “Credit Agreement”) dated as of April 30, 2025.

Pursuant to the Joinder Agreement, the aggregate commitments have increased by $400.0 million such that the total aggregate commitments under the Credit Agreement are $1.5 billion.

On January 8, 2026, we borrowed $150.0 million under the Credit Agreement.

The borrowing remains outstanding at the time of this filing and the proceeds were used for general corporate purposes.

Interest is payable semi-annually on any outstanding amounts and is based on the Term Secured Overnight Financing Rate (“Term SOFR”) plus a credit spread of 87.5 basis points and a Term SOFR adjustment of 10 basis points.

The Amended and Restated Credit Agreement contains a financial performance covenant requiring that the Company maintain a consolidated net leverage ratio, measured as of the last day of each fiscal quarter, of no greater than 3.25 to 1.00.

We were in compliance with all debt covenants at June 30, 2025.

At June 30, 2025, we had $500.0 million of short-term commercial paper available for issuance under an uncommitted private placement program which has been inactive since 2012 and is unrated.

The Credit Agreement contains a financial performance covenant requiring that the Company maintain a consolidated net leverage ratio, measured as of the last day of each fiscal quarter, of no greater than 3.25 to 1.00.

We were in compliance with all debt covenants at December 31, 2025.

At December 31, 2025, we had $500.0 million of short-term commercial paper available for issuance under an uncommitted private placement program which has been inactive since 2012 and is unrated.

Our ability to access the capital markets in a timely manner depends on a number of factors, including our credit rating, the condition of the global economy, investors’ willingness to purchase our securities, interest rates, credit spreads and the valuation levels of equity markets.

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We typically declare cash dividends on a quarterly basis, subject to approval by our Board of Directors.

We declared regular dividends of $0.96 per share during the nine months ended June 30, 2025 and $0.93 per share during the nine months ended June 30, 2024.

We declared regular dividends of $0.33 per share during the three months ended December 31, 2025 and $0.32 per share during the three months ended December 31, 2024.

We currently expect to continue paying comparable regular dividends on a quarterly basis to holders of our common stock depending upon earnings and other relevant factors.

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The size and timing of these purchases will depend on business conditions, price, market and other factors, including the terms of any 10b5-1 stock purchase plan that may be in effect at any given time.

During the three and nine months ended June 30, 2025, we repurchased 7.3 million and 8.1 million shares of our common stock at a cost of $157.4 million and $173.2 million.

During the three and nine months ended June 30, 2024, we repurchased 4.3 million and 7.1 million shares of our common stock at a cost of $101.5 million and $172.0 million.

In December 2023, our Board of Directors authorized the repurchase of up to an additional 27.2 million shares of our common stock in either open market or private transactions, for a total of up to 40.0 million shares available for repurchase under the stock repurchase program.

At June 30, 2025, 21.9 million shares remained available for repurchase under this authorization.

On June 3, 2025, we entered into a definitive agreement to acquire a majority interest in Apera Asset Management for cash consideration of approximately €70.0 million.

In addition, we will pay up to €125.0 million in cash through the fifth anniversary of the closing date based on revenue targets.

The cash consideration is expected to be funded from existing cash and sources of liquidity.

The acquisition is expected to close during the first quarter of fiscal year 2026.

We will pay up to $375.0 million related to our acquisition of Putnam between the third and seventh anniversaries of the closing date related to revenue growth targets from the strategic partnership with Great-West Lifeco, Inc.

and its affiliates which will be recognized in operating income.

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.

During the three months ended December 31, 2025, we repurchased 1.8 million shares of our common stock at a cost of $41.9 million and we repurchased 0.3 million shares of our common stock at a cost of $5.8 million in the prior year period.

In December 2025, our Board of Directors authorized the repurchase of up to an additional 20.8 million shares of our common stock in either open market or private transactions, for a total of up to 40.0 million shares available for repurchase under the stock repurchase program as of such authorization date.

At December 31, 2025, 38.3 million shares remained available for repurchase under this authorization.

On October 1, 2025, we completed the acquisition of Apera Asset Management for cash consideration of €65.2 million net of closing adjustments, funded from existing cash.

In addition, we will pay up to €125.0 million in cash through the fifth anniversary of the closing date based on achieving revenue targets.

As part of our acquisition of Putnam, which closed on January 1, 2024, we will pay up to $375.0 million between the third and seventh anniversaries of the closing date related to revenue growth targets from the strategic partnership with Great-West Lifeco, Inc.

which will be recognized in operating income.

While we have no legal or contractual obligation to do so, we routinely make cash investments in the course of launching sponsored funds.

The funds that we manage have their own resources available for purposes of providing liquidity to meet shareholder redemptions, including securities that can be sold or provided to investors as in-kind redemptions, and lines of credit.

Increased liquidity risks and redemptions have required, and may continue to require, increased cash in the form of loans or other lines of credit to help settle redemptions and for other related purposes.

While we have no legal or contractual obligation to do so, we have in certain instances voluntarily elected to provide the funds with direct or indirect financial support based on our business

We did not provide significant financial or other support to our sponsored funds during the nine months ended June 30, 2025.

We have in certain instances voluntarily elected to provide the funds with direct or indirect financial support based on our business objectives.

We did not provide significant additional financial or other support to our sponsored funds during the three months ended December 31, 2025.

Our cash, cash equivalents and investments portfolio by asset class and accounting classification at December 31, 2025, excluding third-party assets of CIPs, was as follows:

Accounting Classification 1

(in millions) Cash and

Equivalents Investments

Fair Value Equity

Investments Other Investments Direct

Cash and Cash Equivalents $ 2,672.1 $ — $ — $ — $ — $ 2,672.1

Alternative — 451.9 726.4 168.6 633.8 1,980.7

Equity — 344.1 224.7 167.5 214.8 951.1

Fixed Income — 211.6 54.3 34.9 113.5 414.3

Multi-Asset — 55.4 (0.4) — 124.8 179.8

Total investments — 1,063.0 1,005.0 371.0 1,086.9 3,525.9

Total Cash and Cash Equivalents and Investments 2, 3

$ 2,672.1 $ 1,063.0 $ 1,005.0 $ 371.0 $ 1,086.9 $ 6,198.0

______________

1 See Note 1 – Significant Accounting Policies in the notes to consolidated financial statements in Item 8 of Part II of our Annual Report on Form 10-K for fiscal year 2025 for information on investment accounting classifications.

2 Total cash and cash equivalents and investments includes $4,429.5 million maintained for operational activities, including investments in sponsored funds and other products, and $452.8 million necessary to comply with regulatory requirements.

3 Total cash and cash equivalents and investments includes approximately $365 million attributable to employee-owned and other third-party investments made through partnerships which are offset in noncontrolling interests, approximately $352 million of investments that are subject to long-term repurchase agreements and other net financing arrangements, and approximately $440 million of cash and investments related to deferred compensation plans.

CRITICAL ACCOUNTING POLICIES

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We also monitored fluctuations of our common stock per share price to evaluate our market capitalization relative to the reporting unit as a whole.

During the nine months ended June 30, 2025, there were no events or circumstances which would indicate that goodwill or definite-lived intangible assets were more likely than not impaired.

We performed a quantitative impairment test for certain indefinite-lived assets related to acquired mutual fund investment management contracts due to decreased AUM in related products and recognized an impairment of $24.4 million during the quarter ended March 31, 2025.

There were no other impairments of indefinite-lived intangible assets, as no events occurred or circumstances changed that would indicate these assets might be impaired.

During the three months ended December 31, 2025, there were no events

or circumstances which would indicate that goodwill, indefinite-lived intangible assets or definite-lived intangible assets might be impaired.

While we believe that the assumptions used to estimate fair value in our impairment tests are reasonable and appropriate, future changes in the assumptions could result in recognition of impairment.

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We use a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based on whether the inputs to those valuation techniques are observable or unobservable.

As of June 30, 2025, Level 3 assets represented 4% of total assets measured at fair value, which primarily related to CIPs’ investments in equity and debt securities.

There were insignificant transfers into and $39.3 million transfers out of Level 3 during the nine months ended June 30, 2025.

As of December 31, 2025, Level 3 assets represented 4% of total assets measured at fair value, which primarily related to CIPs’ investments in equity and debt securities.

There were no transfers into and $ 16.8 million transfers out of Level 3 during the three months ended December 31, 2025.

Quantitative and Qualitative Disclosures About Market Risk.

During the nine months ended June 30, 2025, there were no material changes from the market risk disclosures in our Form 10‑K for the fiscal year ended September 30, 2024.

During the three months ended December 31, 2025, there were no material changes from the market risk disclosures in our Form 10‑K for the fiscal year ended September 30, 2025.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis