FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
(Mark One)
[X]             QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                    For Quarterly Period Ended March 31, 2003
                                       OR
[ ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

              For the transition period from _________ to _________

                           Commission File No. 1-9318

                            FRANKLIN RESOURCES, INC.
             (Exact name of registrant as specified in its charter)

                 Delaware                                      13-2670991
       (State or other jurisdiction                          (IRS Employer
     of incorporation or organization)                     Identification No.)

                    One Franklin Parkway, San Mateo, CA 94403
                    (Address of Principal Executive Offices)
                                   (Zip Code)

                                 (650) 312-2000
              (Registrant's telephone number, including area code)

              (Former name, former address and former fiscal year,
                          if changed since last report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

YES   X    NO
    -----     -----

     Indicate by check mark whether the registrant is an  accelerated  filer (as
described in Rule 12b-2 of the Exchange Act).

YES   X     NO
    -----     -----

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date.

Outstanding: 253,468,709 shares, common stock, par value $.10 per share at April
30, 2003.

- --------------------------------------------------------------------------------



PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED FINANCIAL STATEMENTS



FRANKLIN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
                                                  THREE MONTHS ENDED        SIX MONTHS ENDED
                                                       MARCH 31                 MARCH 31
(in thousands, except per share data)              2003         2002        2003        2002
- ---------------------------------------------------------------------------------------------
                                                                       
OPERATING REVENUES:
  Investment management fees                   $347,897     $365,778    $699,309    $722,576
  Underwriting and distribution fees            194,158      197,537     380,095     389,544
  Shareholder servicing fees                     55,315       48,024     103,366      95,365
  Other, net                                     15,765       14,629      35,816      36,690
- ---------------------------------------------------------------------------------------------
     TOTAL OPERATING REVENUES                   613,135      625,968   1,218,586   1,244,175
- ---------------------------------------------------------------------------------------------

OPERATING EXPENSES:
  Underwriting and distribution                 173,068      177,327     341,915     349,594
  Compensation and benefits                     160,809      159,764     319,927     319,907
  Information systems, technology and
     occupancy                                   71,404       73,197     143,999     147,791
  Advertising and promotion                      24,226       25,481      46,870      51,906
  Amortization of deferred sales commissions     17,040       17,047      33,085      33,790
  Amortization of intangible assets               4,238        4,258       8,472       8,633
  Other                                          22,644       20,875      45,157      41,670
- ---------------------------------------------------------------------------------------------
     TOTAL OPERATING EXPENSES                   473,429      477,949     939,425     953,291
- ---------------------------------------------------------------------------------------------

Operating income                                139,706      148,019     279,161     290,884

OTHER INCOME/(EXPENSES):
  Investment and other income                    15,558       14,782      27,861      33,111
  Interest expense                              (3,037)      (2,808)     (6,069)     (5,976)
- ---------------------------------------------------------------------------------------------
     Other income, net                           12,521       11,974      21,792      27,135
- ---------------------------------------------------------------------------------------------

Income before taxes on income                   152,227      159,993     300,953     318,019
Taxes on income                                  42,624       39,997      81,590      79,504

- ---------------------------------------------------------------------------------------------
NET INCOME                                     $109,603     $119,996    $219,363    $238,515
- ---------------------------------------------------------------------------------------------

Earnings per share:
     Basic                                        $0.43        $0.46       $0.85       $0.91
     Diluted                                      $0.43        $0.46       $0.85       $0.91

Dividends per share                              $0.075       $0.070      $0.150      $0.140


        See accompanying notes to the consolidated financial statements.

                                       2
- --------------------------------------------------------------------------------





FRANKLIN RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS

                                                                        UNAUDITED
                                                                         MARCH 31  SEPTEMBER 30
(in thousands)                                                               2003          2002
- ------------------------------------------------------------------------------------------------

                                                                               
ASSETS
Current assets:
   Cash and cash equivalents                                             $701,020      $829,237
   Receivables                                                            286,594       292,325
   Investment securities, available-for-sale                            1,286,326     1,103,463
   Prepaid expenses and other                                              95,559        97,783
- ------------------------------------------------------------------------------------------------
      Total current assets                                              2,369,499     2,322,808
- ------------------------------------------------------------------------------------------------

Banking/finance assets:
   Cash and cash equivalents                                              123,866       151,367
   Loans receivable, net                                                  516,679       444,338
   Investment securities, available-for-sale                              474,194       449,629
   Other                                                                   39,769        45,889
- ------------------------------------------------------------------------------------------------
      Total banking/finance assets                                      1,154,508     1,091,223
- ------------------------------------------------------------------------------------------------

Non-current assets:
   Investments, other                                                     258,346       263,927
   Deferred sales commissions                                             162,670       130,617
   Property and equipment, net                                            379,571       394,172
   Intangible assets, net                                                 690,479       697,246
   Goodwill                                                             1,327,582     1,321,939
   Receivable from banking/finance group                                  183,200       100,705
   Other                                                                   80,450       100,101
- ------------------------------------------------------------------------------------------------
      Total non-current assets                                          3,082,298     3,008,707
- ------------------------------------------------------------------------------------------------

      TOTAL ASSETs                                                     $6,606,305    $6,422,738
- ------------------------------------------------------------------------------------------------


              See accompanying notes to the consolidated financial statements.


                                       3
- --------------------------------------------------------------------------------





FRANKLIN RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
                                                                        UNAUDITED
                                                                         MARCH 31  SEPTEMBER 30
(in thousands except share data)                                             2003          2002
- ------------------------------------------------------------------------------------------------
                                                                               
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Compensation and benefits                                             $171,848      $228,093
   Current maturities of long-term debt                                     4,216         7,830
   Accounts payable and accrued expenses                                  125,510       117,246
   Commissions                                                             81,408        81,033
   Income taxes                                                            14,166        12,510
   Other                                                                    8,363         8,307
- ------------------------------------------------------------------------------------------------
      Total current liabilities                                           405,511       455,019
- ------------------------------------------------------------------------------------------------

Banking/finance liabilities:
   Deposits                                                               720,188       733,571
   Payable to Parent                                                      183,200       100,705
   Other                                                                   59,769        49,660
- ------------------------------------------------------------------------------------------------
      Total banking/finance liabilities                                   963,157       883,936
- ------------------------------------------------------------------------------------------------

Non-current liabilities:
   Long-term debt                                                         636,086       595,148
   Deferred taxes                                                         187,466       175,176
   Other                                                                   45,598        46,513
- ------------------------------------------------------------------------------------------------
      Total non-current liabilities                                       869,150       816,837
- ------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------
      Total liabilities                                                 2,237,818     2,155,792
- ------------------------------------------------------------------------------------------------

Commitments and contingencies (Note 10)
Stockholders' equity:
   Preferred stock, $1.00 par value,  1,000,000 shares authorized; none         -             -
   issued
   Common stock, $0.10 par value, 500,000,000 shares authorized;           25,546        25,856
   255,463,878 and 258,555,285 shares issued and outstanding, for March
   and September
   Capital in excess of par value                                         504,810       598,196
   Retained earnings                                                    3,883,497     3,702,636
   Accumulated other comprehensive loss                                  (45,366)      (59,742)
- ------------------------------------------------------------------------------------------------
      Total stockholders' equity                                        4,368,487     4,266,946
- ------------------------------------------------------------------------------------------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $6,606,305    $6,422,738
- ------------------------------------------------------------------------------------------------


                  See accompanying notes to the consolidated financial statements.


                                       4
- --------------------------------------------------------------------------------




FRANKLIN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED                                                                    SIX MONTHS ENDED
                                                                                 MARCH 31
(in thousands)                                                              2003           2002
- ------------------------------------------------------------------------------------------------
                                                                               
NET INCOME                                                              $219,363       $238,515

Adjustments to reconcile net income to net cash
  provided by operating activities:
Decrease in receivables, prepaid expenses and other                       29,863        133,644
Net advances of deferred sales commissions                              (65,381)       (76,118)
Increase in other current liabilities                                      2,290         64,925
Increase in income taxes payable                                           1,656          7,468
Increase in commissions payable                                              374          2,249
Decrease in accrued compensation and benefits                           (27,870)       (38,756)
Depreciation and amortization                                             87,926         91,134
Losses/(gains) on disposal of assets                                       2,240        (5,433)
- ------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                250,461        417,628
- ------------------------------------------------------------------------------------------------

Purchase of investments                                              (1,114,217)      (787,795)
Liquidation of investments                                               897,620        981,974
Purchase of banking/finance investments                                (108,547)       (84,780)
Liquidation of banking/finance investments                               168,596        143,115
Net proceeds from securitization of loans receivable                     124,989        299,980
Net origination of loans receivable                                    (198,589)      (239,147)
Additions of property and equipment                                     (32,052)       (27,992)
Proceeds from sale of property                                               143          9,534
- ------------------------------------------------------------------------------------------------
Net cash (used in)/provided by investing activities                    (262,057)        294,889
- ------------------------------------------------------------------------------------------------

(Decrease)/increase in bank deposits                                    (13,382)         72,362
Exercise of common stock options                                             729         12,010
Net put option premiums and settlements                                    2,862            895
Dividends paid on common stock                                          (37,404)       (35,129)
Purchase of stock                                                      (133,322)        (8,070)
Increase in debt                                                          42,686         43,799
Payments on debt                                                         (6,291)        (4,146)
- ------------------------------------------------------------------------------------------------
Net cash (used in)/provided by financing activities                    (144,122)         81,721
- ------------------------------------------------------------------------------------------------
(Decrease)/increase in cash and cash equivalents                       (155,718)        794,238
Cash and cash equivalents, beginning of  period                          980,604        622,775
- ------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                                $824,886     $1,417,013
- ------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION:
  Value of common stock issued, principally restricted stock             $28,376        $28,151

                  See accompanying notes to the consolidated financial statements.


                                       5
- --------------------------------------------------------------------------------


                            FRANKLIN RESOURCES, INC.
                   Notes to Consolidated Financial Statements
                                 March 31, 2003
                                   (Unaudited)

     1.   Basis of Presentation
          ---------------------

          We have  prepared  these  unaudited  interim  financial  statements of
          Franklin  Resources,   Inc.  and  its  consolidated   subsidiaries  in
          accordance  with  the  instructions  to Form  10-Q and the  rules  and
          regulations  of the Securities  and Exchange  Commission.  Under these
          rules and  regulations,  we have shortened or omitted some information
          and footnote  disclosures  normally  included in financial  statements
          prepared under generally accepted  accounting  principles.  We believe
          that we have made all  adjustments  necessary for a fair  statement of
          the results of operations for the periods shown.  All  adjustments are
          normal and  recurring.  You should  read  these  financial  statements
          together with our audited financial  statements included in our Annual
          Report on Form 10-K for the year ended  September  30,  2002.  Certain
          amounts for the comparative  prior year periods have been reclassified
          to conform to the financial  presentation for and at the periods ended
          March 31, 2003.

     2.   Comprehensive Income
          --------------------

          The following table shows  comprehensive  income for the three and six
          months ended March 31, 2003 and 2002.


                                                                THREE MONTHS ENDED    SIX MONTHS ENDED
                                                                      MARCH 31             MARCH 31
          (in thousands)                                          2003        2002     2003       2002
          ---------------------------------------------------------------------------------------------
                                                                                  
          Net income                                          $109,603    $119,996 $219,363   $238,515
          Net unrealized (loss)/gain on available-for-sale
              securities, net of tax                           (4,629)       3,610    3,155      6,181
          Foreign currency translation adjustments               3,464     (2,217)   11,221    (8,852)
          ---------------------------------------------------------------------------------------------
          Comprehensive income                                $108,438    $121,389 $233,739   $235,844
          ---------------------------------------------------------------------------------------------


                                       6
- --------------------------------------------------------------------------------

     3.   Earnings per Share
          ------------------

          We computed earnings per share as follows:



                                                      THREE MONTHS ENDED         SIX MONTHS ENDED
                                                            MARCH 31                MARCH 31
          (in thousands except per share
             amounts)                                   2003        2002        2003         2002
          ----------------------------------------------------------------------------------------

                                                                             
          Net income                                $109,603    $119,996    $219,363     $238,515
          ----------------------------------------------------------------------------------------

          Weighted-average shares
             outstanding - basic                     257,023     261,596     257,315      261,284
          Incremental shares from assumed
             conversions                                 631         515         603          697
          ----------------------------------------------------------------------------------------
          Weighted-average shares
          outstanding - diluted                      257,654     262,111     257,918      261,981
          ----------------------------------------------------------------------------------------

          Earnings per share:
             Basic and diluted                         $0.43       $0.46       $0.85        $0.91
          ----------------------------------------------------------------------------------------


     4.   Employee Stock Option and Investment Plans
          ------------------------------------------

          Under our stock option plan, we may award  options to some  employees.
          In addition,  we have a  qualified,  non-compensatory  Employee  Stock
          Investment Plan ("ESIP"),  which allows  participants who meet certain
          eligibility  criteria  to buy  shares of common  stock at 90% of their
          market  value on defined  dates.  We account for these plans using the
          intrinsic value method under  Accounting  Principles Board Opinion No.
          25,   "Accounting   for  Stock  Issued  to   Employees"   and  related
          interpretations.  Accordingly,  no  compensation  costs are recognized
          with  respect to stock  options  granted  that have an exercise  price
          equal  to the  market  value  of the  underlying  stock at the date of
          grant, or with respect to shares issued under the ESIP.

          If we had determined compensation costs for our stock option plans and
          our ESIP based upon fair values at the grant dates in accordance  with
          the provisions of Statement of Financial Accounting Standards No. 123,
          "Accounting for Stock-Based Compensation", our net income and earnings
          per share would have been reduced to the pro forma  amounts  indicated
          below. For pro forma purposes, the estimated fair value of options was
          calculated  using  the  Black-Scholes   option-pricing  model  and  is
          amortized over the options' vesting periods.

                                       7
- --------------------------------------------------------------------------------





                                                         THREE MONTHS ENDED      SIX MONTHS ENDED
                                                               MARCH 31              MARCH 31
          (in thousands)                                    2003      2002       2003       2002
          ---------------------------------------------------------------------------------------
                                                                            
          Net Income, as reported                       $109,603  $119,996   $219,363   $238,515
          Less: additional stock-based compensation
          expense determined under the fair value
          method, net of tax                              17,414    15,012     33,949     28,056
          ---------------------------------------------------------------------------------------
            PRO FORMA NET INCOME                         $92,189  $104,984   $185,414   $210,459
          ---------------------------------------------------------------------------------------

          BASIC EARNINGS PER SHARE
            As reported                                    $0.43     $0.46      $0.85      $0.91
            Pro forma                                      $0.36     $0.40      $0.72      $0.81

          DILUTED EARNINGS PER SHARE
            As reported                                    $0.43     $0.46      $0.85      $0.91
            Pro forma                                      $0.36     $0.40      $0.72      $0.80
          ---------------------------------------------------------------------------------------



     5.   Cash and Cash Equivalents
          -------------------------

          Cash and cash  equivalents  at March 31, 2003 and  September  30, 2002
          consisted of the following:


                                                                    MARCH 31,       SEPTEMBER 30,
          (in thousands)                                                 2003                2002
          ----------------------------------------------- -------------------- -------------------

                                                                                   
          Cash and due from banks                                    $245,970            $224,214
          Federal funds sold and securities purchased under
           agreements to resell                                        50,445              82,150
          Other                                                       528,471             674,240
          ----------------------------------------------- -------------------- -------------------
           Total                                                     $824,886            $980,604
          ----------------------------------------------- -------------------- -------------------


        Cash and cash equivalents - other includes money market mutual fund
        investments and U.S. Treasury bills. Federal Reserve Board regulations
        require reserve balances on deposits to be maintained with the Federal
        Reserve Banks by banking subsidiaries. The required reserve balance was
        $2.4 million as of March 31, 2003 and $5.3 million as of September 30,
        2002.

     6.   Securitization of Loans Receivable
          ----------------------------------

          From time to time, we enter into auto loan securitization transactions
          with qualified special purpose entities and record these  transactions
          as  sales.   The   following   table   shows   details  of  auto  loan
          securitization  transactions  for the three and six months ended March
          31, 2003 and 2002:


                                       8
- --------------------------------------------------------------------------------





                                                    THREE MONTHS ENDED          SIX MONTHS ENDED
                                                          MARCH 31                  MARCH 31
          (in thousands)                              2003        2002         2003         2002
          ---------------------------------------------------------------------------------------
                                                                            
          Gross sale proceeds                           $-          $-     $131,620     $319,616
          Net carrying amount of loans sold              -           -      126,104      306,260
          ---------------------------------------------------------------------------------------
          Pre-tax gain                                  $-          $-       $5,516      $13,356
          ---------------------------------------------------------------------------------------


          When we sell auto loans in a securitization  transaction, we record an
          interest-only  strip receivable.  The  interest-only  strip receivable
          represents our contractual  right to receive interest from the pool of
          securitized  loans after the payment of required amounts to holders of
          the   securities   and  certain  other  costs   associated   with  the
          securitization.  Gross  sales  proceeds  include the fair value of the
          interest-only strips.

          We generally  estimate fair value based on the present value of future
          expected  cash flows.  The key  assumptions  used in the present value
          calculations  of  our  securitization  transactions  at  the  date  of
          securitization were as follows:


                                                                THREE MONTHS      SIX MONTHS
                                                                   ENDED             ENDED
                                                                  MARCH 31          MARCH 31
                                                                2003     2002     2003     2002
          --------------------------------------------------------------------------------------

                                                                              
          Excess cash flow discount rate (annual rate)             -        -      12%      12%
          Cumulative life loss rate                                -        -    4.27%    3.75%
          Pre-payment speed assumption (average monthly rate)      -        -    1.76%    1.50%
          --------------------------------------------------------------------------------------


          We   determined   these   assumptions   using  data  from   comparable
          transactions,   historical   information  and  management's  estimate.
          Interest-only  strip  receivables are generally  restricted assets and
          subject to limited recourse provisions.

          We generally  estimate the fair value of the  interest-only  strips at
          each  period-end  based on the present  value of future  expected cash
          flows,   consistent  with  the   methodology   used  at  the  date  of
          securitization.  The  following  shows  the  carrying  value  and  the
          sensitivity of the  interest-only  strip receivables at March 31, 2003
          and  September  30,  2002  to  adverse  changes  in the  key  economic
          assumptions used to measure fair value, which are hypothetical:


                                       9
- --------------------------------------------------------------------------------



                                                                      MARCH 31,   SEPTEMBER 30,
          (in thousands)                                                   2003            2002
          ---------------------------------------------------------------------------------------

                                                                                  
          Carrying amount/fair value of interest-only strips            $27,146         $29,088
          ---------------------------------------------------

          Excess cash flow discount rate (annual rate)                      12%             12%
          --------------------------------------------
              Impact on fair value of 10% adverse change                  $(388)          $(400)
              Impact on fair value of 20% adverse change                  $(765)          $(789)

          Cumulative life loss rate                                       3.95%           3.63%
          -------------------------
              Impact on fair value of 10% adverse change                $(1,827)        $(1,787)
              Impact on fair value of 20% adverse change                $(3,651)        $(3,579)

          Pre-payment speed assumption (average monthly rate)             1.70%           1.73%
          --------------------------------------------------
              Impact on fair value of 10% adverse change                $(2,896)        $(2,632)
              Impact on fair value of 20% adverse change                $(5,461)        $(5,155)
          ---------------------------------------------------------------------------------------


          This sensitivity analysis shows the hypothetical effect of a change in
          the assumptions used to determine the fair value of the  interest-only
          strip   receivable.   Actual  future  market   conditions  may  differ
          materially and accordingly,  this  sensitivity  analysis should not be
          considered our projections of future events or losses.

          With respect to retained  servicing  responsibilities  relating to the
          securitization  trusts,  we receive annual servicing fees ranging from
          1% to 2% of the  loans  securitized.  We also  receive  the  rights to
          future  cash  flows,  if  any,  arising  after  the  investors  in the
          securitization trust have received their contracted return.

          The  following  is a summary of cash flows  received  from and paid to
          securitization trusts.


                                                    THREE MONTHS ENDED          SIX MONTHS ENDED
                                                          MARCH 31                 MARCH 31
          (in thousands)                             2003         2002         2003         2002
          ---------------------------------------------------------------------------------------

                                                                              
          Servicing fees received                  $2,696       $2,092       $5,069       $3,397
          Other cash flows received                 4,266        4,603        9,132        5,922
          Purchase of loans from trusts            10,363        7,964       10,363        8,380
          ---------------------------------------------------------------------------------------


          Amounts  payable to the  trustee for  servicing  income  collected  on
          behalf of the  trusts  of $26.5  million  at March 31,  2003 and $24.9
          million at September  30, 2002 are  included in other  banking/finance
          liabilities.

          The  securitized  loan  portfolio  that  we  manage  and  the  related
          delinquencies  as of March 31,  2003 and  September  30,  2002 were as
          follows:


                                       10
- --------------------------------------------------------------------------------


                                                                     March 31,     September 30,
          (in thousands)                                                  2003              2002
          ---------------------------------------------------------------------------------------
                                                                                  
          Securitized loans held by securitization trusts             $521,560          $530,896
          Delinquencies                                                 10,991             9,317
          ---------------------------------------------------------------------------------------


          Net  charge-offs on the  securitized  loan portfolio were $3.0 million
          and $1.6 million during the three months ended March 31, 2003 and 2002
          and $6.0  million and $2.7  million  during the six months ended March
          31, 2003 and 2002.

     7.   Intangible Assets and Goodwill
          ------------------------------

          Intangible  assets at March 31,  2003 and  September  30, 2002 were as
          follows:



                                                  GROSS CARRYING    ACCUMULATED     NET CARRYING
          (in thousands)                                  AMOUNT   AMORTIZATION           AMOUNT
          ---------------------------------------------------------------------------------------

                                                                               
          AS OF MARCH 31, 2003
          Amortized intangible assets:
          Customer base                                 $232,321      $(31,182)         $201,139
          Other                                           31,546       (18,917)           12,629
          ---------------------------------------------------------------------------------------
                                                         263,867       (50,099)          213,768

          Non-amortized intangible assets:
          Management contracts                           476,711              -          476,711
          ---------------------------------------------------------------------------------------
          Total                                         $740,578      $(50,099)         $690,479
          ---------------------------------------------------------------------------------------

          AS OF SEPTEMBER 30, 2002
          Amortized intangible assets:
          Customer base                                 $231,935      $(23,358)         $208,577
          Other                                           31,546       (18,181)           13,365
          ---------------------------------------------------------------------------------------
                                                         263,481       (41,539)          221,942

          Non-amortized intangible assets:
          Management contracts                           475,304              -          475,304
          ---------------------------------------------------------------------------------------
          Total                                         $738,785      $(41,539)         $697,246
          ---------------------------------------------------------------------------------------


          Estimated  amortization expense for each of the next 5 fiscal years is
          as follows:

                                                     FOR THE FISCAL YEARS ENDING
          (in thousands)                                           SEPTEMBER 30,
          ---------------------------------------- -----------------------------

          2003                                                           $16,959
          2004                                                            16,959
          2005                                                            16,959
          2006                                                            16,959
          2007                                                            16,959
          ---------------------------------------- -----------------------------


                                       11
- --------------------------------------------------------------------------------


          The change in the carrying value of goodwill was as follows:

          (in thousands)
          ----------------------------------------------------------------------

          Goodwill as of September 30, 2002                           $1,321,939
          Foreign currency movements                                       5,643
          ----------------------------------------------------------------------
          Goodwill as of March 31, 2003                               $1,327,582
          ----------------------------------------------------------------------

          We  adopted  Statement  of  Financial  Accounting  Standards  No.  142
          "Goodwill  and Other  Intangible  Assets"  ("SFAS  142") on October 1,
          2001.  SFAS 142 addresses the initial  recognition  and measurement of
          intangible  assets  acquired  outside a business  combination  and the
          recognition  and measurement of goodwill and other  intangible  assets
          after   acquisition.   Under  the  new  standard,   all  goodwill  and
          indefinite-lived  intangible  assets,  including those acquired before
          initial application of the standard,  are not amortized but are tested
          for impairment at least annually.  Accordingly, on October 1, 2001, we
          ceased to amortize goodwill and  indefinite-lived  assets.  All of our
          goodwill and  intangible  assets relate to our  investment  management
          operating  segment.  Indefinite-lived  intangible assets represent the
          value of  management  contracts  related to our mutual funds and other
          investment products.

          As of March 31, 2003,  we completed the annual  impairment  testing of
          goodwill and indefinite-lived intangible assets under the guidance set
          out in SFAS 142 and we determined  that there was no impairment in the
          value of goodwill and  indefinite-lived  assets  recorded in our books
          and records as of October 1, 2002.

     8.   Segment Information
          -------------------

          We  have   two   operating   segments:   investment   management   and
          banking/finance.  We based our  operating  segment  selection  process
          primarily  on services  offered.  The  investment  management  segment
          derives  substantially  all its revenues and net income from providing
          investment advisory, administration, distribution and related services
          to the Franklin, Templeton, Mutual Series, Fiduciary Trust and Bissett
          funds,  and  institutional,  high  net-worth and private  accounts and
          other investment products. The banking/finance segment offers consumer
          lending and selected retail-banking services to individuals.

          Financial information for our two operating segments for the three and
          six months  ended  March 31, 2003 and 2002 is  presented  in the table
          below. Operating revenues of the banking/finance  segment are reported
          net of interest expense and provision for loan losses.


                                       12
- --------------------------------------------------------------------------------



                                                   THREE MONTHS ENDED           SIX MONTHS ENDED
                                                        MARCH 31                    MARCH 31
          (in thousands)                           2003          2002          2003         2002
          ---------------------------------------------------------------------------------------
                                                                          
          OPERATING REVENUES
          Investment management                $600,787      $617,794    $1,190,082   $1,216,753
          Banking/finance                        12,348         8,174        28,504       27,422
          ---------------------------------------------------------------------------------------
          Total                                $613,135      $625,968    $1,218,586   $1,244,175
          ---------------------------------------------------------------------------------------

          INCOME BEFORE TAXES
          Investment management                $146,777      $156,700      $285,712     $299,381
          Banking/finance                         5,450         3,293        15,241       18,638
          ---------------------------------------------------------------------------------------
          Total                                $152,227      $159,993      $300,953     $318,019
          ---------------------------------------------------------------------------------------


          Operating segment assets were as follows:


                                                           MARCH 31,              SEPTEMBER 30,
          (in thousands)                                        2003                       2002
        ---------------------------------------------------------------------------------------

                                                                               
          Investment management                           $5,451,797                 $5,331,515
          Banking/finance                                  1,154,508                  1,091,223
          ---------------------------------------------------------------------------------------
          Total                                           $6,606,305                 $6,422,738
          ---------------------------------------------------------------------------------------



          Operating revenues of the banking/finance  segment included above were
          as follows:



                                                           THREE MONTHS ENDED      SIX MONTHS ENDED
                                                                  MARCH 31              MARCH 31
          (in thousands)                                      2003       2002       2003       2002
          ------------------------------------------------------------------------------------------

                                                                               
          Interest and loan fees                            $8,101     $6,608    $15,964    $17,923
          Interest and dividends on investment securities    5,852      4,112     10,862      9,507
          -----------------------------------------------------------------------------------------
          Total interest income                             13,953     10,720     26,826     27,430
          Interest on deposits                             (1,791)    (2,340)    (3,380)    (5,077)
          Interest on short-term debt                        (110)       (57)      (198)      (275)
          Interest expense - inter-segment                   (605)    (1,341)    (1,409)    (3,486)
          -----------------------------------------------------------------------------------------
          Total interest expense                           (2,506)    (3,738)    (4,987)    (8,838)
          Net interest income                               11,447      6,982     21,839     18,592
          Other income                                       4,234      4,351     13,215     19,162
          Provision for loan losses                        (3,333)    (3,159)    (6,550)   (10,332)
          -----------------------------------------------------------------------------------------
          Total operating revenues                         $12,348     $8,174    $28,504    $27,422
          -----------------------------------------------------------------------------------------


          Inter-segment  interest payments from the  banking/finance  segment to
          the investment management segment are based on market rates prevailing
          at the  inception  of each  loan.  Inter-segment  interest  income and
          expense are not eliminated in our Consolidated Statements of Income.

                                       13
- --------------------------------------------------------------------------------


     9.   Debt
          ----

          In May 2001,  we received  approximately  $490 million in net proceeds
          from  the  sale  of $877  million  principal  amount  at  maturity  of
          zero-coupon  convertible  senior  notes  due  2031  (the  "Convertible
          Notes"). At March 31, 2003,  long-term debt included $501.0 million in
          principal  and  $18.0  million  of  accrued  interest  related  to the
          Convertible  Notes.  The  Convertible  Notes,  which  were  offered to
          qualified  institutional buyers only, carry an interest rate of 1.875%
          per annum,  with an  initial  conversion  premium of 43%.  Each of the
          $1,000 (principal amount at maturity) Convertible Notes is convertible
          into 9.3604 shares of our common stock.  We may redeem the Convertible
          Notes for cash on or after May 11, 2006 at their  accreted  value.  We
          may have to repurchase the Convertible  Notes at their accreted value,
          at the option of the holders,  on May 11 of 2003,  2004,  2006,  2011,
          2016,  2021 and 2026. In this event, we may choose to pay the purchase
          price in cash or shares of our common stock. The amount of Convertible
          Notes that will be redeemed  depends  on,  among  other  factors,  the
          performance of our common stock. On April 9, 2003, we notified holders
          that we would redeem the Convertible  Notes for cash at their accreted
          value on May 11, 2003. If we had to repurchase all of the  Convertible
          Notes on this date,  the total payment would be  approximately  $520.1
          million.

          We did not have any commercial paper  outstanding or medium term notes
          issued at March 31, 2003 and at September  30,  2002.  See Note 13 for
          additional disclosures about subsequent events.

     10.  Commitments and Contingencies
          -----------------------------

          GUARANTEES

          Under  Financial  Accounting  Standards Board  Interpretation  No. 45,
          "Guarantor's  Accounting and Disclosure  Requirements  for Guarantees,
          Including  Indirect  Guarantees  of  Indebtedness  of Others",  we are
          required,  on a  prospective  basis,  to  recognize  in our  financial
          statements a liability for the fair value of any guarantees  issued or
          modified  after   December  31,  2002  as  well  as  make   additional
          disclosures about existing guarantees (see Note 14). The following are
          guarantees  issued as of March 31, 2003. At March 31, 2003,  there was
          no  liability   recognized  in  our  consolidated  balance  sheet  for
          guaranteed  amounts  as  existing  transactions  as of this  date were
          entered into before the effective date of the fair value  provision of
          the interpretation.

          We lease our corporate  headquarters  in San Mateo,  California from a
          lessor  trust under an  operating  lease that  expires in fiscal 2005,
          with  additional  renewal  options  for a  further  period of up to 10
          years. In connection with this lease, we are  contingently  liable for
          approximately  $145  million  in  residual  guarantees,   representing
          approximately 85% of the total construction costs of $170 million.  We
          would become liable under the residual guarantee of $145 million if we
          were unable or unwilling to exercise our renewal  option to extend the
          lease term or buy the corporate headquarter  buildings,  or if we were
          unable  to  arrange  for the sale of the  building  for more than $145
          million.

          We are also contingently liable to purchase the corporate  headquarter
          buildings for an amount equal to the final  construction costs of $170
          million if an event of default occurs under the agreement. An event of
          default  includes,  but is not  limited  to,  failure  to  make  lease
          payments  when  due  and  failure  to  maintain  required   insurance.
          Management  considers the  possibility of default under the provisions
          of the  agreement  to be remote.  The lease is treated as an operating


                                       14
- --------------------------------------------------------------------------------


          lease  as none  of the  capitalization  criteria  under  Statement  of
          Financial Accounting Standards No. 13, "Accounting for Leases" was met
          at the inception of the lease.

          We  provide   investment   management   services  to,  and  have  made
          investments in, a number of  collateralized  debt obligation  entities
          ("CDOs") that, using debt financing, invest in debt instruments. These
          entities  subsequently  issue notes and preferred shares to investors.
          As of March 31, 2003, in relation to one of these entities, and in the
          event that the CDO is  terminated  prior to the issuance of securities
          to investors, we have a contingent obligation in the maximum amount of
          approximately $107 million.

          In relation to the auto loan securitization  transactions that we have
          entered into with a number of qualified special purpose  entities,  we
          are obligated to cover shortfalls in amounts due to the holders of the
          notes up to certain levels as specified under the related  agreements.
          As of March 31, 2003, the maximum  potential amount of future payments
          was $9.6 million.

          At March 31, 2003, our  banking/finance  operating  segment had issued
          financial  standby  letters of credit  totaling  $9.7 million on which
          beneficiaries   would   be  able  to  draw   upon  in  the   event  of
          non-performance  by our customers,  primarily in relation to lease and
          lien obligations of these  customers.  These standby letters of credit
          were  secured  by  marketable  securities  with a fair  value of $20.3
          million  as of March 31,  2003 and  commercial  real  estate  and have
          various expiration dates through March 2004.

          From time to time, we sell put options  giving the purchaser the right
          to sell  shares of our common  stock to us at a  specified  price upon
          exercise of the options on the designated  expiration dates if certain
          conditions   are  met.   These  put  options  are  treated  as  equity
          instruments   and  the  related   premium   received  is  recorded  in
          Stockholders' Equity as Capital in excess of par value. The likelihood
          that we will have to  purchase  our stock  and the  purchase  price is
          contingent  on the  market  value of our  stock  when  the put  option
          contract  becomes  exercisable.  At March  31,  2003,  there  were 4.4
          million put options outstanding with various expiration dates from May
          2003 through January 2004.

          OTHER COMMITMENTS AND CONTINGENCIES

          In February  2001,  we signed an agreement to outsource  management of
          our  data  center  and  distributed  server   operations.   Under  the
          agreement,  we may end the  agreement  any time  beginning on March 1,
          2004 by incurring a termination charge. The maximum termination charge
          payable depends on the termination date, the service levels before our
          termination  of the  agreement,  and costs  incurred  to wind down the
          services.  Based on March 31, 2003 service levels, the termination fee
          payable on March 1, 2004 would  approximate  $37.2  million  and would
          decrease on each one-year anniversary for the following three years.

          We are  involved  in  various  claims and legal  proceedings  that are
          considered normal in our business. While it is not feasible to predict
          or determine the final outcome of these proceedings, we do not believe
          that they  should  have a  material  adverse  effect on our  financial
          position, results of operations or liquidity.

          At  March  31,  2003,  our   banking/finance   operating  segment  had
          commitments to extend credit aggregating $292.7 million,  mainly under
          credit card lines. We lease office space and equipment under long-term
          operating leases.  Future minimum lease payments under  non-cancelable
          leases are not material.


                                       15
- --------------------------------------------------------------------------------

     11.  Transactions with Variable Interest Entities
          --------------------------------------------

          Variable interest  entities ("VIEs") consist of corporations,  trusts,
          partnerships  and other entities where the equity  investment  holders
          have not contributed  sufficient  capital to finance the activities of
          the VIEs or the equity  investment  holders do not have defined rights
          and obligations  normally associated with equity investments (see Note
          14). At March 31, 2003, we were engaged in financial transactions with
          the following VIEs.

          LESSOR  TRUST.  We lease  our  corporate  headquarters  in San  Mateo,
          California  from a lessor trust under an operating  lease as described
          in Note 10. Our maximum  exposure  arising  from this  arrangement  is
          approximately $170 million at March 31, 2003. At this time, we believe
          that it is probable that we will have to consolidate  the lessor trust
          in our annual financial statements as of September 30, 2003.

          COLLATERALIZED  DEBT  OBLIGATION   ENTITIES.   We  provide  investment
          management services to, and have made investments in, a number of CDOs
          as described in Note 10. Our equity ownership  interest in the CDOs is
          currently not sufficient to meet  consolidation  requirements and they
          are  reported  at fair  value.  We earn  investment  management  fees,
          including subordinated management fees in some cases, for managing the
          CDOs,  as well as  incentive  fees  that  are  contingent  on  certain
          performance  conditions.  At March 31, 2003, the combined market value
          of  assets  in these  CDOs was  approximately  $1.7  billion,  and our
          maximum  exposure  to  loss  as a  result  of  these  investments  was
          approximately  $19.6  million.  At this time,  we  believe  that it is
          reasonably  possible  that we  will  have to  either  make  additional
          disclosures  about or consolidate one or more of these entities in our
          annual financial statements as of September 30, 2003.

     12.  Banking Regulatory Ratios
          -------------------------

          Following the acquisition of Fiduciary Trust Company  International in
          April 2001, we became a bank holding  company and a financial  holding
          company   subject   to   various   regulatory   capital   requirements
          administered by the federal banking agencies.  Failure to meet minimum
          capital  requirements  can initiate  certain  mandatory,  and possibly
          additional,  discretionary  actions by regulators that, if undertaken,
          could have a direct  material effect on our financial  statements.  We
          must  meet  specific   capital   adequacy   guidelines   that  involve
          quantitative  measures  of  our  assets,   liabilities,   and  certain
          off-balance  sheet items as  calculated  under  regulatory  accounting
          practices.  Our capital amounts and classification are also subject to
          qualitative  judgments  by  the  regulators  about  components,   risk
          weightings and other factors.

          Quantitative  measures  established  by regulation  to ensure  capital
          adequacy  require us to  maintain a minimum  Tier 1 capital and Tier 1
          leverage  ratio (as  defined in the  regulations),  as well as minimum
          Tier  1 and  Total  risk-based  capital  ratios  (as  defined  in  the
          regulations).  Based on our  calculations  as of March  31,  2003,  we
          exceeded the capital adequacy requirements  applicable to us as listed
          below.


                                       16
- --------------------------------------------------------------------------------





                                                THREE MONTHS ENDED     MINIMUM FOR OUR CAPITAL
        (in thousands)                              MARCH 31, 2003           ADEQUACY PURPOSES
        ------------------------------------- --------------------- ---------------------------

                                                                                     
        Tier 1 capital                                $2,244,324                           N/A
        Total risk-based capital                      $2,255,816                           N/A
        Tier 1 leverage ratio                                47%                            4%
        Tier 1 risk-based capital ratio                      65%                            4%
        Total risk-based capital ratio                       66%                            8%
        ------------------------------------- --------------------- ---------------------------



     13.  Subsequent Events
          -----------------

          In April 2003,  we completed  the sale of  five-year  senior notes due
          April 15, 2008 and totaling $420 million. The senior notes, which were
          offered to qualified institutional buyers only, carry an interest rate
          of 3.7%.

          During April 2003, we purchased  approximately  2.0 million  shares of
          our common stock at a cost of approximately $68.6 million.

     14.  New Accounting Standards
          ------------------------

          In November 2002,  Financial Accounting Standards Board Interpretation
          No.  45,  "Guarantor's  Accounting  and  Disclosure  Requirements  for
          Guarantees,  Including Indirect  Guarantees of Indebtedness of Others"
          ("FIN 45"),  was issued.  FIN 45 addresses  financial  accounting  and
          reporting for companies that issue certain guarantees. Under FIN 45, a
          company must  recognize a liability  at fair value for all  guarantees
          entered  into or  modified  after  December  31,  2002,  even when the
          likelihood of making any payments  under the guarantee is remote.  FIN
          45 also  requires  enhanced  disclosures  for  guarantees  existing at
          December  31,  2002.  The  adoption  of FIN 45 did not have a material
          effect on our consolidated  operating results and financial  position.
          See Note 10 for additional disclosures.

          In December 2002, Statement of Financial Accounting Standards No. 148,
          "Accounting for Stock-Based  Compensation--Transition  and Disclosure"
          ("SFAS  148"),  was issued.  SFAS 148 amends  Statement  of  Financial
          Accounting    Standards   No.   123,   "Accounting   for   Stock-Based
          Compensation",  to provide  alternative  methods of  transition to the
          fair value method of  accounting  for  stock-based  compensation  when
          companies  elect to expense stock options at fair value at the time of
          grant. SFAS 148 also requires  additional  interim  disclosure for all
          companies with stock-based  employee  compensation.  As we adopted the
          intrinsic  value method  described in APB Opinion No. 25,  "Accounting
          for Stock Issued to Employees",  the transition  provision of SFAS 148
          will not apply to us. The  disclosure  requirements  are effective for
          interim periods starting after December 15, 2002. The adoption of SFAS
          148 did not  have a  material  effect  on our  consolidated  operating
          results and  financial  position and we have  provided  the  necessary
          disclosures in Note 4.

          In January 2003,  Financial  Accounting Standards Board Interpretation
          No. 46,  "Consolidation of Variable Interest Entities" ("FIN 46"), was
          issued.  FIN 46 addresses  reporting and disclosure  requirements  for
          VIEs. It defines a VIE as a corporation,  trust,  partnership or other
          entity  where  the  equity  investment  holders  have not  contributed
          sufficient  capital to finance the activities of

                                       17
- --------------------------------------------------------------------------------


          the VIE or the equity  investment  holders do not have defined  rights
          and obligations normally associated with an equity investment.  FIN 46
          requires  consolidation  of a VIE  by  the  enterprise  that  has  the
          majority  of the risks and  rewards of  ownership,  referred to as the
          primary  beneficiary.  It also requires additional  disclosures for an
          enterprise that holds a significant variable interest in a VIE, but is
          not  the  primary   beneficiary.   The  consolidation  and  disclosure
          provisions of FIN 46 are effective  immediately for VIEs created after
          January  31,  2003,  and  for  interim  or  annual  reporting  periods
          beginning  after June 15,  2003 for VIEs  created  before  February 1,
          2003.  FIN 46  also  requires  interim  disclosures  in all  financial
          statements  issued after  January 31, 2003,  regardless of the date on
          which  the  VIE  was  created,  if  it  reasonably  possible  that  an
          enterprise will consolidate or disclose  information  about a VIE when
          FIN 46 becomes effective.  We are currently evaluating the impact that
          the  adoption  of FIN 46 will have on our  results of  operations  and
          financial condition. See Note 11 for interim disclosures under FIN 46.



                                       18
- --------------------------------------------------------------------------------


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

FORWARD-LOOKING STATEMENTS

In addition to historical information,  we also make some statements relating to
the future, which are called "forward-looking" statements. These forward-looking
statements involve a number of risks,  uncertainties and other important factors
that could cause our actual results and outcomes to differ  materially  from any
future  results  or  outcomes  expressed  or  implied  by  such  forward-looking
statements.  Forward-looking statements are our best prediction at the time they
are made,  and for this  reason,  you  should  not rely too  heavily on them and
review the "Risk Factors" section set forth below and in our recent filings with
the U.S.  Securities  and  Exchange  Commission,  which  describes  these risks,
uncertainties and other important factors in more detail.

GENERAL

We derive the majority of our  operating  revenues,  operating  expenses and net
income from providing  investment advisory and related services to retail mutual
funds,  institutional,  high net-worth,  private  accounts and other  investment
products.  This is our main business activity and operating segment.  The mutual
funds and other  products  that we advise,  collectively  called  our  sponsored
investment  products,  are  distributed to the public globally via five distinct
names:

* Franklin    * Templeton     * Mutual Series    * Fiduciary Trust    * Bissett

Our  sponsored  investment  products  include  a broad  range  of  domestic  and
global/international  equity,  balanced/hybrid,  fixed-income  and money  market
mutual funds, as well as other  investment  products that meet a wide variety of
specific investment needs of individuals and institutions.

The level of our  revenues  depends  largely  on the level and  relative  mix of
assets under  management.  To a lesser  degree,  our revenues also depend on the
level of mutual fund sales and the number of mutual fund  shareholder  accounts.
The fees  charged for our services  are based on  contracts  with our  sponsored
investment  products or our  clients.  These  arrangements  could  change in the
future.

Our  secondary   business  and  operating   segment  is   banking/finance.   Our
banking/finance  group  offers  consumer  lending  and  selected  retail-banking
services to high net-worth individuals, foundations and institutions.


                                       19
- --------------------------------------------------------------------------------




RESULTS OF OPERATIONS

                                      THREE MONTHS ENDED                SIX MONTHS ENDED
(in millions except per share              MARCH 31      PERCENT          MARCH 31      PERCENT
amounts)                               2003       2002    CHANGE     2003       2002     CHANGE
- -----------------------------------------------------------------------------------------------
                                                                         
NET INCOME                           $109.6     $120.0      (9%)   $219.4     $238.5       (8%)
EARNINGS PER COMMON SHARE
     Basic and diluted                $0.43      $0.46      (7%)    $0.85      $0.91       (7%)
OPERATING MARGIN                        23%        24%         -      23%        23%          -
- -----------------------------------------------------------------------------------------------



Net income  decreased  9% and 8% during the three and six months ended March 31,
2003 compared to the same periods last year.  These decreases were mainly due to
lower  investment  management  fees  consistent with a decline in simple monthly
average  assets  under  management,   partially  offset  by  higher  shareholder
servicing fees mainly due to an increase in billable shareholder accounts.




ASSETS UNDER MANAGEMENT
                                                                     March 31         March 31
(in billions)                                                            2003             2002
- -----------------------------------------------------------------------------------------------
                                                                                  
Equity:
   Global/international                                                 $75.7            $93.9
   Domestic (U.S.)                                                       42.7             53.2
- -----------------------------------------------------------------------------------------------
      Total equity                                                      118.4            147.1
- -----------------------------------------------------------------------------------------------

Balanced/hybrid                                                          37.4             40.8
Fixed-income:
  Tax-free                                                               52.3             48.7
  Taxable
     Domestic                                                            29.4             24.6
     Global/international                                                 9.4              7.7
- -----------------------------------------------------------------------------------------------
      Total fixed-income                                                 91.1             81.0
- -----------------------------------------------------------------------------------------------

Money market                                                              5.5              5.6
- -----------------------------------------------------------------------------------------------
Total                                                                  $252.4           $274.5
- -----------------------------------------------------------------------------------------------
Simple monthly average for the three-month period (1)                  $255.1           $267.9
Simple monthly average for the six-month period (1)                    $254.6           $261.6
- -----------------------------------------------------------------------------------------------

(1)  Investment  management  fees from  approximately  50% of our  assets  under management at
March 31, 2003 are calculated using a daily average.



Our assets under management at March 31, 2003 were $252.4 billion, 8% lower than
they were a year ago,  mainly due to market  depreciation  in the latter half of
fiscal 2002 and in the quarter  ended March 31,  2003.  Simple  monthly  average
assets  decreased 5% and 3% during the three and six months ended March 31, 2003
over the same periods a year ago.

The simple monthly average mix of assets under management is shown below.


                                       20
- --------------------------------------------------------------------------------




                                                                              SIX MONTHS ENDED
                                                                                   MARCH 31
                                                                                 2003     2002
- -----------------------------------------------------------------------------------------------
                                                                                    
PERCENTAGE OF TOTAL ASSETS UNDER MANAGEMENT
Equity                                                                            48%      52%
Fixed-income                                                                      35%      31%
Balanced/hybrid                                                                   15%      15%
Money market                                                                       2%       2%
- -----------------------------------------------------------------------------------------------
Simple monthly average for the six-month period                                  100%     100%
- -----------------------------------------------------------------------------------------------



The change in the  composition of assets under  management  resulted from market
depreciation  in equity  assets  in the  latter  half of fiscal  2002 and in the
quarter ended March 31, 2003.  This shift in asset mix led to slight decrease in
our effective investment management fee rate (investment management fees divided
by simple  monthly  average assets under  management).  For the six months ended
March 31, 2003, the effective  investment  management fee rate declined slightly
to 0.549% as compared to 0.552% over the same period last year.

Assets under management by shareholder location were as follows:


                                                                               AS OF MARCH 31,
(in billions)                                                                  2003       2002
- ------------------------------------------------------------------------ ----------- ----------

                                                                                  
United States                                                                $211.5     $232.1
Canada                                                                         16.9       22.0
Europe                                                                         10.6       10.8
Asia/Pacific and other                                                         13.4        9.6
- ------------------------------------------------------------------------ ----------- ----------
Total                                                                        $252.4     $274.5
- ------------------------------------------------------------------------ ----------- ----------


Components of the change in our assets under management were as follows:


                                         THREE MONTHS ENDED            SIX MONTHS ENDED
                                                MARCH 31    PERCENT       MARCH 31    PERCENT
(in billions)                                2003     2002   CHANGE     2003    2002   CHANGE
- ----------------------------------------------------------------------------------------------

                                                                      
Beginning assets under management          $257.7   $266.3     (3%)   $247.8  $246.4       1%
Sales                                        17.6     18.8     (6%)     34.8    37.7     (8%)
Reinvested distributions                      0.6      0.5      20%      2.0     3.1    (35%)
Redemptions                                (15.1)   (14.3)       6%   (31.3)  (29.8)       5%
Distributions                               (1.1)    (1.1)        -    (3.2)   (4.8)    (33%)
(Depreciation)/appreciation                 (7.3)      4.3      N/A      2.3    21.9    (89%)
- ----------------------------------------------------------------------------------------------
Ending assets under management             $252.4   $274.5     (8%)   $252.4  $274.5     (8%)
- ----------------------------------------------------------------------------------------------


For the three and six months ended March 31, 2003,  sales  exceeded  redemptions
complex-wide  ("net  inflows")  by $2.5  billion and $3.5  billion,  compared to
inflows of $4.5 billion and $7.9  billion in the same periods last year.  Market
appreciation  of $2.3  billion in the six months  ended March 31,  2003  related
mainly to our fixed-income category.


                                       21
- --------------------------------------------------------------------------------





OPERATING REVENUES

                                   THREE MONTHS ENDED              SIX MONTHS ENDED
                                            MARCH 31    PERCENT           MARCH 31   PERCENT
(in millions)                            2003     2002   CHANGE      2003      2002   CHANGE
- ---------------------------------------------------------------------------------------------

                                                                      
Investment management fees             $347.8   $365.8     (5%)    $699.3    $722.6     (3%)
Underwriting and distribution fees      194.2    197.6     (2%)     380.1     389.5     (2%)
Shareholder servicing fees               55.3     48.0      15%     103.4      95.4       8%
Other, net                               15.8     14.6       8%      35.8      36.7     (2%)
- ---------------------------------------------------------------------------------------------
Total operating revenues               $613.1   $626.0     (2%)  $1,218.6  $1,244.2     (2%)
- ---------------------------------------------------------------------------------------------


SUMMARY

Total  operating  revenues  decreased 2% for both the three and six months ended
March 31, 2003  compared to the same  periods last year  primarily  due to lower
investment  management  related to a decline in simple  monthly  average  assets
under  management,  and lower  underwriting and distribution fees resulting from
lower sales.  The  decreases  were partly offset by higher  shareholder  service
fees.

INVESTMENT MANAGEMENT FEES

Investment  management  fees  account for 57% of our  operating  revenues in the
quarter  ended  March  31,  2003.  These  fees are  generally  calculated  under
contractual  arrangements with our sponsored investment products as a percentage
of the market value of assets under management.  Annual rates vary by investment
objective and type of services provided.  In return for these fees, we provide a
combination  of  investment   advisory,   administrative  and  other  management
services.

Investment  management  fees decreased 5% and 3% during the three and six months
ended March 31, 2003 over the same periods last year  consistent with the 5% and
3% decrease in simple  monthly  average  assets under  management  over the same
periods.

UNDERWRITING AND DISTRIBUTION FEES

We earn underwriting fees from the sale of some classes of sponsored  investment
products on which  investors  pay a sales  commission  at the time of  purchase.
Sales at reduced or zero  commissions  are offered on some classes of shares and
for sales to  shareholders  or  intermediaries  that  exceed  specified  minimum
amounts.  Therefore,  underwriting  fees will change  with the overall  level of
gross sales and the relative mix of sales between different share classes.

Our sponsored  investment  products pay  distribution  fees in return for sales,
marketing  and  distribution  efforts on their behalf.  While other  contractual
arrangements  exist  in  international  jurisdictions,  in  the  United  States,
distribution  fees include 12b-1 fees.  These fees are subject to maximum payout
levels based on a percentage  of the assets in each fund.  We pay a  significant
portion of  underwriting  and  distribution  fees to the financial  advisors and
other intermediaries who sell our sponsored investment products to the public on
our behalf. See the description of underwriting and distribution expenses below.

Underwriting  and  distribution  fees decreased 2% during both the three and six
months ended March 31, 2003 over the same  periods  last year.  During the three
and six months ended March 31,  2003,


                                       22
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commission  revenues  decreased 7% and 5% over the same periods last year mainly
due to a 6% and 8% decrease in product  sales.  Distribution  fees  increased 2%
during the three  months  ended March 31, 2003 and  decreased  1% during the six
months  ended March 31, 2003 over same periods  last year.  The overall  decline
during the six months  ended  March 31,  2003 over the same  period in the prior
year was  related  to a 3%  decline  in  simple  monthly  average  assets  under
management over the same period.

SHAREHOLDER SERVICING FEES

Shareholder  servicing fees are generally fixed charges per shareholder  account
that vary with the particular  type of fund and the service being  rendered.  In
some instances,  sponsored  investment  products are charged these fees based on
the level of assets  under  management.  We  receive  fees as  compensation  for
providing transfer agency services, which include providing customer statements,
transaction  processing,  customer  service  and tax  reporting.  In the  United
States,  transfer  agency service  agreements  provide that accounts closed in a
calendar  year  remain  billable  through  the second  quarter of the  following
calendar  year at a reduced  rate.  In  Canada,  such  agreements  provide  that
accounts  closed in the calendar year remain  billable for four months after the
end of the  calendar  year.  Accordingly,  the  level of fees will vary with the
growth in new accounts and the level of closed accounts that remain billable.

Shareholder  servicing fees increased 15% and 8% during the three and six months
ended March 31, 2003 over the same periods last year.  The increase  reflects an
increase in billable shareholder accounts due to revised shareholder service fee
agreements  effective  on January 1, 2003 and 0.7 million  shareholder  accounts
added in the acquisition of Pioneer ITI AMC Limited  ("Pioneer"),  in July 2002.
Prior to January 2003, the U.S.  transfer agent did not assess a fee for certain
partially serviced shareholder accounts. As of March 31, 2003, billable accounts
included  approximately  3.9 million  additional  partial  service  accounts now
billable  under the  revised  U.S.  shareholder  agreements.  This  increase  in
billable  accounts was partially  offset by lower rates on closed accounts under
the new agreements.

OTHER, NET

Other,  net  consists  mainly of  revenues  from the  banking/finance  operating
segment  as  well  as  income  from   custody   services.   Revenues   from  the
banking/finance  operating  segment include interest income on loans,  servicing
income, and investment income on banking/finance  investment  securities,  which
are offset by interest expense and the provision for anticipated loan losses.

Other,  net  increased  8% during the three months ended March 31, 2003 over the
same  period last year.  This  increase  was mainly due higher  interest on auto
loans and a decline in interest expense.  Other, net decreased 2% during the six
months  ended March 31, 2003 from the same  period last year  consistent  with a
decrease in realized gains from auto loan securitizations to $5.5 million in the
six months ended March 31, 2003 from $13.4 million during the same period in the
prior year, partially offset by a decline in interest expense.


                                       23
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OPERATING EXPENSES
                                       THREE MONTHS ENDED           SIX MONTHS ENDED
                                       MARCH 31           PERCENT       MARCH 31     PERCENT
(in millions)                            2003        2002  CHANGE    2003       2002  CHANGE
- ---------------------------------------------------------------------------------------------

                                                                     
Underwriting and distribution          $173.1      $177.3    (2%)  $341.9     $349.6    (2%)
Compensation and benefits               160.8       159.8      1%   319.9      320.0       -
Information systems, technology
  and occupancy                          71.4        73.2    (2%)   144.0      147.8    (3%)
Advertising and promotion                24.2        25.5    (5%)    46.9       51.9   (10%)
Amortization of deferred
  sales commissions                      17.0        17.0       -    33.1       33.8    (2%)
Amortization of intangible assets         4.2         4.2       -     8.5        8.6    (1%)
Other                                    22.7        20.9      9%    45.1       41.6      8%
- ---------------------------------------------------------------------------------------------
  Total operating expenses             $473.4      $477.9    (1%)  $939.4     $953.3    (1%)
- ---------------------------------------------------------------------------------------------


SUMMARY

Operating expenses decreased 1% during both the three and six months ended March
31, 2003 over the same periods last year.  This  decrease was primarily due to a
decrease in underwriting and distribution,  information systems,  technology and
occupancy  and  advertising  and  promotion  expenses,  partially  offset  by an
increase in other expenses.

UNDERWRITING AND DISTRIBUTION

Underwriting and distribution  includes sales  commissions and distribution fees
paid to brokers and other third parties for selling,  distributing and providing
ongoing services to investors in our sponsored investment products. Underwriting
and distribution expense decreased 2% during both the three and six months ended
March 31, 2003 over the same periods last year  consistent  with the decrease in
underwriting and distribution revenues.

COMPENSATION AND BENEFITS

Compensation  and  benefits  expense  increased 1% during the three months ended
March 31, 2003 and remained  constant during the six months ended March 31, 2003
over the same  periods  last  year.  Although  our  compensation  structure  has
remained  relatively constant as compared to the prior year, we have experienced
increases in employee  insurance and other  benefits costs in the current fiscal
year.  We  employed  approximately  6,600 at March 31, 2003 as compared to about
6,400 at the same time last year.  Our  acquisition  of  Pioneer,  in July 2002,
added approximately 180 employees. In order to hire and retain key employees, we
are committed to keeping our salaries and benefit  packages  competitive,  which
means that the level of  compensation  and benefits may increase more quickly or
decrease more slowly than our revenues.

INFORMATION SYSTEMS, TECHNOLOGY AND OCCUPANCY

Information  systems,  technology and occupancy costs decreased 2% and 3% during
the three and six months  ended March 31, 2003 over the same  periods last year.
While  continuing  work on new  technology  initiatives  and  investment  in our
technology infrastructure,  expenditures have declined from


                                       24
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the prior year as we slowed down a number of  initiatives  and delayed the start
of other technology  projects given the current economic  slowdown and our focus
on cost control and management.

Details of capitalized information systems and technology costs were as follows:



                                                      THREE MONTHS ENDED      SIX MONTHS ENDED
                                                            MARCH 31              MARCH 31
(in thousands)                                           2003       2002       2003       2002
- -----------------------------------------------------------------------------------------------

                                                                          
Net book value at beginning of period                $110,045   $151,321   $121,486   $162,857
Additions during period, net of disposals and other
  adjustments                                           8,414     14,906     15,331     22,432
Amortization during period                           (18,365)   (19,361)   (36,723)   (38,423)
- -----------------------------------------------------------------------------------------------
Net book value at end of period                      $100,094   $146,866   $100,094   $146,866
- -----------------------------------------------------------------------------------------------


ADVERTISING AND PROMOTION

Advertising and promotion  expense decreased 5% and 10% during the three and six
months ended March 31, 2003 over the same  periods  last year.  During the three
and six months  ended March 2002,  we incurred  increased  promotion  expense to
assist in educating the sales channels and the investing public about the strong
relative investment  performance of our sponsored  investment  products.  We are
committed  to invest in  advertising  and  promotion  in  response  to  changing
business  conditions,  which means that the level of  advertising  and promotion
expenditures  may  increase  more  rapidly  or  decrease  more  slowly  than our
revenues.

AMORTIZATION OF DEFERRED SALES COMMISSIONS

Certain  fund share  classes,  including  class B, are sold  without a front-end
sales  charge  to  shareholders,  while  at  the  same  time,  our  distribution
subsidiaries pay a commission on the sale. In the United States,  class A shares
are  sold  without  a  front-end  sales  charge  to  shareholders  when  minimum
investment  criteria  are met  while  our U.S.  distribution  subsidiary  pays a
commission on these sales. Class C shares are sold with a front-end sales charge
that is lower than the  commission  paid by the U.S.  distributor.  We defer and
amortize all up-front commissions paid by our distribution subsidiaries.

We have arranged to finance some of these  deferred  commission  assets  ("DCA")
arising  from our U.S.,  Canadian  and  European  operations  through  Lightning
Finance  Company  Limited  ("LFL"),  a  company  in which  we have an  ownership
interest.  In the United States, LFL has entered into a financing agreement with
our U.S.  distribution  subsidiary and we maintain a continuing  interest in the
assets  until  resold by LFL.  As a result,  we retain DCA sold to LFL under the
U.S.  agreement in our  financial  statements  and amortize  them over an 8-year
period or until resold by LFL in a  securitization,  which  generally  occurs at
least  once  annually.   LFL  did  not  sell  any  U.S.  DCA  in  securitization
transactions  in either the 6 months  ended March 31, 2003 or the 6 months ended
March 31, 2002. In contrast to the U.S. arrangement, LFL has entered into direct
agreements with the Canadian and European sponsored investment products, and, as
a result, we do not record DCA from these sources in our financial statements.

Amortization of deferred sales  commissions  remained  constant and decreased 2%
during the three and six months  ended March 31, 2003 over the same periods last
year.


                                       25
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OTHER INCOME (EXPENSE)

Other  income  (expense)  includes  investment  and other  income  and  interest
expense. Investment and other income is comprised mainly of the following:

* dividends from investments
* interest  income  from   investments  in  government   securities  and  other
  fixed-income investments
* realized gains and losses on investments
* foreign currency exchange gains and losses
* miscellaneous income, including gain or loss on disposal of property.

Other income (expense) increased 5% during the three months ended March 31, 2003
over the same period last year. Other income (expense)  decreased 20% during the
six months  ended  March 31,  2003 over the same  period  last year due to lower
realized  investment  gains  and  interest  income,  partially  offset by higher
foreign exchange gains from our non-U.S. operations.

TAXES ON INCOME

As a multi-national  corporation, we provide investment management services to a
wide range of international  investment  products,  often managed from locations
outside the United States. Some of these jurisdictions have lower tax rates than
the United States. The mix of income (mainly investment management fees) subject
to these lower rates,  when  aggregated  with income  originating  in the United
States,  produces a lower overall  effective tax rate than existing U.S. Federal
and state tax rates.  Our  effective  income tax rate in the quarter ended March
31, 2003  increased  to 28%  compared  to 25% in the same period last year.  The
effective  tax rate will  continue  to reflect  the  relative  contributions  of
foreign  earnings  that  are  subject  to  reduced  tax  rates  and that are not
currently included in U.S. taxable income, as well as other factors.

MATERIAL CHANGES IN FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

At March 31,  2003,  we had  $824.9  million  in cash and cash  equivalents,  as
compared to $980.6  million at  September  30, 2002.  Cash and cash  equivalents
include  cash,  U.S.  Treasury  bills and other debt  instruments  with original
maturities of three months or less and other highly liquid  investments that are
readily  convertible  into  cash,  including  money  market  funds.  The  mix of
short-term  instruments and, in particular,  the maturity schedules of some debt
instruments,  affect  the level  reported  in cash and cash  equivalents  and in
investment  securities,  available-for-sale  in any given period. Liquid assets,
which consist of cash and cash equivalents,  investments  available-for-sale and
current  receivables  increased  to  $2,872.0  million  at March  31,  2003 from
$2,826.0 million at September 30, 2002.

Outstanding  debt  increased  to $640.3  million at March 31,  2003  compared to
$603.0  million at September  30, 2002. As of March 31, 2003,  outstanding  debt
consists  of $519.0  million  in  principal  and  accrued  interest  related  to
outstanding  convertible  notes that we issued in May 2001 and $121.3 million of
other long-term debt. As of September 30, 2002, outstanding debt included $514.2
million  related to the  convertible  notes and $88.8 million of other long-term
debt.  Other  long-term debt consists  mainly of deferred  commission  liability
recognized  in  relation to the U.S.  DCA  financed by LFL that has not yet been
sold by LFL in a  securitization  transaction.  The increase in outstanding debt
from  September 30, 2002 is due to U.S. DCA financed by LFL and the accretion of
interest on the convertible notes.


                                       26
- --------------------------------------------------------------------------------


Each  of  the  $1,000  (principal  amount  at  maturity)  convertible  notes  is
convertible  into  9.3604  shares  of  our  common  stock.  We  may  redeem  the
convertible  notes for cash on or after May 11, 2006 at their accreted value. We
may have to repurchase the  convertible  notes at their accreted  value,  at the
option of the holders, on May 11 of 2003, 2004, 2006, 2011, 2016, 2021 and 2026.
In this event,  we may choose to pay the purchase price in cash or shares of our
common stock. The amount of convertible  notes that will be redeemed depends on,
among other  factors,  the  performance  of our common stock.  Redemption of the
convertible  notes may  require us to obtain  alternative  financing,  which may
increase future interest  expense.  On April 9, 2003 we notified holders that we
would redeem the  convertible  notes for cash at their accreted value on May 11,
2003. If we had to repurchase  all of the  convertible  notes on this date,  the
total payment would be approximately $520.1 million.

As of March 31, 2003, we had $500 million of commercial  paper,  $350 million of
medium term notes and $300 million of debt and equity securities available to be
issued  under  shelf  registration  statements  filed  with the  Securities  and
Exchange Commission. Our committed revolving credit facilities at March 31, 2003
totaled $420 million,  of which, $210 million was under a 364-day facility.  The
remaining $210 million  facility is under a five-year  facility that will expire
in June 2007. As of March 31, 2003,  our Fiduciary  subsidiary  had $350 million
available in uncommitted bank lines under the Federal Reserve Funds system.

On  April  3,  2003,  we  amended  the  $350  million  medium  term  note  shelf
registration  filed with the  Securities  and Exchange  Commission to permit the
issuance of an additional $70 million in medium term notes. On April 8, 2003, we
completed the sale of $420 million in five-year senior notes due April 15, 2008.
The senior  notes,  which were offered to qualified  institutional  buyers only,
carry an  interest  rate of 3.7%.  We  expect to use the net  proceeds  from the
offering for general corporate purposes, which may include repayment of existing
debt.

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. In extreme circumstances, we
might not be able to access this liquidity readily.

We have  arranged  with LFL for  non-recourse  financing  of  sales  commissions
advanced on sales of our B and C shares globally.  The sales commissions that we
have  financed  through LFL during the three and six months ended March 31, 2003
were  approximately  $36.2 million and $68.3 million compared to $36.0 and $65.4
million  over the same  periods  last  year.  LFL's  ability  to  access  credit
facilities  and the  securitization  market will  directly  affect our  existing
financing arrangements.

Our  banking/finance  operating  segment  periodically  enters  into  auto  loan
securitization  transactions with qualified special purpose entities, which then
issue  asset-backed  securities  to  private  investors.  The  outstanding  loan
balances held by these special purpose  entities were $521.6 million as of March
31, 2003 and $530.9  million as of September 30, 2002. Our ability to access the
securitization  market will  directly  affect our plans to finance the auto loan
portfolio in the future.

At March 31, 2003,  the  banking/finance  operating  segment had  commitments to
extend credit  aggregating  $292.7 million,  mainly under its credit card lines,
and had issued  financial  standby  letters of credit totaling $9.7 million that
expire  through  March  2004.  The  standby  letters  of credit  are  secured by
marketable securities and commercial real estate.

During the three and six months ended March 2003, we purchased approximately 2.7
million and 4.3 million  shares of our common  stock at a cost of $90.5  million
and $136.8  million,  including 1 million

                                       27
- --------------------------------------------------------------------------------


shares repurchased under put option contracts. In January 2003, we increased the
number of shares of our  common  stock  authorized  for  purchase  by 10 million
shares.  During April 2003, we purchased 2.0 million  shares of our common stock
at a cost of approximately $68.6 million.

During the quarter  ended March 2003,  we sold put options  giving the purchaser
the right to sell 1.4  million  shares of our common  stock to us at a specified
price upon exercise of the options on the designated expiration dates if certain
conditions  are met.  At March 31,  2003,  there were 4.4  million  put  options
outstanding with various expiration dates from May 2003 through January 2004.

We expect that the main uses of cash will be to:

* expand our core business
* make strategic acquisitions
* acquire shares of our common stock
* fund property and equipment purchases
* pay operating expenses of the business
* enhance our technology infrastructure
* improve our business processes
* pay shareholder dividends
* repay and service debt.

We believe  that we can meet our present and  reasonably  foreseeable  operating
cash needs and future commitments through the following:

* our existing liquid assets
* the continuing cash flow from operations
* our borrowing capacity under current credit facilities
* our ability to issue debt or equity securities
* our mutual fund sales commission financing arrangement.

In  particular,  we expect to finance future  investment in our  banking/finance
activities  through  operating  cash flows,  debt,  increased  deposit  base, or
through the securitization of a portion of the receivables from consumer lending
activities.

CRITICAL ACCOUNTING POLICIES

Our financial  statements and accompanying notes are prepared in accordance with
generally accepted  accounting  principles in the United States. The preparation
of these financial statements requires us to make estimates and assumptions that
impact our financial  position and results of  operations.  These  estimates and
assumptions  are affected by our  application of accounting  policies.  Below we
describe certain critical  accounting  policies that we believe are important to
understanding our results of operations and financial position.

In addition, please refer to Note 1 to the financial statements contained in our
Annual  Report on Form 10-K for the fiscal  year ended  September  30,  2002 for
further discussion of our accounting policies.  Estimates,  by their nature, are
based on judgment and available information.  Differences between actual results
and these estimates could have a material impact on our financial statements.


                                       28
- --------------------------------------------------------------------------------


INTANGIBLE ASSETS AND GOODWILL

Intangible assets and goodwill as of March 31, 2003 were as follows:


(in thousands)                                               NET CARRYING AMOUNT
- ------------------------------------------------------- ------------------------

Goodwill                                                              $1,327,582
Intangible assets - definite-lived                                       213,768
Intangible assets - indefinite-lived                                     476,711
- ------------------------------------------------------- ------------------------
Total                                                                 $2,018,061
- ------------------------------------------------------- ------------------------

Under Statement of Financial  Accounting  Standards No. 142, "Goodwill and Other
Intangible  Assets",  we are  required  to test the fair value of  goodwill  and
indefinite-lived  intangibles  for  impairment at least once a year. As of March
31,  2003,   we   completed   our  annual   impairment   test  of  goodwill  and
indefinite-lived   intangible  assets  and  we  determined  that  there  was  no
impairment to the goodwill and indefinite-lived assets recorded in our books and
records  as  of  October  1,  2002.  While  we  believe  that  our  testing  was
appropriate,  it involved  the use of  estimates  and  assumptions.  We are also
required to consider if any impairment has occurred to definite-lived intangible
assets. Based on our review and evaluation, we do not believe any impairment has
occurred.

INCOME TAXES

As a  multinational  corporation,  we operate in various  locations  outside the
United  States.  We have not made a provision for U.S.  taxes on the  cumulative
undistributed earnings of foreign subsidiaries as those earnings are intended to
be reinvested for an indefinite period of time. These earnings approximated $2.1
billion at March 31, 2003. Changes to our policy of reinvesting foreign earnings
may  have a  significant  effect  on our  financial  condition  and  results  of
operation.

VALUATION OF INVESTMENTS

We record  substantially  all  investments  in our financial  statements at fair
value or amounts that  approximate fair value.  Where  available,  we use prices
from independent  sources such as listed market prices or broker or dealer price
quotations.  For  investments in illiquid and privately held  securities that do
not  have  readily  determinable  fair  values,  we  estimate  the  value of the
securities based upon available information.  However, even where the value of a
security is derived from an independent  market price or broker or dealer quote,
some  assumptions may be required to determine the fair value.  For example,  we
generally assume that the size of positions in securities that we hold would not
be large enough to affect the quoted price of the securities when sold, and that
any such sale would happen in an orderly manner.  However, these assumptions may
be incorrect and the actual value realized on sale could differ from the current
carrying value.

We  evaluate  our  investments  for  other-than-temporary  decline in value on a
periodic basis. This may exist when the fair value of an investment security has
been below the  current  value for an  extended  period of time.  As most of our
investments  are carried at fair value,  if an  other-than-temporary  decline in
value is determined to exist, the unrealized investment loss recorded net of tax
in accumulated other comprehensive income is realized as a charge to net income,
in the period in which the other-than-temporary  decline in value is determined.
During  fiscal 2002, we  recognized  $60.1  million for an  other-than-temporary
decline  in the value of  certain  investments.  While we  believe  that we have
accurately


                                       29
- --------------------------------------------------------------------------------


estimated the amount of other-than-temporary  decline in value in our portfolio,
different  assumptions  could result in changes to the  recorded  amounts in our
financial statements.

LOSS CONTINGENCIES

We are involved in various lawsuits and claims  encountered in the normal course
of business. When such a matter arises and periodically  thereafter,  we consult
with our legal  counsel and  evaluate the merits of the claim based on the facts
available at that time. In management's  opinion,  an adequate  accrual has been
made as of March 31,  2003 to provide  for any losses  that may arise from these
matters.

VARIABLE INTEREST ENTITIES

In the United  States,  the Financial  Accounting  Standards  Board ("FASB") has
recently  issued  Interpretation  No. 46  "Consolidation  of  Variable  Interest
Entities"  (see  Note  14 to  the  financial  statements).  This  interpretation
requires  consolidation of a variable  interest entity ("VIE") by the enterprise
that has the majority of the risks and rewards of ownership,  referred to as the
primary beneficiary.  It also requires additional  disclosures for an enterprise
that holds a  significant  variable  interest  in a VIE,  but is not the primary
beneficiary.  We are currently  evaluating the impact of this  interpretation on
our investments in existence as of January 31, 2003. This evaluation requires us
to make  certain  assumptions  and  estimates in  calculating  the extent of our
interest in such entities,  which may impact our treatment of a lessor trust and
certain collateralized debt obligation entities described below.

LESSOR TRUST. We lease our corporate headquarters in San Mateo,  California from
a lessor  trust  under an  operating  lease that  expires in fiscal  2005,  with
additional  renewal  options for a further period of up to 10 years (see Note 11
to the financial statements).  At this time, we believe that it is probable that
we will have to consolidate the lessor trust in our annual financial  statements
as of September 30, 2003.

COLLATERALIZED  DEBT  OBLIGATION  ENTITIES.  We  provide  investment  management
services  to,  and have made  investments  in, a number of  collateralized  debt
obligation entities (see Note 11 to the financial statements).  At this time, we
believe  that  it is  reasonably  possible  that we will  have  to  either  make
additional disclosures about or consolidate one or more of these entities in our
annual financial statements as of September 30, 2003.


                                       30
- --------------------------------------------------------------------------------

RISK FACTORS

WE FACE STRONG  COMPETITION  FROM NUMEROUS AND SOMETIMES  LARGER  COMPANIES.  We
compete with  numerous  investment  management  companies,  stock  brokerage and
investment  banking  firms,   insurance  companies,   banks,  savings  and  loan
associations and other financial institutions.  Continuing  consolidation in the
financial  services  industry  has created  stronger  competitors  with  greater
financial   resources   and  broader   distribution   channels   than  our  own.
Additionally,  competing  securities dealers whom we rely upon to distribute our
mutual  funds also sell their own  proprietary  funds and  investment  products,
which could limit the  distribution  of our investment  products.  To the extent
that existing or potential customers,  including  securities dealers,  decide to
invest  in or  distribute  the  products  of our  competitors,  the sales of our
products as well as our market share, revenues and net income could decline.

CHANGES  IN THE  DISTRIBUTION  CHANNELS  ON WHICH WE  DEPEND  COULD  REDUCE  OUR
REVENUES AND HINDER OUR GROWTH.  We derive  nearly all of our fund sales through
broker/dealers and other similar investment advisors. Increasing competition for
these distribution  channels has caused our distribution costs to rise and could
cause further increases in the future.  Higher  distribution costs lower our net
revenues and earnings.  Additionally, if one of the major financial advisors who
distribute  our  products  were to  cease  their  operations,  it  could  have a
significant adverse impact on our revenues and earnings.  Moreover,  our failure
to maintain strong business  relationships  with these advisors would impair our
ability to distribute and sell our products,  which would have a negative effect
on our level of assets under  management,  related revenues and overall business
and financial condition.

WE HAVE BECOME SUBJECT TO AN INCREASED RISK OF ASSET  VOLATILITY FROM CHANGES IN
THE GLOBAL EQUITY MARKETS.  We have become subject to an increased risk of asset
volatility from changes in the domestic and global  financial and equity markets
due to the  continuing  threat of terrorism and the recent reports of accounting
irregularities  at certain  public  companies.  Declines in these  markets  have
caused in the past, and would cause in the future,  a decline in our revenue and
income.

THE LEVELS OF OUR ASSETS UNDER  MANAGEMENT,  WHICH IN TURN IMPACT REVENUES,  ARE
SUBJECT TO SIGNIFICANT FLUCTUATIONS.  Global economic conditions, changes in the
equity market place, interest rates,  inflation rates, the yield curve and other
factors that are difficult to predict  affect the mix,  market values and levels
of our assets under management.  Changing market conditions may cause a shift in
our asset mix towards fixed-income products and a related decline in our revenue
and income, since we generally derive higher fee revenues and income from equity
assets than from  fixed-income  products we manage.  Similarly,  our securitized
consumer receivables business is subject to marketplace fluctuation.

WE  FACE  RISKS  ASSOCIATED  WITH  CONDUCTING  OPERATIONS  IN  NUMEROUS  FOREIGN
COUNTRIES.  We sell  mutual  funds and offer  investment  advisory  and  related
services in many different regulatory jurisdictions around the world, and intend
to  continue  to expand  our  operations  internationally.  Regulators  in these
jurisdictions  could  change  their  policies  or laws in a  manner  that  might
restrict or otherwise  impede our ability to distribute  or register  investment
products in their respective markets.

OUR ABILITY TO SUCCESSFULLY INTEGRATE THE WIDELY VARIED SEGMENTS OF OUR BUSINESS
CAN BE IMPEDED BY SYSTEMS AND OTHER  TECHNOLOGICAL  LIMITATIONS.  Our  continued
success in effectively managing and growing our business globally depends on our
ability to integrate the varied accounting, financial and operational systems of
our international business with that of our domestic business.


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OUR  INABILITY TO MEET CASH NEEDS COULD HAVE A NEGATIVE  EFFECT ON OUR FINANCIAL
CONDITION AND BUSINESS  OPERATIONS.  Our ability to meet  anticipated cash needs
depends  upon  factors  including  our  asset  value,  our  creditworthiness  as
perceived by lenders and the market value of our stock.  Similarly,  our ability
to securitize and hedge future loan portfolios and credit card receivables,  and
to obtain continued  financing for Class B and C shares,  is also subject to the
market's perception of those assets,  finance rates offered by competitors,  and
the general  market for private debt. If we are unable to obtain these funds and
financing,  we may be forced to incur unanticipated costs or revise our business
plans.

OUR  EMERGING  MARKET   PORTFOLIOS  AND  RELATED   REVENUES  ARE  VULNERABLE  TO
MARKET-SPECIFIC POLITICAL AND ECONOMIC RISKS. Our emerging market portfolios and
revenues derived from managing these portfolios are subject to significant risks
of loss from  political  and  diplomatic  developments,  currency  fluctuations,
social   instability,    changes   in   governmental   polices,   expropriation,
nationalization,  asset  confiscation  and  changes  in  legislation  related to
foreign ownership. Foreign trading markets, particularly in some emerging market
countries are often smaller,  less liquid, less regulated and significantly more
volatile than the U.S. and other established markets.

DIVERSE AND STRONG  COMPETITION  LIMITS THE INTEREST RATES THAT WE CAN CHARGE ON
CONSUMER LOANS.  We compete with many types of institutions  for consumer loans,
which  can  provide  loans  at  significantly  below-market  interest  rates  in
connection  with  automobile  sales or in some cases zero  interest  rates.  Our
inability  to compete  effectively  against  these  companies or to maintain our
relationships with the various automobile dealers through whom we offer consumer
loans could limit the growth of our consumer loan business.  Economic and credit
market downturns could reduce the ability of our customers to repay loans, which
could cause our consumer loan portfolio losses to increase.

THE  SEPTEMBER  11, 2001 WORLD TRADE  CENTER  TRAGEDY MAY  ADVERSELY  AFFECT OUR
ABILITY TO ACHIEVE  THE  BENEFITS WE EXPECT FROM THE  ACQUISITION  OF  FIDUCIARY
TRUST COMPANY  INTERNATIONAL.  The September 11, 2001 tragedy at the World Trade
Center resulted in the destruction of our Fiduciary headquarters,  loss of 87 of
our employees,  additional  operating  expenses to re-establish and relocate our
operations,  and asset write-offs,  all of which could adversely affect or delay
our  ability to achieve  the  anticipated  benefits  from the  acquisition.  Our
insurance  coverage  may not cover all  losses on claims for  property,  damage,
extra expenses and business  interruptions arising out of the destruction of the
World Trade Center.  For the next several years,  insurance  costs are likely to
increase  materially  and we may not be able to obtain the same types or amounts
of coverage.

WE ARE SUBJECT TO FEDERAL  RESERVE  BOARD  REGULATION.  Upon  completion  of our
acquisition  of Fiduciary in April 2001, we became a bank holding  company and a
financial  holding  company  subject to the  supervision  and  regulation of the
Federal  Reserve  Board.  We are subject to the  restrictions,  limitations,  or
prohibitions of the Bank Holding Company Act of 1956 and the Gramm-Leach  Bliley
Act. The Federal Reserve Board may impose additional limitations or restrictions
on our  activities,  including if the Federal  Reserve Board believes that we do
not have the  appropriate  financial  and  managerial  resources  to commence or
conduct an activity or make an  acquisition.  The Federal Reserve Board may also
take actions as appropriate to enforce applicable federal law.

TECHNOLOGY  AND OPERATING  RISK COULD  CONSTRAIN OUR  OPERATIONS.  We are highly
dependent on the integrity of our  technology,  operating  systems and premises.
Although we have in place certain  disaster  recovery  plans,  we may experience
system  delays  and  interruptions  as a  result  of  natural  disasters,  power
failures,  acts of war, and third party failures,  which could negatively impact
our operations.


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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business,  our  financial  position is subject to market
risk: the potential  loss due to changes in the value of  investments  resulting
from adverse changes in interest rates,  foreign  exchange and/or equity prices.
Management is responsible for managing this risk. Our Enterprise Risk Management
Committee  is  responsible  for  providing a framework to assist  management  to
identify, assess and manage market and other risks.

We are exposed to changes in interest rates mainly through our debt transactions
and portfolio debt holdings available-for-sale,  which are carried at fair value
in our financial statements.  As of March 31, 2003, a significant  percentage of
our  outstanding  debt  is at  fixed  interest  rates.  In  our  banking/finance
operating  segment,  we monitor  the net  interest  rate  margin and the average
maturity of interest earning assets, as well as funding sources. In addition, as
of March 31, 2003, we have considered the potential  impact of the effect on the
banking/finance  operating  segment,  our  outstanding  debt and portfolio  debt
holdings,  individually and collectively,  of a 100 basis point (1%) movement in
market interest rates. We do not expect this change would have a material impact
on our operating revenues or results of operations in either scenario.

We are also exposed to equity price fluctuations through securities we hold that
are carried at fair  value.  To mitigate  this risk,  we maintain a  diversified
investment portfolio.

We operate  mainly in the United  States,  but also  provide  services  and earn
revenues  in Canada,  the  Bahamas,  Europe,  Asia,  South  America,  Africa and
Australia.  A significant  portion of these  revenues and  associated  expenses,
however,  are denominated in U.S.  dollars.  Therefore,  our exposure to foreign
currency fluctuations in our revenues and expenses is not material at this time.
This  situation  may  change in the  future as our  business  continues  to grow
outside the United States.

ITEM 4. CONTROLS AND PROCEDURES

(a)  EVALUATION OF DISCLOSURE  CONTROLS AND  PROCEDURES.  The Company  maintains
disclosure  controls and procedures that are designed to ensure that information
required to be disclosed in the Company's filings under the Securities  Exchange
Act of 1934 is recorded,  processed,  summarized and reported within the periods
specified in the rules and forms of the Securities and Exchange Commission. Such
information  is  accumulated  and  communicated  to  the  Company's  management,
including its principal  executive officer and principal  financial officer,  as
appropriate,  to allow  timely  decisions  regarding  required  disclosure.  The
Company's  management,   including  the  principal  executive  officer  and  the
principal financial officer, recognizes that any set of controls and procedures,
no matter how well designed and operated,  can provide only reasonable assurance
of achieving the desired control objectives.

Within 90 days prior to the filing date of this  Quarterly  Report on Form 10-Q,
the Company has carried out an evaluation,  under the  supervision  and with the
participation  of the Company's  management,  including the Company's  principal
executive  officer  and  the  Company's  principal  financial  officer,  of  the
effectiveness of the design and operation of the Company's  disclosure  controls
and procedures.  Based on such  evaluation,  the Company's  principal  executive
officer and principal financial officer concluded that the Company's  disclosure
controls and procedures are effective.

(b)  CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the
Company's internal controls or in other factors that could significantly  affect
the internal  controls  subsequent to the date of their evaluation in connection
with the preparation of this Quarterly Report on Form 10-Q.


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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There have been no material  developments in the litigation  previously reported
in our Quarterly  Report on Form 10-Q for the period ended  December 31, 2002 as
filed with the Securities  and Exchange  Commission on February 13, 2003. We are
involved  from time to time in  litigation  relating  to claims  arising  in the
normal  course of  business.  Management  is of the  opinion  that the  ultimate
resolution of such claims will not  materially  affect our business or financial
position.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a)  The Annual Meeting of Stockholders of Franklin  Resources, Inc. was held at
10:00 a.m.,  Pacific Standard Time, on January 30, 2003 at the principal offices
of the Company located at One Franklin Parkway, San Mateo, California.

The three proposals presented at the meeting were:

     1.   The  election of eleven (11)  directors  to hold office until the next
          Annual Meeting of Stockholders  or until their  successors are elected
          and shall qualify.

     2.   The ratification of the appointment of  PricewaterhouseCoopers  LLP as
          the  Company's  independent  accountants  for the fiscal  year  ending
          September 30, 2003.

     3.   The approval of the  adoption of the 2002  Universal  Stock  Incentive
          Plan.

(b)  Each of the  eleven nominees  for director  was  elected  and  received the
number of votes set forth below:

                          Name                   Votes For      Votes Withheld
                          ----                   ---------      --------------
                     Harmon E. Burns            208,811,524        3,179,372
                     Charles Crocker            208,850,777        3,140,119
                     Robert D. Joffe            208,799,419        3,191,477
                     Charles B. Johnson         207,748,540        4,242,356
                     Rupert H. Johnson, Jr.     208,812,563        3,178,333
                     Thomas H. Kean             208,773,239        3,217,657
                     James A. McCarthy          203,680,603        8,310,293
                     Chutta Ratnathicam         207,831,590        4,159,306
                     Peter A. Sacerdote         203,522,289        8,468,607
                     Anne M. Tatlock            208,681,169        3,309,727
                     Louis E. Woodworth         203,668,229        8,322,667

(c)  The  ratification of the appointment of  PricewaterhouseCoopers  LLP as the
Company's independent accountants for the fiscal year ending September 30, 2003,
was approved by a vote of 200,588,811 shares in favor, 9,973,248 shares against,
and 1,428,837 shares abstaining.

(d)  The approval of the adoption of the 2002 Universal Stock Incentive Plan was
approved by a vote of 190,683,381  shares in favor,  19,516,716  shares against,
and 1,790,799 shares abstaining.


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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits: see Exhibit Index on page 41 to page 42.

(b)  Reports on Form 8-K:

     (i)  Form 8-K filed on  January  23,  2003  reporting  under  Item 5 "Other
          Events" an  earnings  press  release,  dated  January  23,  2003,  and
          including  said press  release as an Exhibit  under Item 7  "Financial
          Statements and Exhibits"


                                       35
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                                   SIGNATURES
                                   ----------

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                   FRANKLIN RESOURCES, INC.
                                   (Registrant)


Date:  May 12, 2003                By: /s/ Martin L. Flanagan
                                       ----------------------
                                       Martin L. Flanagan
                                       President and Chief Financial Officer


                                       36
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                                 CERTIFICATIONS

I, Charles B. Johnson, certify that:

1.   I have reviewed this quarterly  report on Form 10-Q of Franklin  Resources,
     Inc.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a.   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b.   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c.   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a.   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b.   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and


                                       37
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6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date: May 12, 2003                 /s/ Charles B. Johnson
                                   ----------------------
                                   Charles B. Johnson
                                   Chief Executive Officer



                                       38
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I, Martin L. Flanagan, certify that:

1.   I have reviewed this quarterly  report on Form 10-Q of Franklin  Resources,
     Inc.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a.   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b.   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c.   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a.   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b.   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and


                                       39
- --------------------------------------------------------------------------------


6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date: May 12, 2003                 /s/ Martin L. Flanagan
                                   ----------------------
                                   Martin L. Flanagan
                                   Chief Financial Officer


                                       40
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                                  EXHIBIT INDEX


Exhibit 3(i)(a)     Registrant's Certificate of Incorporation, as filed November
                    28, 1969, incorporated by reference to Exhibit (3)(i) to the
                    Company's  Annual  Report on Form 10-K for the  fiscal  year
                    ended September 30, 1994 (the "1994 Annual Report")

Exhibit 3(i)(b)     Registrant's  Certificate  of  Amendment  of  Certificate of
                    Incorporation,  as filed  March  1,  1985,  incorporated  by
                    reference to Exhibit (3)(ii) to the 1994 Annual Report

Exhibit 3(i)(c)     Registrant's  Certificate  of  Amendment  of  Certificate of
                    Incorporation,  as filed  April  1,  1987,  incorporated  by
                    reference to Exhibit (3)(iii) to the 1994 Annual Report

Exhibit 3(i)(d)     Registrant's  Certificate  of  Amendment  of  Certificate of
                    Incorporation,  as filed February 2, 1994,  incorporated  by
                    reference to Exhibit (3)(iv) to the 1994 Annual Report

Exhibit 3(ii)       Registrant's  Amended  and  Restated By-Laws incorporated by
                    reference to Exhibit 3(ii) to the Company's Annual Report on
                    Form 10-K for the fiscal year ended September 30, 2002

Exhibit 4.1         Indenture  between  Franklin Resources, Inc.  and  The Chase
                    Manhattan Bank (formerly  Chemical Bank), as trustee,  dated
                    as of  May  19,  1994,  incorporated  by  reference  to  the
                    Company's Registration Statement on Form S-3, filed on April
                    14, 1994

Exhibit 4.2         Indenture  between Franklin Resources, Inc.  and The Bank of
                    New York dated May 11, 2001  incorporated  by  reference  to
                    Exhibit 4.2 to the  Registrant's  Registration  Statement on
                    Form S-3, filed on August 6, 2001

Exhibit 4.3         Form  of  Liquid  Yield  Option  Note due 2031 (Zero Coupon-
                    Senior)  (included  in Exhibit 4.2 hereto)

Exhibit 4.4         Registration  Rights Agreement  between  Franklin Resources,
                    Inc. and Merrill Lynch, Pierce,  Fenner & Smith Incorporated
                    ("Merrill  Lynch")  dated  May  11,  2001,  incorporated  by
                    reference to the Registrant's Registration Statement on Form
                    S-3, filed on August 6, 2001

Exhibit 4.5         Form of 3.7% Senior Notes due 2008

Exhibit 10.69       Amendment to the  Managed Operations Service Agreement dated
                    February 6, 2001, June 10, 2002 and February 3, 2003 between
                    Franklin Templeton Companies, LLC and International Business
                    Machines Corporation

Exhibit 10.70       Representative Form of Franklin Templeton Investor Services,
                    LLC Transfer Agent and Shareholder Services Agreement

Exhibit 12          Computations of ratios of earnings to fixed charges


                                       41
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Exhibit 99.1        Certification  of  Chief  Executive  Officer Pursuant to  18
                    U.S.C.  Section 1350, as Adopted  Pursuant to Section 906 of
                    the Sarbanes-Oxley Act of 2002

Exhibit 99.2        Certification  of  Chief Financial  Officer  Pursuant to  18
                    U.S.C.  Section 1350, as Adopted  Pursuant to Section 906 of
                    the Sarbanes-Oxley Act of 2002


                                       42
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