Greetings, and welcome to the Federated Investors' Third Quarter 2015 Analyst Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Ray Hanley, President of Federated Investors Management Company. Thank you. You may begin.

Good morning and welcome. Leading today’s call will be, Chris Donahue, Federated CEO and President; and Tom Donahue, Chief Financial Officer; and joining us for the Q&A is Debbie Cunningham, Chief Investment Officer for Money Markets. During today’s call, we may make forward-looking statements and we want to note that Federated’s actual results may be materially different than the results implied by such statements. We invite you to review the risk disclosures in our SEC filings. No assurance can be given as to future results and Federated assumes no duty to update any of these forward-looking statements. Chris?

Thank you, Ray and good morning. I will briefly review Federated’s business performance and then Tom will comment on our financial results. I will begin by reviewing our equity business. Third quarter equity market conditions were quite challenging as the S&P was down over 6% and the industry experienced net outflows in equity mutual funds. Federated's equity fund product breadth and strength allowed us to produce another quarter of solid net inflows. In fact, Federated has produced net positive equity flows for eight consecutive quarters. Total Q3 equity net sales for fund and separate accounts combined were $527 million. Federated's equity fund organic growth rate of 4.7% for Q3 annualized was again among the best in the industry. Based on strategic insights data, our third quarter equity fund net flows ranked in the top 3% of the industry, that puts us 20th out of 757 companies. Our equity business continues to be very well-positioned with a variety of strategies producing solid performance and sales results. Using Morningstar data for rank funds as of quarter end, six Federated funds or 23% were in the top decile for the trailing three years. We had 13 funds or 50% in the top quartile and about three-fourth in the top half for the trailing three years. Performance highlights includes Kaufmann Large Cap Funds in the top decile for the trailing three and five years and the International Leaders Fund which is a foreign large cap blend strategy in the top 5% or better for the trailing three, five and 10 years. Four of our MDT strategies were top decile for the trailing three years, including the MDT Stock Large Cap Value Fund and the MDT All Cap Core Fund. Our absolute return funds has developed a top quartile one and three year record in…

Thank you, Chris. Revenue was up 8% compared to Q3 of last year due mainly to lower money fund yield related fee waivers and higher equity managed assets. Revenue increased 3% from the prior quarter due mainly to higher money fund assets including assets from the Reich & Tang acquisition and an additional day in the quarter. Equities contributed 46% of Q3 revenues, again the highest percentage among the various asset classes. Combined equity and fixed-income revenues were 67% of the total. Operating expenses increased 3% compared to Q3 of last year due mainly to higher Money Market fund distribution expense as a result of lower waivers. Operating expenses increased slightly from the prior quarter due mainly to higher distribution expense as a result of higher money fund assets and an additional day in the quarter. The pretax impact of money fund yield related fee waivers of $20.3 million was down from the prior quarter and Q3 of last year. The decreases were due mainly to higher fund gross yields. Based on current assets and yields the impact of these waivers to pretax income in Q4 is expected to be about the same as was in Q3. Looking forward we estimate that gaining 10 basis points in gross yields from beginning Q3 levels would likely reduce the impacts of yield waivers by about 45% and a 25 basis point increase would reduce the impact by about 65%. We expect to capture about two-thirds of the pretax income related to the remaining money fund yield waivers. Multiple factors affect the yield related waiver levels and the ability to capture related income going forward. These factors include changes in customer relationship, fund asset levels, available yields for investments, actions by regulators, changes in the expense level of the funds, changes in the mix of customer assets, changes in product structure, changes in distribution fee arrangements with third parties, Federated's willingness to continue the fee waiver and changes in the extent to which the impact of the waivers is shared by third parties. We expect these factors and their impacts to vary. The Q3 effective tax rate was approximately 37%. Year-to-date the tax rate is about 38% and that continues to be our expectation going forward. Looking at the balance sheet; cash and investments totaled $322 million at quarter end of which $309 million is available to us. We would now like to open the call up for questions.

[Operator Instructions] Our first question comes from the line of Bill Katz with Citigroup. Please proceed with your question.

Okay. Thanks. Good morning. Appreciate the opportunity. So just Tom perhaps when you ended on the fee waivers, did I heard you correctly your sort of guidance of recapturing two-thirds as rates normalized. I think that's down from three quarters in the last guidance. Can you talk about maybe what the delta might be? And then stepping back, a number of your competitors both in the traditional asset managed base and elsewhere have been talking about possibly delaying or not going after the fee waivers from a competitor perspective so, how do we think about the other two thirds at this point?

Yes. When you say capture the remaining, so the sole concept of capturing from the past is all the future that we are talking about. Just making sure we all realize that. In terms of moving from 75% to two-thirds of what we have recaptured, that's the -- technically the product or the clients' relationship that have been finalized and when it can finalize that's when it will -- that's why it moves down, so as we are recapturing things now it's not affecting us.

How much of a big picture perspective, I'm not sure I understand that. How about some big picture perspective just the thought of perhaps limiting the recovery of the go forward fee waiver just from a competitive perspective can't you take some market share. It seems like some of your peers might be looking at these price as a weapon to take some volume?

Bill this is Chris. The overall perspective there would go as follows. As Tom said, the concept of recapturing old fees waived is a non-concept, both because the structure of an investment company and because of the existence of a free and open and competitive market place. So then, yes, we have seen it ever the case that people have an inclination to want to use pricing to try and capture share and this is not our idea at all. What you are seeing that has dwarfed that concept is that the old estimates used to be that the $500 billion move from prime institutional into [govie], now you are seeing estimates in the $1 trillion range which would put it at two-thirds of the total and this perforce because of the pricing of government funds will have an impact there. But we are not going to be using these as weapons or strategies nor to gain share by reducing price or not allowing the price to go back where it would have gone if they ever decide to raise rates.

Okay. Then just a follow-up question on Money Markets. Just coming back to some of these anticipated changes for next year. What is your sense from the client base in terms of which way they might be leaning? Obviously there's a lot of different selections for them and then how do the economics of those products compare to the legacy businesses?

Well, in terms of discussion with clients about how they're leaning, they're leaning every which way and some of them have not yet jumped on the bandwagon of figuring out what to do. Others of them have decided that they definitely want a stable NAV at any cost, at any situation, because as you have heard me say on these calls before, a lot of these money fund clients are looking for a cash management service, which implies dollar in dollar out and that would tend to push them into government funds. We are seeing viability for other types of products private funds, perhaps even the 60 day funds because after the first consideration of stable NAV, the yield does become an important second consideration. We have seen with clients who sweep that they either don't want to mess around with a floating NAV or they don't want to change their systems in order to do a sweep. And so those clients are not going to be utilizing the old standard products and they're going to be heading primarily towards retail products where ever they can as opposed to the institutional. Now in terms of how this all lines up, we don't think there's going to be a whole lot of difference between what's here and what was in the legacy business. The recapture rate that we are mentioning is an issue with the client in terms of what that deal is, but beyond that, when we are looking at developing the private fund and the pricing thereof, we are looking at the standard type pricing that we have now. This is not to say that we can't and won't be in a position to respond if others decide to go another way, but that's currently how we're looking at it.

Okay. Thank you.

Thank you. Our next question comes from the line of Michael Kim with Sandler O'Neill & Partners. Please proceed with your question.

Hey guys, good morning. First just curious to maybe get your thoughts on the recent announcement of the upcoming retirement ahead of the strategic value dividend team, particularly as it relates to potential impact to volumes or flows across the mutual funds' managed accounts and institutional separate accounts just given sort of the pending transition?

Yes. This is Chris. Walter Bean has had an exceptional career and part of that exceptional career just isn't the development of the record and the assets and the flows, but also the people that work with him. And so the team of Dan Peris and Debbie are an outstanding team and as you may recall Dan Peris has published two books over the last several years, putting the academic and scientific aspects of their investment strategy into print. And so far this is something that we obviously plan for, because age does not wait for anyone and we allow graduations here and this is what Walter Bean is availing himself of and so we have not yet seen any change in the flow of assets nor in the interest in the product. And as I mentioned during my remarks we are expanding of the capacity of this particular strategy up into the Canadian marketplace with full anticipation that we will be able to continue to grow that franchise. So we are very thankful of Walter's participation, wish him well in his retirement and intend to roast him at his departure moment.

Fair enough. Then maybe one or two for Tom. Any commentary on sort of the outlook for expenses more broadly just given the ongoing market volatility? And then any specifics in terms of the comp line as we look into the fourth quarter and beyond.

Yes. In terms of the waivers we have already given our commentary on that. In terms of other expenses we still have been pretty active on continuing to manage expenses. You saw the margin pick up, while we are not declaring victory there, we were happy with that. In terms of comp, it's just like the waivers, those things can change.

Understood. Okay and then just lastly, one of the key themes that we've seen across the firms that have reported thus far has been considerable step up in share repurchase activity last quarter. So I know you guys take a bit of a more balanced capital managed approach and the total payout ratio remains high, but just wondering, if you're thinking has shifted at all as it relates to maybe putting a bit more of an emphasis on buybacks prospectively?

Well we did -- you saw we did purchase over 500,000 shares and they are up from 300 previous quarters and I wouldn't be surprised if that would continue. We look at how much -- of a number of different factors we go through. We have our models and start off with, is it a good investment, and where are the risk and balances, and so we have remained active all the way through. And then in terms of how much you're buying, the factor of how much shares we are issuing, we don't like the share count to go up. So that's a constant battle of having to buy shares to make sure that doesn't happen. And we were happy to be able to move up to the 500 level and actually mix a little bit of the share count growth. But we do run the model stance, is this a good investment and that's our fundamental thought process.

Okay. Great. Thanks for taking my questions.

Thank you. Our next question comes from the line of Ken Worthington with JPMorgan. Please proceed with your question.

Hi, good morning. First, on fee waivers, the impact on Federated revenue improved slightly and that's completely intuitive but the cost of distribution went up in the other direction which is unintuitive. So I guess how does that happen in the first place to have distribution actually get hurt when Federated achieves a benefit and I guess is it just one time and I assume we won't see that again, but what is the outlook there?

Ken, it's Ray. I think what you're seeing there is a lot of it is the impact of bringing in the new assets through the Reich & Tang acquisition. They would've had their own characteristics in terms of revenue and distribution expense. If you look at it overall, the waivers, the pretax impact, the impact of Federated was about 24% of the revenue that we waived and so that was down sequentially and down year-over-year. So that, the portion that has affected us has actually gotten better but specifically on the line items you're talking about I think we're getting some acquisition impact for this particular quarter.

Okay. So I actually figured that out. Okay. Thank you there. Then near high level performances, fund performance -- product performances good, compensation flat to down, non-distribution costs kind of flat. You then have been kind of investing in certain areas of the business, what levers are you pulling to kind of manage compensation and manage other expenses while you are kind of investing certain parts of the business? And then when you see higher rates, there is going to be a revenue windfall, are there projects that have been pushed back in the lower rate environment that you will expect to kind of be pursued when you get the kind of inevitable revenue windfall? Thanks.

First of all let me comment on the choice of vocabulary. Not to quibble, but when the revenue from our money funds is restored we don’t consider to windfall. But I will let Tom talk about the mechanics you asked about.

Yes. I am not -- in terms of trying to manage expenses, it is across-the-board, all the employees participating in things that they can figure they can delay, but that doesn't mean that there is a build up expense thing to let's say delay that's going to come and rush out. Things that they can delay and figure out how we don’t have to do, is -- when we have replacements, taking our time on replacing people which means employees here get to do job and a half for somebody else. So that can save you decent amount of money and we continue that here for a while. In terms of other expenses, we are doing a big operation on upgrading all the investment management operations and that takes time and to figure it out there is going to be large dollars spent there, but it's going to be spent over the next three to five years. And so there is no big ramp up that we are expecting there either on the technology side.

Okay, great. Thank you very much. That was it.

Thank you. Our next question comes from the line of Robert Lee with Keefe, Bruyette & Woods. Please proceed with your question.

Thanks. Good morning, guys.

Good morning, Robert.

Chris, maybe a question for you on equity flows and sales. So I mean sales in a pretty tough environment gross sales hold up pretty well. Could you maybe give us a little bit more color or feel for which -- may be which distribution points or channels you're seeing kind of the most success in and I don't know if it's the old Edward Jones channel or RIAA's. Is there any kind of color on kind of your thoughts around where the distribution successes are and where they may be opportunity is would be helpful?

Well. The first one I would mention would be that, you remember a few years ago we talked about adding to the sales force in order to call on the broker/dealer area and that has worked out very, very well. Over the last couple of years we have increased the number of advisors that are actually doing business with us, it's over 37,000 now. Back several years ago that was under 30,000. So that's been a very strong area for us and it is both in the direct IRA business and in the regular broker/dealer business. It has been a big movement that cross hatches all of those areas and trusts along the lines of retirement and depending on who you talk to because it's very difficult to get these numbers and if I had good numbers I'd have good slides, but I don't. But the estimate for us is, we have got just under 50% or over 50% of the business coming in retirement type money. So that what happens is that, when you do the hard work of getting on a platform then you get the automatic investments, you get the reinvestments and these are very, very important things. And it's almost like if you don't get on the platforms you have a problem growing in existing and if you get on the platforms and continue the performance and continue the service that goes with it then that works very well too. On the trust side, what's going on there is a lot of concern about the fiduciary relationship and I'm not trying to get into the DOL thing on the broker/dealer side. But there is a lot of concern about; okay, what is our relationship with the clients, are we following our duty of loyalty, are we following our duty of prudence? And Federated does a lot of work on this as a value-add to the relationship that helps us very well in terms of the trust business and then by stepping stones over into the broker/dealer and RIAA business to do everything we can to try and get clients ready for what the DOL may come up with.

All right great. And maybe I'm just kind of curious as we talked out of the punctured out the money fund business, when do you think and then decide what types of products you know the institutions choose to go in. So you have a lot of banks that want to get rid of deposits. You've talked about that in the past. Can you maybe give us updated thoughts on your current expectations, when you may start to -- maybe you are seeing it or start feeling -- or start to see some of that cash move? You think it's more of a 2016 or maybe year end thing as when you could usually get a kind of year end surge in deposits to banks or money funds? Just your thoughts on that part.

That one Rob is hard to put an exact thing on. Some of it has already moved into various elements into the direct marketplace, for example. Some -- there will be an effort around year end because the year-end becomes important to some of those banks in terms of removing that money from their balance sheet. So that becomes another timeframe. And I think it has to almost wait until the full maturity of the October 16th deadline for implementation of the new rules because that's when everybody really knows what everything is going to look like. Now everyone of us who is in this business are going to try and get things organized well ahead of that, but that's the point at which I have said before that I think you begin to see meaningful positive flows coming back into the money fund business and growth all around. So right now, obviously we are spending a lot of time as are others, restructuring products, talking to clients, and they are trying to figure out exactly where to go. We sit down with all these big banks who also are trying to get people off of their balance sheet and this is part of what informs our effort to create the products, but it's really tough to say exactly when you begin to see that money. And Debbie has a follow-up.

The only thing I would add is that as rates actually increase historically, Money Market funds have lagged the direct market price. We have already started to see yields increase on Money Markets products despite the fact that the Fed hasn't made a move yet. But when that moves actually start in earnest, even if it's at a slow pace, the expectation is that Money Market funds are going to keep pace much more closely correlated than has historically been indicated and that certainly that's when you are going to see the deposits rates lag. They are going to lag for two different reasons. Number one, banks don’t want those deposits anymore; and number two, it's an administered rate, so they can figure out a way that makes it easier for them to shed them in a rising rate environment, especially when they are not keeping pace with that rise. So we do think that the rising rate environment will begin that movement from that in a little bit more earnest.

Great and maybe one last question for Tom, and this is a modeling question. I've a follow-up to Ken's really. When we look at the moderation of fee waivers I won't say recaptured, it looks like most of that in your disclosures come out of -- been come through advisory fees. If you look at kind of other service fees, they have been remarkably stable or imagine your waiving has been remarkably stable kind of the last year-and-a-half despite the improvement in the fee waiver picture. So is there -- I know there's a mix issue in there, but if were thinking ahead and just trying to think about how this flows of the P&L, is it reasonable to think that, hey that, one-third of waivers that you're not going to recapture, that we may -- somehow that's going to play through the other service fee lines as opposed to advisory fee lines. I'm just trying to get a sense on how kind of the moving -- the pieces will move?

Rob, It's Ray. We had talked in the past about the distribution expense being kind of a constant pressure and we talked about that potential to happen with in terms of discussions with a particular customer which are in flux and we don’t when or how that will play out. I do think looking at this line item, this particular period with the waivers of the other service fees essentially going out that does relate to the change in asset composition. So I don’t know then we would get to the same modeling conclusion but that's something we can talk about offline.

Great. Thanks for taking my questions, guys.

Thank you. Our next question comes from the line of Michael Carrier with Bank of America Merrill Lynch. Please proceed with your question.

Thank you, guys. Chris, you hit a little bit on the DOL, but I guess you have got the DOL proposal, and then more recently the SEC's come out with the liquidity proposal. I know it's relatively early and all these are proposals, but I just wanted to get your take on like maybe the liquidity side. And then just on the DOL, when you look at the distribution positioning for Federated, where are the hurdles, based on the current proposal? And how do you think that you're positioned if this goes through?

Okay. We will do liquidity first. On the liquidity rule our attitude is that there is some good things, there is some not some good things and there is some things that could go either way. The good things are that it's the principles base operations. So you get to use your judgment on to what percentage of your fund should have three day liquidity and that is a very good approach. And the judgments are to be based on a lot of data a lot of which we have been utilizing here at Federated for some amount of time so as to do that kind of thing. Obviously not with a precise number on the three-day. So disclosure on this is a positive and targeting and maintaining liquidity levels is a good thing because it is -- back in the old days when I learned about the Investment Company Act, the right of redemption was considered sacramental. So that's pretty good. Now in terms of things that aren't so hot, the idea that you can put all equity securities and all fixed income securities into six buckets some based on business days, some based on calendar days is a lot like measuring something with a ruler and then quoting it in inches. It just doesn't work well and I understand that it's a great business for intermediaries to come in and say, hey, this is a wonderful thing to bucket everything. So I think there's some challenges with that. The thing that can go either way is the swing pricing, a new concept. Obviously it's worked over in some areas in Europe. And my biggest concern about it is the timing and the investor education and understanding of what it will do. The swing pricing has positive aspect in…

Okay, thanks. And then, Tom, just had a quick follow-up. When you gave the waiver outlook in terms of that two-thirds number, I don't think that changed. I just wanted to make sure, because I think when I was just looking at what you said last quarter, it seems pretty similar. I think you were just saying that when the new client -- when that either starts, that relationship and that's what you're expecting versus maybe the current 75%. But I just wanted to make sure we had that right.

Yes. And you are right. It was -- we started out at 75% and that might have been a couple of quarters ago.

Got it, okay. I just wanted to clarify. Thanks.

Thank you. Our next question comes from the line of Surinder Thind with Jefferies. Please proceed with your question.

Good morning, just a couple of different things to touch base on here. One is just going to be simply expenses. Can we talk a little bit about the professional services outlook going forward? Obviously, related to the regulatory activity of the last few years and what's been going on that has been elevated, how should we think about that in the outlying years in terms of 2016 and beyond?

I had love to say we could -- we should drop that as things drop off but it never seems to happen. Something new comes up and I just -- I had be hesitant to model big drops in that line.

Okay, but it has been -- there was a big step up in, I want to say 2013 I believe, and I think it's been trending down a little bit since then. Is that a fair trajectory or are we kind of more at a normalized level for where we think things are at this point?

I think we are at a fairly normalized level, Surinder. The best thing to do would be to take multiple quarters of it and average it out, because as your question indicates, in any given quarter you can see considerable variance there based on use of consultants, outside lawyers, et cetera. So it's probably best just to kind of take that one over a period of time from maybe the last year or so and use that as an average.

That's helpful. And then the other thing I kind of wanted to touch base on is you've generally had good success. A few different products that you've mentioned or areas, and whether it was EFA or value or growth. Can you maybe talk a little bit about the success of the Kaufmann Large Cap and why or maybe you've seen success there? I know that's a product that's done really well in terms of its relative rankings versus peers. But there's also other products out there, similar products in that segment, that also have strong track records but aren't seeing the level of success that you guys are in that product.

I can't address why others don’t do as well with similar products. I will make this observation that there are always in this industry 4-star and 5-star products that don't have positive flows. And the reason for that is usually that the sales effort is not up to the performance of the fund effort. And so as you might imagine you are going to hear my activity on the fact that we have over 200 salespeople who are telling the story. And especially in the Large Cap Kaufmann area, remember this, they got their start in the Mid-Cap area and then went into Small Cap and then into Large Cap. So that they have a long, long, long worthy history of excellent performance in the growth area. And I think just telling that story there is no magic catalyst other than checking out the companies and doing what you've been doing for literally decades and you repeat the sounding joy and repeat the sounding joy and as the performance is there then the investors are very attracted to it.

And then maybe related to that, in terms of the commentary around the sales force, how should we be thinking about maybe headcount or increasing distribution or penetration and stuff or any thoughts around that?

There may be small numbers of incremental adds but nothing that would approach double-digits. We have what 210 now, 214, I think 214 is the number we are using now and we are always looking for little pockets here and there. We did talk about some additions that we were planning on the international side because of our growth in Canada and planned activity in Central America. Then we might add somebody overseas to as well. But it's all one z's and two z's. There is no double-digit plan.

Fair enough. And then maybe one final question, just on your outlook in terms of like the seed portfolio and stuff. I know you mentioned you're adding product and stuff. How should we think about that longer-term, in terms of, how comfortable are you guys with the breadth of product you have currently and maybe versus where the market is going? Obviously we've seen a lot of commentary around like liquid alts and some other products. How do you guys think about those things?

Well we think those are important things for the future which is why a couple of years ago we hired a fellow called Michael Dieschbourg and reorganized the $1.6 billion or $1.7 billion of assets into an alternative area. And that's why I highlighted the Absolute Return Fund and commented on the Managed Volatility II Fund. And the analogy I have used on these calls before is that way more than a decade ago we came up with a theme and a group of funds called the Power of Income. Strategic Value Dividend was one of the leaders in that stake. It included equity income and capital income as well and others. So it was a whole movement. And the way we are looking at is that these alternative products have the potential in our view to grow into a situation similar to what those Power of Income Funds have done. But it takes a lot of time. The immediate catalyst though caused geyser eruptions but they are steady growers and that's why we like to highlight the ones that are attracting assets and developing one and three year records. So we would be -- we view ourselves as betting on the growth of the alternative space very strongly.

Great, thank you.

Thank you. Our next question comes from the line of Eric Berg with RBC Capital Markets. Please proceed with your question.

Thank you and good morning.

Good morning, Eric.

Thank you. My question is going to be purposefully high level and general. Listening to a number of companies in this sector, including yours, you would think that the challenges are very great, maybe not a fire drill but that the challenges are very great, and that in general terms, the state of the business today is more difficult than it was a few years ago. At least that's my take away; this is sort of the tone, that we're in a very, very difficult time. But I'm trying to understand whether that really is the right inference to draw. Is the business generally speaking of money management in worse shape than it was a few years ago? After all, interest rates really haven't changed all that much this year. The stock market really hasn't changed all that much this year in the United States. Yes, emerging market prices have collapsed, but some people view that as an opportunity; volatility, people make money off of volatility. So that's my question. Given everything that's going on, is it more difficult and more challenging to be running your business today than it was a year ago or three years ago?

Well rates have been dramatically lower than we had experienced for years. We have been challenged in managing in that environment. And so '08 till 2015 is -- there is enough time to get used to it. And so, yes it is challenging but we don’t feel like we are in some crisis and we're managing through it and properly with obviously our earnings part depressed based on where rates are and we have dealt with that in a fashion that allows us to continue to invest in the future, like Chris talked about Dieschbourg and seeding other products and trying to make sure that we're set up for growth and yet still have respectable margin and a respectable earnings. So sure it's challenged but basically we are used to it. Chris probably has a follow-up too.

Yes. It is more challenging in these senses. Every time you turnaround there is another gang of regulations. So we have been through re-do the whole thing on Money Market funds, which to the people working on it is truly water boarding as we were told by one of the commissioners it would be. We are now dealing with the liquidity rule. We are now dealing with a fiduciary rule and the SEC has said they are going to come out with a derivatives rule before year end. Well even though these challenges are greater, there are other things going on. Early on when we were going public in '98, I talked about the potential of the triumph of investment advice as opposed to the do-it-yourself. All of these things point towards the need for the advisor and that's the gang that we are betting on as the intermediary and the advisor. This is one of the chief problems of the DOL proposal is it will tend to less than diminish if not eliminate advise for people that don't have substantial balances of money. The other effect of this regulation, which is most unfortunate, but nonetheless you deal with it, is that it all oligopolizes the business. You can see it clearly in the money funds business but makes it more and more difficult for other players to get in. And when you look at what the responsibilities you have on the distribution side, it's not only oligopolized in the sense of creating investment management operations, it's oligopolized in the sense of getting onto platforms as I articulated earlier. So I can at once say that it is far more challenging and say that we are very happy with where we are and with our growth prospects at the same time and would still contend vigorously that this investment management business is a great business.

Very, very helpful. I hope to talk to you more about this. Thank you to both of you.

Thank you. Our next question comes from the line of Patrick Davitt with Autonomous Research. Please proceed with your question.

Good morning, thank you. My question is on the 4Q waiver guidance. And maybe you could remind us how to think about that relative to the way short rates track, because I would've thought there might be some reversal there given the way short rates have tracked. So any kind of color how to think about that relative to the way the short rates track?

I will just give you the technical points behind the modeling and then Debbie can talk about our outlook for rates. And basically we are looking at the overnight repo rates being in the mid-to-high-single single-digit and that's really one of the more critical factors when we look at -- where we think the waivers are going to come out. The other comment I would make if you look at the asset growth remember that waivers are both a rate and a volume calculation. If you look at the asset growth we had in the third quarter and again with the acquisition in there, it was mostly on the prime side where of course waivers have even over the last several years not been much of an issue. But Debbie can comment on where we think rates are heading.

Sure. From a repo perspective unchanged there in the single digits as Ray mentioned. From a LIBOR based securities perspective, so that it includes government agencies, commercial papers, CDs, floating rate securities, those rates are also fairly unchanged, maybe up a couple of basis point despite the fact that Fed missed the market and didn’t move in September. Treasuries are a little bit mixed at this point just given what is happening from budgetary discussion perspective, depending on what treasuries you are looking at they could be almost trading negative to price to trading high double digits. So it's really hard to make an estimation there. But we are confident that the budgetary process will move forward and get passed. So all-in-all we are looking at rates that are still for the most part unchanged to maybe 1 basis point or 2 basis points higher and therefore the expectations that the waivers there are very similar.

Okay that's helpful thank you. Then just a point of clarification on your prepared comments, the flow numbers you gave at the very beginning were as of October 16th and the asset numbers were as of the 21st?

Correct.

Okay. Thanks a lot.

Thank you. There are no further questions at this time. Mr. Hanley I will turn the floor back to you for any final remarks.

Well, thank you for joining us today. That will conclude our call.