Tom Gallagher (Credit Suisse): Have you seen any changes domestic versus international other than sort of isolating the UK situation?

Chip Mason: No. There are larger pools of money that are out there now for much lower basis points, but there is not any other trend.

Tom Gallagher (Credit Suisse): Can you comment on plans for the U.S. roll out of Permal?

Chip Mason: The company has tried to analyze that. It has been slower than it would have anticipated and that has been a good thing. The company is afraid that the product is more complex than the normal retail broker deals with, not that they do not have the intelligence, but they all have the training. What Legg Mason is trying to do is, take smaller teams and train them on the product. Although it continues to grow, it has not just jumped off the table. The growth though in the other parts of the world is so strong that the company is physically having trouble marketing-wise just keeping up with it.

Matt Snowling (FBR): Can you talk about your plans regarding the distribution partnership facility and does it make more sense to open it up to outside providers?

Chip Mason: It is not Legg Mason’s choice per se. there has been a combination of lower flows than would have been expected and less performance than would have been expected on the other side. The combination has caused a question as to what would ultimately be done on the exclusive arrangement.

Marc Irizarry (Goldman Sachs): The operating margin is sequentially up a 120 bps. Why your flows in equity are more negative?

Barry Bilson: Legg Mason’s short term goal on the pre-tax margin, on adjusted revenue of around 35% is still its short-term goal. Some of the underlying business dynamics have not been as would have hoped and do not need to be labored, but the company is in a period where it has not experienced a historical level of equity asset in flow. This quarter sits at 34.5% after it does its best to control the cost for long periods of time to clamp down with some of the discretionary spending, which till this point it has not clamped down because it is in the best interest of the franchise to be doing some of these investments.

Cynthia Meyer (Merrill Lynch): Is there any chance the Royce would have to close in more products given their small CAP end have been solid?

Barry Bilson: No. They have had solid returns and growth which and they have watched that closely.

Cynthia Meyer (Merrill Lynch): Can you give a sense of Private Capital''s year-to-date performance?

Chip Mason: They ended up last year, including fees or not, right at the S&P.