Asset Management operating revenue was $207 million in the second quarter of 2012, 2% lower than the first quarter of 2012 and 13% lower than the second quarter of 2011. Management fees during the period totaled $195 million, reflecting a 2% decline, compared to the first quarter of 2012 and a 12% decline, compared to the prior year period. The sequential decline was driven primarily by a decrease in the level of AUM at June 30, 2012, due to market depreciation, partially offset by net inflows of $1.1 billion in the second quarter. The year-over- year quarterly decline was driven primarily by a decrease in the level of AUM, caused by market depreciation, and, to a lesser extent, a slight shift in the asset mix.
Incentive fees were in line with the first quarter of 2012 but declined compared to the second quarter of 2011, primarily due to a change in one mandate from a quarterly to an annual performance fee basis.AUM was $148 billion as of June 30, 2012, up 5% from year-end 2011 and was down 5% from March 31, 2012, primarily reflecting market depreciation. Average AUM of $151 billion for the second quarter of 2012 was essentially unchanged from the 2011 full-year average. First Half Asset Management operating revenue was $417 million in the first half of 2012, 10% lower than the first half of 2011. Management fees were $395 million in the first half of 2012, 8% lower than the first half of 2011. Average AUM for the first half of 2012 was $149 billion, 6% lower than the first half of 2011. Net inflows were $1 billion for the first half of 2012. Our primarily institutional client mix remained broadly diversified by investment strategy and geography. We continued to win significant new mandates across a broad spectrum of investment strategies and to provide superior investment solutions to our clients around the world.
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