Franklin Resources Inc., parent company to Franklin Templeton Investments, is reporting slightly lower profits for its latest quarter. Quarterly profits fell as rising assets under management failed to offset higher expenses.

Franklin saw net income of US$120 million on revenues of US$626 million for the second quarter ended March 31, compared with net income of US$131.7 million on revenues of US$577.4 million in the comparable quarter a year ago. However, earnings were up from the first quarter of fiscal 2002.

Operating income increased 4% in the second quarter over the prior quarter. Operating revenues were up in the second quarter as compared to last quarter as a result of higher investment management and underwriting and distribution fees, while operating expenses were slightly higher this quarter as compared to last quarter, principally as a result of higher underwriting and distribution expenses.

As of March 31, assets under management by the company’s subsidiaries were US$274.5 billion, as compared to US$266.3 billion last quarter and US$215.7 billion a year ago. Simple monthly average assets under management during the current quarter were US$267.9 billion compared to US$256.4 billion in the preceding quarter and US$224.9 billion in the same quarter a year ago.

Equity assets now comprise 54% of total assets under management as compared to 53% last quarter and 62% at March 31, 2001.