SOURCE: Franklin Resources, Inc.

April 28, 2009 09:00 ET

Franklin Resources, Inc. Announces Second Quarter Results

SAN MATEO, CA--(Marketwire - April 28, 2009) - Franklin Resources, Inc. (Franklin Templeton Investments) (NYSE: BEN) today announced net income of $110.8 million, or $0.48 per share diluted, on revenues of $912.3 million for the quarter ended March 31, 2009. For the quarter ended December 31, 2008, net income was $120.9 million, or $0.52 per share diluted, on revenues of $969.3 million. For the quarter ended March 31, 2008, net income was $366.1 million, or $1.54 per share diluted, on revenues of $1,503.7 million.

Operating income for the quarter ended March 31, 2009 was $223.3 million, as compared to $268.4 million for the prior quarter and $519.1 million for the quarter ended March 31, 2008. Other, net operating revenues for the quarter ended March 31, 2009 included a $26.0 million decline in the fair value of certain retained interests in securitization transactions, as compared to declines of $17.7 million for the prior quarter and $0.6 million for the quarter ended March 31, 2008.

The company's non-operating income (expenses) for the quarter ended March 31, 2009 included $(33.9) million of investment and other income (losses), net, as compared to $(45.0) million for the prior quarter and $32.4 million for the quarter ended March 31, 2008.

Total assets under management by the company's subsidiaries were $391.1 billion at March 31, 2009, as compared to $416.2 billion at December 31, 2008 and $591.1 billion at March 31, 2008. Simple monthly average assets under management during the quarter ended March 31, 2009 were $396.6 billion, as compared to $438.7 billion in the prior quarter and $610.2 billion in the same quarter a year ago. Equity assets comprised 44% of total assets under management at March 31, 2009, as compared to 47% of total assets under management at December 31, 2008 and 55% of total assets under management at March 31, 2008. Fixed-income assets comprised 35% of total assets under management at March 31, 2009, as compared to 32% of total assets under management at December 31, 2008 and 25% of total assets under management at March 31, 2008. Hybrid assets accounted for 19% of total assets under management at March 31, 2009, December 31, 2008 and March 31, 2008. Net new flows for the quarter ended March 31, 2009 were $(5.5) billion, as compared to $(18.2) billion for the prior quarter and $(6.1) billion for the same quarter a year ago.

Cash and cash equivalents were $2.4 billion at March 31, 2009, as compared to $2.5 billion at September 30, 2008. Stockholders' equity was $7.0 billion at March 31, 2009, as compared to $7.1 billion at September 30, 2008. The company had 232.0 million shares of common stock outstanding at March 31, 2009, as compared to 232.8 million shares outstanding at September 30, 2008. During the quarter ended March 31, 2009, the company repurchased 1.4 million shares of its common stock for a total cost of $68.3 million.

Fiscal Second Quarter 2009 Highlights

Global Business Developments(1)

(See important footnotes in "Supplemental Information" section at the end of this release.)

--  Barron's named Franklin Templeton Investments "King of the Decade,"
    ranking the company the best performing U.S. mutual fund family (out of 48
    fund families) for the 10-year period ended December 31, 2008.(2)
--  Franklin Resources, Inc. increased its ownership in Dubai-based
    Algebra Capital to 40 percent. The strategic relationship between the two
    companies was originally established in September 2007 when Franklin
    Resources, Inc. acquired a 25 percent ownership in Algebra Capital.
--  Franklin Resources, Inc. announced that the company's Board of
    Directors authorized the company to purchase, from time to time, an
    additional 10 million shares of its common stock.
--  Franklin Templeton Investments launched Franklin U.S. Opportunities
    Fund within its U.K.-registered Franklin Templeton Funds range.
--  Franklin Templeton Investments launched a new asset management company
    in Mexico, Franklin Templeton Asset Management México S.A. de C.V., along
    with three new funds available to Mexican investors.
--  Franklin Templeton Investments announced that it opened an office in
    Kuala Lumpur, Malaysia. The office has been established as a foreign fund
    management company under the Malaysian Special Scheme.
--  Since its October 2008 launch, the company's RetireMetrics™ U.S. sales
    and marketing campaign has resulted in first time sales from over 4,500 new
    financial advisors.
--  In Korea, Franklin Templeton Japan Equity Plus Feeder Fund was named
    the "Best International Equity Fund of 2008" by Maeil Economic Daily and
    Franklin India Equity Plus Feeder Fund was named "Best India Equity Fund of
    2008" by Zeroin.
    

Lipper Performance Rankings of Franklin Templeton's U.S.-Registered Long-
Term Mutual Funds(1),(3)

FRANKLIN TEMPLETON(4),(5)

 Lipper Quartile             Period Ended March 31, 2009
                --------------------------------------------------
                  1-Year       3-Year       5-Year       10-Year
                 Assets (%)   Assets (%)   Assets (%)   Assets (%)
                -----------  -----------  -----------  -----------
      1st & 2nd          71%          66%          88%          94%
                -----------  -----------  -----------  -----------
      3rd & 4th          29%          34%          12%           6%
                -----------  -----------  -----------  -----------


FRANKLIN TEMPLETON EQUITY(4),(6)

 Lipper Quartile             Period Ended March 31, 2009
                --------------------------------------------------
                   1-Year       3-Year       5-Year      10-Year
                 Assets (%)   Assets (%)   Assets (%)   Assets (%)
                -----------  -----------  -----------  -----------
      1st & 2nd          58%          44%          83%          93%
                -----------  -----------  -----------  -----------
      3rd & 4th          42%          56%          17%           7%
                -----------  -----------  -----------  -----------


FRANKLIN TEMPLETON FIXED-INCOME(4),(7)

 Lipper Quartile             Period Ended March 31, 2009
                --------------------------------------------------
                   1-Year       3-Year       5-Year      10-Year
                 Assets (%)   Assets (%)   Assets (%)   Assets (%)
                -----------  -----------  -----------  -----------
      1st & 2nd          85%          89%          94%          95%
                -----------  -----------  -----------  -----------
      3rd & 4th          15%          11%           6%           5%
                -----------  -----------  -----------  -----------

FRANKLIN EQUITY(4),(8)

 Lipper Quartile             Period Ended March 31, 2009
                --------------------------------------------------
                   1-Year       3-Year       5-Year      10-Year
                 Assets (%)   Assets (%)   Assets (%)   Assets (%)
                -----------  -----------  -----------  -----------
      1st & 2nd          25%          27%          82%          94%
                -----------  -----------  -----------  -----------
      3rd & 4th          75%          73%          18%           6%
                -----------  -----------  -----------  -----------

TEMPLETON EQUITY(4),(9)

 Lipper Quartile             Period Ended March 31, 2009
                --------------------------------------------------
                   1-Year       3-Year       5-Year      10-Year
                 Assets (%)   Assets (%)   Assets (%)   Assets (%)
                -----------  -----------  -----------  -----------
      1st & 2nd          93%          38%          73%          87%
                -----------  -----------  -----------  -----------
      3rd & 4th           7%          62%          27%          13%
                -----------  -----------  -----------  -----------


MUTUAL SERIES EQUITY(4),(10)

 Lipper Quartile             Period Ended March 31, 2009
                --------------------------------------------------
                   1-Year       3-Year       5-Year      10-Year
                 Assets (%)   Assets (%)   Assets (%)   Assets (%)
                -----------  -----------  -----------  -----------
      1st & 2nd          99%          99%         100%         100%
                -----------  -----------  -----------  -----------
      3rd & 4th           1%           1%           0%           0%
                -----------  -----------  -----------  -----------


FRANKLIN TEMPLETON TAXABLE FIXED-INCOME(4),(11)

 Lipper Quartile             Period Ended March 31, 2009
                --------------------------------------------------
                   1-Year       3-Year       5-Year      10-Year
                 Assets (%)   Assets (%)   Assets (%)   Assets (%)
                -----------  -----------  -----------  -----------
      1st & 2nd          91%          91%          95%          93%
                -----------  -----------  -----------  -----------
      3rd & 4th           9%           9%           5%           7%
                -----------  -----------  -----------  -----------


FRANKLIN TEMPLETON TAX-FREE FIXED-INCOME(4),(12)

 Lipper Quartile             Period Ended March 31, 2009
                --------------------------------------------------
                   1-Year       3-Year       5-Year      10-Year
                 Assets (%)   Assets (%)   Assets (%)   Assets (%)
                -----------  -----------  -----------  -----------
      1st & 2nd          82%          88%          94%          95%
                -----------  -----------  -----------  -----------
      3rd & 4th          18%          12%           6%           5%
                -----------  -----------  -----------  -----------

Performance quoted above represents past performance, which cannot predict
or guarantee future results.





Franklin Resources, Inc.
Preliminary Condensed Consolidated Income Statements
Unaudited
(in thousands, except per
 share data and assets
 under  management)

                    Three months ended             Six Months ended
                         March 31,                      March 31,
               ---------------------------  ------------------------------
                                      %                               %
                 2009      2008     Change     2009        2008     Change
               --------  ---------  ------  ----------  ----------  ------
Operating
 Revenues
Investment
 management
 fees         $552,936  $ 915,965    (40%)  $1,153,210  $1,936,280    (40%)
Underwriting
 and
 distribution
 fees          304,655    499,513    (39%)    609,584   1,073,309     (43%)
Shareholder
 servicing
 fees           66,514     73,417     (9%)    132,856     146,592      (9%)
Consolidated
 sponsored
 investment
 products
 income, net     1,761      3,764    (53%)      3,647       6,668     (45%)
Other, net     (13,594)    11,033     NM      (17,695)     26,434      NM
              --------  --------- ------   ----------  ----------  ------
  Total
   operating
   revenues    912,272  1,503,692    (39%)  1,881,602   3,189,283     (41%)
              --------  --------- ------   ----------  ----------  ------
Operating
 Expenses
Underwriting
 and
 distribution  293,534    485,612    (40%)    583,063   1,038,202     (44%)
Compensation
 and benefits  236,732    280,625    (16%)    480,795     560,915     (14%)
Information
 systems,
 technology
 and occupancy  65,398     79,854    (18%)    133,996     159,471     (16%)
Advertising
 and promotion  26,700     47,372    (44%)     50,927      94,016     (46%)
Amortization
 of deferred
 sales
 commissions    33,754     43,322    (22%)     70,366      87,873     (20%)
Other           32,832     47,820    (31%)     70,769      93,990     (25%)
              --------  --------- ------   ----------  ----------  ------
  Total
  operating
   expenses    688,950    984,605    (30%)  1,389,916   2,034,467     (32%)
              --------  --------- ------   ----------  ----------  ------
Operating
 Income        223,322    519,087    (57%)    491,686   1,154,816     (57%)
              --------  --------- ------   ----------  ----------  ------
Other Income
 (Expenses)
Consolidated
 sponsored
 investment
 products
 losses, net    (9,336)   (26,064)   (64%)    (45,820)    (27,041)     69%
Investment and
 other
 (losses)
 income, net   (33,929)    32,393     NM      (78,938)    113,166      NM
Interest
 expense        (2,092)    (5,948)   (65%)     (3,292)    (11,993)    (73%)
              --------  --------- ------   ----------  ----------  ------
  Other
   (expenses)
   income, net (45,357)       381     NM     (128,050)     74,132      NM
              --------  --------- ------   ----------  ----------  ------
Income before
 taxes         177,965    519,468    (66%)    363,636   1,228,948     (70%)
Taxes on
 income         67,159    153,372    (56%)    131,930     344,536     (62%)
              --------  --------- ------   ----------  ----------  ------
Net Income    $110,806  $ 366,096    (70%) $  231,706  $  884,412     (74%)
              ========  ========= ======   ==========  ==========  ======

Earnings per
 Share
  Basic       $   0.48  $    1.55    (69%) $     1.00  $     3.70     (73%)
  Diluted         0.48       1.54    (69%)       1.00        3.67     (73%)

Dividends per
 Share        $   0.21  $    0.20      5%  $     0.42  $     0.40       5%

Average Shares
 Outstanding
 (in thousands)
  Basic        231,178    236,520     (2%)    231,405     239,066      (3%)
  Diluted      231,891    238,360     (3%)    232,319     241,171      (4%)

Operating
 Margin (a)         24%        35%                 26%         36%

Assets Under
 Management
 (in billions)
Beginning of
 period       $  416.2  $   643.7    (35%) $    507.3  $    645.9     (21%)
  Long-term
   sales          19.8       41.1    (52%)       47.6        88.7     (46%)
  Long-term
   redemptions   (24.8)     (47.7)   (48%)      (69.9)      (90.3)    (23%)
  Net cash
   management     (0.5)       0.5     NM         (1.4)        0.1      NM
              --------  --------- ------   ----------  ----------  ------
     Net new
      flows       (5.5)      (6.1)   (10%)      (23.7)       (1.5)     NM
  Reinvested
   distributions   1.9        2.2    (14%)        9.0        21.7     (59%)
              --------  --------- ------   ----------  ----------  ------
Net flows         (3.6)      (3.9)    (8%)      (14.7)       20.2      NM
Distributions     (2.5)      (3.4)   (26%)      (11.5)      (26.5)    (57%)
Depreciation
 and other       (19.0)     (45.3)   (58%)      (90.0)      (48.5)    86%
              --------  --------- ------   ----------  ----------  ------
End of period $  391.1  $   591.1    (34%)  $   391.1   $   591.1     (34%)
              ========  ========= ======   ==========  ==========  ======
Simple Monthly
 Average for
 Period       $  396.6  $   610.2    (35%)  $   417.9   $   629.0     (34%)


 (a) Defined as operating income divided by total operating revenues.





Franklin Resources, Inc.
Preliminary Condensed Consolidated Income Statements
Unaudited
(in thousands,
 except per share data,
 employees and billable
 shareholder accounts)            Three months ended
               -----------------------------------------------------------
                                     %
              31-Mar-09 31-Dec-08  Change  30-Sep-08  30-Jun-08  31-Mar-08
               --------  --------  ------  ---------  ---------  ---------

Operating
 Revenues
Investment
 management
 fees          $552,936  $600,274     (8%) $ 822,388  $ 924,722  $ 915,965
Underwriting
 and
 distribution
 fees           304,655   304,929      0%    424,450    504,272    499,513
Shareholder
 servicing
 fees            66,514    66,342      0%     69,651     73,127     73,417
Consolidated
 sponsored
 investment
 products
 income, net      1,761     1,886     (7%)     1,487      2,768      3,764
Other, net      (13,594)   (4,101)   231%      3,478     16,760     11,033
               --------  -------- ------   ---------  ---------  ---------
  Total operating
   revenues     912,272   969,330     (6%) 1,321,454  1,521,649  1,503,692
               --------  -------- ------   ---------  ---------  ---------
Operating
 Expenses
Underwriting and
 distribution   293,534   289,529      1%    406,526    492,385    485,612
Compensation
 and benefits   236,732   244,063     (3%)   274,091    285,651    280,625
Information
 systems,
 technology
 and occupancy   65,398    68,598     (5%)    83,038     78,477     79,854
Advertising
 and promotion   26,700    24,227     10%     45,489     44,804     47,372
Amortization
 of deferred
 sales
 commissions     33,754    36,612     (8%)    48,196     41,935     43,322
Other            32,832    37,937    (13%)    52,143     46,182     47,820
               --------  -------- ------   ---------  ---------  ---------
  Total operating
   expenses     688,950   700,966     (2%)   909,483    989,434    984,605
               --------  -------- ------   ---------  ---------  ---------
  Operating
   Income       223,322   268,364    (17%)   411,971    532,215    519,087
               --------  -------- ------   ---------  ---------  ---------
Other Income
 (Expenses)
Consolidated
 sponsored
 investment
 products
 losses, net     (9,336)  (36,484)   (74%)   (35,507)    (9,005)   (26,064)
Investment and
 other
 (losses)
 income, net    (33,929)  (45,009)   (25%)    77,763     33,969     32,393
Interest
 expense         (2,092)   (1,200)    74%       (478)    (3,287)    (5,948)
               --------  -------- ------   ---------  ---------  ---------
  Other (expenses)
   income, net  (45,357)  (82,693)   (45%)    41,778     21,677        381
               --------  -------- ------   ---------  ---------  ---------
Income before
 taxes          177,965   185,671     (4%)   453,749    553,892    519,468
Taxes on
 income          67,159    64,771      4%    153,260    150,580    153,372
               --------  -------- ------   ---------  ---------  ---------
  Net Income   $110,806  $120,900     (8%) $ 300,489  $ 403,312  $ 366,096
               ========  ======== ======   =========  =========  =========

Earnings per
 Share
  Basic        $   0.48  $   0.52     (8%) $    1.29  $    1.72  $    1.55
  Diluted          0.48      0.52     (8%)      1.28       1.71       1.54

Dividends per
 Share         $   0.21  $   0.21      0%  $    0.20  $    0.20  $    0.20



Average Shares
 Outstanding
 (in thousands)
  Basic         231,178   231,626      0%    232,832    234,631    236,520
  Diluted       231,891   232,688      0%    234,563    236,485    238,360

Operating
 Margin (a)          24%       28%                31%        35%        35%

Employees         8,233     8,608     (4%)     8,809      8,958      8,916
Billable
 Shareholder
 Accounts
 (in millions)     21.9      21.0      4%       20.4       22.4       22.0

(a) Defined as operating income divided by total operating revenues.





ASSETS UNDER MANAGEMENT BY INVESTMENT OBJECTIVE
(in billions)
                                   Three months ended
                  ---------------------------------------------------------
                                         %
                  31-Mar-09 31-Dec-08  Change 30-Sep-08 30-Jun-08 31-Mar-08
                  --------- --------- --------  ------- --------- ---------
Equity
  Global/
   international  $   124.7 $   142.6     (13%) $ 190.3 $   233.7 $   243.4
  Domestic (U.S.)      48.5      55.2     (12%)    72.9      82.5      84.8
                  --------- --------- -------   ------- --------- ---------
  Total equity        173.2     197.8     (12%)   263.2     316.2     328.2
                  --------- --------- -------   ------- --------- ---------

Hybrid                 75.0      78.8      (5%)    93.9     109.5     109.8

Fixed-Income
  Tax-free             59.3      56.1        6%    59.7      61.6      59.6
  Taxable:
  Global/
   international (a)   43.0      45.9      (6%)    52.7      54.3      54.5
  Domestic (U.S.)      32.5      29.8       9%     30.5      31.6      31.5
                  --------- --------- -------   ------- --------- ---------
  Total
   fixed-income       134.8     131.8       2%    142.9     147.5     145.6

  Cash Management
   (a), (b)             8.1       7.8       4%      7.3       7.0       7.5

                  --------- --------- -------   ------- --------- ---------
Total Ending
 Assets Under
 Management       $   391.1 $   416.2      (6%) $ 507.3 $   580.2 $   591.1
                  ========= ========= =======   ======= ========= =========

Simple Monthly
 Average Assets
 Under Management $   396.6 $   438.7     (10%) $ 555.4 $   602.9 $   610.2



ASSETS UNDER MANAGEMENT (c) AND FLOWS - UNITED STATES AND INTERNATIONAL
(in billions)
                             As of and for three months ended
                ----------------------------------------------------------
                           % of                % of                 % of
               31-Mar-09   Total   31-Dec-08   Total    31-Mar-08   Total
                --------  --------  --------  --------  --------  --------
Long-Term Sales
 United States  $   13.4        68% $   13.5        49% $   19.3        47%
 International
  (a)                6.4        32%     14.3        51%     21.8        53%
                --------  --------  --------  --------  --------  --------
 Total
  Long-Term
  Sales         $   19.8       100% $   27.8       100% $   41.1       100%
                ========  ========  ========  ========  ========  ========

Long-Term
 Redemptions
 United States  $  (16.1)       65% $  (24.8)       55% $  (20.7)       43%
 International
  (a)               (8.7)       35%    (20.3)       45%    (27.0)       57%
                --------  --------  --------  --------  --------  --------
 Total
  Long-Term
  Redemptions   $  (24.8)      100% $  (45.1)      100% $  (47.7)      100%
                ========  ========  ========  ========  ========  ========

Assets Under
 Management
 United States  $  297.5        76% $  313.8        75% $  438.6        74%
 International      93.6        24%    102.4        25%    152.5        26%
                --------  --------  --------  --------  --------  --------
 Total Assets
  Under
  Management    $  391.1       100% $  416.2       100% $  591.1       100%
                ========  ========  ========  ========  ========  ========


(a) As a result of regulatory changes, certain amounts previously included
    in global/international fixed-income are included in cash management
    effective as of January 1, 2009.
(b) Includes both U.S.-registered money market funds and foreign funds with
    similar investment objectives.
(c) Assets under management include assets for which we provide various
    investment management services as described in Item I "Business" in
    Part I of our Form 10-K for the fiscal year ended September 30, 2008.





ASSETS UNDER MANAGEMENT AND FLOWS BY INVESTMENT OBJECTIVE

(in billions)                                    Three months ended
                                          --------------------------------
                                           31-Mar-09  31-Dec-08  31-Mar-08
                                          ---------- ---------- ----------
Global/international equity
  Beginning assets                        $    142.6 $    190.3 $    286.1
                                          ---------- ---------- ----------
  Long-term sales                                5.3        8.1       13.3
  Long-term redemptions                         (8.2)     (13.5)     (21.6)
  Net exchanges                                 (0.3)      (1.1)      (0.9)
                                          ---------- ---------- ----------
    Net new flows                               (3.2)      (6.5)      (9.2)
  Reinvested distributions                       0.3        4.0        0.5
                                          ---------- ---------- ----------
    Net flows                                   (2.9)      (2.5)      (8.7)
  Distributions                                 (0.3)      (4.4)      (0.6)
  Depreciation and other                       (14.7)     (40.8)     (33.4)
                                          ---------- ---------- ----------
  Ending assets                                124.7      142.6      243.4
                                          ---------- ---------- ----------
Domestic (U.S.) equity
  Beginning assets                              55.2       72.9       95.8
                                          ---------- ---------- ----------
  Long-term sales                                2.2        3.0        3.1
  Long-term redemptions                         (4.1)      (5.0)      (5.4)
  Net exchanges                                 (0.4)        --       (0.4)
                                          ---------- ---------- ----------
    Net new flows                               (2.3)      (2.0)      (2.7)
  Reinvested distributions                       0.1        0.9         --
                                          ---------- ---------- ----------
    Net flows                                   (2.2)      (1.1)      (2.7)
  Distributions                                 (0.1)      (1.2)        --
  Depreciation and other                        (4.4)     (15.4)      (8.3)
                                          ---------- ---------- ----------
  Ending assets                                 48.5       55.2       84.8
                                          ---------- ---------- ----------
Hybrid
  Beginning assets                              78.8       93.9      116.4
                                          ---------- ---------- ----------
  Long-term sales                                2.7        2.5        3.4
  Long-term redemptions                         (3.4)      (5.0)      (3.8)
  Net exchanges                                 (0.1)      (0.7)      (0.2)
                                          ---------- ---------- ----------
    Net new flows                               (0.8)      (3.2)      (0.6)
  Reinvested distributions                       0.7        0.9        0.7
                                          ---------- ---------- ----------
    Net flows                                   (0.1)      (2.3)       0.1
  Distributions                                 (0.9)      (1.3)      (1.1)
  Depreciation and other                        (2.8)     (11.5)      (5.6)
                                          ---------- ---------- ----------
  Ending assets                                 75.0       78.8      109.8
                                          ---------- ---------- ----------
Tax-free income
  Beginning assets                              56.1       59.7       59.3
                                          ---------- ---------- ----------
  Long-term sales                                2.7        2.5        3.2
  Long-term redemptions                         (2.0)      (3.9)      (1.9)
  Net exchanges                                  0.1       (0.3)        --
                                          ---------- ---------- ----------
    Net new flows                                0.8       (1.7)       1.3
  Reinvested distributions                       0.4        0.4        0.4
                                          ---------- ---------- ----------
    Net flows                                    1.2       (1.3)       1.7
  Distributions                                 (0.7)      (0.7)      (0.7)
  Appreciation (depreciation) and other          2.7       (1.6)      (0.7)
                                          ---------- ---------- ----------
  Ending assets                           $     59.3 $     56.1 $     59.6
                                          ========== ========== ==========
                                           [Table continued on next page]





ASSETS UNDER MANAGEMENT AND FLOWS BY INVESTMENT OBJECTIVE

                                       [Table continued from previous page]

(in billions)                                    Three months ended
                                          --------------------------------
                                           31-Mar-09  31-Dec-08  31-Mar-08
                                          ---------- ---------- ----------
Global/international taxable fixed-income
  Beginning assets                         $    45.9  $    52.7  $    48.3
                                          ---------- ---------- ----------
  Long-term sales                                3.7        9.4       16.2
  Long-term redemptions                         (5.0)     (14.9)     (12.9)
  Net exchanges                                  0.2       (0.1)       0.9
                                          ---------- ---------- ----------
    Net new flows                               (1.1)      (5.6)       4.2
  Reinvested distributions                       0.2        0.6        0.3
                                          ---------- ---------- ----------
    Net flows                                   (0.9)      (5.0)       4.5
  Distributions                                 (0.2)      (1.0)      (0.6)
  (Depreciation) appreciation and other         (1.8)      (0.8)       2.3
                                          ---------- ---------- ----------
  Ending assets                                 43.0       45.9       54.5
                                          ---------- ---------- ----------
Domestic (U.S.) taxable fixed-income
  Beginning assets                              29.8       30.5       31.5
                                          ---------- ---------- ----------
  Long-term sales                                3.2        2.3        1.9
  Long-term redemptions                         (2.1)      (2.8)      (2.1)
  Net exchanges                                  0.4        0.8         --
                                          ---------- ---------- ----------
    Net new flows                                1.5        0.3       (0.2)
  Reinvested distributions                       0.2        0.3        0.2
                                          ---------- ---------- ----------
    Net flows                                    1.7        0.6         --
  Distributions                                 (0.3)      (0.4)      (0.3)
  Appreciation (depreciation) and other          1.3       (0.9)       0.3
                                          ---------- ---------- ----------
  Ending assets                                 32.5       29.8       31.5
                                          ---------- ---------- ----------
Cash Management
  Beginning assets                               7.8        7.3        6.3
                                          ---------- ---------- ----------
  Net cash management                           (0.5)      (0.9)       0.5
  Net exchanges                                  0.1        1.4        0.6
                                          ---------- ---------- ----------
    Net new flows                               (0.4)       0.5        1.1
  Reinvested distributions                        --         --        0.1
                                          ---------- ---------- ----------
    Net flows                                   (0.4)       0.5        1.2
  Distributions                                   --         --       (0.1)
  Appreciation and other                         0.7         --        0.1
                                          ---------- ---------- ----------
  Ending assets                                  8.1        7.8        7.5
                                          ---------- ---------- ----------
Total
  Beginning assets                             416.2      507.3      643.7
                                          ---------- ---------- ----------
  Long-term sales                               19.8       27.8       41.1
  Long-term redemptions                        (24.8)     (45.1)     (47.7)
  Long-term net exchanges                       (0.1)      (1.4)      (0.6)
  Net cash management                           (0.5)      (0.9)       0.5
  Cash management net exchanges                  0.1        1.4        0.6
                                          ---------- ---------- ----------
    Net new flows                               (5.5)     (18.2)      (6.1)
  Reinvested distributions                       1.9        7.1        2.2
                                          ---------- ---------- ----------
    Net flows                                   (3.6)     (11.1)      (3.9)
  Distributions                                 (2.5)      (9.0)      (3.4)
  Depreciation and other                       (19.0)     (71.0)     (45.3)
                                          ---------- ---------- ----------
Ending Assets Under Management            $    391.1 $    416.2 $    591.1
                                          ========== ========== ==========

Conference Call Information

Pre-recorded audio commentary on the second quarter results from Franklin Resources, Inc.'s President and Chief Executive Officer, Greg Johnson, and Executive Vice President and Chief Financial Officer, Ken Lewis, will be available today at approximately 9:15 a.m. Eastern Time. They will also lead a live teleconference today at 4:30 p.m. Eastern Time to answer questions.

Access to the pre-recorded audio commentary and accompanying slides will be available at franklinresources.com under the "Investor relations - Earnings releases" section. The pre-recorded audio commentary will also be available by dialing (800) 642-1687 in the U.S. and Canada or (706) 645-9291 internationally using access code 92817003, anytime through 11:59 p.m. Eastern Time on May 12, 2009.

Access to the live teleconference will be available at franklinresources.com 10 minutes before the start of the call or by dialing (877) 480-6346 in the U.S. and Canada or (706) 902-1906 internationally. A replay of the call can be accessed by calling (800) 642-1687 in the U.S. and Canada or (706) 645-9291 internationally using access code 92048659, after 5:30 p.m. Eastern Time today through 11:59 p.m. Eastern Time on May 12, 2009.

Questions regarding the pre-recorded audio commentary or teleconference should be directed to Franklin Resources, Inc., Investor Relations at (650) 312-4091 or Corporate Communications at (650) 312-2245.

Franklin Resources, Inc. is a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management solutions managed by its Franklin, Templeton, Mutual Series, Fiduciary Trust, Darby and Bissett investment teams. The San Mateo, CA-based company has more than 60 years of investment experience and over $391 billion in assets under management as of March 31, 2009. For more information, please call 1-800/DIAL BEN® or visit franklinresources.com.

Supplemental Information

Investors should carefully consider a fund's investment goals, risks, charges and expenses before investing. To obtain a prospectus, which contains this and other information, for any U.S.-registered Franklin Templeton fund, investors should talk to their financial advisors or call Franklin/Templeton Distributors, Inc. at 1-800/DIAL BEN® (1-800/342-5236). Please read the prospectus carefully before investing.

1. Nothing in this section shall be considered a solicitation to buy or an offer to sell a security to any person in any jurisdiction where such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Franklin/Templeton Distributors, Inc., One Franklin Parkway, San Mateo, CA, is the funds' principal distributor and a wholly owned subsidiary of Franklin Resources, Inc. The information in the "Global Business Developments" section above is being provided for information purposes only.

2. Barron's "The Best Families in a Bruising Year," February 2, 2009. For the one- and five-year periods ended 12/31/08, Franklin Templeton ranked 26 out of 59 and 16 out of 53 fund families, respectively. Barron's did not include sales charges in calculating returns. Each fund's return was measured against those of all funds in its Lipper category, resulting in a percentile ranking which was then weighted by asset size, relative to the fund family's other assets in its general classification. To qualify for Lipper/Barron's Fund Survey, a group must have at least three funds in Lipper's general U.S.-stock category, as well as one in the world equity category, which combines global and international funds. They also must have at least one mixed-equity fund, which holds stocks and bonds, at least two taxable-bond funds and one tax-exempt offering. Past performance does not guarantee future results.

3. Lipper rankings for Franklin Templeton U.S.-registered mutual funds are based on Class A shares. Franklin Templeton funds are compared against a universe of all share classes.

4. Lipper calculates averages by taking all the funds and share classes in a peer group and averaging their total returns for the periods indicated. Lipper tracks 149 peer groups of U.S. retail mutual funds, and the groups vary in size from 7 to 948 funds. Lipper total return calculations include reinvested dividends and capital gains, but do not include sales charges or expense subsidization by the manager. Results may have been different if these or other factors had been considered.

5. Source: Lipper® Inc., 3/31/09. Of the eligible Franklin Templeton long-term mutual funds tracked by Lipper, 41, 30, 33 and 42 funds ranked in the top quartile and 26, 29, 30 and 17 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

6. Source: Lipper® Inc., 3/31/09. Of the eligible Franklin Templeton equity mutual funds tracked by Lipper, 24, 14, 10 and 19 funds ranked in the top quartile and 13, 12, 18 and 6 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

7. Source: Lipper® Inc., 3/31/09. Of the eligible Franklin Templeton non-money market fixed-income mutual funds tracked by Lipper, 17, 16, 23 and 23 funds ranked in the top quartile and 13, 17, 12 and 11 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

8. Source: Lipper® Inc., 3/31/09. Of the eligible Franklin equity mutual funds tracked by Lipper, 16, 8, 6 and 11 funds ranked in the top quartile and 8, 8, 12 and 5 funds ranked in the second quartile, for the one-, three- , five- and 10-year periods, respectively, for their respective Lipper peer groups.

9. Source: Lipper® Inc., 3/31/09. Of the eligible Templeton equity mutual funds tracked by Lipper, 4, 2, 0 and 3 funds ranked in the top quartile and 3, 2, 3 and 0 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

10. Source: Lipper® Inc., 3/31/09. Of the eligible Mutual Series equity mutual funds tracked by Lipper, 4, 4, 4 and 5 funds ranked in the top quartile and 2, 2, 3 and 1 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

11. Source: Lipper® Inc., 3/31/09. Of the eligible Franklin Templeton non-money market taxable fixed-income mutual funds tracked by Lipper, 6, 5, 4 and 4 funds ranked in the top quartile and 3, 3, 4 and 2 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

12. Source: Lipper® Inc., 3/31/09. Of the eligible Franklin Templeton non-money market tax-free fixed-income mutual funds tracked by Lipper, 11, 11, 19 and 19 funds ranked in the top quartile and 10, 14, 8 and 9 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

Forward-Looking Statements:

The financial results in this press release are preliminary. Statements in this press release regarding Franklin Resources, Inc. ("Franklin") and its subsidiaries, which are not historical facts, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors, some of which are listed below, that could cause the actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements. These and other risks, uncertainties and other important factors are described in more detail in Franklin's recent filings with the U.S. Securities and Exchange Commission, including, without limitation, in Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations in Franklin's Annual Report on Form 10-K for the fiscal year ended September 30, 2008, and Franklin's subsequent Form 10-Q filing.

--  We are subject to extensive and complex, overlapping and frequently
    changing rules, regulations and legal interpretations.
--  Regulatory and legislative actions and reforms have made the
    regulatory environment in which we operate more costly and future actions
    and reforms could adversely impact our assets under management, increase
    costs and negatively impact our profitability and future financial results.
--  The amount and mix of our assets under management are subject to
    significant fluctuations and could negatively impact our revenues and
    income.
--  Our ability to maintain the beneficial tax treatment we anticipate
    with respect to non-U.S. earnings we have repatriated is based on current
    interpretations of the American Jobs Creation Act of 2004 (the "Jobs Act")
    and permitted use of such amounts in accordance with our domestic
    reinvestment plan and the Jobs Act.
--  Any significant limitation or failure of our software applications and
    other technology systems that are critical to our operations could
    constrain our operations.
--  We face risks, and corresponding potential costs and expenses,
    associated with conducting operations and growing our business in numerous
    countries.
--  We depend on key personnel and our financial performance could be
    negatively affected by the loss of their services.
--  Strong competition from numerous and sometimes larger companies with
    competing offerings and products could limit or reduce sales of our
    products, potentially resulting in a decline in our market share, revenues
    and net income.
--  Changes in the distribution and sales channels on which we depend
    could reduce our revenues and hinder our growth.
--  Our increasing focus on international markets as a source of
    investments and sales of investment products subjects us to increased
    exchange rate and other risks in connection with earnings and income
    generated overseas.
--  Poor investment performance of our products could affect our sales or
    reduce the level of assets under management, potentially negatively
    impacting our revenues and income.
--  We could suffer losses in earnings or revenue if our reputation is
    harmed.
--  Our future results are dependent upon maintaining an appropriate level
    of expenses, which is subject to fluctuation.
--  Our ability to successfully integrate widely varied business lines can
    be impeded by systems and other technological limitations.
--  Our inability to successfully recover should we experience a disaster
    or other business continuity problem could cause material financial loss,
    loss of human capital, regulatory actions, reputational harm or legal
    liability.
--  Certain of the portfolios we manage, including our emerging market
    portfolios, are vulnerable to significant market-specific political,
    economic or other risks, any of which may negatively impact our revenues
    and income.
--  Our revenues, earnings and income could be adversely affected if the
    terms of our management agreements are significantly altered or these
    agreements are terminated by the funds we advise.
--  Regulatory and governmental examinations and/or investigations, civil
    litigation relating to previously-settled regulatory and governmental
    investigations, and the legal risks associated with our business, could
    adversely impact our assets under management, increase costs and negatively
    impact our profitability and/or our future financial results.
--  Our ability to meet cash needs depends upon certain factors, including
    our asset value, credit worthiness and the market value of our stock.
--  Our ability to access the capital markets in a timely manner should we
    seek to do so depends on a number of factors.
--  Diverse and strong competition limits the interest rates that we can
    charge on consumer loans.
--  Our business could be negatively affected if we or our banking
    subsidiaries fail to remain well capitalized.
--  Liquidity needs could affect our banking business.
    

Contact Information

  • Contact:
    Franklin Resources, Inc.
    Investor Relations:
    Brian Sevilla
    (650) 312-4091
    Corporate Communications:
    Matt Walsh
    (650) 312-2245
    franklinresources.com