Franklin Resources ( BEN), manager of the Franklin and Templeton mutual funds, reported a 32% increase in quarterly profit, thanks to a rise in assets, but still failed to beat analyst estimates. The company also took a charge to cover costs associated with a trading scandal.

San Mateo, Calif.-based Franklin earned $173.9 million, or 69 cents a share, in its fiscal third quarter, compared to $131.4 million, or 52 cents a share, in the year-ago period. Revenue jumped by more than a quarter to $862.8 million, up from $683.9 million last year.

The company said results included a charge of $21.5 million to cover anticipated costs associated with the settlement of governmental investigations of payments to securities dealers who sell fund shares. Franklin took a charge of $60 million in the second quarter for the same item.

The company's results were below Thomson First Call's analyst consensus of 76 cents a share. Looking forward, the consensus forecast for the company's fourth-quarter earnings is 78 cents compared to 61 cents last year.

Assets under management rose to $350.8 billion at the end of the third quarter from $287 billion a year earlier but were down slightly from $351.6 billion at the end of the second quarter.

The company said its funds performed strongly in the third quarter with over 70% of its long-term mutual fund assets held in funds ranked in the top two quartiles of their respective Lipper peer groups for the one-year period ended June 30, 2004.

Shares fell $1.05, or 2.1%, to $48.45.

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