San Mateo, Calif.-based mutual fund company Franklin Resources ( BEN) beat Wall Street expectations by reporting a net income of $426.8 million, or $1.67 per share diluted, on revenues of $1.43 billion for the first quarter ended Dec. 31, 2006. Analysts had forecast earnings of $1.51 a share.

The company also announced that operating income for the quarter was $508.1 million, up 26% from the $404.6 million reported during the same quarter the previous year. Franklin's nonoperating income for the quarter included $71.1 million of investment and other income, a 119% increase from the $32.4 million for the same period last year.

Franklin's assets under management were $552.9 billion as of year-end 2006, compared with $464.8 billion at the end of 2005. Equity assets made up 60% of total assets under management as of Dec. 31, 2006, compared with 59% a year earlier. Fixed-income assets comprised 21% of total assets under management, compared with 23% the previous year.

Other highlights for the quarter:
  • 94% of Franklin Templeton's long-term mutual fund assets were in funds ranked in the top two quartiles of their respective Lipper peer groups for the 10-year period ended Dec. 31, 2006.
  • 100% of Franklin Templeton's tax-free fixed income mutual fund assets were in funds ranked in the top two quartiles of their respective Lipper peer groups for the three-, five- and 10-year periods ended Dec. 31, 2006.
  • 92% of Franklin Templeton's equity mutual fund assets were in funds ranked in the top two quartiles of their respective Lipper peer groups for the 10-year period ended Dec 31, 2006.