Press Release

EX-99.1 2 dex991.htm PRESS RELEASE Press Release

EXHIBIT 99.1

One Franklin Parkway

San Mateo, CA 94403-1906

tel (650) 312-2000

franklinresources.com


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

FOR IMMEDIATE RELEASE

Franklin Resources, Inc. Announces First Quarter Results

San Mateo, CA, January 28, 2010 - Franklin Resources, Inc. (Franklin Templeton Investments) (NYSE: BEN) today announced net income¹ of $355.6 million, or $1.54 per share diluted, on revenues of $1,377.4 million for the quarter ended December 31, 2009. For the quarter ended September 30, 2009, net income¹ was $367.4 million, or $1.59 per share diluted, on revenues of $1,238.9 million. For the quarter ended December 31, 2008, net income¹ was $120.9 million, or $0.52 per share diluted, on revenues of $969.3 million.

Operating income for the quarter ended December 31, 2009 was $467.0 million, as compared to $384.7 million for the prior quarter and $268.4 million for the quarter ended December 31, 2008. The company’s non-operating income (expenses) for the quarter ended December 31, 2009 included $33.0 million of investment and other income (losses), net, as compared to $87.3 million for the quarter ended September 30, 2009 and $(45.0) million for the quarter ended December 31, 2008.

Total assets under management by the company’s subsidiaries were $553.5 billion at December 31, 2009, as compared to $523.4 billion at September 30, 2009 and $416.2 billion at December 31, 2008. Simple monthly average assets under management during the quarter ended December 31, 2009 were $534.9 billion, as compared to $488.3 billion in the prior quarter and $438.7 billion in the same quarter a year ago. Equity assets comprised 46% of total assets under management at December 31, 2009, as compared to 47% of total assets under management at September 30, 2009 and December 31, 2008. Fixed-income assets comprised 34% of total assets under management at December 31, 2009, as compared to 33% of total assets under management at September 30, 2009 and 32% of total assets under management at December 31, 2008. Hybrid and other assets accounted for 20% of total assets under management at December 31, 2009 and September 30, 2009, as compared to 21% at December 31, 2008. Net new flows for the quarter ended December 31, 2009 were $14.3 billion, as compared to $12.2 billion for the prior quarter and $(18.2) billion for the same quarter a year ago.

Cash and cash equivalents and investments were $5.4 billion at December 31, 2009, as compared to $5.8 billion at September 30, 2009. Total stockholders’ equity was $7.1 billion at December 31, 2009, as compared to $7.6 billion at September 30, 2009. The company had 228.2 million shares of common stock outstanding at December 31, 2009, as compared to 229.3 million shares outstanding at September 30, 2009. During the quarter ended December 31, 2009, the company repurchased 1.6 million shares of its common stock for a total cost of $174.0 million.

- 1 -

On December 18, 2009, the company declared a regular quarterly cash dividend of $0.22 per share which was paid on January 8, 2010. The quarterly dividend of $0.22 per share represents a 5% increase over the dividend paid in the prior quarter and the same quarter a year ago. Additionally, the company declared a special cash dividend of $3.00 per share which was paid on December 31, 2009. These dividends are consistent with the company’s long-term capital management strategy of continuing to invest in the business, maintaining financial strength and flexibility, and returning a substantial portion of the company’s earnings to stockholders through common stock repurchases and the payment of dividends.

- 2 -

Lipper Performance Rankings of Franklin Templeton's U.S.-Registered Long-Term Mutual Funds²^,³

FRANKLIN TEMPLETON^4,5


Lipper Quartile	*Period Ended December 31, 2009*
	1-Year Assets (%)	3-Year Assets (%)	5-Year Assets (%)	10-Year Assets (%)
1st & 2nd	68%	85%	85%	91%
3rd & 4th	32%	15%	15%	9%

FRANKLIN TEMPLETON EQUITY^4,6


Lipper Quartile	*Period Ended December 31, 2009*
	1-Year Assets (%)	3-Year Assets (%)	5-Year Assets (%)	10-Year Assets (%)
1st & 2nd	80%	87%	85%	93%
3rd & 4th	20%	13%	15%	7%

FRANKLIN TEMPLETON FIXED-INCOME^4,7


Lipper Quartile	*Period Ended December 31, 2009*
	1-Year Assets (%)	3-Year Assets (%)	5-Year Assets (%)	10-Year Assets (%)
1st & 2nd	53%	82%	84%	90%
3rd & 4th	47%	18%	16%	10%

FRANKLIN EQUITY⁴^,⁸


Lipper Quartile	*Period Ended December 31, 2009*
	1-Year Assets (%)	3-Year Assets (%)	5-Year Assets (%)	10-Year Assets (%)
1st & 2nd	84%	83%	78%	91%
3rd & 4th	16%	17%	22%	9%

TEMPLETON EQUITY^4,9


Lipper Quartile	*Period Ended December 31, 2009*
	1-Year Assets (%)	3-Year Assets (%)	5-Year Assets (%)	10-Year Assets (%)
1st & 2nd	92%	89%	88%	92%
3rd & 4th	8%	11%	12%	8%

MUTUAL SERIES EQUITY^4,10


Lipper Quartile	*Period Ended December 31, 2009*
	1-Year Assets (%)	3-Year Assets (%)	5-Year Assets (%)	10-Year Assets (%)
1st & 2nd	41%	99%	99%	100%
3rd & 4th	59%	1%	1%	0%

- 3 -

FRANKLIN TEMPLETON TAXABLE FIXED-INCOME^4,11


Lipper Quartile	*Period Ended December 31, 2009*
	1-Year Assets (%)	3-Year Assets (%)	5-Year Assets (%)	10-Year Assets (%)
1st & 2nd	49%	70%	68%	69%
3rd & 4th	51%	30%	32%	31%

FRANKLIN TEMPLETON TAX-FREE FIXED-INCOME^4,12


Lipper Quartile	*Period Ended December 31, 2009*
	1-Year Assets (%)	3-Year Assets (%)	5-Year Assets (%)	10-Year Assets (%)
1st & 2nd	55%	89%	93%	100%
3rd & 4th	45%	11%	7%	0%

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

- 4 -

Franklin Resources, Inc.

Preliminary Condensed Consolidated Income Statements¹³

Unaudited

(in thousands, except per share data


and assets under management)	Three months ended December 31,
	2009			2008			% Change
Operating Revenues
Investment management fees	$	806,664		$	600,274		34%
Underwriting and distribution fees		488,053			304,929		60%
Shareholder servicing fees		69,543			66,342		5%
Consolidated sponsored investment products income, net		448			1,886		(76%	)
Other, net		12,703			(4,101	)	NM

Total operating revenues		1,377,411			969,330		42%

Operating Expenses
Underwriting and distribution		467,027			289,529		61%
Compensation and benefits		254,312			244,063		4%
Information systems, technology and occupancy		68,610			68,598		0%
Advertising and promotion		34,848			24,227		44%
Amortization of deferred sales commissions		46,546			36,612		27%
Other		39,091			37,937		3%

Total operating expenses		910,434			700,966		30%

Operating Income		466,977			268,364		74%

Other Income (Expenses)
Consolidated sponsored investment products gains (losses), net		15,072			(47,442	)	NM
Investment and other income (losses), net		32,978			(45,022	)	NM
Interest expense		(742	)		(1,200	)	(38%	)

Other income (expenses), net		47,308			(93,664	)	NM

Income before taxes		514,285			174,700		194%
Taxes on income		156,736			64,771		142%

Net Income		357,549			109,929		225%
Less: Net income (loss) attributable to noncontrolling interests		1,946			(10,971	)	NM

Net Income attributable to Franklin Resources, Inc.	$	355,603		$	120,900		194%

Earnings per Share¹⁴
Basic	$	1.55		$	0.52		198%
Diluted		1.54			0.52		196%
Dividends per Share	$	3.22		$	0.21		NM
Average Shares Outstanding¹⁴ (in thousands)
Basic		227,892			231,626		(2%	)
Diluted		229,251			232,688		(1%	)
Operating Margin¹⁵		34%			28%
Assets Under Management¹⁶ (in billions)
Beginning of period	$	523.4		$	507.3		3%
Long-term sales		42.2			27.8		52%
Long-term redemptions		(28.2	)		(45.1	)	(37%	)
Net cash management		0.3			(0.9	)	NM

Net new flows		14.3			(18.2	)	NM
Reinvested distributions		3.7			7.1		(48%	)

Net flows		18.0			(11.1	)	NM
Distributions		(4.5	)		(9.0	)	(50%	)
Appreciation (depreciation) and other		16.6			(71.0	)	NM

End of period	$	553.5		$	416.2		33%

Simple Monthly Average for Period	$	534.9		$	438.7		22%

- 5 -

Franklin Resources, Inc.

Preliminary Condensed Consolidated Income Statements¹³

Unaudited

(in thousands, except per share data, employees

and billable shareholder accounts)


	Three months ended
	31-Dec-09			30-Sep-09			% Change		30-Jun-09			31-Mar-09			31-Dec-08
Operating Revenues
Investment management fees	$	806,664		$	724,953		11%		$	625,025		$	552,936		$	600,274
Underwriting and distribution fees		488,053			433,361		13%			365,217			304,655			304,929
Shareholder servicing fees		69,543			67,381		3%			67,113			66,514			66,342
Consolidated sponsored investment products income, net		448			1,640		(73%	)		2,908			1,761			1,886
Other, net		12,703			11,592		10%			13,295			(13,594	)		(4,101	)

Total operating revenues		1,377,411			1,238,927		11%			1,073,558			912,272			969,330

Operating Expenses
Underwriting and distribution		467,027			418,284		12%			350,675			293,534			289,529
Compensation and benefits		254,312			246,773		3%			230,943			236,732			244,063
Information systems, technology and occupancy		68,610			71,999		(5%	)		68,203			65,398			68,598
Advertising and promotion		34,848			37,314		(7%	)		27,888			26,700			24,227
Amortization of deferred sales commissions		46,546			39,747		17%			32,865			33,754			36,612
Other		39,091			40,088		(2%	)		36,798			32,832			37,937

Total operating expenses		910,434			854,205		7%			747,372			688,950			700,966

Operating Income		466,977			384,722		21%			326,186			223,322			268,364

Other Income (Expenses)
Consolidated sponsored investment products gains (losses), net		15,072			42,830		(65%	)		44,503			(11,106	)		(47,442	)
Investment and other income (losses), net		32,978			87,338		(62%	)		52,574			(33,893	)		(45,022	)
Interest expense		(742	)		(268	)	177%			(211	)		(2,092	)		(1,200	)

Other income (expenses), net		47,308			129,900		(64%	)		96,866			(47,091	)		(93,664	)

Income before taxes		514,285			514,622		0%			423,052			176,231			174,700
Taxes on income		156,736			136,180		15%			116,204			67,159			64,771

Net Income		357,549			378,442		(6%	)		306,848			109,072			109,929
Less: Net income (loss) attributable to noncontrolling interests		1,946			11,086		(82%	)		9,132			(1,734	)		(10,971	)

Net Income attributable to Franklin Resources, Inc.	$	355,603		$	367,356		(3%	)	$	297,716		$	110,806		$	120,900

Earnings per Share¹⁴
Basic	$	1.55		$	1.60		(3%	)	$	1.29		$	0.48		$	0.52
Diluted		1.54			1.59		(3%	)		1.28			0.47			0.52

Dividends per Share	$	3.22		$	0.21		NM		$	0.21		$	0.21		$	0.21

Average Shares Outstanding¹⁴ (in thousands)
Basic		227,892			228,741		0%			229,804			231,178			231,626
Diluted		229,251			230,061		0%			230,819			231,890			232,688

Operating Margin		34%			31%					30%			24%			28%

Employees		7,752			7,745		0%			7,847			8,233			8,608

Billable Shareholder Accounts (in millions)		22.2			21.4		4%			22.4			21.9			21.0

- 6 -

ASSETS UNDER MANAGEMENT BY INVESTMENT OBJECTIVE


(in billions)	Three months ended
	31-Dec-09		30-Sep-09		% Change		30-Jun-09		31-Mar-09		31-Dec-08
Equity
Global/international	$	189.5	$	183.1	3%		$	153.1	$	124.7	$	142.6
Domestic (U.S.)		66.3		63.9	4%			56.7		48.5		55.2

Total equity		255.8		247.0	4%			209.8		173.2		197.8

Hybrid		104.0		98.2	6%			85.8		75.0		78.8

Fixed-Income
Tax-free		69.7		69.6	0%			62.4		59.3		56.1
Taxable:
Global/international¹⁷		77.5		63.3	22%			50.2		43.0		45.9
Domestic (U.S.)		40.4		38.4	5%			35.5		32.5		29.8

Total fixed-income		187.6		171.3	10%			148.1		134.8		131.8
Cash Management^17,18		6.1		6.9	(12%	)		7.5		8.1		7.8

Total Ending Assets Under Management	$	553.5	$	523.4	6%		$	451.2	$	391.1	$	416.2

Simple Monthly Average Assets Under Management	$	534.9	$	488.3	10%		$	428.0	$	396.6	$	438.7

ASSETS UNDER MANAGEMENT AND FLOWS – UNITED STATES AND INTERNATIONAL


(in billions)		As of and for the three months ended
		31-Dec-09			% of Total	30-Sep-09			% of Total	31-Dec-08			% of Total
Long-Term Sales
	United States	$	23.8		56%	$	21.5		62%	$	13.5		49%
	International¹⁷		18.4		44%		13.4		38%		14.3		51%

	Total Long-Term Sales	$	42.2		100%	$	34.9		100%	$	27.8		100%


Long-Term Redemptions
	United States	$	(15.1	)	54%	$	(13.4	)	58%	$	(24.8	)	55%
	International¹⁷		(13.1	)	46%		(9.9	)	42%		(20.3	)	45%

	Total Long-Term Redemptions	$	(28.2	)	100%	$	(23.3	)	100%	$	(45.1	)	100%


Assets Under Management
	United States	$	407.9		74%	$	389.3		74%	$	313.8		75%
	International		145.6		26%		134.1		26%		102.4		25%

	Total Assets Under Management	$	553.5		100%	$	523.4		100%	$	416.2		100%

- 7 -

ASSETS UNDER MANAGEMENT AND FLOWS BY INVESTMENT OBJECTIVE


(in billions)		Three months ended
		31-Dec-09			30-Sep-09			31-Dec-08
Global/international equity
	Beginning assets	$	183.1		$	153.1		$	190.3

	Long-term sales		11.1			9.7			8.1
	Long-term redemptions		(12.6	)		(9.1	)		(13.5	)
	Net exchanges		—			0.1			(1.1	)

	Net new flows		(1.5	)		0.7			(6.5	)
	Reinvested distributions		1.1			0.2			4.0

	Net flows		(0.4	)		0.9			(2.5	)
	Distributions		(1.2	)		(0.1	)		(4.4	)
	Appreciation (depreciation) and other		8.0			29.2			(40.8	)

	Ending assets		189.5			183.1			142.6

Domestic (U.S.) equity
	Beginning assets		63.9			56.7			72.9

	Long-term sales		2.5			2.5			3.0
	Long-term redemptions		(3.1	)		(2.8	)		(5.0	)
	Net exchanges		(0.1	)		(0.1	)		—

	Net new flows		(0.7	)		(0.4	)		(2.0	)
	Reinvested distributions		0.3			0.3			0.9

	Net flows		(0.4	)		(0.1	)		(1.1	)
	Distributions		(0.4	)		(0.4	)		(1.2	)
	Appreciation (depreciation) and other		3.2			7.7			(15.4	)

	Ending assets		66.3			63.9			55.2

Hybrid
	Beginning assets		98.2			85.8			93.9

	Long-term sales		4.4			3.7			2.5
	Long-term redemptions		(2.7	)		(2.8	)		(5.0	)
	Net exchanges		—			0.1			(0.7	)

	Net new flows		1.7			1.0			(3.2	)
	Reinvested distributions		1.0			0.9			0.9

	Net flows		2.7			1.9			(2.3	)
	Distributions		(1.3	)		(1.2	)		(1.3	)
	Appreciation (depreciation) and other		4.4			11.7			(11.5	)

	Ending assets		104.0			98.2			78.8

Tax-free fixed-income
	Beginning assets		69.6			62.4			59.7

	Long-term sales		3.7			3.9			2.5
	Long-term redemptions		(2.2	)		(1.9	)		(3.9	)
	Net exchanges		(0.1	)		—			(0.3	)

	Net new flows		1.4			2.0			(1.7	)
	Reinvested distributions		0.5			0.5			0.4

	Net flows		1.9			2.5			(1.3	)
	Distributions		(0.8	)		(0.8	)		(0.7	)
	(Depreciation) appreciation and other		(1.0	)		5.5			(1.6	)

	Ending assets	$	69.7		$	69.6		$	56.1

[Table continued on next page]

- 8 -

ASSETS UNDER MANAGEMENT AND FLOWS BY INVESTMENT OBJECTIVE

[Table continued from previous page]


(in billions)		Three months ended
		31-Dec-09			30-Sep-09			31-Dec-08
Global/international taxable fixed-income
	Beginning assets	$	63.3		$	50.2		$	52.7

	Long-term sales		16.8			11.6			9.4
	Long-term redemptions		(5.4	)		(4.3	)		(14.9	)
	Net exchanges		1.3			1.3			(0.1	)

	Net new flows		12.7			8.6			(5.6	)
	Reinvested distributions		0.5			0.3			0.6

	Net flows		13.2			8.9			(5.0	)
	Distributions		(0.5	)		(0.3	)		(1.0	)
	Appreciation (depreciation) and other		1.5			4.5			(0.8	)

	Ending assets		77.5			63.3			45.9

Domestic (U.S.) taxable fixed-income
	Beginning assets		38.4			35.5			30.5

	Long-term sales		3.7			3.5			2.3
	Long-term redemptions		(2.2	)		(2.4	)		(2.8	)
	Net exchanges		—			(0.1	)		0.8

	Net new flows		1.5			1.0			0.3
	Reinvested distributions		0.3			0.2			0.3

	Net flows		1.8			1.2			0.6
	Distributions		(0.3	)		(0.3	)		(0.4	)
	Appreciation (depreciation) and other		0.5			2.0			(0.9	)

	Ending assets		40.4			38.4			29.8

Cash Management
	Beginning assets		6.9			7.5			7.3

	Net cash management		0.3			0.6			(0.9	)
	Net exchanges		(1.1	)		(1.3	)		1.4

	Net new flows		(0.8	)		(0.7	)		0.5
	Reinvested distributions		—			—			—

	Net flows		(0.8	)		(0.7	)		0.5
	Distributions		—			—			—
	Appreciation and other		—			0.1			—

	Ending assets		6.1			6.9			7.8

Total
	Beginning assets		523.4			451.2			507.3

	Long-term sales		42.2			34.9			27.8
	Long-term redemptions		(28.2	)		(23.3	)		(45.1	)
	Long-term net exchanges		1.1			1.3			(1.4	)
	Net cash management		0.3			0.6			(0.9	)
	Cash management net exchanges		(1.1	)		(1.3	)		1.4

	Net new flows		14.3			12.2			(18.2	)
	Reinvested distributions		3.7			2.4			7.1

	Net flows		18.0			14.6			(11.1	)
	Distributions		(4.5	)		(3.1	)		(9.0	)
	Appreciation (depreciation) and other		16.6			60.7			(71.0	)

Ending Assets Under Management		$	553.5		$	523.4		$	416.2

- 9 -

Conference Call Information

Pre-recorded audio commentary on the first 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 49554966, anytime through 11:59 p.m. Eastern Time on February 12, 2010.

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 also be accessed by calling (800) 642-1687 in the U.S. and Canada or (706) 645-9291 internationally, using access code 49450578, after 5:30 p.m. Eastern Time on January 28, 2010 through 11:59 p.m. Eastern Time on February 12, 2010.

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

Franklin Resources, Inc. [NYSE:BEN] 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 $553 billion in assets under management as of December 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.

Net income represents net income attributable to Franklin Resources, Inc.

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.

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. Performance rankings for other share classes may differ.

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 958 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.

Source: Lipper^® Inc., 12/31/09. Of the eligible Franklin Templeton long-term mutual funds tracked by Lipper, 26, 37, 40 and 40 funds ranked in the top quartile and 35, 32, 23 and 23 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

Source: Lipper^® Inc., 12/31/09. Of the eligible Franklin Templeton equity mutual funds tracked by Lipper, 20, 19, 14 and 14 funds ranked in the top quartile and 20, 17, 13 and 12 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., 12/31/09. Of the eligible Franklin Templeton non-money market fixed-income mutual funds tracked by Lipper, 5, 18, 26 and 26 funds ranked in the top quartile and 15, 15, 10 and 11 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

Source: Lipper^® Inc., 12/31/09. Of the eligible Franklin equity mutual funds tracked by Lipper, 14, 12, 8 and 8 funds ranked in the top quartile and 12, 10, 8 and 6 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

Source: Lipper^® Inc., 12/31/09. Of the eligible Templeton equity mutual funds tracked by Lipper, 6, 4, 2 and 3 funds ranked in the top quartile and 5, 4, 3 and 3 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., 12/31/09. Of the eligible Mutual Series equity mutual funds tracked by Lipper, 0, 3, 4 and 3 funds ranked in the top quartile and 3, 3, 2 and 3 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., 12/31/09. Of the eligible Franklin Templeton non-money market taxable fixed-income mutual funds tracked by Lipper, 2, 4, 5 and 4 funds ranked in the top quartile and 4, 3, 2 and 1 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., 12/31/09. Of the eligible Franklin Templeton non-money market tax-free fixed-income mutual funds tracked by Lipper, 3, 14, 21 and 22 funds ranked in the top quartile and 11, 12, 8 and 10 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

13.

Effective October 1, 2009, the company adopted a new accounting standard that modifies the presentation of consolidated net income to include the amount attributable to noncontrolling interests for all periods presented.

14.

Effective October 1, 2009, the company retrospectively adopted a new accounting standard that modifies the earnings per share calculations to recognize its nonvested stock awards and nonvested stock unit awards that contain nonforfeitable rights to dividends or dividend equivalents as if they were a separate class of stock.

15.

Defined as operating income divided by operating revenues.

16.

Assets under management include assets for which the company provides 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, 2009.

17.

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.

18.

Cash management includes both U.S.-registered money market funds and non-U.S. registered funds with similar investment objectives.

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 U.S. Private Securities Litigation Reform Act of 1995. When used in this press release, words or phrases generally written in the future tense and/or preceded by words such as “will”, “may”, “could”, “expect”, “believe”, “anticipate”, “intend”, “plan”, “seek”, “estimate” or other similar words are forward-looking statements.

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 actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance.

- 11 -

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, 2009:

•

Volatility and disruption of the capital and credit markets, and adverse changes in the global economy, may significantly affect our results of operations and may put pressure on our financial results.

•

The amount and mix of our assets under management are subject to significant fluctuations.

•

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.

•

Changes in tax laws or exposure to additional income tax liabilities could have a material impact on our financial condition, results of operations and liquidity.

•

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, technology or other systems that are critical to our operations could constrain our operations.

•

Our investment management business operations are complex and a failure to properly perform operational tasks or the misrepresentation of our products and services could have an adverse effect on our revenues and income.

•

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 third-party 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 and other sponsored investment products 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 the market value of our assets, operating cash flows and our perceived credit worthiness.

•

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, and liquidity needs could affect our banking business.

•

We are dependent on the earnings of our subsidiaries.

- 12 -

Any forward-looking statement made by us in this press release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

# # #

- 13 -