April 12 (Reuters) - State Street's assets under

management for the first quarter rose by nearly 20% helping it

post an increase in fee earned from managing clients, the

company said on Friday, sending its shares up 4.2% in premarket

trading.

State Street services and manages investments for

high-net-worth clients that include governments, institutions

and investment companies. The bank had record $4.3 trillion in

assets under management (AUM) at the end of the March quarter,

up from $3.6 trillion last year.

However, its quarterly profit fell nearly 16% to $463

million, or $1.37 per share, due to a 6% rise in its expenses,

including $130 million to replenish the Federal Deposit

Insurance Corporation's insurance fund.

In line with broader industry trends, State Street's net

interest income (NII) in the quarter declined 6.5% to $716

million in the quarter ended March. 31, from a year earlier.

CEO Ron O'Hanley said the bank's fee revenue growth

reflected robust performance across its Global Advisors and

Front office solutions businesses, which, along with growth in

servicing fees, more than offset lower trading revenues as

volatility remained muted.