Private equity firm KKR & Co reported lower-than-expected second-quarter earnings on Wednesday as investment income declined, sending its shares down 4.5 in early trading.

Economic net income (ENI), a measure used by private equity firms to report earnings, was $315 million, down 27 percent from $433 million a year earlier.

ENI after tax per adjusted unit was 36 cents, down from 48 cents in the 2010 quarter. Analysts' average forecast was 40 cents.

KKR said that while the fair value of its investments rose, the level of appreciation was lower than a year earlier. Last year it had returns on deals such as its investment in oil and gas exploration firm East Resources.

Second-quarter investment income was $239.8 million, down from $370.6 million a year earlier and far below the first quarter's $617.9 million.

KKR shares fell 64 cents to $13.50 in early trading on the New York Stock Exchange.

(Reporting by Megan Davies; editing by John Wallace)

(This story corrects the year-earlier investment income in 5th paragraph)