Meet Dave
AN UNEXPECTED INVESTOR
A hypothetical illustration
This is Dave’s story.
Right before he turned 22, his
grandfather passed away. Dave
and his younger brother, Paul,
each inherited $50,000.
Paul
Like his grandfather had done, Dave invested the
money in Franklin Income Fund, which seeks to
maximize income, while maintaining prospects for
capital appreciation, by investing in a diversified
portfolio of stocks and bonds. Paul bought
Certificates of Deposit (6‐Month CDs), which were
earning an attractive interest rate at the time.
From 1970–2016, both Dave and Paul left
the money invested and never made another
contribution. While Paul never touched the money,
Dave withdrew $359,688 for several important
events throughout his life.
Investor’s Profile (Hypothetical)
Dave
Cincinnati, Ohio
67 Years Old
Married
FRANKLIN INCOME
FUND – ADVISOR
CLASS
$50,000
Total Amount Invested
in 1970
Let’s take
a look at
Dave’s journey.
Where is
Dave now?
47 years later…
Open flap to see answers.
CAROLYN IS OFF TO COLLEGE
HOME SWEET HOME
For the next four years, he pays her tuition,
room and board as she prepares for her
career in the field of Accounting.
Dave jumps at the opportunity to
purchase a beautiful house in his
childhood neighborhood.
A hypothetical illustration
$17,9503
$50,000
1980
1979
VACATION MEMORIES
1995
1991
Carolyn gets married and
Dave gives the happy couple
a generous gift to start
their new life together.
1981
$6,438
2
2010
FOURTH GRANDCHILD
$25,000
1990
2000
$1,000
IT’S A BOY
Dave and Claire welcome
a new addition to the family,
a sweet boy named Luke.
Dave and Claire celebrate
the birth of their first
child, a beautiful girl
named Carolyn.
Dave buys the hip Ford
Pinto he has had his eye
on for a while.
Dave’s first grandchild
is born. With the future
already in mind, he opens
a 529 College Savings plan.
$3,000
GOODBYE, PINTO
2003
$359,688
2009
THIRD GRANDCHILD
ENDING PORTFOLIO VALUE 5
Just as he’s done for the
first two, Dave opens a third
529 College Savings plan.
VS.
$2,496,480
$1,870,761
2007
SECOND GRANDCHILD
1985
Another grandchild arrives
and another 529 College
Savings plan is opened.
‘75
25.82
‘76
22.63
‘77
8.66
‘78
8.36
‘79
28.56
‘80
19.58
‘81
1.14
‘82
36.07
‘83
15.35
‘84
15.51
‘85
18.36
‘86
19.65
‘87
4.87
‘88
8.81
‘89
12.67
‘90
-8.77
‘91
41.15
‘92
15.24
‘93
21.53
30-Day Standardized
Yield13 (As of 3/31/17)
S&P 500 INDEX6
After all the withdrawals
Dave made, the ending
value of his investment
in Franklin Income Fund
is over 2.4 million dollars!
2005
1987
What about Paul?
‘94
-6.38
‘95
21.29
‘96
10.45
IMPORTANT LEGAL INFORMATION
The figures shown represent performance of a hypothetical investment and
withdrawals to illustrate how this fund may fit as part of a well-diversified retirement
17.77% 3.66% 7.51% 5.38%
10.31%
Advisor Class (FRIAX)10
0.46%
3.70%
0.71
income investment portfolio. The hypothetical illustration is provided for general
11
Class A (FKINX)
educational purposes only and does not constitute investment or tax advice.
3.40%
0.61% With Waiver
0.71
With Maximum 4.25% Initial Sales Charge 13.20% 2.01% 6.33% 4.78%
10.18%
It’s important to note that the amounts withdrawn do not represent dividends or income,
Without Sales Charge
18.02% 3.49% 7.29% 5.24%
10.25%
Without Waiver
3.39%
but, rather, the proceeds from the sale of shares. This illustration assumes sufficient
shares are sold from the shareholder’s account at the time of each withdrawal to provide
for the withdrawal amount. Please note that this hypothetical investment does not take
Performance data represents past performance, which does not guarantee future results. Current performance may differ from figures shown.
into account federal, state or municipal taxes. If taxes were taken into account, the
The fund’s investment returns and principal values will change with market conditions, and you may have a gain or a loss when you sell your shares.
Please call Franklin Templeton Investments at (800) DIAL BEN/342-5236 or visit franklintempleton.com for the most recent month-end performance. hypothetical values shown would have been lower. The results of the withdrawals could
vary substantially depending on investment performance of the fund during the period.
Advisor Class shares are only offered to certain eligible investors as stated in the prospectus. They are offered without sales charges or Rule 12b-1 fees. The The amount chosen for withdrawal impacts the value remaining at the end of the period.
fund offers multiple share classes, which are subject to different fees and expenses that will affect their performance. Please see the prospectus for details. In a period of declining market values, continued withdrawals could eventually exhaust
the principal. If withdrawals were made at other times and/or in different amounts, the
results will be different. Investing in a Franklin Templeton fund does not guarantee
Not FDIC Insured May Lose Value No Bank Guarantee
one’s retirement income needs would be met.
Meet Dave: An Unexpected Investor
TOTAL WITHDRAWALS
$65,000
$55,000
Average Annual Total Returns9 (Periods Ended March 31, 2017)
Gross Expense
1-Year 3-Year 5-Year 10-Year Since Inception (8/31/48)
Ratio12
|
Carolyn always said she
wanted a big family!
Dave opens a fourth
529 College Savings plan.
$60,000
$13,2072
1973
% Annual Total Returns—Advisor Class8
‘70
‘71
‘72
‘73
‘74
3.04
19.96
4.31
-4.21
-12.34
$55,000
Dave’s beloved Pinto
breaks down and
he purchases a new
Honda Accord.
$2,8522
1974
Dave and Claire spend
two weeks in Europe
celebrating their 15-year
wedding anniversary.
529
NEW CAR SMELL
GRANDPA DAVE
529
IT’S A GIRL
WEDDED BLISS
529
Dave marries Claire,
his college sweetheart.
529
WEDDING BELLS
1976
2017
FATHER OF THE BRIDE
$2,000
With two kids to drive
around, Dave purchases
a Ford LTD Station Wagon.
1970
$29,1234
Dave takes his family on
a vacation to Florida to see
the Space Shuttle and spend
some time at the beach.
DAD-MOBILE
1978
Dave is getting ready to retire and
rediscover some old passions. As he
thinks about what’s next, Dave works
with his financial advisor to develop
a written retirement income plan.
As Dave figures out how to deal with
an “empty nest,” he pays for four
years of tuition, room and board while
Luke studies as an English major.
Dave invests
On January 1, 1970
in Franklin Income
Fund – Advisor
Class1
WHAT’S NEXT?
LUKE IS OFF TO COLLEGE
$24,1184
529
Dave’s journey
Beta (3-Year)14
(As of 3/31/17)
|
franklintempleton.com
‘97
18.04
‘98
1.12
‘99
-0.58
‘00
20.29
‘01
0.81
‘02
-0.92
‘03
31.32
‘04
12.40
‘05
2.01
‘06
19.39
‘07
5.08
This communication is general in nature and provided for educational and
informational purposes only. It should not be considered or relied upon as
legal, tax or investment advice or an investment recommendation, or as
a substitute for legal or tax counsel. Any investment products or services
named herein are for illustrative purposes only, and should not be considered
an offer to buy or sell, or an investment recommendation for, any specific
security, strategy or investment product or service. Always consult a qualified
professional or your own independent financial advisor for personalized advice
or investment recommendations tailored to your specific goals, individual
situation, and risk tolerance.
Franklin Templeton does not provide legal or tax advice. Federal and state
laws and regulations are complex and subject to change, which can materially
impact your results. Franklin Templeton Distributors, Inc. (FTDI) cannot
guarantee that such information is accurate, complete or timely; and disclaims
any liability arising out of your use of, or any tax position taken in reliance on,
such information.
franklintempleton.com
‘08
-30.27
‘09
35.43
‘10
13.15
‘11
2.51
‘12
14.48
‘13
14.50
‘14
3.86
‘15
-7.75
‘16
16.61
1. $50,000 in 1970 would be worth $306,287 in today’s dollars (2016). Source: United States Department of
Labor, Bureau of Labor Statistics Inflation Calculator. As of January 2017.
http://www.bls.gov/data/inflation_calculator.htm
2. Source: Kelley Blue Book. Historical prices for a new Ford Pinto Sedan in 1974, Ford LTD Wagon in 1978
and Honda Accord LX in 1987.
3. Source: U.S. Census Bureau—New Residential Sales. 25% down payment on an average home price
of $71,800 for a new single family home in 1979.
4. Figure is the aggregate cost of college tuition, fees, room and board for a public 4-year university
during the respective 4-academic year period. The illustration assumes that withdrawal of the cost for
each academic year was made at the end of the applicable calendar year. Source: The College Board,
Trends in College Pricing © 2017 The College Board, www.collegeboard.com. Table 2—Average Tuition
and Fees and Board in Current Dollars and in 2015 Dollars, 1971–72 to 2015–16 (Enrollment Weighted).
5. Hypothetical Franklin Income Fund ending portfolio value for the period 1/1/70–12/31/16 assumes
a $50,000 initial investment on 1/1/70, Advisor Class without Sales Charge, withdrawals made at the
end of each applicable year, and the reinvestment of all dividends and capital gains at net asset value.
Remember Dave’s brother,
Paul, invested in CDs7
to be safe. Without
making any withdrawals,
his investment grew to
$693,156.*
*It’s important to note that CDs are insured by the
Federal Deposit Insurance Corporation (FDIC) for
up to $250,000 and offer a fixed rate of return,
whereas fund shares are not insured and are
subject to loss. The S&P 500 Index is considered
representative of the U.S. stock market and
returns do not reflect the deduction of fees or sales
charges. Indexes are unmanaged and one cannot
invest directly in an index.
Meet Dave: An Unexpected Investor
What will your journey look like? For more information about Franklin Income Fund and
to discuss what’s next for you, please contact your financial advisor.
Franklin Templeton Distributors, Inc.
One Franklin Parkway
San Mateo, CA 94403-1906
(800) DIAL BEN® / 342-5236
franklintempleton.com
WHAT ARE THE RISKS?
All investments involve risks, including possible loss of principal. The fund’s share price and yield will be affected by interest rate movements.
Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the fund adjust to a rise in interest rates,
the fund’s share price may decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The
fund’s portfolio includes a substantial portion of higher-yielding, lower-rated corporate bonds because of the relatively higher yields they offer.
Floating rate loans are lower-rated, higher-yielding instruments, which are subject to increased risk of default and can potentially result in
loss of principal. These securities carry a greater degree of credit risk relative to investment-grade securities. Stock prices fluctuate, sometimes
rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. These
and other risk considerations are discussed in the fund’s prospectus.
Investors should carefully consider mutual fund and/or 529 college savings plan investment goals, risks, charges and expenses before investing.
To obtain a mutual fund summary prospectus and/or prospectus or the Investor Handbook, which contain this and other information, talk to your
financial advisor or call Franklin Templeton Distributors, Inc., the principal distributor of Franklin Templeton’s U.S. registered mutual funds and
the manager and underwriter for the 529 plan at (800) DIAL BEN/342-5236 or visit franklintempleton.com. You should read the mutual fund
prospectus and/or Investor Handbook carefully before investing or sending money and, with respect to investments in the 529 plan, consider whether
your, or the beneficiary’s, home state offers any state tax or other benefits that are only available for investments in its qualified tuition program.
6. Index performance includes hypothetical withdrawals for comparison purposes. Source: © 2017 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar
and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages
or losses arising from any use of this information. Past performance is no guarantee of future results.
7. Hypothetical 6-Month CD investment ending value for the period 1/1/70–12/31/16 assumes a $50,000 initial investment on 1/1/70, no withdrawals, and the reinvestment of interest. Methodology:
the annual rate for a 6-Month CD was divided by 12 to get an approximate monthly rate to run the investment illustration. Sources: The Federal Reserve H.15 Report (1/1/70–6/30/13) and BanxQuote
© 2017 BanxCorp (7/1/13–12/31/16).
8. Annual total returns reflect the fund’s return for each year and do not take into account the withdrawals shown in this hypothetical illustration.
9. This fund offers other share classes, subject to different fees and expenses that will affect their performance.
10. Effective 12/31/96, the fund began offering Advisor Class shares. For periods prior to the fund’s Advisor Class inception date, a restated figure is used based on the fund’s oldest share class,
Class A performance, excluding the effect of Class A’s maximum initial sales charge but reflecting the effect of the Class A Rule 12b-1 fees; and for periods after the fund’s Advisor Class inception
date, actual Advisor Class performance is used, reflecting all charges and fees applicable to that class.
11. Effective 5/1/94, the fund implemented a Rule 12b-1 plan, which affects subsequent performance.
12. The fund has a fee waiver associated with any investment it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through January 31, 2018.
Fund investment results reflect the fee waiver; without this waiver, the results would have been lower.
13. The fund’s 30-Day Standardized Yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the fund’s actual
income distribution rate, which reflects the fund’s past dividends paid to shareholders.
14. Beta is a measure of the fund’s volatility relative to the market, as represented by the S&P 500 Index. A beta greater than 1.00 indicates volatility greater than the market. Based on the 3-year
period ended as of the date of the calculation.
© 2017 Franklin Templeton Investments. All rights reserved.
RTSI BMD 05/17