MEET DAVE An Unexpected Investor - Franklin Templeton
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An Unexpected Investor
MEET DAVE
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 1970–2019, 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
$50,000
Total Amount Invested
CLASS in 1970
Let’s take
a look at
Dave’s journey.
Dave’s journey HOME SWEET HOME
Dave jumps at the opportunity to
purchase a beautiful house in his
CAROLYN IS OFF TO COLLEGE
For the next four years, he pays her tuition,
room and board as she prepares for her
A hypothetical illustration childhood neighborhood. career in the field of Accounting.
WHAT’S NEXT?
$24,1184 LUKE IS OFF TO COLLEGE Dave is getting ready to retire and
$17,9503
As Dave figures out how to deal with rediscover some old passions. As he
Dave invests an “empty nest,” he pays for four thinks about what’s next, Dave works
$50,000 years of tuition, room and board while
Luke studies as an English major.
with his financial advisor to develop
a written retirement income plan.
on January 1, 1970
in Franklin Income $29,1234
Fund – Advisor 1980 VACATION MEMORIES 1991 1995
1979 2020
Class1 Dave takes his family on
a vacation to Florida to see
the Space Shuttle and spend
some time at the beach.
DAD-MOBILE FATHER OF THE BRIDE
$2,000
With two kids to drive
1981 Carolyn gets married and
around, Dave purchases
Dave gives the happy couple
a Ford LTD Station Wagon.
a generous gift to start 2010
$6,438 2 their new life together.
1978 FOURTH GRANDCHILD
1990 $25,000
2000 Carolyn always said she
WEDDING BELLS wanted a big family!
529
Dave marries Claire, Dave opens a fourth
his college sweetheart. WEDDED BLISS GRANDPA DAVE 529 College Savings plan. TOTAL WITHDRAWALS
$1,000
Dave and Claire spend
two weeks in Europe
Dave’s first grandchild $65,000 $359,688
1970 is born. With the future 2009
529
1976 IT’S A BOY celebrating their 15-year
already in mind, he opens
wedding anniversary.
Dave and Claire welcome a 529 College Savings plan. THIRD GRANDCHILD ENDING PORTFOLIO VALUE 5
$2,981,629
a new addition to the family, $3,000 GOODBYE, PINTO $55,000 Just as he’s done for the
529
a sweet boy named Luke.
Dave’s beloved Pinto 2003 first two, Dave opens a third
breaks down and 529 College Savings plan. VS.
he purchases a new
$60,000
IT’S A GIRL NEW CAR SMELL Honda Accord. 2007 $2,865,417 S&P 500 INDEX6
Dave and Claire celebrate Dave buys the hip Ford SECOND GRANDCHILD
the birth of their first Pinto he has had his eye $13,2072
Another grandchild arrives
529
child, a beautiful girl on for a while. After all the withdrawals
529
and another 529 College
named Carolyn. Savings plan is opened. Dave made, the ending
1974 $2,8522 1985
value of his investment
$55,000
2005 in Franklin Income Fund
1973 is over 2.9 million dollars!
1987
What about Paul?
Remember Dave’s brother,
% Annual Total Returns—Advisor Class8
‘70 ‘71 ‘72 ‘73 ‘74 ‘75 ‘76 ‘77 ‘78 ‘79 ‘80 ‘81 ‘82 ‘83 ‘84 ‘85 ‘86 ‘87 ‘88 ‘89 ‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19
Paul, invested in CDs7
3.04 19.96 4.31 -4.21 -12.34 25.82 22.63 8.66 8.36 28.56 19.58 1.14 36.07 15.35 15.51 18.36 19.65 4.87 8.81 12.67 -8.77 41.15 15.24 21.53 -6.38 21.29 10.45 18.04 1.12 -0.58 20.29 0.81 -0.92 31.32 12.40 2.01 19.39 5.08 -30.27 35.43 13.15 2.51 14.48 14.50 3.86 -7.75 16.61 8.62 -5.22 16.02 to be safe. Without
This communication is general in nature and provided for educational and 1. $50,000 in 1970 would be worth $339,912 in today’s dollars (2019). Source: United States Department of
making any withdrawals,
Average Annual Total Returns9 (Periods Ended March 31, 2020) Since Inception 30-Day Standardized Yield13 IMPORTANT LEGAL INFORMATION
Expense Beta (3-Year)14
The figures shown represent performance of a hypothetical investment and informational purposes only. It should not be considered or relied upon as Labor, Bureau of Labor Statistics Inflation Calculator. As of January 2020. his investment grew to
1-Year 3-Year
5-Year 10-Year (8/31/48) (As of 03/31/20) Ratio (As of 03/31/20) legal, tax or investment advice or an investment recommendation, or as http://www.bls.gov/data/inflation_calculator.htm
withdrawals to illustrate how this fund may fit as part of a well-diversified retirement 2. Source: Kelley Blue Book. Historical prices for a new Ford Pinto Sedan in 1974, Ford LTD Wagon in 1978 $698,496.*
Advisor Class (FRIAX)10
-11.91% -1.24% 1.24% 5.07% 9.80% 4.10% 0.47% 1.16 a substitute for legal or tax counsel. Any investment products or services
income investment portfolio. The hypothetical illustration is provided for general and Honda Accord LX in 1987.
Class A (FKIQX)11 With Maximum 3.75% Initial Sales Charge -14.91% -2.63% 0.30% 4.52%
12
9.65% educational purposes only and does not constitute investment or tax advice. named herein are for illustrative purposes only, and should not be considered
3.67% 0.72% 1.12 3. Source: U.S. Census Bureau—New Residential Sales. 25% down payment on an average home price *It’s important to note that CDs are insured by the
Without Sales Charge -11.60% -1.39% 1.07% 4.92% 9.71% an offer to buy or sell, or an investment recommendation for, any specific of $71,800 for a new single family home in 1979.
It’s important to note that the amounts withdrawn do not represent dividends or income, security, strategy or investment product or service. Always consult a qualified Federal Deposit Insurance Corporation (FDIC) for
but, rather, the proceeds from the sale of shares. This illustration assumes sufficient 4. Figure is the aggregate cost of college tuition, fees, room and board for a public 4-year university
professional or your own independent financial advisor for personalized advice during the respective 4-academic year period. The illustration assumes that withdrawal of the cost for up to $250,000 and offer a fixed rate of return,
shares are sold from the shareholder’s account at the time of each withdrawal to provide or investment recommendations tailored to your specific goals, individual whereas fund shares are not insured and are
each academic year was made at the end of the applicable calendar year. Source: The College Board,
Performance data represents past performance, which does not guarantee future results. Current performance may differ from figures shown. for the withdrawal amount. Please note that this hypothetical investment does not take situation, and risk tolerance. Trends in College Pricing © 2020 The College Board, www.collegeboard.com. Table 2—Average Tuition subject to loss. The S&P 500 Index is considered
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. into account federal, state or municipal taxes. If taxes were taken into account, the and Fees and Board in Current Dollars and in 2015 Dollars, 1971–72 to 2015–16 (Enrollment Weighted). representative of the U.S. stock market and
hypothetical values shown would have been lower. The results of the withdrawals could Franklin Templeton does not provide legal or tax advice. Federal and state
Please call Franklin Templeton at (800) DIAL BEN/342-5236 or visit franklintempleton.com for the most recent month-end performance. 5. Hypothetical Franklin Income Fund ending portfolio value for the period 1/1/70–12/31/19 assumes returns do not reflect the deduction of fees or sales
vary substantially depending on investment performance of the fund during the period. laws and regulations are complex and subject to change, which can materially a $50,000 initial investment on 1/1/70, Advisor Class without Sales Charge, withdrawals made at the
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. impact your results. Franklin Templeton Distributors, Inc. (FTDI) cannot charges. Indexes are unmanaged and one cannot
end of each applicable year, and the reinvestment of all dividends and capital gains at net asset value.
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 guarantee that such information is accurate, complete or timely; and disclaims invest directly in an index.
the principal. If withdrawals were made at other times and/or in different amounts, the any liability arising out of your use of, or any tax position taken in reliance on,
such information.
| |
Not FDIC Insured May Lose Value No Bank Guarantee
results will be different. Investing in a Franklin Templeton fund does not guarantee
one’s retirement income needs would be met.
Meet Dave: An Unexpected Investor franklintempleton.com franklintempleton.com Meet Dave: An Unexpected Investor
Where is Dave now? 50 years later… Open flap to see answers.
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.
WHAT ARE THE RISKS?
All investments involve risks, including possible loss of principal. The fund’s portfolio includes a substantial portion of higher-yielding, lower-
rated corporate bonds and some floating rate loans, which are also higher-yielding and lower-rated. These investments have more credit risk
than investment-grade securities and are subject to increased risk of default and potential 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. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual
companies, particular industries or sectors, or general market conditions. Foreign investing involves additional risks such as currency and
market volatility, as well as political and social instability. These and other risk considerations are discussed in the fund’s prospectus.
Investors should carefully consider a mutual fund’s and/or 529 college savings plan’s investment goals, risks, charges and expenses before investing.
To obtain a mutual fund summary prospectus and/or prospectus or the 529 plan Investor Handbook, which contains this and other information,
talk to your financial advisor, 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. Please carefully read
a mutual fund prospectus and/or 529 plan Investor Handbook before you invest or send money. With respect to investments in the 529 plan,
consider whether your, or the beneficiary’s, home state offers any state tax or other state benefits such as financial aid, scholarship funds, and
protection from creditors that are only available for investments in its qualified tuition program.
6. Index performance includes hypothetical withdrawals for comparison purposes. Source: © 2020 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 1/1/70–12/31/19 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 Federal
Reserve Economic data © 2020 FRED (7/1/13–12/31/19).
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 A1 performance, excluding the effect of Class A1’s maximum initial sales charge but reflecting the effect of the Class A1 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 9/10/18 Class A shares closed to new investors, were renamed Class A1 shares, and a new Class A share with a different expense structure became available. Class A performance shown
has been calculated as follows: (a) for periods prior to 9/10/18, a restated figure is used based on the fund’s Class A1 performance and including any Rule 12b-1 rate differential as exists between Class
A1 and Class A; and (b) for periods after 9/10/18, actual Class A performance is used, reflecting all charges and fees applicable to that class. Effective 5/1/94, the fund implemented a Rule 12b-1 plan,
which affects subsequent performance.
12. Prior to 3/1/19, these shares were offered at a higher initial sales charge of 4.25%; thus actual returns would have differed. Total returns with sales charges have been restated to reflect the
current maximum initial sales charge of 3.75%.
13. The fund’s 30-Day Standardized Yield is calculated using the net income (interest and dividends) per share earned over a trailing 30-day period (annualized), divided by the fund’s share price at
the end of that period. 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 blended 50% MSCI USA High Dividend Yield Index + 25% Bloomberg Barclays High Yield Very Liquid Index
+ 25% Bloomberg Barclays US Aggregate Index. The MSCI USA High Dividend Yield Index is designed to reflect the performance of mid- and large-cap equities (excluding REITs) with higher dividend
income, which is sustainable and persistent, than average dividend yields of securities in the MSCI USA Index, its parent index. The Bloomberg Barclays US High Yield Very Liquid Index (VLI) is a
component of the US Corporate High Yield Index designed to track a more liquid component of the USD-denominated, high yield, fixed-rate corporate bond market. 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.
Franklin Templeton Distributors, Inc.
One Franklin Parkway
San Mateo, CA 94403-1906
(800) DIAL BEN® / 342-5236
franklintempleton.com
© 2020 Franklin Templeton. All rights reserved. RTSI BMD 04/20
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