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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 1970–2015, 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 – CLASS A
$50,000
Total Amount Invested
in 1970
Let’s take
a look at
Dave’s journey.
Where is
Dave now?
46 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
$24,118
$17,9503
$50,000
1980
1979
VACATION MEMORIES
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 buys the hip Ford
Pinto he has had his eye
on for a while.
$3,000
GOODBYE, PINTO
2009
THIRD GRANDCHILD
2003
1985
$1,887,433
Just as he’s done for the
first two, Dave opens a third
529 College Savings plan.
VS.
2007
Another grandchild arrives
and another 529 College
Savings plan is opened.
$55,000
$359,688
ENDING PORTFOLIO VALUE 5
SECOND GRANDCHILD
$13,207
1973
TOTAL WITHDRAWALS
$60,000
2
$2,852
Carolyn always said she
wanted a big family!
Dave opens a fourth
529 College Savings plan.
$65,000
$55,000
Dave’s beloved Pinto
breaks down and
he purchases a new
Honda Accord.
2
1974
Dave’s first grandchild
is born. With the future
already in mind, he opens
a 529 College Savings plan.
529
NEW CAR SMELL
Dave and Claire celebrate
the birth of their first
child, a beautiful girl
named Carolyn.
GRANDPA DAVE
Dave and Claire spend
two weeks in Europe
celebrating their 15-year
wedding anniversary.
529
IT’S A GIRL
WEDDED BLISS
529
Dave marries Claire,
his college sweetheart.
529
WEDDING BELLS
1976
2016
FATHER OF THE BRIDE
$2,000
With two kids to drive
around, Dave purchases
a Ford LTD Station Wagon.
1970
$29,1234
1995
1991
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 – Class A1
WHAT’S NEXT?
LUKE IS OFF TO COLLEGE
4
529
Dave’s journey
$1,670,920
S&P 500 INDEX6
After all the withdrawals
Dave made, the ending
value of his investment
in Franklin Income Fund
is over 1,8 million dollars!
2005
1987
What about Paul?
% Annual Total Returns—Class A (with Sales Charge)8
‘70
‘71
‘72
‘73
‘74
‘75
-1.34
19.96
4.31
-4.21
-12.34
25.82
‘76
22.63
‘77
8.66
‘78
8.36
‘79
28.56
Average Annual Total Returns—Class A9 (Periods Ended December 31, 2015)
1-Year 3-Year 5-Year 10-Year Since Inception (8/31/48)
With Maximum 4.25% Initial Sales Charge10 -11.85% 1.63% 4.15%
5.00%
10.08%
Without Sales Charge
5.47%
10.15%
-7.81% 3.12% 5.09%
‘80
19.58
‘81
1.14
‘82
36.07
‘83
15.35
Gross Expense
Ratio11 30-Day Standardized Yield12
0.61%
(As of 12/31/15) 4.73%
‘84
15.51
‘85
18.36
‘86
19.65
Beta (3-Year)13
(As of 12/31/15) 0.72%
Performance data represents past performance, which does not guarantee future results. Current performance may differ from figures shown.
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.
1. $50,000 in 1970 would be worth $306,630.15 in today’s dollars (2015). Source: United States Department of Labor, Bureau of Labor Statistics Inflation Calculator. As of October 2015.
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
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Not FDIC Insured May Lose Value No Bank Guarantee
Meet Dave: An Unexpected Investor
‘87
4.87
‘88
8.81
‘89
12.67
‘90
-8.77
‘91
41.15
‘92
15.24
‘93
21.53
‘94
-6.38
‘95
21.29
‘96
10.45
cost for each academic year was made at the end of the applicable calendar year. Source: The College Board,
Trends in College Pricing © 2016 The College Board, www.collegeboard.com. Table 2—Average Tuition and
Fees and Board in Current Dollars and in 2014 Dollars, 1971–72 to 2014–15 (Enrollment Weighted).
5. Hypothetical Franklin Income Fund ending portfolio value for the period 1/1/70–12/31/15 assumes
a $50,000 initial investment on 1/1/70, Class A with current maximum sales charge withdrawals made at
the end of each applicable year, and the reinvestment of all dividends and capital gains at net asset value.
6. Index performance includes hypothetical withdrawals for comparison purposes. Source: © 2016
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 1/1/70–12/31/15 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 © 2016 BanxCorp (7/1/13–12/31/15).
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.
franklintempleton.com
‘97
16.85
‘98
0.95
‘99
-0.74
‘00
20.59
‘01
0.65
‘02
-1.06
‘03
30.96
‘04
12.17
‘05
1.85
‘06
19.12
‘07
5.31
9. This fund offers other share classes, subject to different fees and expenses that will affect
their performance.
10. Effective 5/1/94, the fund implemented a Rule 12b-1 plan, which affects subsequent performance.
11. The fund has a fee waiver associated with its investments in a Franklin Templeton money
fund, contractually guaranteed through at least its current fiscal year end. Fund investment
results reflect the fee waiver; without this reduction, the results would have been lower. For its
most recently completed fiscal year, the impact of this fee waiver was immaterial.
12. The 30-Day Standardized Yield reflects an estimated yield to maturity. It should be regarded
as an estimate of the fund’s rate of investment income, and it may not equal the fund’s actual
income distribution rate, which reflects the fund’s past dividends paid to shareholders.
13. Beta is a measure of a fund’s volatility relative to an appropriate index based on its investment
goal. A beta greater than 1.00 indicates volatility greater than the market’s. Beta calculated
using S&P 500 Index as the benchmark. Based on monthly returns over the last three years.
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
franklintempleton.com
‘08
-30.51
‘09
35.01
‘10
12.91
‘11
2.83
‘12
13.68
‘13
14.23
‘14
4.12
‘15
-7.81
retirement income investment portfolio. The hypothetical illustration is
provided for general educational purposes only and does not constitute
investment or tax advice.
It’s important to note that the amounts withdrawn do not represent dividends
or income, 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 into account federal, state or municipal
taxes. If taxes were taken into account, the 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. The amount chosen for
withdrawal impacts the value remaining at the end of the period. 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 one’s retirement income needs would be met.
Remember Dave’s brother,
Paul, invested in CDs7
to be safe. Without
making any withdrawals,
his investment grew to
$692,262.*
*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
Franklin Templeton Investments
Your Source for:
• Mutual Funds
•Retirement
• 529 College Savings Plans
• Separately Managed Accounts
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/(800) 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.
© 2016 Franklin Templeton Investments. All rights reserved.
RTSI BMD 01/16