fi360 Fiduciary Score & Retirement Plan Advisory Group Score Report

Transcription

1 DCIO Solutions fi360 Fiduciary Score & Retirement Plan Advisory Group Score Report

2 Franklin Templeton Investments At Franklin Templeton Investments, we re dedicated to one goal: delivering exceptional asset management for our clients. By bringing together multiple, world-class investment teams in a single firm, we re able to offer specialized expertise across styles and asset classes, all supported by the strength and resources of one of the world s largest asset managers. Focus on Investment Excellence At the core of our firm you ll find multiple independent investment teams each with a focused area of expertise from traditional to alternative strategies and multi-asset solutions. Across the firm, our portfolio teams share a commitment to excellence grounded in rigorous, fundamental research and robust, disciplined risk management. Global Perspective Shaped by Local Expertise In today s complex and interconnected world, smart investing demands a global perspective. Having pioneered global investing more than 60 years ago, our perspective is built on decades of experience and shaped by the local expertise of our investment professionals who are on the ground across the globe, working to spot smart investment ideas and potential risks firsthand. Strength and Experience Since our founding in 1947, we ve stayed focused on putting clients first and delivering relevant investment solutions, strong long-term results and reliable, personal service that have helped us to become a trusted partner to investors around the globe. Invest with a Retirement Leader Franklin Templeton Investments is a leader in retirement investing, managing over $200 billion on behalf of individuals, businesses and institutions.* *As of 9/30/17. Not FDIC Insured May Lose Value No Bank Guarantee

3 A Review of Franklin Templeton Funds Available for Use as Investment-Only Options Review fi360 Fiduciary Score and Retirement Plan Advisory Group Scores on Franklin Templeton funds available for use in retirement plans. Also included, for each fund, is the expense ratio without and with waiver.* fi360 Fiduciary Score ** is a peer percentile ranking of an investment against a set of quantitative due diligence criteria selected to reflect prudent fiduciary management. The fi360 Fiduciary Score should not be used as the sole source of information in an investment decision. Retirement Plan Advisory Group Scorecard System TM ** methodology incorporates both quantitative and qualitative factors in evaluating fund managers and their investment strategies, and is built around pass/fail criteria on a scale of 0 to 10 (with 10 being the highest possible score). For additional information or fund availability within certain platforms, please contact your DCIO Specialist or call the Franklin Templeton Retirement Sales Department at (800) 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. As a financial professional, only you can provide your customers with personalized advice and investment recommendations tailored to their 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 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. *Advisor Class and Class Z shares are only offered to qualified investors that meet certain eligibility criteria. **See Important Disclosures for more information on the fi360 & RPAG methodologies on page 4. franklintempleton.com 1

4 Advisor/Class Z Shares As of September 30, 2017 Fund (Advisor/Z Class) GROWTH Franklin DynaTech Fund Symbol/ CUSIP FDYZX Expense Ratio 1,2,3 Without Waiver (With Waiver) Morningstar Category fi360 Fiduciary Score (# of Peers) RETIREMENT PLAN ADVISOR GROUP SCORECARD SYSTEM TM Score Avg 1yr Avg 3yr Avg 5yr Avg 10yr 9/30/17 6/30/17 3/31/17 12/31/ % Large Growth (0.66%) (1,463) (1,399) (1,162) (994) (650) Franklin Growth Fund FCGAX 0.65% Large Growth (0.63%) (1,463) (1,399) (1,162) (994) (650) Franklin Small Cap Growth Fund FSSAX 0.89% Small Growth (0.87%) (675) (615) (546) (493) (309) Franklin Small-Mid Cap Growth Fund FSGAX 0.72% Mid-Cap Growth (0.71%) (636) (590) (531) (468) (299) BLEND Franklin Rising Dividends Fund FRDAX 0.66% Large Blend (0.66%) (1,369) (1,291) (1,128) (1,017) (643) VALUE Franklin Small Cap Value Fund FVADX 0.88% Small Value (0.86%) (409) (379) (318) (263) (156) GLOBAL Franklin Mutual Global Discovery Fund MDISX 0.99% World Stock (0.99%) (937) (853) (654) (562) (282) INTERNATIONAL Franklin International Growth Fund FNGZX 1.21% Foreign (1.00%) Large Growth (358) (347) (296) (254) (140) Franklin Mutual International Fund FMIZX 1.22% Foreign (1.17%) Large Value (307) (284) (233) (192) (91) Franklin International Small Cap Growth Fund FKSCX 1.14% Foreign Small/ (1.14%) Mid Blend (88) (80) (70) (58) (25) Templeton Foreign Fund TFFAX 0.97% Foreign (0.97%) Large Value (307) (284) (233) (192) (91) SECTOR Franklin Utilities Fund FRUAX 0.58% Utilities (0.58%) (61) (59) (58) (56) (44) FIXED INCOME Franklin High Income Fund FVHIX 0.64% High Yield Bond (0.63%) (663) (601) (479) (411) (265) Franklin Strategic Income Fund FKSAX 0.67% Multisector Bond (0.63%) (270) (235) (177) (143) (75) Franklin Total Return Fund FBDAX 0.68% Intermediate (0.63%) Term Bond (947) (906) (781) (685) (439) Franklin U.S. Government Securities Fund FUSAX 0.63% Intermediate (0.62%) Government (282) (265) (248) (220) (159) = Fund closed to new investors. Past performance does not guarantee future results. A fund s investment return and principal value will change with market conditions, and an investor may have a gain or a loss when they sell their shares. Please call Franklin Templeton Investments at (800) DIAL BEN/ or visit franklintempleton.com for each fund s standardized and most recent month-end performance. 2 fi360 Fiduciary Score & Retirement Plan Advisory Group Scores

5 Advisor/Class Z Shares (cont d.) As of September 30, 2017 Fund (Advisor/Z Class) FIXED INCOME (cont d.) Templeton Global Bond Fund Templeton Global Total Return Fund HYBRID Franklin Balanced Fund Franklin Income Fund Symbol/ CUSIP TGBAX TTRZX FBFZX FRIAX Expense Ratio 1,2,3 Without Waiver (With Waiver) Morningstar Category fi360 Fiduciary Score (# of Peers) RETIREMENT PLAN ADVISOR GROUP SCORECARD SYSTEM TM Score Avg 1yr Avg 3yr Avg 5yr Avg 10yr 9/30/17 6/30/17 3/31/17 12/31/ % World Bond (0.68%) (331) (311) (238) (195) (103) 0.86% World Bond (0.83%) (331) (311) (238) (195) (103) 0.78% (0.77%) Allocation 50% to 70% Equity 0 (798) 3 (767) 22 (616) 18 (537) (314) 0.46% Allocation 30% (0.46%) to 50% Equity (451) (423) (346) (315) (144) Templeton Global Balanced Fund TZINX 0.92% World Allocation (0.91%) (441) (408) (303) (239) (124) ASSET ALLOCATION Franklin Conservative Allocation Fund 4 FTCZX 0.99% Allocation 30% (0.99%) to 50% Equity (451) (423) (346) (315) (144) Franklin Moderate Allocation Fund 5 FMTZX 1.02% Allocation 50% (1.02%) to 70% Equity (798) (767) (616) (537) (314) Franklin Growth Allocation Fund 6 FGTZX 1.11% Allocation 70% (1.07%) to 85% Equity (386) (362) (273) (234) (138) Franklin LifeSmart Retirement Income Fund 7 FLRDX 1.20% Target Date (0.60%) 2015 (112) (101) (81) (54) (7) Franklin LifeSmart 2020 FLROX 1.38% Target Date 93 (0.70%) 2020 (207) (185) (153) (126) (32) Franklin LifeSmart FLRFX 1.18% Target Date (0.72%) 2025 (177) (161) (118) (80) (7) Franklin LifeSmart 2030 FLRZX 1.46% Target Date 88 (0.74%) 2030 (207) (185) (153) (126) (32) Franklin LifeSmart FLRHX 1.26% Target Date (0.74%) 2035 (177) (161) (118) (80) (7) Franklin LifeSmart 2040 FLSHX 1.64% Target Date 91 (0.75%) 2040 (207) (185) (153) (126) (32) Franklin LifeSmart FLRLX 1.43% Target Date (0.76%) 2045 (177) (161) (117) (79) (1) Franklin LifeSmart 2050 FLSOX 1.92% Target Date 86 (0.95%) 2050 (200) (178) (144) (98) (8) Franklin LifeSmart 2055 FLTKX 4.46% Target Date (0.75%) 2055 (164) (127) (67) (9) Past performance does not guarantee future results. A fund s investment return and principal value will change with market conditions, and an investor may have a gain or a loss when they sell their shares. Please call Franklin Templeton Investments at (800) DIAL BEN/ or visit franklintempleton.com for each fund s standardized and most recent month-end performance. franklintempleton.com 3

6 Important Disclosures fi360 Fiduciary Score Methodology The fi360 Fiduciary Score is a peer percentile ranking of an investment against a set of quantitative due diligence criteria selected to reflect prudent fiduciary management. For each investment with at least a three-year history, fi360 calculates the fi360 Fiduciary Score based on the following due diligence criteria: regulatory oversight, minimum track record, stability of the organization, assets in the investment, composition consistency with asset class, style consistency, expense ratio/fees relative to peers, risk-adjusted performance relative to peers, and performance relative to peers. Investments are evaluated on a monthly basis. If an investment does not meet an individual due diligence criterion, points are assigned. Investments that satisfy all of the due diligence criteria receive a fi360 Fiduciary Score of 0. Every other investment is given a Score of based on their point total, and representing their percentile ranking within their peer group. For example, an investment with an fi360 Fiduciary Score of 37 means it scores in the 37th percentile of its peers. An fi360 Fiduciary Score of 0 is most favorable. It represents that an investment meets or exceeds all of fi360 s recommended due diligence thresholds. A Score of 100 is least favorable. The fi360 Fiduciary Score Average is a one-, three-, five-, or ten-year rolling average of an investment s fi360 Fiduciary Score. The Average is also calculated on a monthly basis. The fi360 Fiduciary Score represents a suggested course of action and is not intended, nor should it be used, as the sole source of information for reaching an investment decision. Visit for the complete methodology document. Scorecard System Methodology The Scorecard System Methodology incorporates both quantitative and qualitative factors in evaluating fund managers and their investment strategies. The Scorecard System is built around pass/fail criteria, on a scale of 0 to 10 (with 10 being the best) and has the ability to measure Active, Passive and Asset Allocation investing strategies. Active and Asset Allocation strategies are evaluated over a five year time period, and Passive strategies are evaluated over a three year time period. Eighty percent of the fund s score is quantitative (made up of eight unique factors), incorporating modern portfolio theory statistics, quadratic optimization analysis, and peer group rankings (among a few of the quantitative factors). The other twenty percent of the score is qualitative, taking into account things such as manager tenure, the fund s expense ratio relative to the average fund expense ratio in that asset class category, and the fund s strength of statistics (statistical significance). Other criteria that may be considered in the qualitative score includes the viability of the firm managing the assets, management or personnel issues at the firm, and/ or whether there has been a change in direction of the fund s stated investment strategy. Combined, these factors are a way of measuring the relative performance, characteristics, behavior and overall appropriateness of a fund for inclusion into a plan as an investment option. 4 fi360 Fiduciary Score & Retirement Plan Advisory Group Scores

7 Footnotes Past performance does not guarantee future results. A fund s investment return and principal value will change with market conditions, and an investor may have a gain or a loss when they sell their shares. Please call Franklin Templeton Investments at (800) DIAL BEN/ or visit franklintempleton.com for each fund s standardized and most recent month-end performance. Franklin Templeton Investments offers other mutual funds and share classes that are not listed here. Advisor Class and Class Z are only offered to certain eligible investors as stated in the prospectus. 1. The noted funds have an expense reduction contractually guaranteed through the dates below. Please see the prospectus for additional information. Franklin Growth Allocation Fund (4/30/18); Franklin International Growth Fund (11/30/2017); Franklin Mutual International Fund (4/30/2018). 2. The noted funds have a fee waiver associated with any investment they make in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through the dates noted below. Please see the prospectus for additional information. Franklin Balanced Fund (2/28/18); Franklin DynaTech Fund (1/31/18); Franklin Growth Fund (1/31/18); Franklin High Income Fund (9/30/18); Franklin Small Cap Growth Fund (8/31/18); Franklin Small Cap Value Fund (2/28/18); Franklin Small-Mid Cap Growth Fund (8/31/18); Franklin Strategic Income Fund (8/31/18); Franklin U.S. Government Securities Fund (1/31/18); Templeton Global Balanced Fund (4/30/18); Templeton Global Bond Fund (4/30/18); Templeton Global Total Return Fund (4/30/18). 3. The noted funds have an expense reduction and a fee waiver associated with any investment they make in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through the dates noted below. Please see the prospectus for additional information. Franklin LifeSmart 2020 (4/30/18); Franklin LifeSmart 2025 (4/30/18); Franklin LifeSmart 2030 (4/30/18); Franklin LifeSmart 2035 (4/30/18); Franklin LifeSmart 2040 (4/30/18); Franklin LifeSmart 2045 (4/30/18); Franklin LifeSmart 2050 (4/30/18); Franklin LifeSmart 2055 (4/30/18); Franklin LifeSmart Retirement Income Fund (4/30/18); Franklin Total Return Fund (2/28/18). 4. As of 1/1/13, the fund changed its target allocations, with short-term investments (formerly a targeted allocation of 20%) now combined into the fixed income fund target allocation; such a change can impact performance. The fund s investment goal remained the same. 5. As of 1/1/13, the fund changed its target allocations, with short-term investments (formerly a targeted allocation of 10%) now combined into the fixed income fund target allocation; such a change can impact performance. The fund s investment goal remained the same. Effective 1/1/15, Franklin Moderate Allocation Fund increased target allocation to equity funds by 5% (from 55% to 60%) and correspondingly decreased the target allocation to fixed income funds (from 45% to 40%). The fund s investment goal remains the same. 6. As of 1/1/13, the fund changed its target allocations, with short-term investments (formerly a targeted allocation of 5%) now combined into the fixed income fund target allocation; such a change can impact performance. The fund s investment goal remained the same. 7. Effective 5/1/16, the fund changed its goal and certain investment strategies, adopted a managed distribution policy, and changed its name from Franklin LifeSmart Such changes can impact performance. 8. On 1/1/14 the funds glide path was modified, including increasing its tactical allocation ranges and adding a strategic allocation to alternative funds. On 7/1/13, the fund changed its target allocation, with short-term investments combined into the fixed income allocations. On 5/1/11, the fund s glide path was modified, and among other changes, reflects a lower starting allocation to equity funds. Such changes can impact performance. The fund s investment goal has remained the same. franklintempleton.com 5

8 Franklin Templeton Distributors, Inc. One Franklin Parkway San Mateo, CA (800) franklintempleton.com All financial decisions and investments involve risks, including possible loss of principal. For a discussion of each fund s primary risks, please see the prospectus. Your clients should carefully consider a fund s investment goals, risks, charges and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information, please call Franklin Templeton Retirement Sales Department at (800) Your clients should carefully read a prospectus before they invest or send money Franklin Templeton Investments. All rights reserved. RDCIO BR360 11/17