AN UNEXPECTED INVESTOR. Meet Ted. A hypothetical illustration

Transcription

1 AN UNEXPECTED INVESTOR Meet Ted A hypothetical illustration

2 This is Ted s story. Right before he turned 22, his grandfather passed away. Ted and his younger brother, John, each inherited $50,000. Investor s Profile (Hypothetical) Ted Nashville, Tennessee 67 Years Old Married John Like his grandfather had done, Ted invested the money in Franklin Mutual Shares Fund, which seeks capital appreciation, with income as a secondary goal. Its strategy is focused on undervalued mid- and large-cap equity securities, which may include foreign securities and, to a lesser extent, distressed securities and merger arbitrage. John bought Certificates of Deposit (6 Month CDs), which were earning an attractive interest rate at the time. From , both Ted and John left the money invested and never made another contribution. While John never touched the money, Ted withdrew $359,688 for several important events throughout his life. FRANKLIN MUTUAL SHARES FUND CLASS Z $50,000 Total Amount Invested in 1970 Let s take a look at Ted s journey.

3 Where is Ted now? 48 years later Open flap to see answers.

4 Ted s journey A hypothetical illustration Ted invests $50,000 on January 1, 1970 in Franklin Mutual Shares Fund Class Z WEDDING BELLS Ted marries Lisa, his college sweetheart. $1,000 IT S A GIRL Ted and Lisa celebrate the birth of their first child, a beautiful girl named Katie HOME SWEET HOME Ted jumps at the opportunity to purchase a beautiful house in his childhood neighborhood $17,950 3 DAD-MOBILE With two kids to drive around, Ted purchases a Ford LTD Station Wagon. $6,438 2 IT S A BOY Ted and Lisa welcome a new addition to the family, a sweet boy named Daniel. NEW CAR SMELL Ted buys the hip Ford Pinto he has had his eye on for a while. $2, VACATION MEMORIES Ted takes his family on a vacation to Florida to see the Space Shuttle and spend some time at the beach. $2,000 WEDDED BLISS Ted and Lisa spend two weeks in Europe celebrating their 15-year wedding anniversary. $3,000 GOODBYE, PINTO Ted s beloved Pinto breaks down and he purchases a new Honda Accord $13, KATIE IS OFF TO COLLEGE For the next four years, he pays her tuition, room and board as she prepares for her career in the field of Accounting $24,118 4 FATHER OF THE BRIDE Katie gets married and Ted gives the happy couple a generous gift to start their new life together. $25,000 GRANDPA TED Ted s first grandchild is born. With the future already in mind, he opens a College Savings plan. $55, SECOND GRANDCHILD Another grandchild arrives and another College Savings plan is opened. $55, DANIEL IS OFF TO COLLEGE As Ted figures out how to deal with an empty nest, he pays for four years of tuition, room and board while Daniel studies as an English major. $29, FOURTH GRANDCHILD Katie always said she wanted a big family! Ted opens a fourth College Savings plan. $65,000 THIRD GRANDCHILD Just as he s done for the first two, Ted opens a third College Savings plan. $60, WHAT S NEXT? Ted is getting ready to retire and rediscover some old passions. As he thinks about what s next, Ted works with his financial advisor to develop a written retirement income plan. TOTAL WITHDRAWALS $359,688 ENDING PORTFOLIO VALUE 5 $11,936,090 VS. $2,279,177 S&P 500 INDEX 6 After all the withdrawals Ted made, the ending value of his investment in Franklin Mutual Shares Fund is over 11 million dollars! % Annual Total Returns Class Z Average Annual Total Returns (Periods Ended December 31, 2017) Gross Expense Beta (3-Year) 10 1-Year 3-Year 5-Year 10-Year Since Inception (7/1/49) Ratio (As of 12/31/17) Class Z (MUTHX) 8.49% 6.54% 10.76% 5.33% 12.77% 0.80% 0.87 Class A (TESIX) 9 With Maximum 5.75% Initial Sales Charge 1.97% 4.18% 9.16% 4.41% 11.77% 1.05% 0.87 Without Sales Charge 8.21% 6.26% 10.46% 5.03% 11.87% 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/ or visit franklintempleton.com for the most recent month-end performance. Class Z 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 fund offers multiple share classes, which are subject to different fees and expenses that will affect their performance. Please see the prospectus for details. 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 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 Not FDIC Insured May Lose Value No Bank Guarantee 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. 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. All financial decisions and investments involve risk, including possible loss of principal. What about John? Remember Ted s brother, John, invested in CDs 7 to be safe. Without making any withdrawals, his investment grew to $694,191.* *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 Ted: An Unexpected Investor franklintempleton.com franklintempleton.com Meet Ted: An Unexpected Investor

5 What will your journey look like? For more information about Franklin Mutual Shares Fund and to discuss what s next for you, please contact your financial advisor. Franklin Templeton Distributors, Inc. One Franklin Parkway San Mateo, CA (800) DIAL BEN / franklintempleton.com WHAT ARE THE RISKS? All investments involve risks, including possible loss of principal. Value securities may not increase in price as anticipated or may decline further in value. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. The fund s investments in companies engaged in mergers, reorganizations or liquidations also involve special risks as pending deals may not be completed on time or on favorable terms. The fund may invest in lower-rated bonds, which entail higher credit risk. Please consult the prospectus for a more detailed description of the fund s risks. Investors should carefully consider a mutual fund s and/or college savings plan s investment goals, risks, charges and expenses before investing. To obtain a mutual fund summary prospectus and/or prospectus or the 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 plan, at (800) DIAL BEN/ or visit franklintempleton.com. Please carefully read a mutual fund prospectus and/or plan Investor Handbook before you invest or send money. With respect to investments in the 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. 1. $50,000 in 1970 would be worth $329,089 in today s dollars (2017). Source: United States Department of Labor, Bureau of Labor Statistics Inflation Calculator. As of January Source: Kelley Blue Book. Historical prices for a new Ford Pinto Sedan in 1974, Ford LTD Wagon in 1978 and Honda Accord LX in 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 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 2018 The College Board, Table 2 Average Tuition and Fees and Board in Current Dollars and in 2015 Dollars, to (Enrollment Weighted). 5. Hypothetical Franklin Mutual Shares Fund ending portfolio value for the period 1/1/70 12/31/17 assumes a $50,000 initial investment on 1/1/70, Class Z, 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: 2018 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 12/31/17 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 2018 FRED (7/1/13 12/31/17). 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. Prior to 11/1/96, the fund offered only a single class of shares without a sales charge and Rule 12b-1 expenses, Class Z shares. Figures reflect a restatement of the original share class to include both the Rule 12b-1 fees and maximum initial sales charges (when quoting figures with sales charges) applicable to each share class as though in effect from the fund s inception. For periods after 11/1/96, actual performance is used, reflecting all charges and fees applicable to that class. 10. 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 Franklin Templeton Investments. All rights reserved. RTSI BMT 01/18