Mutual Series Marks 60 Years of Value Investing

From Franklin Resources, Inc.
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Flagship Mutual Shares Fund Employs Deep Value Strategy Since 1949

San Mateo, CA, July 7, 2009 – Franklin Templeton Investments (NYSE: BEN) is commemorating the 60th anniversary of its Mutual Series group and launch of its flagship Mutual Shares Fund. Founded in 1949, Mutual Series has a long history as deep value investors with a very distinct style, searching aggressively for investment opportunities in undervalued stocks, merger arbitrage situations, corporate reorganizations and distressed securities. 

  “At Mutual Series, we are opportunistic value investors, who think and act like company owners,” said Peter Langerman, president and CEO of Mutual Series and co-portfolio manager of Mutual Shares Fund, which opened on July 1, 1949.  “We focus on recognizing value that most other investors miss.  We seek to buy intrinsic value at a discount, often with a catalyst in place that we think will unlock that value. Sometimes we see changes that can be made to increase shareholder value, and we will get involved in making those changes happen.”

This approach has delivered solid long-term returns to Mutual Series investors. Over 99% of Mutual Series (Class A shares) assets were in funds ranked in the top two quartiles of their respective Lipper peer groups for total return for the one-, three-, five- and 10-year periods ended May 31, 2009.1  

“It goes back to our bottom-up, fundamental approach,” said Langerman of the team’s strong relative performance record. “We try to understand the risk and downside in each specific investment. We don’t know when markets will move, but we are always careful about owning companies that fit our criteria and that can sustain themselves through even a challenging economic environment, so that we can seek to deliver solid, risk-adjusted returns in the long-term.” 

A Rich History

Mutual Shares Corporation was established in 1949 by several men, including Max Heine, who used to say his strategy was “to buy a dollar for 50 cents.”   Heine Securities Corporation, former investment advisor of the Mutual Series funds, was incorporated in 1975. That year, Michael Price joined the firm and learned its distinct approach to value investing.

By the mid-1980s, Price became well-known for his aggressive shareholder activism, finding value in troubled companies and pressing management, often very publicly, to unlock that value for shareholders. Price became president, chief operating officer, chairman and sole owner of Heine Securities in 1988 and moved the firm’s operations from New York City to Short Hills, New Jersey, where Mutual Series’ offices remain today.  In 1996, Franklin Resources acquired the firm, and the Mutual Series funds became part of the Franklin Templeton Investments fund family.  Price stayed on as chairman until leaving the firm in 2001. 

Langerman originally joined Heine Securities Corporation in 1986 and worked closely with Price. He served as CEO of Mutual Series beginning in 1998 before leaving in 2002 to serve as director of New Jersey’s Division of Investment, overseeing employee pension funds. Langerman rejoined Mutual Series in 2005 in his current role as president and CEO.

Mutual Series Today

Mutual Series’ time-tested approach of applying dedicated fundamental research to identify businesses whose true value has been missed and engaging in shareholder activism to unlock that value, while keeping an eye on below average risk, continues today.  At present, the Mutual Series investment team comprises more than 25 portfolio managers, analysts and traders with an average of over 16 years of industry experience, including a dedicated distressed securities team. 

Looking toward the future, Langerman said, “The silver lining in all of the recent market volatility is that stocks are at levels where we are finding some attractive opportunities, both in the U.S. and internationally.  To put it simply, we’re just going to keep doing what we’ve always done—roll up our sleeves to do our own proprietary research and concentrate on uncovering compelling value opportunities wherever they may hide.”

In addition to Mutual Shares Fund, the group’s line-up includes Mutual Beacon Fund, Mutual European Fund, Mutual Financial Services Fund, Mutual Global Discovery Fund, Mutual Quest Fund and Mutual Recovery Fund.  In May 2009, Mutual Series added an eighth fund to its offerings for U.S. investors, Mutual International Fund, which invests primarily in Europe and developed Asia.  In addition, Mutual Series also manages funds that are available to investors in many countries around the world.

Value securities may not increase in price as anticipated or may decline further in value. The fund’s investments in foreign securities involve special risks including currency fluctuations, and economic and political uncertainties. The fund may also invest in companies engaged in mergers, reorganizations or liquidations, which involve special risks as pending deals may not be completed on time or on favorable terms, as well as lower-rated bonds, which entail higher credit risk.

Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. To obtain a prospectus, which contains this and other information, talk to your financial advisor, call us at (800) DIAL BEN/ (800) 342-5236 or visit franklintempleton.com. Please carefully read the prospectus before you invest or send money.

Franklin Resources, Inc. [NYSE:BEN], is a global investment management organization operating as Franklin Templeton Investments.  Franklin Templeton Investments provides global and domestic investment management solutions managed by its Franklin, Templeton, Mutual Series, Fiduciary Trust, Darby and Bissett investment teams.  The San Mateo, CA-based company has more than 60 years of investment experience and over $448 billion in assets under management as of May 31, 2009.  For more information, please call (800) DIAL BEN® or visit franklintempleton.com.

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  1. Source: Lipper® Inc., 5/31/09.  Lipper calculates averages by taking all the funds and share classes in a peer group and averaging their total returns for the periods indicated. Lipper total return calculations include reinvested dividends and capital gains, but do not include sales charges or expense subsidization by the manager. Results may have been different if these or other factors had been considered. Of the eligible Mutual Series equity mutual funds tracked by Lipper, 3, 3, 3 and 5 funds ranked in the top quartile and 3, 3, 3 and 1 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups. Past performance does not guarantee future results.