United States
When he was a young man, Dave inherited $50,000.1 He didn’t need the money at the time, so in 1970, he invested it in the Franklin Income Fund. Dave never added another penny, but over the years he withdrew more than $350,000. This is Dave’s story…
MEET DAVE
A Hypothetical Illustration with Franklin Income Fund─Advisor Class2
January 1, 1970 – December 31, 2018
Thanks to Franklin Income Fund’s 70-year history of uninterrupted dividends3 and the power of compounding, Dave was able to withdraw seven times his original inheritance while maintaining a healthy account balance year after year. See how Dave’s hypothetical investment would have grown through the years.
An Unexpected Investor
Growth of a Hypothetical $50,000 Investment in Franklin Income Fund─Advisor Class2,4
Dave’s Account Balance for the Years Ended December 31
| 1970 | 1971 | 1972 | 1973 | 1974 | 1975 | 1976 |
|---|---|---|---|---|---|---|
| $51,520 | $60,605 | $63,218 | $60,559 | $53,084 | $63,204 | $77,509 |
| 1977 | 1978 | 1979 | 1980 | 1981 | 1982 | 1983 |
| $84,222 | $91,263 | $109,054 | $108,946 | $110,186 | $147,213 | $169,806 |
| 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| $196,151 | $232,155 | $274,187 | $287,542 | $298,496 | $336,302 | $306,798 |
| 1991 | 1992 | 1993 | 1994 | 1995 | 1996 | 1997 |
| $433,059 | $492,775 | $591,804 | $548,256 | $656,970 | $718,157 | $839,312 |
| 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 |
| $841,172 | $828,574 | $996,715 | $979,541 | $970,502 | $1,274,471 | $1,370,636 |
| 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 |
| $1,398,181 | $1,603,575 | $1,685,064 | $1,133,194 | $1,534,686 | $1,662,941 | $1,704,752 |
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 |
| $1,951,652 | $2,234,545 | $2,320,868 | $2,140,954 | $2,496,480 | $2,711,567 | $2,569,905 |
Performance data represents past performance, which does not guarantee future results. Current performance may differ from the figures shown. A fund’s investment returns and principal values will change with market conditions, and investors may have a gain or a loss when they sell their shares. Please view Franklin Income Fund’s most recent month-end performance.
Dividends will vary depending on the fund's income, and past distributions are not indicative of future trends.
Average Annual Total Returns (For Periods Ended September 30, 2019)
| 1-year | 3-year | 5-year | 10-year | Since Inception (8/31/48) | |
|---|---|---|---|---|---|
| Advisor Class (FRIAX)3 | 4.65% | 6.28% | 3.98% | 7.59% | 10.10% |
| Class A (FKIQX)1 | |||||
| Without Sales Charge | 4.40% | 6.06% | 3.79% | 7.41% | 10.01% |
| With 3.75% Initial Sales Charge12 | 0.49% | 4.72% | 3.00% | 7.00% | 9.95% |
| 30-Day Standardized Yield (As of 9/ | Expense Ratio | Beta(3-Year)12 (As of 09/30/19) | |
|---|---|---|---|
| Advisor Class (FRIAX)2 | 3.95% | 0.47% | 1.07 |
| Class A (FKIQX)9 | 3.55% | 0.72% | 1.11 |
Annual Total Returns – Advisor Class13
| 1970 | 1971 | 1972 | 1973 | 1974 | 1975 | 1976 | 1977 | 1978 | 1979 |
|---|---|---|---|---|---|---|---|---|---|
| 3.04% | 19.96% | 4.31% | -4.21% | -12.34% | 25.82% | 22.63% | 8.66% | 8.36% | 28.56% |
| 1980 | 1981 | 1982 | 1983 | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| 19.58% | 1.14% | 36.07% | 15.35% | 15.51% | 18.36% | 19.65% | 4.87% | 8.81% | 12.67% |
| 1990 | 1991 | 1992 | 1993 | 1994 | 1995 | 1996 | 1997 | 1998 | 1999 |
| -8.77% | 41.15% | 15.24% | 21.53% | -6.38% | 21.29% | 10.45% | 18.04% | 1.12% | -0.58% |
| 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 |
| 20.29% | 0.81% | -0.92% | 31.32% | 12.40% | 2.01% | 19.39% | 5.08% | -30.27% | 35.43% |
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | |
| 13.15% | 2.51% | 14.48% | 14.50% | 3.86% | -7.75% | 16.61% | 8.62% | -5.22% |
Advisor Class Shares are only offered to certain eligible investors as stated in the prospectus. They are offered without sales charges or Rule12b-1 fees. The fund offers multiple share classes, which are subject different fees and expenses that will affect their performance. Please see the prospectus for details.
- $50,000 in January 1970 would be worth $332,318 in today’s dollars (December 2018). Source: United States Department of Labor, Bureau of Labor Statistics Inflation Calculator. As of January 2019. http://www.bls.gov/data/inflation_calculator.htm.
- 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.
- Dividends will vary depending on the fund's income, and past distributions are not indicative of future trends.
- Source: Morningstar via Advanced HypotheticalsTM. Assumes initial $50,000 investment on January 1, 1970. No additional investments are made. All dividends and capital gains are reinvested at net asset value. Assumes withdrawals are made at the end of each applicable year: $1,000 in 1970, $2,852 in 1974, $6,438 in 1978, $17,950 in 1979, $2,000 in 1981, $3,000 in 1985, $13,207 in 1987, $24,118 in 1991, $29,123 in 1995, $25,000 in 2000, $55,000 in 2003, $55,000 in 2005, $60,000 in 2007, and $65,000 in 2009.
- 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.
- 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.
- 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 © 2019 The College Board, www.collegeboard.com. Table 2—Average Tuition and Fees and Board in Current Dollars and in 2015 Dollars, 1971–72 to 2015–16 (Enrollment Weighted).
- Hypothetical Franklin Income Fund ending portfolio value for the period 1/1/70–12/31/18 assumes a $50,000 initial investment on 1/1/70, Advisor Class without Sales Charge, withdrawals made at the end of each applicable year, and the reinvestment of all dividends and capital gains at net asset value.
- Effective 9/10/18 Class A shares closed to new investors, were named 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.
- The fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the fund’s actual income distribution rate, which reflects the fund’s past dividends paid to shareholders.
- 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%.
- 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.
- Annual total returns reflect the fund’s return for each year and do not take into account the withdrawals shown in this hypothetical illustration.
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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 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 would be different. Investing in a Franklin Templeton fund does not guarantee one’s retirement income needs will 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. 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 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.
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 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.
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