Tax-Smart Strategy

Translating savings into a regular “paycheck” in retirement can feel challenging. The challenge is making sure your distribution plan provides you with the retirement income that helps you achieve your goals and address your concerns while lasting as long as you do. Work with your financial advisor to determine your individual needs and develop a written plan to address them.

The Income for What’s Next®: Tax-Smart Strategy seeks to make it easy to draw down on savings to replace income that may also save on taxes. The strategy is comprised of a 30% allocation each to the Franklin Federal Tax-Free Income Fund and Franklin Federal Intermediate-Term Tax-Free Income Fund and 20% each to the Franklin Rising Dividends Fund and Franklin Mutual Global Discovery Fund. The hypothetical illustrations below show how this investment strategy and the use of systematic withdrawals may fit as part of a well-diversified retirement income investment portfolio.

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HYPOTHETICAL ILLUSTRATIONS: 19 YEARS OF SYSTEMATIC AND INCREASING WITHDRAWALS1

January 1, 2000–December 31, 2018

$100,000 Initial Investment (Advisor Class / Class Z), $5,000 First-Year Withdrawal Amount (5% of Initial Investment), 3% Annual Increase in Withdrawal Amount, Reinvest Dividends and Capital Gains

 

SUMMARY ILLUSTRATION BASED ON SYSTEMATIC WITHDRAWALS

$125,586
Total Withdrawals
Based on 19 years of systematic and increasing withdrawals

Summary Chart

HYPOTHETICAL ACCOUNT VALUE AFTER $125,586 OF WITHDRAWALS

$95,420
Ending Portfolio Value - Advisor Class/Class Z

$52,844
Ending Blended Benchmark Value2

Hypothetical Account Value Chart

AVERAGE ANNUAL TOTAL RETURNS3

Periods ended June 30, 2019

Funds are available in additional share classes which may have different fees.

 Franklin Federal Tax-Free Income - Advisor Class (FAFTX)4, 5Franklin Federal Intermediate-Term Tax-Free Income Fund - Advisor Class(FITZX) 5, 8Franklin Rising Dividends Fund - Advisor Class (FRDAX)10Franklin Mutual Global Discovery Fund - Advisor Class (MDISX)
 Class A PerformanceClass A PerformanceClass A PerformanceClass A Performance
Fund Description The fund seeks to provide investors with as high a level of income exempt from federal income taxes as is consistent with prudent investment management and the preservation of shareholders' capital. The fund seeks to provide investors with as high a level of income exempt from federal income taxes as is consistent with prudent investment management and the preservation of shareholders’ capital. The fund maintains a dollar-weighted average portfolio maturity of three to 10 years. The fund seeks long-term capital appreciation by investing at least 80% of its net assets in companies of any size that have paid consistently rising dividends. The fund seeks capital appreciation. Its strategy is focused on undervalued mid- and large-cap equity securities, with a significant portion of its assets in foreign securities and, to a lesser extent, distressed securities and merger arbitrage.
Inception Date 10/7/83 9/21/92 1/14/87 12/31/92
1-Year 5.66% 4.74% 13.98% 4.14%
3-Year 1.95% 1.38% 13.30% 8.24%
5-Year 3.22% 2.41% 10.01% 4.02%
10-Year 4.75% 3.99% 13.87% 8.47%
Since Inception 6.36% 4.65% 9.63% 11.03%
Expense Ratio 0.52% Without Waiver9 0.55%
With Waiver 0.46%
0.63% 0.98%
30-Day Standardized Yield6
As of 06/30/19
1.86% Without Waiver  1.14%
With Waiver 1.25%
N/A N/A
Beta (3-Year) 7
As of 06/30/19
- - 0.98 0.88

WHAT ARE THE RISKS?

Franklin Federal Tax-Free Income Fund
Performance Prospectus

All investments involve risks, including possible loss of principal. Because municipal bonds are sensitive to interest rate movements, the fund’s yield and share price will fluctuate with market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in the fund adjust to a rise in interest rates, the fund’s share price may decline. Puerto Rico municipal bonds have been impacted by recent adverse economic and market changes, which may cause the fund’s share price to decline. Changes in the credit rating of a bond, or in the credit rating or financial strength of a bond’s issuer, insurer or guarantor, may affect the bond’s value. The fund may invest a significant part of its assets in municipal securities that finance similar types of projects, such as utilities, hospitals, higher education and transportation. A change that affects one project would likely affect all similar projects, thereby increasing market risk.

Franklin Federal Intermediate-Term Tax-Free Income Fund
Performance Prospectus

All investments involve risks, including possible loss of principal. Because municipal bonds are sensitive to interest rate movements, the fund’s yield and share price will fluctuate with market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in the fund adjust to a rise in interest rates, the fund’s share price may decline. Changes in the credit rating of a bond, or in the credit rating or financial strength of a bond’s issuer, insurer or guarantor, may affect the bond’s value. The fund may invest a significant part of its assets in municipal securities that finance similar types of projects, such as utilities, hospitals, higher education and transportation. A change that affects one project would likely affect all similar projects, thereby increasing market risk.

Franklin Rising Dividends Fund
Performance Prospectus

All investments involve risks, including possible loss of principal. Value securities may not increase in price as anticipated or may decline further in value. For stocks paying dividends, dividends are not guaranteed, and can increase, decrease or be totally eliminated without notice. While smaller and midsize companies may offer substantial opportunities for capital growth, they also involve heightened risks and should be considered speculative. Historically, smaller- and midsize-company securities have been more volatile in price than larger company securities, especially over the short term. These and other risks are detailed in the fund’s prospectus.

Franklin Mutual Global Discovery Fund
Performance Prospectus

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. To the extent that the Fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, the Fund may be subject to greater risks of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. Financial services companies are subject to extensive government regulation that may affect their profitability in many ways, including by limiting the amount and types of loans and other commitments they can make, and the interest rates and fees they can charge. Because the fund may invest its assets in companies in a specific region, including Europe, it is subject to greater risks of adverse developments in that region and/or the surrounding regions than a fund that is more broadly diversified geographically. Current political and financial uncertainty surrounding the European Union may increase market volatility and the economic risk of investing in companies in Europe. Smaller-company stocks have exhibited greater price volatility than larger-company stocks, particularly over the short term. 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.