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Inflation 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®: Inflation-Smart Strategy has a relatively moderate level of risk in seeking to support an annual withdrawal strategy to address anticipated, inflation-sensitive income needs. The strategy is comprised of a 20% allocation each to the Franklin Rising Dividends Fund, Franklin Adjustable U.S. Government Securities Fund, Franklin Income Fund, Franklin Mutual Global Discovery Fund and the Templeton Global Bond 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: 18 YEARS OF SYSTEMATIC AND INCREASING WITHDRAWALS1

January 1, 2000–December 31, 2017

$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

$117,074
Total Withdrawals
Based on 18 years of systematic and increasing withdrawals

Summary Chart

HYPOTHETICAL ACCOUNT VALUE AFTER $117,074 OF WITHDRAWALS

$145,428
Ending Portfolio Value - Advisor Class/Class Z

$34,259
Ending Blended Benchmark Value2

Hypothetical Account Value Chart

AVERAGE ANNUAL TOTAL RETURNS3

Periods ended September 30, 2018

 Franklin Rising Dividends Fund - Advisor Class (FRDAX)4Franklin Adjustable U.S. Government Securities Fund - Advisor Class (FAUZX)7Franklin Income Fund - Advisor Class (FRIAX)10Franklin Mutual Global Discovery Fund - Advisor Class (MDISX)Templeton Global Bond Fund - Advisor Class (TGBAX)12
 Class A PerformanceClass A PerformanceClass A PerformanceClass A PerformanceClass A Performance
Fund Description 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 a high level of current income, while providing lower volatility of principal than a fund that invests in fixed-rate securities. The fund invests predominantly in adjustable-rate mortgage securities (ARMS) that are issued or guaranteed by the U.S. government, its agencies or instrumentalities. The fund's investments may include securities issued by government-sponsored entities, such as Fannie Mae and Freddie Mac.8 The fund seeks to maximize income, while maintaining prospects for capital appreciation, by investing in a diversified portfolio of stocks and bonds. 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. The fund seeks current income with capital appreciation and growth of income, by investing at least 80% of its net assets in bonds of governments, government related entities and government agencies located around the world. The fund regularly enters into various currency-related and other transactions involving derivative instruments.
Inception Date 1/14/87 10/20/87 8/31/48 12/31/92 9/18/86
1-Year 16.07% 0.82% 2.34% 3.09% -2.07%
3-Year 16.82% 0.33% 9.06% 9.50% 3.72%
5-Year 11.47% 0.37% 5.42% 6.71% 1.84%
10-Year 11.29% 1.21% 8.20% 7.81% 5.72%
Since Inception 9.68% 3.69% 10.18% 11.34% 7.35%
Expense Ratio 0.65% Without Waiver9 0.69%
With Waiver 0.68%
Without Waiver11 0.48%
With Waiver 0.47%
0.96% Without Waiver13 0.78%
With Waiver 0.71%
30-Day Standardized Yield5
As of 10/31/18
N/A Without Waiver 1.72%
With Waiver 1.73%
Without Waiver 4.16%
With Waiver 4.17%
N/A Without Waiver 5.48%
With Waiver 5.57%
Beta (3-Year)6
As of 10/31/18
0.91 - 0.56 0.80 -

WHAT ARE THE RISKS?

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 Adjustable U.S. Government Securities Fund
Performance | Prospectus

All investments involve risks, including possible loss of principal. Interest rate movements, unscheduled mortgage prepayments and other risk factors will affect the fund’s share price and yield. Bond prices generally move in the opposite direction of interest rates. As the prices of bonds in a 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. These and other risk considerations are discussed in the fund’s prospectus.

Franklin Income Fund
Performance | Prospectus

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.

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. 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.

Templeton Global Bond Fund
Performance | Prospectus

All investments involve risks, including possible loss of principal. Derivatives, including currency management strategies, involve costs and can create economic leverage in the portfolio which may result in significant volatility and cause the fund to participate in losses on an amount that exceeds the fund’s initial investment. The fund may not achieve the anticipated benefits, and may realize losses when a counterparty fails to perform as promised. The markets for particular securities or types of securities are or may become relatively illiquid. Reduced liquidity will have an adverse impact on the security’s value and on the fund’s ability to sell such securities when necessary to meet the fund’s liquidity needs or in response to a specific market event. Foreign securities involve special risks, including currency fluctuations (which may be significant over the short term) and economic and political uncertainties; investments in developing markets involve heightened risks related to the same factors. Sovereign debt securities are subject to various risks in addition to those relating to debt securities and foreign securities generally, including, but not limited to, the risk that a government entity may be unwilling or unable to pay interest and repay principal on its sovereign debt, or otherwise meet its obligations when due. Investments in lower-rated bonds include higher risk of default and loss of principal. Bond prices generally move in the opposite direction of interest rates. 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. These and other risks are discussed in the fund’s prospectus.