franklintempleton.com A Guide to Asset Allocation B

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1 A Guide to Asset Allocation franklintempleton.com A Guide to Asset Allocation B

2 Is There a Secret to Investment Success? Is It Timing the Market Perfectly or Investing in the Hottest? Actually, for many investors, the biggest factor in determining long-term success has been asset allocation. What Is Asset Allocation? Simply stated, asset allocation is investing your money in different categories of assets typically stocks, bonds and cash equivalents such as money market funds so your investments are well diversified. Ultimately, the objective of a good asset allocation plan is to develop an investment portfolio that will help you reach your financial objectives with the degree of risk you find comfortable. A well-diversified plan will not outperform the top asset class in any given year, but over time it may be one of the most effective ways to realize your long-term goals. Asset Allocation Can Help You: Reduce Risk. Portfolio diversification may reduce the amount of volatility you experience by simultaneously spreading market risk across many different asset classes. Improve Your Chances to Earn More Consistent Returns Over Time. By investing in several asset classes, you may improve your chances of participating in market gains, and lessen the impact of poorperforming asset categories on your overall portfolio returns. Stay Focused on Your Goals. A well-allocated portfolio alleviates the need to constantly adjust investment positions to chase market trends, and can help reduce the urge to buy or sell in response to the market s short-term ups and downs. Market s up today, down tomorrow. Who knows where things are headed? We need a long-term game plan. Consider Asset Allocation Not FDIC Insured May Lose No Bank Guarantee

3 and Are Just the Beginning Within each of the two broad asset classes of stocks and bonds are several asset categories that can be essential to building a truly diversified portfolio. Because these types of investments may perform differently in various types of markets, each can provide an additional layer of diversification. Below are several asset categories you may want to consider: -Cap -cap stocks (can be growth or value) are issued by corporations with a total market value of generally $10 billion or more. Because large companies are often mature and established, their stocks tend to be less volatile than those of smaller companies. -Cap -cap stocks (can be growth or value) are issued by corporations with a total market value of generally $2.5 billion or less. er companies offer the potential to grow quickly, but can be more volatile than larger-company stocks, particularly over the short term. Generally, these are stocks of corporations that have exhibited faster-than-average gains in earnings or revenues and are expected to continue growing faster than competitors and the economy. stocks typically have high price/earnings ratios relative to the overall stock market and often make little or no dividend payments to shareholders. Typically, these are stocks of well-established businesses that are temporarily out of favor with investors, and have low price/earnings ratios. While growth stocks may tend to shine in a strong economy, value stocks may outperform during sluggish markets or periods of volatility. bonds U.S. Government These bonds are issued by entities owned, backed or sponsored by the U.S. government. Income received from these bonds is usually taxable. Municipal These bonds are issued by state and local government agencies to finance public projects and services. Also known as tax-exempt or tax-free bonds, they typically pay interest that is not subject to federal regular income tax. In the state of issue, the interest is usually free from both state and local income taxes as well. 1 Because of this tax benefit, municipal bonds usually offer lower pre-tax yields than similar taxable bonds. Corporate Companies issue bonds to finance projects such as modernizing or building new facilities. These bonds may offer a higher yield than government bonds, but are often considered riskier as they are not issued by the government. The interest of these bonds is taxable. issued by foreign governments ( sovereigns ) or foreign corporations. These bonds may offer higher yields and exchange rate opportunities, but are subject to higher levels of political and economic risk. Income received from these bonds is taxable. stocks are issued by corporations based outside the United States. While some foreign stocks move in tandem with the U.S. stock market, others may not. 1. For investors subject to the alternative minimum tax, all or a portion of the interest income may be subject to such tax. Distributions of capital gains are generally taxable. franklintempleton.com A Guide to Asset Allocation 1

4 Why Diversify? Because Winners Rotate. Perhaps nothing better illustrates the need for an asset allocation plan than the chart below, which shows how various asset classes performed on a year-by-year basis from 1994 through The best-performing asset class is at the top of each column. Please remember, past performance does not guarantee future results. Annual Return of Key Asset Classes Between Ranked in Order of Performance from Best to Worst Best % 38.13% 23.97% 36.53% 42.16% 43.09% 22.83% 14.02% 10.26% % 3.13% 37.58% 22.96% 33.36% 28.58% 28.25% 11.63% 8.44% % 47.25% 1.32% 37.00% large 21.99% small 31.78% 20.33% 27.30% 6.08% 2.49% % 46.03% -0.64% 31.04% small 21.37% large 29.98% 14.67% 21.26% -3.02% -9.23% % 39.17% -1.54% 28.45% 16.49% 22.36% 8.69% 21.04% -9.10% % % 31.79% -1.82% 25.75% 11.26% 12.95% 1.23% 12.72% % % % 28.68% -2.43% 18.47% 6.36% 9.65% -2.55% -0.82% % % % 25.66% Worst -2.92% 11.55% 3.63% 2.06% -6.45% -1.49% % % % 4.10% This chart is for illustrative purposes only and does not represent the performance of any Franklin, Templeton or Mutual Series fund. For current performance of any Franklin, Templeton or Mutual Series fund, please visit franklintempleton.com or call (800) DIAL BEN/ A Guide to Asset Allocation franklintempleton.com

5 I don t want all my eggs in one basket. How can I be prepared to face any type of market? Diversify Across Asset Classes % 14.02% % % % % % % 18.05% 43.30% Best 20.70% 5.82% 23.48% 9.13% % 32.46% 26.85% 4.65% 17.90% 38.82% 18.33% 4.91% 20.80% 7.05% % 31.57% 24.50% 2.11% 17.68% 34.52% 15.71% 4.71% 18.37% 6.97% % 27.17% 15.10% -0.48% 16.35% 32.75% 14.31% 4.55% 15.79% 5.49% % 26.46% 15.06% -2.91% 16.00% 32.39% 10.88% 4.15% 13.35% 1.99% % 21.18% 15.05% -4.18% 14.61% 31.99% 6.13% 4.00% 11.01% -1.57% % 20.58% 8.21% -5.50% 14.59% 23.29% 4.34% 2.43% 4.33% -9.78% % 5.93% 6.54% % 4.21% -2.02% Worst Diversification does not guarantee a profit or protect against a loss. 2. Source: 2014 Morningstar. n stocks are represented by the S&P 500 Index; n large growth stocks are represented by the S&P 500/Barra Index until 1995 and S&P 500 Index thereafter; n large value stocks are represented by the S&P 500/Barra Index until 1995 and S&P 500 Index thereafter; n small stocks are represented by the Russell 2000 Index; n small growth stocks are represented by the Russell 2000 Index; n small value stocks are represented by the Russell 2000 Index; n foreign stocks are represented by the MSCI EAFE Index; and n bonds are represented by the Barclays U.S. Aggregate Index. 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 not its content providers are responsible for any damages or losses arising from any use of this information. Past performance does not guarantee future results. Indexes are unmanaged, and one cannot invest directly in an index. franklintempleton.com A Guide to Asset Allocation 3

6 Does Asset Allocation Really Work? Yes. In addition to helping reduce overall volatility and improving your chances to earn more consistent returns over time, keeping assets properly allocated helps you avoid the temptation to try to time the market. Consider the three scenarios below, illustrating different strategies used by investors. In each situation, $10,000 was invested annually each January 1, over the past 20 years for a total investment of $200, The first scenario shows the results of investing in the previous year s winner (the best-performing asset class), while the second shows the returns generated by investing in the previous year s loser (the worst-performing asset class). The third scenario shows the results of an asset allocation plan that consistently invested across several asset classes in equal proportion each year. While these returns can t guarantee future results, as you can see during the past 20 years, asset allocation was the most successful strategy. 20-Year Period Ended December 31, 2013 average Annual Total Investment of Portfolio Total Return 1. Chasing the Winners $200,000 $431, % Investing in last year s bestperforming asset class 3,4 2. Investing with the Losers $200,000 $475, % Investing in last year s worstperforming asset class 3,5 3. Asset Allocation $200,000 $510, % Investing consistently across several asset classes in equal proportion each year 3,6 This chart is for illustrative purposes only. It is important to note that an asset allocation strategy does not ensure results superior to other investment strategies and also does not guarantee a profit or protect against a loss. The chart does not represent the performance of any Franklin, Templeton or Mutual Series fund. For the current performance of any Franklin, Templeton or Mutual Series fund, please visit franklintempleton.com or call (800) DIAL BEN/ Some say to buy what s hot, others say to look for bargains. Who should I believe? Take a Diversified, Long-Term Approach 3. Source: 2014 Morningstar. The three scenarios above included large-cap stocks, represented by the S&P 500 Index; large-cap growth stocks, represented by the S&P 500/ Barra Index until 1995 and S&P 500 Index thereafter; large-cap value stocks, represented by the S&P 500/Barra Index until 1995 and S&P 500 Index thereafter; small-cap stocks, represented by the Russell 2000 Index; small-cap growth stocks, represented by the Russell 2000 Index; small-cap value stocks, represented by the Russell 2000 Index; foreign stocks, represented by the MSCI EAFE Index; and bonds, represented by the Barclays U.S. Aggregate Index. 4. Each year s new investments are made into the best-performing asset class index of the previous calendar year. 5. Each year s new investments are made into the worst-performing asset class index of the previous calendar year. 6. Annual investments are distributed evenly among all eight asset class indexes each calendar year and the portfolio is rebalanced annually. Indexes are unmanaged; one cannot invest directly in an index. This illustration assumes that indexes are reasonable representations of asset classes and their returns. However, investment manager performance relative to the different asset class indexes has varied widely during the past 20 years. 4 A Guide to Asset Allocation franklintempleton.com

7 Asset Allocation Can Help Balance Risk and Reward Asset allocation helps you stay in control of your financial plan, tailoring your investments to fit your goals and tolerance for risk. Think of it this way: While you might like to earn 30% annually on your investments, could you weather a 30% loss? Could you ride out a bear market that lasted a year or longer, or would you need to tap your investments for near-term expenses? Creating an asset allocation plan designed with your unique needs in mind can help you face any type of market with greater confidence. 15% The graph below shows the historical returns and volatility of several asset classes individually, compared to an asset allocation of 80% stocks, spread evenly across different types of equities, and 20% bonds. As you can see, although a few asset classes had slightly higher returns, they also exposed the investor to more risk than the asset allocation portfolio. While past results can t guarantee future returns, you can see that a little diversification can go a long way. Volatility and Returns of Different Asset Classes 7 20-Year Period Ended December 31, 2013 We want our money to grow, but we re not sure how much risk we can handle. Put risk and reward in perspective Average Annual Total Return 10% 5% Asset Allocation Portfolio 0% 0% 5% 10% 15% 20% 25% Risk/Volatility 7. Source: 2014 Morningstar. -cap growth stocks are represented by the S&P 500/Barra Index until 1995 and S&P 500 Index thereafter; large-cap value stocks are represented by the S&P 500/Barra Index until 1995 and S&P 500 Index thereafter; small-cap growth stocks are represented by the Russell 2000 Index; small-cap value stocks are represented by the Russell 2000 Index; foreign stocks are represented by the MSCI EAFE Index; and bonds are represented by the Barclays U.S. Aggregate Index. 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 does not guarantee future results. Risk is measured by the annualized standard deviation of monthly total returns. The asset allocation portfolio is rebalanced annually. Indexes are unmanaged, and one cannot invest directly in an index. franklintempleton.com A Guide to Asset Allocation 5

8 For Portfolio Diversification, Look to Franklin Templeton Franklin Templeton Investments is one of the largest mutual fund organizations in the U.S., offering a variety of professionally managed mutual funds covering every major asset class. So, whether your risk/reward profile leads to a conservative, moderate or aggressive asset allocation plan, Franklin Templeton Investments offers funds to meet your needs. Stock Funds Franklin Focused Core Equity Fund Franklin Cap Equity Fund Franklin Rising Dividends Fund Stock Funds Franklin DynaTech Fund Franklin Flex Cap Fund 8 Franklin Fund Franklin Opportunities Fund 8 Stock Funds Franklin Equity Income Fund Franklin Cap Fund Mutual Beacon Fund 8 Mutual Quest Fund 8 Mutual Shares Fund 8 Stock Funds Franklin Cap Fund Franklin -Mid Cap Fund Stock Funds Franklin Balance Sheet Investment Fund Franklin MicroCap Fund 9 Franklin Cap Fund Stock Funds Franklin International Fund Franklin World Perspectives Fund Mutual Global Discovery Fund Mutual International Fund Templeton Fund Templeton er Companies Fund Templeton Global Opportunities Trust Templeton Fund Templeton World Fund Bond Funds Franklin Adjustable U.S. Government Securities Fund Franklin Floating Rate Daily Access Fund Franklin High Income Fund Franklin Low Duration Total Return Fund Franklin Strategic Income Fund Franklin Total Return Fund Franklin U.S. Government Securities Fund Templeton Global Bond Fund Municipal Bond Funds 10 Franklin Federal Intermediate-Term Tax-Free Income Fund Franklin Federal Limited-Term Tax-Free Income Fund Franklin Federal Tax-Free Income Fund Franklin High Yield Tax-Free Income Fund Franklin offers 26 additional municipal bond funds including state-specific funds. All investments involve risk, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. A bond 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 a fund adjust to a rise in interest rates, a fund s share price may decline. Special risks are associated with foreign securities, including currency fluctuations, economic instability and political developments. Investors should carefully consider a fund s investment goals, risks, charges and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information for any of the Franklin, Templeton or Mutual Series funds listed in this brochure, talk to your financial advisor, call (800) or visit franklintempleton.com. Please read a prospectus carefully before investing. 6 A Guide to Asset Allocation franklintempleton.com

9 Our Funds Focusing on Special Opportunities Investors looking for a targeted investment opportunity, but who want professional management and greater diversification than owning a few individual stocks or bonds can offer, may want to consider sector or regional funds. Because these funds employ concentrated, narrowly-focused investment strategies, they may offer greater potential returns than more broadly invested portfolios. Please remember that the opportunity for increased reward also brings greater risk. Sector Funds Franklin Biotechnology Discovery Fund Franklin DynaTech Fund Franklin Global Listed Infrastructure Fund Franklin Global Real Estate Fund Franklin Gold and Precious Metals Fund Franklin Natural Resources Fund Franklin Pelagos Commodities Strategy Fund Franklin Real Estate Securities Fund Franklin Utilities Fund Mutual Financial Services Fund regional Funds Franklin India Fund Mutual European Fund Templeton BRIC Fund Templeton China World Fund Templeton Developing Markets Trust Templeton Emerging Markets Cap Fund Templeton Frontier Markets Fund Combination Funds Can Make Asset Allocation Easier Franklin Templeton offers many combination funds that can help simplify asset allocation. These include three actively managed target risk funds with objectives ranging from conservative to growth-oriented, and eight retirement target date funds offering active management and asset allocation that becomes more conservative as the retirement target date nears. 11 In addition, we offer a multi-asset real return fund that seeks to protect from the effects of inflation. For investors with a preference for greater active management, we manage a global tactical asset allocation fund. Finally, we offer two portfolios that invest in set allocations of some of our flagship funds and have an automatic rebalancing feature. asset allocation Funds Target Risk Funds Franklin Templeton Conservative Allocation Fund Franklin Templeton Moderate Allocation Fund Franklin Templeton Allocation Fund Target Date Funds 11 Franklin LifeSmart TM 2015 Retirement Target Fund Franklin LifeSmart TM 2020 Retirement Target Fund Franklin LifeSmart TM 2025 Retirement Target Fund Franklin LifeSmart TM 2030 Retirement Target Fund Franklin LifeSmart TM 2035 Retirement Target Fund Franklin LifeSmart TM 2040 Retirement Target Fund Franklin LifeSmart TM 2045 Retirement Target Fund Franklin LifeSmart TM 2050 Retirement Target Fund Global Tactical Asset Allocation Fund Franklin Templeton Global Allocation Fund Multi-Asset Real Return Fund Franklin Templeton Multi-Asset Real Return Fund Static Allocation Funds Franklin Templeton Corefolio Allocation Fund Franklin Templeton Founding Funds Allocation Fund 8. These funds generally invest in a combination of large-, medium- and small-capitalization stocks. 9. The fund is closed to new investors, with the exception of select retirement plans. Existing shareholders may continue adding to their accounts. 10. Alternative minimum tax may apply. 11. Investors generally choose the fund that has the stated target date most closely approximating their retirement date. It s important to note that the principal value of the fund will fluctuate and is not guaranteed at any time, including at or after the stated target date for the fund; nor is there any guarantee that the fund will provide sufficient income, at or through the investor s retirement. franklintempleton.com A Guide to Asset Allocation 7

10 Why We Say, Gain from Our Perspective We Offer Management Expertise Across Multiple Investment Disciplines Founded in 1947, Franklin Templeton has always been committed to disciplined portfolio management and the principles of diversification. When it comes to investments, we know that one size does not fit all. Markets change, and so can investors goals. That s why we offer a broad range of fund choices covering the spectrum of styles and strategies. Each of our distinct portfolio teams invests independently according to its own convictions and market perspectives. This means our shareholders can access professional expertise across disciplines essential for true diversification. Bringing together the expertise of Franklin, Templeton and Mutual Series Franklin allows investors to benefit from diverse investment perspectives within a single fund family. This approach enables shareholders to leverage our breadth and diversity, while enjoying benefits such as a single quarterly statement featuring all of their accounts. And, if their investment needs change over time, shareholders can exchange shares between funds in most cases with no additional sales charge. Ed Jamieson Chief Investment Officer Franklin Equity Group Expertise: -Style Equity Location: San Mateo, New York and London Investment Professionals: 58 Assets Under Management: $119.3 Billion Investment Approach: Our team conducts fundamental analysis as we seek out companies that meet our criteria for growth, quality and valuation. We pay close attention to the trade-off between growth opportunities and risks before making portfolio selections. Donald Taylor Chief Investment Officer U.S. Expertise: -Style Equity Location: Fort Lee, New Jersey Investment Professionals: Assets Under Management: $26.9 Billion Investment Approach: We look for good companies that are temporarily out of favor and available at bargain prices. We want to buy companies trading at a discount to book or asset value, and we also consider valuable intangibles such as brands or franchises that might not be reflected in the current price of the stock. As of 12/31/13. Assets under management (AUM) figures above are composed of U.S.- and foreign-based funds, separate accounts, institutional accounts and variable annuities. Assets of hybrid funds and accounts are allocated, as appropriate, across multiple CIO teams. 12. Additional research provided by securities analysts in San Mateo, California. 8 A Guide to Asset Allocation franklintempleton.com

11 Templeton Mutual Series Christopher Molumphy Chief Investment Officer Franklin Templeton Fixed Income Group Norm Boersma Chief Investment Officer Templeton Global Equity Group Peter Langerman President and Chief Executive Officer Mutual Series Expertise: Fixed Income Locations: San Mateo, New York, London, Mumbai, Dubai, Seoul, Kuala Lumpur, Shanghai, Singapore, and São Paulo Investment Professionals: 156 Assets Under Management: $397.1 Billion Expertise: Global Equity Locations: Nassau, Fort Lauderdale, Toronto, Edinburgh, London, Hong Kong, Singapore and Melbourne Investment Professionals: 40 Assets Under Management: $124.6 Billion Expertise: Deep -Style Equity Location: Short Hills, NJ, and London Investment Professionals: 28 Assets Under Management: $73.7 Billion Investment Approach: We focus on providing income consistent with prudent investment management, and adhere to a disciplined investment process. As a leader in fixed income investing, we offer shareholders a depth of research and analytical resources few in the industry can match. Investment Approach: We are global bargain hunters. We search the world for attractive stocks we think are trading for less than their potential worth. We take a long-term perspective, looking at a company s potential over the next five years. Investment Approach: We want to buy a dollar s worth of value for as little as possible. Our unique value approach focuses primarily on undervalued stocks, and to a lesser extent, distressed securities and merger arbitrage. We think like business owners and are willing to become actively involved with a company to help unlock value for our shareholders. franklintempleton.com A Guide to Asset Allocation 9

12 What Kind of Asset Allocation Is Right for Me? The first step in developing your asset allocation plan should be a discussion with your financial advisor. Here are some questions you may want to consider: Have I prioritized my primary financial goals? What s my investment time frame? How much fluctuation in the value of my investments can I handle? The samples below offer a general idea of what various asset allocation plans look like and how they have performed over time. Please remember, past performance does not guarantee future results. Consider These Sample Portfolios Year Period Ending December 31, % 20-Year Average Annual Total Return 8.39% % Best One-Year Return 38.37% Worst One-Year Return % 80% 20% 20-Year Average Annual Total Return 8.22% Best One-Year Return 31.52% % % Worst One-Year Return % 60% 40% 20-Year Average Annual Total Return 7.85% Best One-Year Return 24.66% % % Worst One-Year Return % 40% 40% 20% Cash Equivalents 20-Year Average Annual Total Return 6.74% Best One-Year Return 18.92% Worst One-Year Return % % % Cash Equivalents... 20% 20% 60% 20% Cash Equivalents 20-Year Average Annual Total Return 6.05% Best One-Year Return 17.44% Worst One-Year Return -4.03% % % Cash Equivalents... 20% The figures above are for illustrative purposes only and do not represent the performance of any Franklin, Templeton or Mutual Series fund. For the current performance of any Franklin, Templeton or Mutual Series fund, please visit franklintempleton.com or call (800) DIAL BEN/ A Guide to Asset Allocation franklintempleton.com

13 Make Sure You Keep Your Plan on Target Over time, some of your investments may sometimes grow more quickly or decline less than others, which can cause your allocations to shift. As a result, you might end up taking on more risk than you intended or not pursuing your goals as aggressively as you would have liked. Meeting periodically with your financial advisor to review your portfolio can help keep your plan on target. You may want to rebalance your portfolio, adjusting your investments to reflect your original allocation, or modify your plan to reflect changes in your goals or personal situation. In the two pie charts below, you can see how a well-diversified portfolio might have shifted over the past five years, taking on a different risk/return profile. Original Allocation 14 Allocation 5 Years Later December 31, 2008 December 31, % % % % % % % % % % % % I want to be sure my financial strategy stays on track. review your portfolio annually and rebalance 13. Source: 2014 Morningstar. Stock investments are represented by equal investments in the S&P 500 Index, Russell 2000 Index and MSCI EAFE Index, representing large U.S. stocks, small U.S. stocks and foreign stocks, respectively. are represented by the Barclays U.S. Aggregate Index. Cash equivalents are represented by the Payden & Rygel 90-Day U.S. Treasury Bill Index. Portfolios are rebalanced annually. Indexes are unmanaged, and one cannot invest directly in an index. 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 does not guarantee future results. 14. Source: 2014 Morningstar. -cap growth stocks are represented by the S&P 500 Index; large-cap value stocks are represented by the S&P 500 Index; small-cap growth stocks are represented by the Russell 2000 Index; small-cap value stocks are represented by the Russell 2000 Index; foreign stocks are represented by the MSCI EAFE Index; and bonds are represented by the Barclays U.S. Aggregate Index. Indexes are unmanaged, and one cannot invest directly in an index. franklintempleton.com A Guide to Asset Allocation 11

14 Franklin Templeton Investments Gain From Our Perspective Franklin Templeton s distinct multi-manager structure combines the specialized expertise of three world-class investment management groups Franklin, Templeton and Mutual Series. Specialized expertise Each of our portfolio management groups operates autonomously, relying on its own research and staying true to the unique investment disciplines that underlie its success. Franklin. Founded in 1947, Franklin is a recognized leader in fixed income investing and also brings expertise in growth- and value-style U.S. equity investing. Templeton. Founded in 1940, Templeton pioneered international investing and, in 1954, launched what has become the industry s oldest global fund. Today, with offices in over 25 countries, Templeton offers investors a truly global perspective. Mutual Series. Founded in 1949, Mutual Series is dedicated to a unique style of value investing, searching aggressively for opportunity among what it believes are undervalued stocks, as well as arbitrage situations and distressed securities. True diversification Because our management groups work independently and adhere to different investment approaches, Franklin, Templeton and Mutual Series funds typically have distinct portfolios. That s why our funds can be used to build truly diversified allocation plans covering every major asset class. Reliability You Can Trust At Franklin Templeton Investments, we seek to provide investors with strong risk-adjusted returns over the long term, as well as the reliable, accurate and personal service that has helped us become one of the most trusted names in financial services. Mutual Funds Retirement 529 College Savings Plans SEPARATELY MANAGED Accounts

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16 Take Advantage of Professional Advice Determining your financial goals a comfortable retirement, a college education for the kids, a new home may not be too complicated, but developing a solid asset allocation plan designed to meet those goals can be. Franklin Templeton recommends consulting a professional financial advisor to help you. Not only do they offer market knowledge and planning expertise, they have experience gained from helping other people with goals similar to yours. Chances are your financial advisor will also want to review your portfolio annually to determine if certain adjustments are needed to keep your asset allocation plan balanced and on target. While asset allocation can be a valuable tool to help reduce volatility, all investments involve risk, including possible loss of principal. Typically, the more aggressive the investment or the greater the potential return, the more risk involved. Generally, investors should be comfortable with some fluctuation in the value of their investments, especially over the short term. Diversification does not assure better performance and cannot eliminate the risk of loss. A fund s specific risks are described in greater detail in the prospectus, and you should always read a fund s prospectus carefully before investing. blend Sector Global International Hybrid alternative Asset allocation Fixed Income Tax-Free Income Franklin Templeton Distributors, Inc. One Franklin Parkway, San Mateo, CA (800) DIAL BEN / franklintempleton.com Franklin Templeton Investments Your Source For: Mutual Funds Retirement 529 College Savings Plans Separately Managed Accounts Investors should carefully consider a fund s investment goals, risks, charges and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information, talk to your financial advisor, call us at (800) DIAL BEN/ , or visit franklintempleton.com. Please carefully read a prospectus before you invest or send money Franklin Templeton Investments. All rights reserved. ALLOC G 03/14 A A Guide to Asset Allocation franklintempleton.com