EXHIBIT 99
----------
Contact: Franklin Resources, Inc.
Investor Relations: Alan Weinfeld (650) 525-8900
Corporate Communications: Holly Gibson Brady (650) 312-4701
franklintempleton.com
--------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
FRANKLIN RESOURCES, INC. ANNOUNCES FOURTH QUARTER RESULTS
SAN MATEO, CA, OCTOBER 25, 2001 - Franklin Resources, Inc. (Franklin
Templeton Investments) (NYSE: BEN) today reported net income of $83.9 million,
or $0.32 per share diluted, including $(0.02) per share diluted charge for
events related to September 11, and reported revenues of $603.9 million for the
quarter ended September 30, 2001, compared with net income of $119.7 million, or
$0.46 per share diluted, on revenues of $609.5 million in the preceding quarter
and net income of $140.8 million, or $0.58 per share diluted, on revenues of
$593.1 million in the comparable quarter a year ago. Net income for the year
ended September 30, 2001 was $484.7 million, or $1.91 per share diluted, on
revenues of $2,354.8 million as compared to net income of $562.1 million, or
$2.28 per share diluted, on revenues of $2,340.1 million a year ago. Operating
results for Fiduciary Trust Company International, the company's recently
acquired subsidiary, are included as of April 10, 2001.
On September 11, 2001, Fiduciary's World Trade Center offices were
destroyed. "We are deeply saddened by the loss of our 87 employees," said
Charles B. Johnson, chairman and CEO of Franklin Resources, Inc. "Immediately
following the attacks, our efforts were refocused to assist the families and
employees who have been affected by the tragedy and to recover Fiduciary's
business operations as quickly as possible. We have established new permanent
headquarters for Fiduciary in midtown Manhattan and established a memorial trust
fund to aid those affected."
This quarter's results include a net charge related to the events of
September 11 of approximately $7.6 million predominately related to the loss of
employees, additional operating expenses to re-establish the operations and
asset write-offs net of estimated insurance proceeds.
Revenues were down this quarter as compared to last quarter as a result of
lower investment management fees and lower shareholder servicing fees resulting
from a reduction in billable shareholder accounts in the U.S. Operating expenses
were up this quarter as compared to last quarter principally due to higher
information technology costs, and increased advertising and promotion expenses
to communicate the strong investment performance of the company's investment
products. Investment and other income was down this quarter as compared to last
quarter primarily due to the completion last quarter of the recognition of the
prior year's $32.8 million pre-tax gain on the sale of the company headquarters,
fewer investment gains and lower interest income.
As of September 30, 2001, assets under management by the company's
subsidiaries were $246.4 billion, as compared to $267.9 billion last quarter and
$229.9 billion at this time last year. Simple monthly average assets under
management during the current quarter were $261.3 billion compared to $255.9
billion in the preceding quarter and $231.4 billion in the same quarter a year
ago. Equity assets now comprise 51% of total assets under management as compared
to 55% last quarter and 66% at September 30, 2000. Fixed income assets now
comprise 32% of total assets under management, as compared to 29% last quarter
and 28% at the same time last year. Hybrid assets now account for 15% of total
assets under management, as compared to 14% last quarter and 4% at the same time
last year. For the quarters ended September 30, 2001 and June 30, 2001 sales and
reinvested dividends exceeded redemptions ("net inflows") complex-wide by $1.8
billion and $2.7 billion respectively. For the quarter ended September 30, 2000
net outflows were $1.6 billion.
Mr. Johnson stated, "While current market conditions have presented
challenging times to the company and our industry, the long-term outlook remains
positive. We continue to position our company for continued growth, but are
taking immediate action to reduce our cost structure in response to uncertain
market conditions."
2
FOURTH QUARTER 2001 HIGHLIGHTS
PERFORMANCE AND PRODUCTS (1),(2)
(See important footnotes in "Supplemental Information" section at the end of the
release.)
* Over 70% of Franklin Templeton's long-term U.S. retail mutual fund assets
ranked in the top two quartiles of their respective Lipper peer groups for
the one-, three-, five- and 10-year periods ended September 30,
2001. (3),(4)
* Mutual Series funds ranked in the top two quartiles of their respective
Lipper peer groups for the one-, three-, five- and 10-year periods ended
September 30, 2001, as applicable, with Mutual Shares and Mutual Beacon
consistently placing in the first quartile over these periods.
Additionally, Mutual Discovery received #1 rankings for the one- and
five-year periods and ranked in the top quintile for the three-year period.
Mutual European ranked in the top 5% for the one-, three-, and five-year
periods. (3),(5)
* While S&P 500, Dow, and NASDAQ were down 26.6%, 15.6%, and 58.7%
respectively for the one-year period ended September 30, 2001, Mutual
Shares, Mutual Beacon, Mutual Qualified, and Mutual Financial Services
funds were up 4.0%, 3.5%, 3.4% and 12.7%, respectively. Moreover, these
funds outperformed all of these indices over applicable three-, five- and
10-year periods ended September 30, 2001. (6)
* Over 95% of Templeton equity mutual fund assets ranked in the top two
quartiles of their respective Lipper peer groups for the one-, three-,
five- and 10-year periods ended September 30, 2001. Templeton Growth and
Templeton Foreign funds ranked in the first quartile for the same time
periods, and also outpaced the MSCI World and MSCI EAFE Indexes during the
same time periods, respectively. (3),(7)
* Over 95% of Franklin's tax-free income fund assets were rated 4 or 5 stars
overall by Morningstar as of September 30, 2001. (8),(9)
* Franklin's flagship taxable fixed income products, Franklin U.S. Government
Securities Fund and Franklin's AGE High Income Fund, ranked in the top two
quartiles of their respective Lipper peer groups for the one-, three-,
five- and 10-year periods ended September 30, 2001. (3),(10)
* Over 92% of Franklin Templeton Investments Corp.'s Canadian retail mutual
fund assets were in funds ranked 4 or 5 stars overall by Morningstar as of
September 30, 2001. (9),(11)
* Launched new equity funds in Canada, Singapore and France, a real estate
fund in Australia and a CBO in Korea.
* Introduced a new Franklin Large Cap Growth strategy for the institutional
platform. (12)
GLOBAL BUSINESS DEVELOPMENTS
* Franklin California Growth Fund was featured in the 2001 MONEY 100.
* Announced realignment of Mutual Series management.
* Completed the registration of a new rep office in Beijing.
* Hosted live webcasts "2001 Global Investing: Opportunities and Outlook" in
Canada and "Discovering Retirement Plans and The New Tax Law: Understanding
the Changes and Opportunities That Await You" in the U.S.
* Franklin Templeton Investments Corp. went live on FundCom in Canada, an
industry-wide initiative providing Canadian dealers with the ability to
view their client accounts across multiple fund companies, with a single
query over the Internet.
* Signed up more than 10% of Franklin Templeton's German-based shareholders
for online account access and re-launched India's web site with expanded
online interactive tools/calculators and account access features.
* Franklintempleton.com introduced Edelivery, a new email subscription
service that notifies shareholders of the availability of online
statements.
FIDUCIARY TRUST UPDATE
* Established new permanent headquarters for Fiduciary Trust at 600 Fifth
Avenue, a part of the Rockefeller Center complex in midtown Manhattan.
* Continued consolidation of Fiduciary, Templeton and Franklin institutional
marketing under the FTI Institutional global platform.
* Formed FT Fiduciary Trust Memorial Fund to assist Fiduciary Trust and
Franklin Templeton families affected by the World Trade Center tragedy.
* The World Trade Center tragedy has accelerated efforts to leverage the
operational and technical infrastructure of the combined organization.
3
FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
(Dollar amounts in thousands except
assets under management and per share THREE MONTHS ENDED YEAR ENDED
data) SEPTEMBER 30 SEPTEMBER 30
-------------------------------------------------------------------
2001 2000 % 2001 2000 %
---- ---- Change ---- ---- Change
------ ------
OPERATING REVENUES
Investment management fees $358,738 $354,265 1% $1,407,202 $1,399,121 1%
Underwriting and distribution fees 186,192 179,728 4% 709,476 709,285 -
Shareholder servicing fees 45,618 52,312 (13)% 199,525 211,416 (6)%
Other 13,335 6,745 98% 38,640 20,318 90%
--------------------------------------------------------------------
TOTAL OPERATING REVENUES 603,883 593,050 2% 2,354,843 2,340,140 1%
--------------------------------------------------------------------
OPERATING EXPENSES
Underwriting and distribution 166,073 160,416 4% 636,868 623,144 2%
Compensation and benefits 165,705 137,155 21% 615,281 535,710 15%
Information systems, technology and 76,191 59,890 27% 263,297 213,670 23%
occupancy
Advertising and promotion 32,388 27,477 18% 106,261 101,196 5%
Amortization of deferred sales commissions 16,801 20,416 (18)% 68,977 83,627 (18)%
Amortization of intangible assets 19,902 9,314 114% 56,590 37,163 52%
Other 25,326 23,483 8% 87,925 82,187 7%
September 11, 2001 net expense 7,649 - - 7,649 - -
--------------------------------------------------------------------
TOTAL OPERATING EXPENSES 510,035 438,151 16% 1,842,848 1,676,697 10%
--------------------------------------------------------------------
OPERATING INCOME 93,848 154,899 (39)% 511,995 663,443 (23)%
--------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Investment and other income 19,643 33,841 (42)% 136,351 90,108 51%
Interest expense (3,138) (3,418) (8)% (10,556) (13,960) (24)%
-------------------------------------------------------------------
OTHER INCOME (EXPENSE), NET 16,505 30,423 (46%) 125,795 76,148 65%
-------------------------------------------------------------------
Income before taxes on income 110,353 185,322 (40)% 637,790 739,591 (14)%
Taxes on income 26,484 44,499 (40)% 153,069 177,502 (14)%
--------------------------------------------------------------------
NET INCOME $83,869 $140,823 (40)% $484,721 $562,089 (14)%
====================================================================
EARNINGS PER SHARE
Basic $0.32 $0.58 (45)% $1.92 $2.28 (16)%
Diluted $0.32 $0.58 (45)% $1.91 $2.28 (16)%
DIVIDENDS PER SHARE $0.065 $0.06 8% $0.26 $0.24 8%
AVERAGE SHARES OUTSTANDING (in thousands)
Basic 261,639 243,665 7% 252,628 246,116 3%
Diluted 263,005 244,078 8% 253,663 246,624 3%
EBITDA MARGIN /1/ 26% 35% - 33% 36% -
OPERATING MARGIN /2/ 16% 26% - 22% 28% -
ASSETS UNDER MANAGEMENT (in millions)
Beginning of Period $267,928 $229,878 17% $229,923 $218,100 5%
Sales 14,766 11,588 27% 58,491 51,699 13%
Reinvested Dividends 583 619 (6)% 8,981 8,686 3%
Redemptions (13,564) (13,834) (2)% (58,589) (62,749) (7)%
Fiduciary acquisition - - - 45,838 - N/A
Appreciation/(Depreciation) (23,328) 1,672 N/A (38,259) 14,187 N/A
END OF PERIOD $246,385 $229,923 7% $246,385 $229,923 7%
SIMPLE MONTHLY AVERAGE FOR PERIOD $261,314 $231,370 13% $243,404 $227,682 7%
/1/ EBITDA Margin: Earnings before interest, taxes on income, depreciation and the amortization of intangibles
divided by total revenues.
/2/ Operating Margin: Operating income divided by total operating revenues.
4
FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
(Dollar amounts in thousands except
per share data) THREE MONTHS ENDED
30-SEP-01 30-JUN-01 % 31-MAR-01 31-DEC-00 30-SEP-00
--------- --------- CHANGE --------- --------- ---------
------
OPERATING REVENUES
Investment management fees $358,738 $362,543 (1)% $340,136 $345,785 $354,265
Underwriting and distribution fees 186,192 180,757 3% 178,165 164,362 179,728
Shareholder servicing fees 45,618 53,723 (15)% 51,962 48,222 52,312
Other 13,335 12,450 7% 7,150 5,705 6,745
----------------------------------------------------------------
TOTAL OPERATING REVENUES 603,883 609,473 (1)% 577,413 564,074 593,050
----------------------------------------------------------------
OPERATING EXPENSES
Underwriting and distribution 166,073 162,977 2% 162,134 145,684 160,416
Compensation and benefits 165,705 167,643 (1)% 140,074 141,859 137,155
Information systems, technology and 76,191 70,576 8% 59,002 57,528 59,890
occupancy
Advertising and promotion 32,388 27,314 19% 24,433 22,126 27,477
Amortization of deferred sales commissions 16,801 16,361 3% 17,579 18,236 20,416
Amortization of intangible assets 19,902 16,672 19% 10,107 9,909 9,314
Other 25,326 23,234 9% 19,611 19,754 23,483
September 11, 2001 net expense 7,649 - - - - -
----------------------------------------------------------------
TOTAL OPERATING EXPENSES 510,035 484,777 5% 432,940 415,096 438,151
----------------------------------------------------------------
OPERATING INCOME 93,848 124,696 (25)% 144,473 148,978 154,899
----------------------------------------------------------------
OTHER INCOME (EXPENSE)
Investment and other income 19,643 34,698 (43)% 32,054 49,956 33,841
Interest expense (3,138) (1,889) 66% (3,259) (2,270) (3,418)
----------------------------------------------------------------
OTHER INCOME (EXPENSE), NET 16,505 32,809 (50)% 28,795 47,686 30,423
----------------------------------------------------------------
Income before taxes on income 110,353 157,505 (30)% 173,268 196,664 185,322
Taxes on income 26,484 37,802 (30)% 41,584 47,199 44,499
----------------------------------------------------------------
NET INCOME $83,869 $119,703 (30)% $131,684 $149,465 $140,823
================================================================
EARNINGS PER SHARE
Basic $0.32 $0.46 (30)% $0.54 $0.61 $0.58
Diluted $0.32 $0.46 (30)% $0.54 $0.61 $0.58
DIVIDENDS PER SHARE $0.065 $0.065 - $0.065 $0.065 $0.06
AVERAGE SHARES OUTSTANDING (in
thousands)
Basic 261,639 260,815 - 244,256 243,708 243,665
Diluted 263,005 262,174 - 245,127 244,409 244,078
EBITDA MARGIN /1/ 26% 32% - 35% 38% 35%
OPERATING MARGIN /2/ 16% 20% - 25% 26% 26%
EMPLOYEES 6,868 7,101 (3)% 6,319 6,328 6,489
BILLABLE SHAREHOLDER ACCOUNTS (in millions) 8.4 10.1 (17)% 10.2 9.7 9.2
/1/ EBITDA Margin: Earnings before interest taxes on income, depreciation and the amortization of intangibles
divided by total revenues.
/2/ Operating Margin: Operating income divided by total operating revenues.
5
FRANKLIN RESOURCES, INC.
PRELIMINARY SUMMARY BALANCE SHEET
(Dollar amounts in thousands)
PRELIMINARY
SEPTEMBER SEPTEMBER
30, 2001 30, 2000
-------- --------
ASSETS
Current Assets $1,859,921 $1,656,294
Banking Finance Assets 1,229,244 299,562
Other Assets 3,106,130 2,086,587
-------------------------------------------------------------------------------------
TOTAL ASSETS $6,195,295 $4,042,443
-------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $457,433 $489,559
Banking/Finance Liabilities 1,070,661 238,954
Other Liabilities 689,305 348,437
-------------------------------------------------------------------------------------
Total Liabilities 2,217,399 1,076,950
Total Stockholders' Equity 3,977,896 2,965,493
-------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,195,295 $4,042,443
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
ENDING SHARES OF COMMON STOCK OUTSTANDING 260,797 243,730
-------------------------------------------------------------------------------------
6
ASSETS UNDER MANAGEMENT BY INVESTMENT OBJECTIVE
(in billions)
30-SEP-01 30-JUN-01 31-MAR-01 31-DEC-00 30-SEP-00
-------------------------------------------------------------
EQUITY
Global/international $80.2 $93.4 $87.6 $96.4 $97.6
Domestic 44.5 53.3 45.5 50.0 53.9
-------------------------------------------------------------
Total Equity 124.7 146.7 133.1 146.4 151.5
-------------------------------------------------------------
HYBRID FUNDS 36.1 38.3 9.8 10.1 9.3
FIXED INCOME
Tax-free 48.4 46.9 45.8 45.0 44.0
Taxable
Domestic 24.4 23.4 17.2 16.2 15.6
Global/international 7.2 7.2 3.9 3.7 4.2
-------------------------------------------------------------
Total Fixed Income 80.0 77.5 66.9 64.9 63.8
-------------------------------------------------------------
MONEY FUNDS 5.6 5.4 5.9 5.5 5.3
-------------------------------------------------------------
TOTAL ENDING ASSETS $246.4 $267.9 $215.7 $226.9 $229.9
-------------------------------------------------------------
-------------------------------------------------------------
SIMPLE MONTHLY AVERAGE ASSETS $261.3 $255.9 $224.9 $226.5 $231.4
=============================================================
ASSETS UNDER MANAGEMENT & FLOWS
(in billions) THREE MONTHS ENDED
30-SEP-01 30-JUN-01 % CHANGE 30-SEP-00 % CHANGE
--------- --------- -------- --------- --------
Beginning Assets Under Management $267.9 $215.7 24% $229.9 17%
U.S. Retail Assets
Beginning Assets $170.8 $161.6 6% $172.5 (1)%
----------------------------------------------------------------------------------------------
Sales 9.5 10.9 (13)% 8.3 14%
Reinvested Dividends 0.6 2.0 (70)% 0.6 -
Redemptions (9.2) (10.5) (12)% (10.0) (8)%
Appreciation/(Depreciation) (13.6) 6.8 N/A 2.7 N/A
----------------------------------------------------------------------------------------------
Ending Assets 158.1 170.8 (7)% 174.1 (9)%
----------------------------------------------------------------------------------------------
Other Assets, including International and Institutional
Beginning Assets 97.1 54.1 79% 57.4 69%
----------------------------------------------------------------------------------------------
Sales 5.3 4.5 18% 3.3 61%
Reinvested Dividends - 0.2 - - -
Redemptions (4.4) (4.4) - (3.8) 16%
Fiduciary acquisition - 45.8 - - -
Appreciation/(Depreciation) (9.7) (3.1) 213% (1.1) 782%
----------------------------------------------------------------------------------------------
Ending Assets 88.3 97.1 (9)% 55.8 58%
----------------------------------------------------------------------------------------------
Ending Assets Under Management $246.4 $267.9 (8)% $229.9 7%
Total Assets Under Management
Beginning Assets $267.9 $215.7 24% $229.9 17%
--------------------------------------------------------------------------------------------
Sales 14.8 15.4 (4)% 11.6 28%
Reinvested Dividends 0.6 2.2 (73)% 0.6 -
Redemptions (13.6) (14.9) (9)% (13.8) (1)%
Fiduciary acquisition - 45.8 - - -
Appreciation/(Depreciation) (23.3) 3.7 N/A 1.6 N/A
--------------------------------------------------------------------------------------------
Ending Assets $246.4 $267.9 (8)% $229.9 7%
--------------------------------------------------------------------------------------------
Note: A significant number of institutional assets are invested in U.S. Retail funds and are disclosed
in that category in the above table. Total institutional and high net worth assets at September 30, 2001
were over $85 billion.
7
30-SEP-01 30-JUN-01 30-SEP-00
--------- --------- ---------
GLOBAL/INTERNATIONAL EQUITY
Beginning Assets $93.4 $87.6 $103.6
-----------------------------------------------------------------------------------------
Sales 4.4 5.3 3.8
Reinvested Dividends - 0.7 -
Redemptions (4.5) (5.8) (6.6)
Fiduciary acquisition - 3.2 -
Appreciation/(Depreciation) (13.1) 2.4 (3.2)
-----------------------------------------------------------------------------------------
Ending Assets 80.2 93.4 97.6
-----------------------------------------------------------------------------------------
DOMESTIC EQUITY
Beginning Assets 53.3 45.5 49.6
-----------------------------------------------------------------------------------------
Sales 2.7 3.1 3.7
Reinvested Dividends - 0.7 -
Redemptions (2.6) (2.2) (2.6)
Fiduciary acquisition - 3.7 -
Appreciation/(Depreciation) (8.9) 2.5 3.2
-----------------------------------------------------------------------------------------
Ending Assets 44.5 53.3 53.9
-----------------------------------------------------------------------------------------
HYBRID
Beginning Assets 38.3 9.8 8.9
-----------------------------------------------------------------------------------------
Sales 0.6 0.6 0.2
Reinvested Dividends 0.1 0.2 0.1
Redemptions (0.7) (0.5) (0.4)
Fiduciary acquisition - 29.1 -
Appreciation/(Depreciation) (2.2) (0.9) 0.5
-----------------------------------------------------------------------------------------
Ending Assets 36.1 38.3 9.3
-----------------------------------------------------------------------------------------
TAX-FREE INCOME
Beginning Assets 46.9 45.8 43.8
-----------------------------------------------------------------------------------------
Sales 1.6 1.6 0.8
Reinvested Dividends 0.3 0.3 0.3
Redemptions (1.1) (1.2) (1.3)
Fiduciary acquisition - 0.1 -
Appreciation/(Depreciation) 0.7 0.3 0.4
-----------------------------------------------------------------------------------------
Ending Assets 48.4 46.9 44.0
-----------------------------------------------------------------------------------------
TAXABLE FIXED INCOME
Beginning Assets 30.6 21.1 18.8
-----------------------------------------------------------------------------------------
Sales 2.5 1.9 1.3
Reinvested Dividends 0.1 0.2 0.1
Redemptions (1.9) (1.8) (1.0)
Fiduciary acquisition - 9.7 -
Appreciation/(Depreciation) 0.3 (0.5) 0.6
-----------------------------------------------------------------------------------------
Ending Assets 31.6 30.6 19.8
-----------------------------------------------------------------------------------------
MONEY FUNDS
Beginning Assets 5.4 5.9 5.2
-----------------------------------------------------------------------------------------
Sales 3.0 2.9 1.8
Reinvested Dividends 0.1 0.1 0.1
Redemptions (2.8) (3.4) (1.9)
Appreciation/(Depreciation) (0.1) (0.1) 0.1
-----------------------------------------------------------------------------------------
Ending Assets 5.6 5.4 5.3
-----------------------------------------------------------------------------------------
ENDING ASSETS UNDER MANAGEMENT $246.4 $267.9 $229.9
8
CONFERENCE CALL INFORMATION
As previously announced, members of the investment community and general
public are invited to listen to the conference call TODAY, THURSDAY, OCTOBER 25,
2001 AT 1:30 P.M. PACIFIC STANDARD TIME. Access to the teleconference will be
available via franklintempleton.com 10 minutes before the start of the call or
by dialing (800) 230-1096 in the U.S. or (612) 288-0337 internationally.
A replay of the call will be archived on franklintempleton.com through
November 1, 2001. The replay can also be accessed by calling (800) 475-6701 in
the U.S. or (320) 365-3844 internationally and using access code #605542, after
5:00 p.m. Pacific Standard Time on October 25 through 11:59 p.m. Pacific
Standard Time on November 1.
Franklin Templeton Investments provides global and domestic investment
management, shareholder and distribution services to the Franklin, Templeton and
Mutual Series mutual funds, institutional and private accounts in approximately
125 different nations worldwide. Franklin Templeton Investments' headquarters
are located at One Franklin Parkway, San Mateo, CA, 94403.
MEMORIAL FUND INFORMATION
Franklin Templeton Investments formed FT Fiduciary Trust Memorial Fund to
assist Fiduciary Trust and Franklin Templeton families affected by the World
Trade Center tragedy. The memorial fund and account have been established at
Franklin Templeton Bank & Trust, FSB, One Franklin Parkway, San Mateo, CA 94403,
1-877-236-7932.
SUPPLEMENTAL INFORMATION
(1) Nothing in this section shall be considered a solicitation to buy or an
offer to sell a security to any person in any jurisdiction where such
offer, solicitation, purchase or sale would be unlawful under the
securities laws of such jurisdiction. For more information on any U.S.
Franklin Templeton fund, investors should request a prospectus containing
more complete information, including sales charges, expenses and risks,
from securities dealers or by calling Franklin Templeton Distributors, Inc.
at 1-800/DIAL BEN(R) (1-800/342-5236). Investors should read the prospectus
carefully before investing or sending money. Franklin Templeton
Distributors, Inc., One Franklin Parkway, San Mateo, CA, is the funds'
principal distributor and a wholly owned subsidiary of Franklin Resources,
Inc.
(2) PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. Morningstar ratings are
based on Class A shares. Lipper rankings are based on Class A shares, with
the exception of those for Mutual Series, which are based on Class Z
shares, which are offered to qualified investors only and have no sales
charges nor Rule 12b-1 fees. All asset data is based on 8/31/01 figures.
Indices are unmanaged and one cannot invest directly in them. Fund returns
quoted reflect Class A shares. Performance returns, ratings and rankings
for other classes may vary. Investment return and principal value will
fluctuate with market conditions and an investor may experience a gain or
loss when they sell their shares.
(3) Lipper calculates averages by taking all the funds in a peer group and
averaging their total returns for the periods indicated. Lipper tracks 131
peer groups of long-term U.S. retail mutual funds, and the groups vary in
size from 1 to 885. 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.
(4) Source: Lipper(R) Inc., 9/30/01. Of the eligible Franklin Templeton
non-money market funds tracked by Lipper, 34, 41, 32 and 11 funds ranked in
the top quartile and 24, 20, 25 and 22 funds ranked in the second quartile,
for the one-, three-, five- and 10-year periods, respectively, for their
respective Lipper peer groups.
(5) Source: Lipper(R) Inc., 9/30/01. Mutual Discovery Class Z ranked #1 in a
universe of 40 funds in Lipper's "Global Small-Cap Funds" group for the
one-year period, 13 of 32 for the three-year period and #1 of 22 for the
five-year period. Mutual European Class Z ranked #2 in a universe of 172
funds in Lipper's "European Region Funds" group for the one-year period, 7
of 77 for the three-year period and 2 of 60 for the five-year period.
Mutual Discovery (inception 12/31/92), Mutual European (inception 7/3/96)
and Mutual Financial Services Fund (inception 8/19/97) do not have 10-year
track records.
(6) Mutual Shares, Mutual Beacon, Mutual Qualified and Mutual Financial
Services fund returns are based on Class A shares without sales charges.
Prior to 11/1/96 only a single class of fund shares was offered without a
9
sales charge and Rule 12b-1 expenses. Returns shown are a restatement of
the original class to include the Rule 12b-1 fees as though in effect from
the fund's inception.
(7) Source:Lipper(R) Inc., 9/30/01. 10 out of 11 eligible Templeton equity
funds ranked in the top two Lipper quartiles for the one-year period, 7 of
11 for the three-year period, 7 of 11 for the five-year period and 5 of 7
for the 10-year period for their respective Lipper peer groups. Templeton
Growth Fund Class A ranked 7 in a universe of 271 funds in Lipper's "Global
Funds" group for the one-year period, 25 of 204 for the three-year period,
28 of 130 for the five-year period and 4 of 29 for the 10-year period.
Templeton Foreign Fund Class A ranked 17 in a universe of 713 funds in
Lipper's "International Funds" group for the one-year period, 37 of 525 for
the three-year period, 64 of 332 for the five-year period and 12 of 55 for
the 10-year period. Source for MSCI returns: Standard & Poor's Micropal.
(8) Source: MORNINGSTAR(C) 9/30/01. Morningstar proprietary ratings reflect
historical risk-adjusted performance as of 9/30/01. The ratings are subject
to change every month. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
Morningstar ratings are calculated from a fund's three-, five-, and 10-year
average annual returns, if applicable, in excess of 90-day Treasury bill
returns with appropriate fee adjustments, and a risk factor that reflects
fund performance below 90-day T-bill returns. The top 10% of the funds in a
broad asset class receive five stars, the next 22.5% receive four stars,
and the next 35% receive three stars. Morningstar does not guarantee the
accuracy of the information.
(9) Source: MORNINGSTAR(C) 9/30/01. Twenty Franklin tax-free income funds
received four stars, and seven received five stars.
(10) Source: Lipper(R) Inc., 9/30/01. Franklin U.S. Government Securities Fund
Class A ranked 18 in a universe of 59 funds in Lipper's "GNMA Funds" group
for the one-year period, 12 of 43 for the three-year period, 10 of 39 for
the five-year period and 9 of 22 for the 10-year period. Franklin's AGE
High Income Fund Class A ranked 190 in a universe of 383 funds in Lipper's
"High Current Yield Funds" group for the one-year period, 135 of 271 for
the three-year period, 52 of 149 for the five-year period and 21 of 54 for
the 10-year period.
(11) Source: MORNINGSTAR(C) 9/30/01. Of the eligible Canadian funds rated by
Morningstar, six received five stars and eight received four stars.
(12) Investors interested in institutional strategies should contact
Institutional Sales at (1-800/368-3677) to obtain more information.
FORWARD-LOOKING STATEMENTS
Statements in this press release regarding Franklin Resources, Inc.'s
business which are not historical facts are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements involve a number of risks, uncertainties and other
important factors that could cause the actual results and outcomes to differ
materially from any future results or outcomes expressed or implied by such
forward-looking statements. These risks, uncertainties and other important
factors are either set forth below or described in more detail in the risk
factor section in Franklin's recent filings with the U.S. Securities and
Exchange Commission, including, the "Forward-Looking Statements" section of the
Management's Discussion and Analysis of Financial Condition and Results of
Operations in Franklin's Form 10-K for the fiscal year ended September 30, 2000.
* We face strong competition from numerous and sometimes larger
companies.
* In the future, we may incur materially increased insurance costs or
may not be able to obtain the same types or amounts of coverage as a
result of the recent terrorist attacks.
* Changes in the distribution channels on which we depend could reduce
our revenues or hinder our growth.
* We have become subject to an increased risk of asset volatility from
changes in the domestic and global equity markets due to the recent
terrorist attacks.
* The levels of our assets under management are subject to significant
fluctuations.
* We may not recover payment for all insurance claims on any property
loss, business interruptions, life insurance and workers compensation
exposure.
* Previously announced revenue and cost synergies from the acquisition
of Fiduciary Trust may not be fully realized or may take longer to
realize than expected.
* We could experience disruption from the relocation of Fiduciary
Trust's New York offices, making it more difficult to maintain
relationships with clients or employees.
# # #