EXHIBIT 99
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[Logo] One Franklin Parkway
San Mateo, CA 94403-1906
tel 650/312.2000
franklintempleton.com
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Contact: Franklin Resources, Inc.
Investor Relations: Alan Weinfeld (650) 525-8900
Corporate Communications: Lisa Gallegos (650) 312-3395
franklintempleton.com
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FOR IMMEDIATE RELEASE
FRANKLIN RESOURCES, INC. ANNOUNCES SECOND QUARTER RESULTS
SAN MATEO, CA, APRIL 24, 2003 - Franklin Resources, Inc. (Franklin
Templeton Investments) (NYSE: BEN) today reported net income of $109.6 million,
or $0.43 per share diluted on revenues of $613.1 million for the quarter ended
March 31, 2003. In the preceding quarter, net income was $109.8 million, or
$0.43 per share diluted, on revenues of $605.5 million. In the comparable
quarter a year ago, net income was $120.0 million, or $0.46 per share diluted,
on revenues of $626.0 million. Operating income this quarter was approximately
the same as in the prior quarter and decreased 6% over the same quarter in the
prior year.
As of March 31, 2003, assets under management by the company's subsidiaries
were $252.4 billion, as compared to $257.7 billion last quarter and $274.5
billion at this time last year. Simple monthly average assets under management
during the current quarter were $255.1 billion compared to $254.8 billion in the
preceding quarter and $267.9 billion in the same quarter a year ago. Equity
assets now comprise 47% of total assets under management as compared to 48% last
quarter and 54% at March 31, 2002. Fixed-income assets now comprise 36% of total
assets under management, as compared to 34% last quarter and 30% at the same
time last year. As of March 31, 2003, balanced/hybrid assets account for 15% of
total assets under management, and remained unchanged from last quarter and the
comparable quarter a year ago. Sales exceeded redemptions by $2.6 billion for
the current quarter compared to $1.1 billion for the prior quarter and $4.5
billion for the comparable quarter a year ago.
FISCAL SECOND QUARTER 2003 HIGHLIGHTS
PERFORMANCE AND PRODUCTS /1/,/2/
(See important footnotes in "Supplemental Information" section at the end of the
release.)
o Over 80% of Franklin Templeton's total equity fund assets were in funds
ranked in the top two quartiles of their respective LIPPER peer groups for
the one-, three-, five- and 10-year periods ended March 31, 2003. /3/,/8/
o Over 95% of Templeton equity mutual fund assets were in funds ranked in the
top two quartiles of their respective LIPPER peer groups for the one-,
three-, five- and 10-year periods ended March 31, 2003, while over 70% of
assets were in funds ranked in the top quartile. /4/,/8/
o Franklin Federal Tax-Free Income Fund and Franklin New York Tax-Free Income
Fund were both rated 4 stars overall by MORNINGSTAR as of March 31, 2003.
/6/
o Franklin U.S. Government Securities Fund ranked in the top half of its
LIPPER peer group for the one-, three-, five- and 10-year periods ended
March 31, 2003. /7/,/8/
o Templeton Foreign Fund and Templeton Growth Fund ranked in the top 20% of
their respective LIPPER peer groups for the one-, three-, five- and 10-year
periods ended March 31, 2003, and were also rated 4 stars overall by
MORNINGSTAR as of March 31, 2003. /5/,/6/,/8/
o All six Mutual Series funds were rated either 4 or 5 stars overall by
MORNINGSTAR as of March 31, 2003, and ranked in the top quintile of their
respective LIPPER peer groups for the applicable one-, three-, five- and
10-year periods ended March 31, 2003. /6/,/8/,/9/
o Franklin MicroCap Value Fund received a U.S. LIPPER Fund Award for
consistent performance compared to its peers in the "Small-Cap Value Funds"
category. The fund ranked in the top decile of its LIPPER peer group for
the one-, three- and five-year periods ended March 31, 2003. The fund was
also rated 5 stars overall by MORNINGSTAR. /6/,/8/,/10/,/11/
o Franklin Income Fund ranked in the top half of its LIPPER peer group for
the one-, three-, five- and 10-year periods ended March 31, 2003. The fund
was also rated 4 stars overall by Morningstar. As of March 31, 2003, the
fund's assets under management reached an all-time high of $10.5 billion.
/6/,/8/,/12/
o Franklin Utilities Fund ranked in the top two quartiles of its LIPPER peer
group for the one-, three-, five- and 10-year periods ended March 31, 2003.
The fund was also rated 4 stars overall by MORNINGSTAR. /6/,/8/,/13/
o Franklin Balance Sheet Investment Fund ranked in the top half of its LIPPER
peer group over the one-, three-, five- and 10-year periods ended March 31,
2003. The fund was also rated 4 stars overall by MORNINGSTAR. /6/,/8/,/14/
o Franklin Flex Cap Growth Fund ranked in the top third of its Lipper peer
group for the one-, three-, five- and 10-year periods ended March 31, 2003.
The fund was also rated 4 stars overall by MORNINGSTAR. /6/,/8/,/15/
GLOBAL BUSINESS DEVELOPMENTS
o Franklin Templeton Investments won an additional $100 million fixed-income
separate account mandate from the Central Bank of China.
o The WALL STREET JOURNAL named Franklin Templeton Investments as the largest
foreign retail fund company in the German market.
o Franklin Templeton Investments was ranked #1 out of 64 by IFA Magazine for
offering superior service to independent financial advisors in Germany, and
was awarded the "Service Award 2003" (ranked #1) by FONDS PROFESSIONELL,
the leading IFA magazine in Germany and Austria.
o The S&P Investment Fund Awards in Belgium recognized Franklin Templeton
Investments for "Best Overall Performance for a Family of Funds over a
3-year Period". In Singapore, Mutual Beacon Fund was awarded "Best
Performing Equity Global Fund" for three-year performance, and China Fund
for "Best Performing Equity China (Greater) Fund" for three-year returns.
o Fiduciary Trust was recognized as the best Global Fixed Income (unhedged)
manager for one-year performance in ASIAN INVESTOR'S 2003 Achievement
Awards.
o Franklin Templeton Korea was recognized by three local papers, in
conjunction with various rating agencies, for consistent high performance
over the past three years.
o Internet consultant KASINA named Franklin Templeton Investments in the top
three for eMail Marketing in Canada and the U.S. among 118 asset management
firms worldwide.
o Mark Mobius, managing director of Templeton Asset Management, Ltd.,
received an "Award of Excellence" from the Capital Link Forum for his
contribution to the closed-end fund industry.
o Franklin Templeton Investments was awarded the 529 mandate for New Jersey,
to market and manage investments for NJBEST and Franklin Templeton 529
College Savings Plan.
o Approximately 900 financial advisors attended Franklin Templeton's Chief
Investment Officer conference call, a 68% increase over the previous
semi-annual call.
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FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
(Dollar amounts in thousands except assets THREE MONTHS ENDED SIX MONTHS ENDED
under management and per share data)
MARCH 31 MARCH 31
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2003 2002 % 2003 2002 %
---- ---- Change ---- ---- Change
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OPERATING REVENUES
Investment management fees $347,897 $365,778 (5%) $699,309 $722,576 (3%)
Underwriting and distribution fees 194,158 197,537 (2%) 380,095 389,544 (2%)
Shareholder servicing fees 55,315 48,024 15% 103,366 95,365 8%
Other, net 15,765 14,629 8% 35,816 36,690 (2%)
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TOTAL OPERATING REVENUES 613,135 625,968 (2%) 1,218,586 1,244,175 (2%)
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OPERATING EXPENSES
Underwriting and distribution 173,068 177,327 (2%) 341,915 349,594 (2%)
Compensation and benefits 160,809 159,764 1% 319,927 319,907 -
Information systems, technology and
occupancy 71,404 73,197 (2%) 143,999 147,791 (3%)
Advertising and promotion 24,226 25,481 (5%) 46,870 51,906 (10%)
Amortization of deferred sales commissions 17,040 17,047 - 33,085 33,790 (2%)
Amortization of intangible assets 4,238 4,258 - 8,472 8,633 (2%)
Other 22,644 20,875 8% 45,157 41,670 8%
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TOTAL OPERATING EXPENSES 473,429 477,949 (1%) 939,425 953,291 (1%)
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OPERATING INCOME 139,706 148,019 (6%) 279,161 290,884 (4%)
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OTHER INCOME (EXPENSES)
Investment and other income 15,558 14,782 5% 27,861 33,111 (16%)
Interest expense (3,037) (2,808) 8% (6,069) (5,976) 2%
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OTHER INCOME, NET 12,521 11,974 5% 21,792 27,135 (20%)
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Income before taxes on income 152,227 159,993 (5%) 300,953 318,019 (5%)
Taxes on income 42,624 39,997 7% 81,590 79,504 3%
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NET INCOME $109,603 $119,996 (9%) $219,363 $238,515 (8%)
========================================================
EARNINGS PER SHARE
Basic $0.43 $0.46 (7%) $0.85 $0.91 (7%)
Diluted $0.43 $0.46 (7%) $0.85 $0.91 (7%)
DIVIDENDS PER SHARE $0.075 $0.070 7% $0.150 $0.140 7%
AVERAGE SHARES OUTSTANDING (in thousands)
Basic 257,023 261,596 (2%) 257,315 261,284 (2%)
Diluted 257,654 262,111 (2%) 257,918 261,981 (2%)
OPERATING MARGIN /1/ 23% 24% - 23% 23% -
ASSETS UNDER MANAGEMENT (in millions)
Beginning of period $257,735 $266,287 (3%) 247,760 $246,385 1%
Sales 17,441 18,759 (7%) 34,565 37,682 (8%)
Reinvested distributions 630 567 11% 2,067 3,103 (33%)
Redemptions (14,871) (14,318) 4% (30,906) (29,802) 4%
Distributions (1,157) (1,129) 2% (3,252) (4,792) (32%)
Acquisitions - - - - - -
(Depreciation)/appreciation (7,400) 4,308 N/A 2,144 21,898 (90%)
END OF PERIOD $252,378 $274,474 (8%) $252,378 $274,474 (8%)
SIMPLE MONTHLY AVERAGE FOR PERIOD $255,056 $267,923 (5%) $254,551 $261,570 (3%)
/1/ Operating Margin: Operating income divided by total operating revenues.
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FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
(Dollar amounts in thousands except
per share data) THREE MONTHS ENDED
31-MAR-03 31-DEC-02 % 30-SEP-02 30-JUN-02 31-MAR-02
--------- --------- CHANGE --------- --------- ---------
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OPERATING REVENUES
Investment management fees $347,897 $351,412 (1%) $355,239 $384,840 $365,778
Underwriting and distribution fees 194,158 185,937 4% 189,853 213,300 197,537
Shareholder servicing fees 55,315 48,051 15% 47,105 48,832 48,024
Other, net 15,765 20,051 (21%) 16,110 19,078 14,629
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TOTAL OPERATING REVENUES 613,135 605,451 1% 608,307 666,050 625,968
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OPERATING EXPENSES
Underwriting and distribution 173,068 168,847 2% 175,054 191,586 177,327
Compensation and benefits 160,809 159,118 1% 157,627 167,570 159,764
Information systems, technology and
occupancy 71,404 72,595 (2%) 70,797 75,573 73,197
Advertising and promotion 24,226 22,644 7% 25,703 29,268 25,481
Amortization of deferred sales commissions 17,040 16,045 6% 16,141 17,677 17,047
Amortization of intangible assets 4,238 4,234 - 4,236 4,238 4,258
Other 22,644 22,513 1% 17,983 26,286 20,875
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TOTAL OPERATING EXPENSES 473,429 465,996 2% 467,541 512,198 477,949
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OPERATING INCOME 139,706 139,455 - 140,766 153,852 148,019
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OTHER INCOME (EXPENSES)
Other-than-temporary decline in investments
value - - - (60,068) - -
Investment and other income 15,558 12,303 26% 14,015 18,017 14,782
Interest expense (3,037) (3,032) - (3,168) (3,158) (2,808)
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OTHER INCOME (EXPENSES), NET 12,521 9,271 35% (49,221) 14,859 11,974
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Income before taxes on income 152,227 148,726 2% 91,545 168,711 159,993
Taxes on income 42,624 38,966 9% 23,027 43,021 39,997
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NET INCOME $109,603 $109,760 - $68,518 $125,690 $119,996
================================================================
EARNINGS PER SHARE
Basic $0.43 $0.43 - $0.26 $0.48 $0.46
Diluted $0.43 $0.43 - $0.26 $0.48 $0.46
DIVIDENDS PER SHARE $0.075 $0.075 - $0.070 $0.070 $0.070
AVERAGE SHARES OUTSTANDING (in
thousands)
Basic 257,023 257,600 - 260,444 261,952 261,596
Diluted 257,654 258,218 - 261,497 263,087 262,111
OPERATING MARGIN /1/ 23% 23% - 23% 23% 24%
EMPLOYEES 6,619 6,670 (1%) 6,711 6,457 6,444
BILLABLE SHAREHOLDER ACCOUNTS /2/ (in millions) 14.3 10.1 42% 9.6 9.7 9.5
/1/ Operating Margin: Operating income divided by total operating revenues.
/2/ Effective January 1, 2003, billable shareholder accounts include 3.9 million additional partial service shareholder accounts.
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FRANKLIN RESOURCES, INC.
PRELIMINARY SUMMARY BALANCE SHEET
(Dollar amounts in thousands)
PRELIMINARY
MARCH SEPTEMBER
31, 2003 30, 2002
-------- --------
ASSETS
Current assets $2,369,499 $2,322,808
Banking/ finance assets 1,154,508 1,091,223
Non-current assets 3,082,298 3,008,707
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TOTAL ASSETS $6,606,305 $6,422,738
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $405,511 $455,019
Banking/ finance liabilities 963,157 883,936
Non-current liabilities 869,150 816,837
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Total liabilities 2,237,818 2,155,792
Total stockholders' equity 4,368,487 4,266,946
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,606,305 $6,422,738
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ENDING SHARES OF COMMON STOCK OUTSTANDING 255,464 258,555
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ASSETS UNDER MANAGEMENT BY INVESTMENT OBJECTIVE
(in billions) 31-MAR-03 31-DEC-02 30-SEP-02 30-JUN-02 31-MAR-02
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EQUITY
Global/international $75.7 $81.4 $76.5 $93.6 $93.9
Domestic (U.S.) 42.7 43.5 41.4 48.5 53.2
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Total equity 118.4 124.9 117.9 142.1 147.1
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BALANCED/HYBRID 37.4 38.3 36.6 39.6 40.8
FIXED-INCOME
Tax-free 52.3 52.1 52.8 50.2 48.7
Taxable:
Domestic (U.S.) 29.4 27.3 26.1 24.7 24.6
Global/international 9.4 9.1 8.6 8.4 7.7
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Total fixed-income 91.1 88.5 87.5 83.3 81.0
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MONEY 5.5 6.0 5.8 5.4 5.6
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TOTAL ENDING ASSETS $252.4 $257.7 $247.8 $270.4 $274.5
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SIMPLE MONTHLY AVERAGE ASSETS $255.1 $254.8 $259.0 $274.8 $267.9
=============================================================
ASSETS UNDER MANAGEMENT & FLOWS
(in billions) THREE MONTHS ENDED
31-MAR-03 31-DEC-02 % CHANGE 31-MAR-02 % CHANGE
--------- --------- -------- --------- --------
BEGINNING ASSETS UNDER MANAGEMENT $257.7 $247.8 4% $266.3 (3%)
U.S. RETAIL ASSETS
Beginning assets $162.7 $157.7 3% $167.9 (3%)
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Sales 9.0 9.4 (4%) 11.3 (20%)
Reinvested distributions 0.6 1.3 (54%) 0.5 20%
Redemptions (7.4) (8.8) (16%) (8.7) (15%)
Distributions (1.1) (1.9) (42%) - 100%
Acquisitions - - - - -
(Depreciation)/appreciation (3.4) 5.0 N/A 1.8 N/A
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Ending assets 160.4 162.7 (1%) 172.8 (7%)
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OTHER ASSETS, INCLUDING INTERNATIONAL AND INSTITUTIONAL
Beginning assets $95.0 $90.1 5% $98.4 (3%)
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Sales 8.4 7.7 9% 7.5 12%
Reinvested distributions - 0.1 (100%) - -
Redemptions (7.4) (7.2) 3% (5.6) 32%
Distributions - (0.2) (100%) (1.1) (100%)
Acquisitions - - - - -
(Depreciation)/appreciation (4.0) 4.5 N/A 2.5 N/A
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Ending assets 92.0 95.0 (3%) 101.7 (10%)
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ENDING ASSETS UNDER MANAGEMENT $252.4 $257.7 (2%) $274.5 (8%)
TOTAL ASSETS UNDER MANAGEMENT
BEGINNING ASSETS $257.7 $247.8 4% $266.3 (3%)
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Sales 17.4 17.1 2% 18.8 (7%)
Reinvested distributions 0.6 1.4 (57%) 0.5 20%
Redemptions (14.8) (16.0) (8%) (14.3) 3%
Distributions (1.1) (2.1) (48%) (1.1) -
Acquisitions - - - - -
(Depreciation)/appreciation (7.4) 9.5 N/A 4.3 N/A
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ENDING ASSETS $252.4 $257.7 (2%) $274.5 (8%)
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Note: Institutional assets totaling approximately $15.6 billion are invested in U.S. Retail fund and annuity
products and are disclosed in U.S. Retail assets in the above table. Total institutional and high net-worth
assets at March 31, 2003, were approximately $82.2 billion, of which high net-worth assets comprised $9.3
billion.
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ASSETS UNDER MANAGEMENT & FLOWS BY INVESTMENT OBJECTIVE (in billions)
THREE MONTHS ENDED 31-MAR-03 31-DEC-02 31-MAR-02
- ------------------ --------- --------- ---------
GLOBAL/INTERNATIONAL EQUITY
Beginning assets $81.4 $76.5 $89.4
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Sales 5.4 6.5 6.9
Reinvested distributions - 0.6 -
Redemptions (4.6) (5.8) (5.1)
Distributions - (0.6) -
Acquisitions - - -
(Depreciation)/appreciation (6.5) 4.2 2.7
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Ending assets 75.7 81.4 93.9
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DOMESTIC (U.S.) EQUITY
Beginning assets 43.5 41.4 51.7
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Sales 2.3 2.5 3.8
Reinvested distributions - 0.3 -
Redemptions (2.0) (2.6) (2.2)
Distributions - (0.3) -
Acquisitions - - -
(Depreciation)/appreciation (1.1) 2.2 (0.1)
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Ending assets 42.7 43.5 53.2
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BALANCED/HYBRID
Beginning assets 38.3 36.6 38.6
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Sales 1.8 0.9 1.6
Reinvested distributions 0.1 0.1 0.1
Redemptions (1.1) (1.0) (0.4)
Distributions (0.2) (0.2) (0.2)
Acquisitions - - -
(Depreciation)/appreciation (1.5) 1.9 1.1
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Ending assets 37.4 38.3 40.8
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TAX-FREE INCOME
Beginning assets 52.1 52.8 48.3
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Sales 1.4 1.5 1.7
Reinvested distributions 0.4 0.3 0.3
Redemptions (1.4) (1.5) (1.2)
Distributions (0.6) (0.7) (0.6)
Acquisitions - - -
Appreciation/(depreciation) 0.4 (0.3) 0.2
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Ending assets 52.3 52.1 48.7
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TAXABLE FIXED-INCOME
Beginning assets 36.4 34.7 32.5
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Sales 4.2 3.1 2.4
Reinvested distributions 0.1 0.1 0.1
Redemptions (2.8) (2.3) (2.7)
Distributions (0.3) (0.3) (0.3)
Acquisitions - - -
Appreciation 1.2 1.1 0.3
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Ending assets 38.8 36.4 32.3
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MONEY
Beginning assets 6.0 5.8 5.8
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Sales 2.3 2.6 2.4
Reinvested distributions - - -
Redemptions (2.9) (2.8) (2.7)
Distributions - - -
Acquisitions - - -
Appreciation 0.1 0.4 0.1
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Ending assets 5.5 6.0 5.6
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ENDING ASSETS UNDER MANAGEMENT $252.4 $257.7 $274.5
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CONFERENCE CALL INFORMATION
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On Thursday, April 24, 2003, Franklin Resources, Inc., [NYSE:BEN] will
release its second fiscal quarter 2003 financial results. Martin Flanagan and
Greg Johnson, co-presidents of Franklin Resources, Inc., will lead a live
conference call at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss
the quarterly results and answer analysts' questions.
Access to the teleconference will be available via franklintempleton.com 10
minutes before the start of the call or by dialing (877) 574-4065 in the U.S. or
(706) 679-3804 internationally.
A replay of the call will be archived on franklintempleton.com through May
1, 2003. The replay can also be accessed by calling (800) 642-1687 in the U.S.
or (706) 645-9291 internationally using access code #9203079, after 7:30 p.m.
Eastern Time on April 24, 2003, through 11:59 p.m. Eastern Time on May 1, 2003.
Any questions regarding the teleconference call should be directed to Franklin
Resources, Inc. Investor Relations at (650) 525-8900 or Corporate Communications
at (650) 312-3395.
Franklin Templeton Investments provides global and domestic investment
management services to its Franklin, Templeton, Mutual Series, Fiduciary Trust
and other sponsored investment products. The San Mateo, CA-based company has
over 50 years of investment experience. For more information, please visit
franklintempleton.com or call 1-800/DIAL BEN(R).
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 2/28/03 figures
unless noted otherwise. Indices are unmanaged and one cannot invest
directly in them. Unless otherwise noted, 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. Source: Lipper(R)Inc., 3/31/03. Of the eligible Franklin Templeton
non-money market equity funds tracked by LIPPER, 19, 25, 16 and 11 funds
ranked in the top quartile and 8, 7, 14 and 6 funds ranked in the second
quartile of their respective LIPPER peer groups, for the one-, three-,
five- and 10-year periods, respectively.
4. Source: Lipper(R)Inc., 3/31/03. While shorter-term performance for some
Templeton funds has been negative, 6 out of 12 eligible Templeton equity
funds ranked in the top quartile for the one-year period, 9 of 11 for the
three-year period, 2 of 11 for the five-year period and 4 of 9 for the
10-year period within their respective LIPPER peer groups. 8 out of 12
eligible Templeton equity funds ranked in the top quartile for the
one-year period, 10 of 11 for the three-year period, 7 of 11 for the
five-year period and 5 of 9 for the 10-year period within their respective
LIPPER peer groups.
5. Source: Lipper(R)Inc., 3/31/03. Templeton Growth Fund Class A ranked 44 in
a universe of 311 funds in LIPPER'S "Global Funds" group for the one-year
period, 14 of 221 for the three-year period, 22 of 166 for the five-year
period and 5 of 33 for the 10-year period. Templeton Foreign Fund Class A
ranked 143 in a universe of 823 funds in LIPPER'S "International Funds"
group for the one-year period, 20 of 616 for the three-year period, 55 of
457 for the five-year period and 13 of 100 for the 10-year period.
Templeton Growth Fund and Templeton Foreign Fund have experienced negative
short-term performance.
6. Source: [Morningstar](C)3/31/03. For each fund with at least a three-year
history, MORNINGSTAR calculates a MORNINGSTAR Rating based on a
MORNINGSTAR Risk-Adjusted Return measure that accounts for variation in a
fund's monthly performance (including the effects of sales charges, loads,
and redemption fees), placing more emphasis on downward variations and
rewarding consistent performance. The top 10% of funds in each category
receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3
stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star.
(Each share class is counted as a fraction of one fund within this
8
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scale and rated separately, which may cause slight variations in the
distribution percentages.) The Overall MORNINGSTAR Rating for a fund is
derived from a weighted-average of the performance figures associated with
its three-, five- and 10-year (if applicable) MORNINGSTAR Rating metrics.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. MORNINGSTAR Rating is
for the A share class only; other classes may have different performance
characteristics. The following fund was rated against 287; 246; 113
Municipal National Long funds for the respective 3-, 5- and 10-year
periods ended 3/31/03, as applicable. For the 3-, 5- and 10-year periods
ended 3/31/03, the MORNINGSTAR ratings were: Franklin Federal Tax-Free
Income Fund 3, 3, 4. The following fund was rated against 88; 84; 43
Municipal New York Long funds for the respective 3-, 5- and 10-year
periods ended 3/31/03, as applicable. For the 3-, 5- and 10-year periods
ended 3/31/03, the MORNINGSTAR ratings were: Franklin New York Tax-Free
Income Fund 3, 4, 4. The following fund was rated against 681; 510; 107
Foreign Stock funds for the respective 3-, 5- and 10-year periods ended
3/31/03, as applicable. For the 3-, 5- and 10-year periods ended 3/31/03,
the MORNINGSTAR ratings were: Templeton Foreign Fund 5, 4, 4. The
following fund was rated against 260; 203; 44 "World Stock Funds" for the
respective 3-, 5- and 10-year periods ended 3/31/03, as applicable. For
the 3-, 5- and 10-year periods ended 3/31/03, the MORNINGSTAR ratings
were: Templeton Growth Fund 5, 4, 4. The following funds were rated
against 167; 125; N/A Mid-Cap Value funds for the respective 3-, 5- and
10-year periods ended 3/31/03, as applicable. For the 3-, 5- and 10-year
periods ended 3/31/03, the MORNINGSTAR ratings were: Mutual Beacon 3, 4,
N/A; Mutual Qualified 3, 4, N/A; Mutual Shares 3, 4 ,N/A. The following
fund was rated against 260; 203; N/A World Stock funds for the respective
3-, 5- and 10-year periods ended 3/31/03, as applicable. For the 3-, 5-
and 10-year periods ended 3/31/03, the MORNINGSTAR ratings were: Mutual
Discovery 5, 5, N/A. The following fund was rated against 124; 63; N/A
Europe Stock funds for the respective 3-, 5- and 10-year periods ended
3/31/03, as applicable. For the 3-, 5- and 10-year periods ended 3/31/03,
the MORNINGSTAR ratings were: Mutual European 5, 5, N/A. The following
fund was rated against 83; 50; N/A Specialty-Financial funds for the
respective 3-, 5- and 10-year periods ended 3/31/03, as applicable. For
the 3-, 5- and 10-year periods ended 3/31/03, the MORNINGSTAR ratings
were: Mutual Financial Services 4, 5, N/A. The following fund was rated
against 742; 584; 149 Domestic Hybrid funds for the respective 3-, 5- and
10-year periods ended 3/31/03, as applicable. For the 3-, 5- and 10-year
periods ended 3/31/03, the MORNINGSTAR ratings were: Franklin Income Fund
5, 4, 3. The following fund was rated against 72; 64; 20
Specialty-Utilities funds for the respective 3-, 5- and 10-year periods
ended 3/31/03, as applicable. For the 3-, 5- and 10-year periods ended
3/31/03, the MORNINGSTAR ratings were: Franklin Utilities Fund 5, 5, 3.
The following funds were rated against 178; 122; 30 Small Value funds for
the respective 3-, 5- and 10-year periods ended 3/31/03, as applicable.
For the 3-, 5- and 10-year periods ended 3/31/03, the MORNINGSTAR ratings
were: Franklin Balance Sheet Investment Fund 4, 4, 4; Franklin MicroCap
Value Fund 5, 5, N/A. The following fund was rated against 514; 346; 95
Mid-Cap Growth funds for the respective 3-, 5- and 10-year periods ended
3/31/03, as applicable. For the 3-, 5- and 10-year periods ended 3/31/03,
the MORNINGSTAR ratings were: Franklin Flex Cap Growth Fund 3, 3, 5.
7. Source: Lipper(R)Inc., 3/31/03. Franklin U.S. Government Securities Fund
Class A ranked 20 in a universe of 66 funds in LIPPER'S "GNMA Funds" group
for the one-year period, 18 of 53 for the three-year period, 12 of 41 for
the five-year period and 5 of 24 for the 10-year period.
8. LIPPER calculates averages by taking all funds in a peer group and
averaging their total returns for the periods indicated. LIPPER tracks 129
peer groups of long-term U.S. retail mutual funds, and the groups vary in
size from 4 to 1057. 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.
9. Source: Lipper(R)Inc., 3/31/03. While our Mutual Series funds experienced
declines in 2002 and into 2003, 6 out of 6 eligible Mutual Series equity
funds ranked in the top LIPPER quartiles for the one-year period, 6 of 6
for the three-year period, 6 of 6 for the five-year period and 4 of 4 for
the 10-year period for their respective LIPPER peer groups.
10. Source: Lipper(R)Inc., 3/31/03. Franklin MicroCap Value Fund Class A
ranked 5 in a universe of 246 funds in LIPPER'S "Small-Cap Value Funds"
group for the one-year period, 8 of 175 for the three-year period, and 10
of 112 for the five-year period. Franklin MicroCap Value Fund has
experienced negative short-term performance.
11. Source: Lipper(R)Inc., 3/31/03. Awards are subject to change, are based
on past performance and are not intended to predict future results. The
award was based on a Consistent Return score determined by using a
risk-adjusted return and the strength of the fund's performance trend for
the three-year period ended December 31, 2002.
12. Source: Lipper(R)Inc., 3/31/03. Franklin Income Fund Class A ranked 48 in
a universe of 126 funds in Lipper's "Income Funds" group for the one-year
period, 4 of 89 for the three-year period, 15 of 72 for the five-year
period and 6 of 14 for the 10-year period. Franklin Income Fund has
experienced negative short-term performance.
13. Source: Lipper(R)Inc., 3/31/03. Franklin Utilities Fund Class A ranked 5
in a universe of 88 funds in Lipper's "Utility Funds" group for the
one-year period, 2 of 76 for the three-year period, 5 of 69 for the
five-year period and 9 of 22 for the 10-year period. Franklin Utilities
Fund has experienced negative short-term performance.
14. Source: Lipper(R)Inc., 3/31/03. Franklin Balance Sheet Investment Fund
Class A ranked 30 in a universe of 209 funds in LIPPER'S "Mid-Cap Value
Funds" group for the one-year period, 13 of 123 for the three-year period,
26 of 91 for the five-year period and 4 of 25 for the 10-year period.
Franklin Balance Sheet Investment Fund has experienced negative short-term
performance.
15. Source: Lipper(R)Inc., 3/31/03. Franklin Flex Cap Growth Fund Class A
ranked 124 in a universe of 403 funds in LIPPER'S "Multi-Cap Growth Funds"
group for the one-year period, 86 of 261 for the three-year period, 14 of
168 for the five-year period and 4 of 50 for the 10-year period. Franklin
Flex Cap Growth Fund has experienced negative short-term fund performance.
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FORWARD-LOOKING STATEMENTS
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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 described in more detail in the "Risk Factors" section in Franklin's
recent filings with the U.S. Securities and Exchange Commission, including,
without limitation, the "Risk Factors" section of the Management's Discussion
and Analysis of Financial Condition and Results of Operations in Franklin's
Annual Report on Form 10-K for the fiscal year ended September 30, 2002, and
Franklin's most recent Form 10-Q.
o Continuing volatility in the equity markets have caused the levels of our
assets under management to fluctuate significantly.
o Continued weak market conditions may lower our assets under management and
reduce our revenues and income.
o We face strong competition from numerous and sometimes larger companies.
o Changes in the distribution channels on which we depend could reduce our
revenues or hinder our growth.
o The September 11, 2001 World Trade Center tragedy may adversely affect our
ability to achieve the benefits we expect from the acquisition of
Fiduciary Trust Company International.
o The ongoing threat of terrorism and the recent reports of accounting
irregularities may adversely affect the general economy, financial and
capital markets and our business.
o We face risks associated with conducting operations in numerous foreign
countries.
o Our emerging market portfolios and related revenues are vulnerable to
market-specific political and economic risks.
o Our ability to meet cash needs depends upon certain factors, including our
asset value, credit worthiness and the market value of our stock.
o Technology and operating risk and limitations could constrain our
operations.
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