EXHIBIT 99.1
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One Franklin Parkway
San Mateo, CA 94403-1906
tel 650/312.2000
franklintempleton.com
[LOGO OMITTED]
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Contact: Franklin Resources, Inc.
Investor Relations: Greta Gahl (650) 312-4091
Corporate Communications: Holly Gibson Brady (650) 312-4701
franklintempleton.com
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FOR IMMEDIATE RELEASE
FRANKLIN RESOURCES, INC. ANNOUNCES FIRST QUARTER RESULTS
SAN MATEO, CA, JANUARY 27, 2005 - Franklin Resources, Inc. (Franklin Templeton
Investments) (NYSE: BEN) today reported net income of $240.0 million, or $0.92
per share diluted on revenues of $986.0 million for the quarter ended December
31, 2004. In the quarter ended September 30, 2004, net income was $187.7
million, or $0.73 per share diluted, on revenues of $881.7 million. For the
quarter ended December 31, 2003, net income was $172.3 million, or $0.67 per
share diluted on revenues of $809.7 million. Operating income increased 24% this
quarter over the prior quarter and increased 35% over the same quarter in the
prior year.
As of December 31, 2004, assets under management by the company's
subsidiaries were $402.2 billion, as compared to $361.9 billion last quarter and
$336.7 billion at this time last year. Simple monthly average assets under
management during the current quarter were $381.0 billion compared to $353.3
billion in the preceding quarter and $318.7 billion in the same quarter a year
ago. Equity assets now comprise 57% of total assets under management as compared
to 55% last quarter and 54% at December 31, 2003. Fixed-income assets now
comprise 25% of total assets under management as compared to 27% last quarter
and 29% at the same time last year. As of December 31, 2004, hybrid assets
account for 17% of total assets under management as compared to 16% last quarter
and 15% at December 31, 2003. Sales exceeded redemptions by $8.8 billion for the
current quarter compared to $6.6 billion for the prior quarter and $7.4 billion
for the comparable quarter a year ago.
-1-
FISCAL FIRST QUARTER 2005 HIGHLIGHTS
PERFORMANCE AND PRODUCTS /1,/2
(See important footnotes in "Supplemental Information" section at the end of the
release.)
* Over 80% of Franklin Templeton's long-term mutual fund assets were in funds
ranked in the top two quartiles of their respective LIPPER peer groups for
the one-year period ended December 31, 2004, and over 90% of long-term
mutual fund assets were in funds ranked in the top two quartiles for the
three-, five- and 10-year periods. /3,/4
* More than 95% of Franklin Templeton's fixed income 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 December 31,
2004. /3,/5
* Over 70% of Franklin Templeton's total equity mutual fund assets were in
funds ranked in the top two quartiles of their respective LIPPER peer
groups for the one-year period ended December 31, 2004, and over 85% of
equity mutual fund assets were in funds ranked in the top two quartiles for
the three-, five- and 10-year periods. /3,/6
* Franklin Income Fund, the company's largest fund with over $30 billion in
assets as of December 31, 2004, ranked in the top quartile of the LIPPER
Income Funds peer group for total return among 198, 115, 79 and 20 funds
for the one-, three-, five- and 10-year periods. The fund also received
LIPPER Leader awards for Total Return and Preservation and was rated 5
stars overall by MORNINGSTAR among 228 Conservative Allocation funds as of
December 31, 2004. /7,/12,/13
* Franklin Federal Tax-Free Income Fund ranked in the top two quartiles of
the LIPPER General Municipal Debt Funds peer group for total return among
297, 269, 234 and 139 funds for the one-, three-, five- and 10-year periods
ended December 31, 2004. The fund was rated 4 stars overall by MORNINGSTAR
among 258 Muni National Long funds as of December 31, 2004. /8,/13
* Templeton Growth Fund ranked in the top quartile of the LIPPER Global
Large-Cap Value Funds peer group for total return among 24, 23, 18 and 3
funds for the one-, three-, five- and 10-year periods ended December 31,
2004. Templeton Growth also received Lipper Leader awards for Total Return,
Preservation and Consistent Return and was rated 4 stars overall by
MORNINGSTAR among 274 World Stock funds as of December 31, 2004. /9,/12,/13
* Templeton World Fund ranked in the top two quartiles of the LIPPER Global
Multi-Cap Core Funds peer group for total return among 61, 49, 26 and 10
funds for the one-, three-, five- and 10-year periods ended December 31,
2004. Templeton World received a LIPPER Leader award for Consistent Return
and was rated 4 stars overall by MORNINGSTAR among 274 World Stock funds as
of December 31, 2004. /10,/12,/13
* Franklin Flex-Cap Growth Fund ranked in the top two quartiles of the LIPPER
Multi-Cap Growth Funds peer group for total return among 418, 343, 223 and
74 funds for the one-, three-, five- and 10-year periods ended December 31,
2004. The fund received a LIPPER Leader Award for Total Return and outpaced
the S&P 500 Index benchmark for the one-, three- and 10-year periods ended
December 31, 2004. /11,/12
PERFORMANCE QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE WITH MARKET
CONDITIONS SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN PERFORMANCE QUOTED. PLEASE CALL FRANKLIN
TEMPLETON INVESTMENTS AT 1-800/DIAL BEN(R) (1-800/342-5236) OR VISIT
FRANKLINTEMPLETON.COM FOR MOST RECENT MONTH-END PERFORMANCE.
GLOBAL BUSINESS DEVELOPMENTS
* In a quarterly survey of shareholder satisfaction conducted by National
Quality Review (NQR), a third party customer service evaluator, 95% of
customers responding to the survey said they would recommend Franklin
Templeton Investments to others, and 91% rated their overall satisfaction a
four or five (five representing "Completely Satisfied").
* Franklin Templeton was rated No. 1 in the German market for product quality
by Feri Trust and had the highest percentage of funds receiving top ratings
in the research agency's September survey.
* Franklintempleton.com received DALBAR's Certified Website Seal recognizing
excellence in customer satisfaction and service quality for the financial
advisor and shareholder sites.
* Franklin Templeton India Mutual Fund was declared "Fund of the Year for
2004" by Indian publication Business India, in association with
personalfn.com. The award was based on asset growth, performance,
introduction of innovative products and education of investors.
* Templeton Emerging Markets Fund was named Emerging Markets Fund of the
Year, and the company's
-2-
"Feet On the Street" campaign for the Outlook and Opportunities Forum won a
marketing award at the 2004 Canadian Investment Awards.
* Celebrated the 50th anniversary of Templeton Growth Fund in global offices,
including 18 road shows in the U.S. and an event in Germany that was
attended by 1,600 independent financial advisors, partners, clients and
employees.
* Launched Franklin Real Return Fund and Franklin Low Duration Total Return
Fund, two new income funds for U.S. retail investors.
* Franklin Templeton Investment Management Limited, a subsidiary of Franklin
Resources, Inc., became one of the first foreign asset management firms to
be licensed by the Dubai Financial Services Authority to operate in the new
Dubai International Financial Centre.
CERTAIN REGULATORY MATTERS
On January 21, 2005, the staff of the National Association of Securities
Dealers, Inc. verbally advised the company that it has determined to withdraw
its recommendation of a disciplinary proceeding against Franklin Templeton
Distributors, Inc. relating to the use of directed brokerage commissions and
will take no further action on this matter. Separately, Franklin Templeton
Investments Corp. ("FTIC"), our Canadian subsidiary that manages our Franklin
Templeton Canadian mutual funds, continues to provide information to the staff
of the Ontario Securities Commission ("OSC") in response to its December 10,
2004 letter indicating that enforcement proceedings are contemplated against
FTIC relating to market timing strategies allegedly used by some accounts in our
Canadian funds. The company has entered into discussions with the OSC staff in
efforts to settle this matter to the extent the company can reasonably do so. We
cannot predict the likelihood of whether these discussions will result in a
settlement or the terms or amount of any such settlement. Should a settlement be
reached, the amount could be material to the company's financial results. These
matters were previously described in the company's Form 10-K for the fiscal year
ended September 30, 2004.
-3-
FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
(Dollar amounts in thousands except assets under management and THREE MONTHS ENDED
per share data) DECEMBER 31
------------------------------------
%
2004 2003 CHANGE
---- ---- ------
OPERATING REVENUES
Investment management fees $566,483 $454,508 25%
Underwriting and distribution fees 340,378 276,249 23%
Shareholder servicing fees 63,167 61,338 3%
Consolidated sponsored investment products income, net 615 26 2,265%
Other, net 15,379 17,545 (12%)
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TOTAL OPERATING REVENUES 986,022 809,666 22%
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OPERATING EXPENSES
Underwriting and distribution 311,422 248,728 25%
Compensation and benefits 211,507 189,204 12%
Information systems, technology and occupancy 66,805 69,648 (4%)
Advertising and promotion 26,108 21,232 23%
Amortization of deferred sales commissions 31,378 22,448 40%
Amortization of intangible assets 4,411 4,402 --
Other 34,307 31,144 10%
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TOTAL OPERATING EXPENSES 685,938 586,806 17%
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OPERATING INCOME 300,084 222,860 35%
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OTHER INCOME (EXPENSES)
Consolidated sponsored investment products gains, net 16,163 4,000 304%
Investment and other income 27,389 16,191 69%
Interest expense (7,987) (7,111) 12%
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OTHER INCOME, NET 35,565 13,080 172%
------------------------------------
Income before taxes on income and cumulative effect of an accounting
change 335,649 235,940 42%
Taxes on income 95,660 68,423 40%
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INCOME BEFORE CUMULATIVE EFFECT OF AN ACCOUNTING CHANGE, NET OF TAX 239,989 167,517 43%
Cumulative effect of an accounting change, net of tax -- 4,779 (100%)
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NET INCOME $239,989 $172,296 39%
====================================
BASIC EARNINGS PER SHARE
Income before cumulative effect of an accounting change $0.96 $0.68 41%
Cumulative effect of an accounting change -- 0.02 (100%)
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Net income $0.96 $0.70 37%
====================================
DILUTED EARNINGS PER SHARE /1
Income before cumulative effect of an accounting change $0.92 $0.65 42%
Cumulative effect of an accounting change -- 0.02 (100%)
------------------------------------
Net income $0.92 $0.67 37%
====================================
DIVIDENDS PER SHARE $0.100 $0.085 18%
AVERAGE SHARES OUTSTANDING (IN THOUSANDS)
Basic 250,418 247,758 1%
Diluted /1 262,629 258,443 2%
/1 Diluted earnings per share and diluted average shares outstanding for all periods shown reflect
the adoption of the Emerging Issues Task Force Issue No. 04-8, "The Effect of Contingently
Convertible Debt on Diluted Earnings Per Share".
-4-
FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
(Dollar amounts in thousands except assets under management and THREE MONTHS ENDED
per share data) DECEMBER 31
------------------------------------
%
2004 2003 CHANGE
---- ---- ------
OPERATING MARGIN /2 30% 28% --
ASSETS UNDER MANAGEMENT (in millions)
Beginning of period $361,860 $301,857 20%
Sales 28,387 23,829 19%
Reinvested distributions 4,288 1,920 123%
Redemptions (19,637) (16,448) 19%
Distributions (5,251) (2,659) 97%
Acquisitions -- 878 (100%)
Appreciation 32,559 27,344 19%
END OF PERIOD $402,206 $336,721 19%
SIMPLE MONTHLY AVERAGE FOR PERIOD $381,039 $318,739 20%
/2 Operating margin: Operating income divided by total operating revenues.
-5-
FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
(Dollar amounts in thousands except
per share data) THREE MONTHS ENDED
31-DEC-04 30-SEP-04 % CHANGE 30-JUN-04 31-MAR-04 31-DEC-03
------------------- -------- --------- --------- ---------
OPERATING REVENUES
Investment management fees $566,483 $511,116 11% $505,409 $499,595 $454,508
Underwriting and distribution fees 340,378 293,464 16% 282,852 298,357 276,249
Shareholder servicing fees 63,167 60,419 5% 60,582 61,724 61,338
Consolidated sponsored investment products
income, net 615 874 (30%) 1,136 1,483 26
Other, net 15,379 15,859 (3%) 17,836 17,836 17,545
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TOTAL OPERATING REVENUES 986,022 881,732 12% 867,815 878,995 809,666
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OPERATING EXPENSES
Underwriting and distribution 311,422 266,076 17% 252,250 268,057 248,728
Compensation and benefits 211,507 189,563 12% 193,532 197,139 189,204
Information systems, technology and 66,805 68,015 (2%) 67,464 68,413 69,648
occupancy
Advertising and promotion 26,108 27,711 (6%) 31,139 31,935 21,232
Amortization of deferred sales commissions 31,378 26,760 17% 24,688 24,997 22,448
Amortization of intangible assets 4,411 4,403 -- 4,398 4,401 4,402
Provision for governmental investigations,
proceedings and actions -- 23,500 (100%) 21,500 60,000 --
September 11, 2001 recovery, net -- -- -- -- (30,277) --
Other 34,307 33,935 1% 31,858 29,120 31,144
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TOTAL OPERATING EXPENSES 685,938 639,963 7% 626,829 653,785 586,806
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OPERATING INCOME 300,084 241,769 24% 240,986 225,210 222,860
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OTHER INCOME (EXPENSES)
Consolidated sponsored investment products
gains (losses), net 16,163 (2,963) N/A (3,463) 5,819 4,000
Investment and other income 27,389 30,869 (11%) 14,300 28,946 16,191
Interest expense (7,987) (7,916) 1% (7,832) (7,799) (7,111)
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OTHER INCOME, NET 35,565 19,990 78% 3,005 26,966 13,080
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Income before taxes on income and
cumulative effect of an accounting change 335,649 261,759 28% 243,991 252,176 235,940
Taxes on income 95,660 74,078 29% 70,095 79,385 68,423
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INCOME BEFORE CUMULATIVE EFFECT OF AN
ACCOUNTING CHANGE, NET OF TAX 239,989 187,681 28% 173,896 172,791 167,517
Cumulative effect of an accounting change,
net of tax -- -- -- -- -- 4,779
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NET INCOME $239,989 $187,681 28% $173,896 $172,791 $172,296
=================================================================
BASIC EARNINGS PER SHARE
Income before cumulative effect of an
accounting change $0.96 $0.75 28% $0.70 $0.69 $0.68
Cumulative effect of an accounting change -- -- -- -- -- 0.02
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Net income $0.96 $0.75 28% $0.70 $0.69 $0.70
=================================================================
DILUTED EARNINGS PER SHARE /3
Income before cumulative effect of an
accounting change $0.92 $0.73 26% $0.67 $0.67 $0.65
Cumulative effect of an accounting change -- -- -- -- -- 0.02
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Net income $0.92 $0.73 26% $0.67 $0.67 $0.67
=================================================================
-6-
FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
THREE MONTHS ENDED
31-DEC-04 30-SEP-04 % CHANGE 30-JUN-04 31-MAR-04 31-DEC-03
--------- --------- -------- --------- --------- ---------
DIVIDENDS PER SHARE $0.100 $0.085 18% $0.085 $0.085 $0.085
AVERAGE SHARES OUTSTANDING (in thousands)
Basic 250,418 249,564 -- 249,802 249,549 247,758
Diluted /3 262,629 260,638 1% 261,325 261,032 258,443
OPERATING MARGIN /4 30% 27% -- 28% 26% 28%
EMPLOYEES 6,779 6,696 1% 6,557 6,484 6,462
BILLABLE SHAREHOLDER ACCOUNTS (in millions) 15.9 15.3 4% 15.9 16.0 15.1
/3 Diluted earnings per share and diluted average shares outstanding for all periods shown reflect the
adoption of the Emerging Issues Task Force Issue No. 04-8, "The Effect of Contingently Convertible
Debt on Diluted Earnings Per Share".
/4 Operating margin: Operating income divided by total operating revenues.
-7-
FRANKLIN RESOURCES, INC.
PRELIMINARY SUMMARY BALANCE SHEET
(Dollar amounts and number of shares in thousands)
PRELIMINARY
DECEMBER 31, SEPTEMBER 30,
2004 2004
---------- ----
ASSETS
Current assets $4,245,654 $4,044,212
Banking/ finance assets 827,987 825,844
Non-current assets 3,377,607 3,358,079
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TOTAL ASSETS $8,451,248 $8,228,135
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $825,267 $921,115
Banking/ finance liabilities 702,253 658,717
Non-current liabilities 1,491,826 1,465,430
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Total liabilities 3,019,346 3,045,262
Minority interest 92,570 76,089
Total stockholders' equity 5,339,332 5,106,784
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $8,451,248 $8,228,135
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ENDING SHARES OF COMMON STOCK OUTSTANDING 250,243 249,680
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-8-
ASSETS UNDER MANAGEMENT BY INVESTMENT OBJECTIVE
(in billions) 31-DEC-04 30-SEP-04 % CHANGE 30-JUN-04 31-MAR-04 31-DEC-03
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EQUITY
Global/international $155.7 $132.9 17% $128.6 $126.7 $118.5
Domestic (U.S.) 73.3 66.4 10% 66.3 66.0 63.6
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Total equity 229.0 199.3 15% 194.9 192.7 182.1
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HYBRID 66.4 59.0 13% 55.9 54.1 51.1
FIXED-INCOME
Tax-free 51.8 51.3 1% 49.9 53.0 52.4
Taxable:
Domestic 32.5 31.3 4% 30.1 32.4 32.2
(U.S.)
Global/international 16.3 14.2 15% 13.6 13.6 13.1
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Total 100.6 96.8 4% 93.6 99.0 97.7
fixed-income
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MONEY MARKET 6.2 6.8 (9%) 6.4 5.8 5.8
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TOTAL ENDING ASSETS $402.2 $361.9 11% $350.8 $351.6 $336.7
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SIMPLE MONTHLY AVERAGE ASSETS $381.0 $353.3 8% $347.8 $345.7 $318.7
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ASSETS UNDER MANAGEMENT & FLOWS
(in billions) THREE MONTHS ENDED
31-DEC-04 30-SEP-04 % CHANGE 31-DEC-03 % CHANGE
--------- --------- -------- --------- --------
BEGINNING ASSETS UNDER MANAGEMENT $361.9 $350.8 3% $301.9 20%
U.S. RETAIL ASSETS
Beginning assets $224.3 $217.6 3% $188.0 19%
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Sales 13.9 11.0 26% 13.4 4%
Reinvested distributions 3.9 0.7 457% 1.7 129%
Redemptions (8.2) (7.5) 9% (8.4) (2%)
Distributions (4.9) (1.2) 308% (2.3) 113%
Acquisitions -- -- -- -- --
Appreciation 17.5 3.7 373% 15.6 12%
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Ending assets $246.5 $224.3 10% $208.0 19%
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OTHER ASSETS, INCLUDING INTERNATIONAL AND INSTITUTIONAL
Beginning assets $137.6 $133.2 3% $113.9 21%
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Sales 14.5 12.4 17% 10.4 39%
Reinvested distributions 0.4 0.1 300% 0.2 100%
Redemptions (11.5) (9.3) 24% (8.0) 44%
Distributions (0.4) (0.1) 300% (0.4) --
Acquisitions -- -- -- 0.9 (100%)
Appreciation 15.1 1.3 1,062% 11.7 29%
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Ending assets $155.7 $137.6 13% $128.7 21%
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ENDING ASSETS UNDER MANAGEMENT $402.2 $361.9 11% $336.7 19%
TOTAL ASSETS UNDER MANAGEMENT
BEGINNING ASSETS $361.9 $350.8 3% $301.9 20%
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Sales 28.4 23.4 21% 23.8 19%
Reinvested distributions 4.3 0.8 438% 1.9 126%
Redemptions (19.6) (16.8) 17% (16.4) 20%
Distributions (5.4) (1.3) 315% (2.7) 100%
Acquisitions -- -- -- 0.9 (100%)
Appreciation 32.6 5.0 552% 27.3 19%
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ENDING ASSETS $402.2 $361.9 11% $336.7 19%
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Note: Institutional assets totaling approximately $31.7 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 December 31, 2004, were approximately $132.2 billion, of which high
net-worth assets comprised $12.6 billion.
-9-
ASSETS UNDER MANAGEMENT & FLOWS BY INVESTMENT OBJECTIVE (in billions)
THREE MONTHS ENDED 31-DEC-04 30-SEP-04 31-DEC-03
- ------------------ --------- --------- ---------
GLOBAL/INTERNATIONAL EQUITY
Beginning assets $132.9 $128.6 $99.8
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Sales 10.5 7.6 8.8
Reinvested distributions 2.3 -- 0.9
Redemptions (6.1) (4.6) (5.6)
Distributions (2.7) (0.1) (1.1)
Acquisitions -- -- 0.3
Appreciation 18.8 1.4 15.4
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Ending assets 155.7 132.9 118.5
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DOMESTIC (U.S.) EQUITY
Beginning assets 66.4 66.3 55.4
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Sales 4.0 3.4 4.1
Reinvested distributions 1.0 -- 0.2
Redemptions (3.7) (2.7) (2.8)
Distributions (1.1) -- (0.3)
Acquisitions -- -- --
Appreciation/(depreciation) 6.7 (0.6) 7.0
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Ending assets 73.3 66.4 63.6
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HYBRID
Beginning assets 59.0 55.9 45.8
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Sales 4.5 3.4 3.3
Reinvested distributions 0.4 0.3 0.3
Redemptions (1.4) (1.1) (1.0)
Distributions (0.6) (0.4) (0.4)
Acquisitions -- -- --
Appreciation 4.5 0.9 3.1
----------------------------------------------------------------------------------------
Ending assets 66.4 59.0 51.1
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TAX-FREE INCOME
Beginning assets 51.3 49.9 52.2
----------------------------------------------------------------------------------------
Sales 1.2 1.2 1.2
Reinvested distributions 0.3 0.3 0.3
Redemptions (1.2) (1.4) (1.5)
Distributions (0.6) (0.5) (0.6)
Acquisitions -- -- --
Appreciation 0.8 1.8 0.8
----------------------------------------------------------------------------------------
Ending assets 51.8 51.3 52.4
----------------------------------------------------------------------------------------
TAXABLE FIXED-INCOME
Beginning assets 45.5 43.7 42.9
----------------------------------------------------------------------------------------
Sales 5.5 4.2 4.1
Reinvested distributions 0.3 0.2 0.2
Redemptions (3.8) (3.6) (3.2)
Distributions (0.4) (0.3) (0.3)
Acquisitions -- -- 0.6
Appreciation 1.7 1.3 1.0
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Ending assets 48.8 45.5 45.3
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MONEY MARKET
Beginning assets 6.8 6.4 5.8
----------------------------------------------------------------------------------------
Sales 2.7 3.6 2.3
Reinvested distributions -- -- --
Redemptions (3.4) (3.4) (2.3)
Distributions -- -- --
Acquisitions -- -- --
Appreciation 0.1 0.2 --
----------------------------------------------------------------------------------------
Ending assets 6.2 6.8 5.8
----------------------------------------------------------------------------------------
ENDING ASSETS UNDER MANAGEMENT $402.2 $361.9 $336.7
-10-
CONFERENCE CALL INFORMATION
- ---------------------------
On Thursday, January 27, 2005, Martin Flanagan and Greg Johnson, co-CEOs 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) 480-6346 in the U.S. or
(706) 645-0197 internationally.
A replay of the call will be archived on franklintempleton.com through
February 7, 2005. The replay can also be accessed by calling (800) 642-1687 in
the U.S. or (706) 645-9291 internationally using access code #3285489, after
5:30 p.m. Eastern Time on January 27, 2005, through 11:59 p.m. Eastern Time on
February 7, 2005.
Franklin Resources, Inc. [NYSE:BEN], is a global investment organization
operating as Franklin Templeton Investments. Franklin Templeton Investments
provides global and domestic investment management solutions managed by its
Franklin, Templeton, Mutual Series and Fiduciary Trust investment teams. The San
Mateo, CA-based company has more than 50 years of investment experience and over
$402 billion in assets under management as of December 31, 2004. For more
information, please call 1-800/DIAL BEN(R) or visit franklintempleton.com.
SUPPLEMENTAL INFORMATION
INVESTORS SHOULD CAREFULLY CONSIDER A FUND'S INVESTMENT GOALS, RISKS, CHARGES
AND EXPENSES BEFORE INVESTING. TO OBTAIN A PROSPECTUS, WHICH CONTAINS THIS AND
OTHER INFORMATION, FOR ANY U.S. FRANKLIN TEMPLETON FUND, INVESTORS SHOULD TALK
TO THEIR FINANCIAL ADVISORS OR CALL FRANKLIN TEMPLETON DISTRIBUTORS, INC. AT
1-800/DIAL BEN(R) (1-800/342-5236). PLEASE READ THE PROSPECTUS CAREFULLY BEFORE
INVESTING.
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. 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. MORNINGSTAR ratings and LIPPER rankings for Franklin Templeton U.S.-based
funds are based on Class A shares, with the exception of LIPPER rankings
for Mutual Series funds, which are based on Class Z shares. Class Z shares
are offered to qualified investors only and have no sales charges nor Rule
12b-1 fees. Franklin Templeton funds are compared against a universe of all
share classes. All Franklin Templeton Class A (Class Z) asset data is based
on 11/30/04 figures unless noted otherwise. Indices are unmanaged and one
cannot invest directly in them. Fund performance comparisons with indices
were calculated at the fund's NAV. Unless otherwise noted, fund returns
quoted reflect Class A shares. Performance returns, ratings and rankings
for other classes may vary.
3. LIPPER calculates averages by taking all the funds and share classes in a
peer group and averaging their total returns for the periods indicated.
LIPPER tracks 143 peer groups of long-term U.S. retail mutual funds, and
the groups vary in size from 4 to 966 funds. 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., 12/31/04. Of the eligible Franklin Templeton
long-term mutual funds tracked by LIPPER, 51, 47, 52 and 29 funds ranked in
the top quartile and 21, 24, 21 and 24 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., 12/31/04. Of the eligible Franklin Templeton
non-money market fixed income funds tracked by LIPPER, 38, 31, 30 and 19
funds ranked in the top quartile and 2, 10, 10 and 17 funds ranked in the
second quartile, for the one-, three-, five- and 10-year periods,
respectively, for their respective LIPPER peer groups.
6. Source: LIPPER(R) Inc., 12/31/04. Of the eligible Franklin Templeton equity
funds tracked by LIPPER, 13, 16, 22 and 10 funds ranked in the top quartile
and 19, 14, 11 and 7 funds ranked in the second quartile, for the one-,
three-, five- and 10-year periods, respectively, for their respective
LIPPER peer groups.
7. Source: LIPPER(R) Inc., 12/31/04. Franklin Income Fund Class A ranked 27 in
a universe of 198 funds in LIPPER's "Income Funds" group for the one-year
period, 2 of 115 for the three-year period, 2 of 79 for the five-year
period and 5 of 20 for the 10-year period.
8. Source: LIPPER(R) Inc., 12/31/04. Franklin Federal Tax-Free Income Fund
Class A ranked 15 in a universe of 297 funds in LIPPER'S "General Municipal
Debt Funds" group for the one-year period, 64 of 269 for the three-year
period, 76 of 234 for the five-year period and 43 of 139 for the 10-year
period.
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9. Source: LIPPER(R) Inc., 12/31/04. Templeton Growth Fund Class A ranked 3 in
a universe of 24 funds in LIPPER'S "Global Large-Cap Value Funds" group for
the one-year period, 2 of 23 for the three-year period, 2 of 18 for the
five-year period and 1 of 3 for the 10-year period.
10. Source: LIPPER(R) Inc., 12/31/04. Templeton World Fund Class A ranked 20 in
a universe of 61 funds in LIPPER'S "Global Multi-Cap Core Funds" group for
the one-year period, 14 of 49 for the three-year period, 5 of 26 for the
five-year period and 3 of 10 for the 10-year period.
11. Source: LIPPER Inc., 12/31/04. Franklin Flex-Cap Growth Fund Class A ranked
117 in a universe of 418 funds in LIPPER'S "Multi-Cap Growth Funds" group
for the one-year period, 40 of 343 for the three-year period, 55 of 223 for
the five-year period and 7 of 74 for the 10-year period.
12. Source: LIPPER(R) Inc., 12/31/04. A LIPPER Leaders distinction does not
imply that a fund named as a LIPPER Leader had the best performance in its
category. LIPPER Leaders Awards are based on Class A shares. LIPPER ratings
for Consistent Return reflect funds' historical risk-adjusted returns,
adjusted for volatility, relative to peers. LIPPER ratings for Total Return
reflect funds' historical total return performance relative to peers.
LIPPER ratings for Preservation reflect funds' historical loss avoidance
relative to other funds within the same asset class. Preservation ratings
are relative, rather than absolute, measures, and funds named LIPPER
Leaders for Preservation may still experience losses periodically; those
losses may be larger for equity and mixed equity funds than for fixed
income funds. The LIPPER ratings are subject to change every month and are
based on an equal-weighted average of percentile ranks for the Consistent
Return, Total Return and Preservation metrics over three-, five- and
10-year periods (if applicable). 20% of funds in each peer group are named
LIPPER Leaders, the next 20% receive a score of 2, the middle 20% are
scored 3, the next 20% are scored 4, and the lowest 20% are scored 5.
Bracketed information represents the number of funds in each category. N/A
indicates that there were not enough funds in a category to constitute a
class. Templeton World Fund, in LIPPER'S Global Multi-Cap Core
classification, received the following ratings for the three-, five- and
10-year periods respectively: Consistent Return: 2 [44], 2 [23], 2 [7].
Franklin Income Fund, in LIPPER'S Income classification, received the
following ratings for the three-, five- and 10-year periods respectively:
Preservation (in Mixed Equity asset class): LIPPER Leader [945], LIPPER
Leader [746], LIPPER Leader [301]; Total Return: LIPPER Leader [115],
LIPPER Leader [79], 2 [20]. Templeton Growth Fund, in LIPPER'S Global
Large-Cap Value classification, received the following ratings for the
three-, five- and 10-year periods respectively: Consistent Return: LIPPER
Leader [23], LIPPER Leader [18], N/A [N/A]; Preservation (in Mixed Equity
asset class): LIPPER Leader [7532], LIPPER Leader [5340], LIPPER Leader
[1772]; Total Return: LIPPER Leader [23], LIPPER Leader [18], N/A [N/A].
Franklin Federal Tax-Free Income Fund, in LIPPER'S General Municipal Debt
classification, received the following ratings for the three-, five- and
10-year periods respectively: Tax Efficiency: LIPPER Leader [269], LIPPER
Leader [234], LIPPER Leader [139]. Franklin Flex-Cap Growth Fund, in
LIPPER'S Multi-Cap Growth classification, received the following ratings
for the three-, five- and 10-year periods respectively: Total Return:
LIPPER Leader [343], 2 [223], LIPPER Leader [74]. LIPPER ratings are not
intended to predict future results, and LIPPER does not guarantee the
accuracy of this information. More information is available at
www.lipperleaders.com. LIPPER Leader Copyright 2003, Reuters, All Rights
Reserved.
13. Source: [MORNINGSTAR](C) 12/31/04. 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 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 228; 164; 53
Conservative Allocation funds for the respective three-, five- and 10-year
periods ended 12/31/04, as applicable. For the three-, five- and 10-year
periods ended 12/31/04, the MORNINGSTAR ratings were: Franklin Income Fund
5, 5, 5. The following funds were rated against 274; 208; 73 World Stock
funds for the respective three-, five- and 10-year periods ended 12/31/04,
as applicable. For the three-, five- and 10-year periods ended 12/31/04,
the MORNINGSTAR ratings were: Templeton Growth Fund 4, 4, 4 and Templeton
World Fund 3, 4, 4. The following fund was rated against 258; 232; 149 Muni
National Long funds for the respective three-, five- and 10-year periods
ended 12/31/04, as applicable. For the three-, five- and 10-year periods
ended 12/31/04, the MORNINGSTAR ratings were: Franklin Federal Tax-Free
Income Fund 3, 3, 4.
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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, some of which are listed below, 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 and other risks,
uncertainties and other important factors are described in more detail in
Franklin Resources, Inc.'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, 2004.
* Governmental investigations, settlements of such investigations,
ongoing and proposed governmental actions, and regulatory examinations
of the company and its business activities as described in more detail
in the company's press releases and regulatory filings, as well as
civil litigation arising out of or related to such matters, could
adversely impact our assets under management, increase costs and
negatively impact the profitability of the company and future
financial results.
* Regulatory or legislative actions and reforms, particularly those
specifically focused on the mutual fund industry, could adversely
impact our assets under management, increase costs and negatively
impact the profitability of the company and future financial results.
* Volatility in the equity markets may cause the levels of our assets
under management to fluctuate significantly.
* Weak market conditions may lower our assets under management and
reduce our revenues and income.
* We face strong competition from numerous and sometimes larger
companies.
* Changes in the distribution channels on which we depend could reduce
our revenues or hinder our growth.
* We face risks associated with conducting operations in numerous
foreign countries.
* Certain of the portfolios we manage, including our emerging market
portfolios and related revenues, are vulnerable to market-specific
political or economic risks.
* Our ability to meet cash needs depends upon certain factors, including
our asset value, credit worthiness and the market value of our stock.
* Technology and operating risk and limitations could constrain our
operations.
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