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 THIRD QUARTER RESULTS
SAN MATEO, CA, JULY 28, 2005 - Franklin Resources, Inc. (Franklin Templeton
Investments) (NYSE: BEN) today reported net income of $261.9 million, or $1.00
per share diluted on revenues of $1,109.7 million for the quarter ended June 30,
2005. In the quarter ended March 31, 2005, net income was $221.3 million, or
$0.85 per share diluted, on revenues of $1,051.2 million. For the quarter ended
June 30, 2004, net income was $173.9 million, or $0.67 per share diluted on
revenues of $867.8 million. Operating income increased 27% this quarter over the
prior quarter and increased 44% over the same quarter in the prior year.
As of June 30, 2005, assets under management by the company's subsidiaries were
$425.4 billion, as compared to $412.1 billion as of the end of last quarter and
$350.8 billion at the end of the third quarter last year. Simple monthly average
assets under management during the current quarter were $416.0 billion compared
to $407.4 billion in the preceding quarter and $347.8 billion in the same
quarter a year ago. Equity assets comprised 57% of total assets under management
consistent with the last quarter and compared to 56% at June 30, 2004.
Fixed-income assets comprised 24% of total assets under management consistent
with the last quarter and compared to 27% at the same time last year. As of June
30, 2005, hybrid assets accounted for 17% of total assets under management
consistent with the last quarter and compared to 16% at June 30, 2004. Sales
exceeded redemptions by $7.7 billion for the current quarter compared to $11.5
billion for the prior quarter and $2.0 billion for the comparable quarter a year
ago.
-1-
FISCAL THIRD QUARTER 2005 HIGHLIGHTS
PERFORMANCE AND PRODUCTS /1,/2
(See important footnotes in "Supplemental Information" section at the end of the
release.)
* Over 85% 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-, three-, five- and 10-year periods ended June 30, 2005. /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 June 30, 2005.
/3,/5
* Over 80% of Franklin Templeton's 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 June 30, 2005. /3,/6
* 100% of Mutual Series 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 June 30, 2005. /3,/7
* Franklin Income Fund, the company's largest fund with over $35 billion in
assets as of June 30, 2005, ranked in the top quintile of the LIPPER Income
Funds peer group for total return among 237, 150, 93 and 25 funds for the
one-, three-, five- and 10-year periods. /3,/8 The fund also received
LIPPER Leader awards for Total Return, Consistent Return and Preservation,
and was rated 5 stars overall by MORNINGSTAR among 243 Conservative
Allocation funds as of June 30, 2005. /16,/17
* Templeton Growth Fund ranked in the top third of the LIPPER Global
Large-Cap Value Funds peer group for total return among 21, 21, 16 and 4
funds for the one-, three-, five- and 10-year periods ended June 30, 2005.
/3,/9 The fund received a LIPPER Leader award for Preservation, and was
rated 4 stars overall by Morningstar among 293 World Stock funds as of June
30, 2005. /16,/17
* Mutual Shares Fund ranked in the top third of the LIPPER Multi-Cap Value
Funds peer group for total return among 467, 361, 237 and 89 funds for the
one-, three-, five- and 10-year periods ended June 30, 2005. /3,/10 The
fund received a LIPPER Leader award for Preservation, and was rated 4 stars
overall by MORNINGSTAR among 828 Large Value funds as of June 30, 2005.
/16,/17
* Mutual Discovery Fund ranked in the top two quartiles of the LIPPER Global
Multi-Cap Value Funds peer group for total return among 49, 44, 27 and 12
funds for the one-, three-, five- and 10-year periods ended June 30, 2005.
/3,/11 The fund received LIPPER Leader awards for Consistent Return and
Preservation, and was rated 5 stars overall by MORNINGSTAR among 293 World
Stock funds as of June 30, 2005. /16,/17
* Templeton Global Bond Fund ranked in the top quintile of the LIPPER Global
Income Funds peer group for total return among 93, 84, 64 and 35 funds for
the one-, three-, five- and 10-year periods ended June 30, 2005. /3,/12 The
fund received LIPPER Leader awards for Total Return and Consistent Return,
and was rated 4 stars overall by MORNINGSTAR among 123 World Bond funds as
of June 30, 2005. /16,/17
* Templeton World Fund ranked in the top two quartiles of the LIPPER Global
Multi-Cap Core Funds peer group for total return among 61, 50, 37 and 11
funds for the one-, three-, five- and 10-year periods ended June 30, 2005.
/3,/13 The fund received LIPPER Leader awards for Total Return and
Consistent Return, and was rated 4 stars overall by MORNINGSTAR among 293
World Stock funds as of June 30, 2005. /16,/17
* Franklin Federal Tax-Free Income Fund ranked in the top third of the LIPPER
General Municipal Debt Funds peer group for total return among 281, 257,
225 and 146 funds for the one-, three-, five- and 10-year periods ended
June 30, 2005. /3,/14 The fund received LIPPER Leader awards for Total
Return and Consistent Return, and was rated 4 stars overall by MORNINGSTAR
among 245 Muni National Long funds as of June 30, 2005. /16,/17
* Franklin High-Yield Tax-Free Income Fund ranked in the top third of the
LIPPER High Yield Municipal Debt Funds peer group for total return among
78, 71, 67 and 32 funds for the one-, three-, five- and 10-year periods
ended June 30, 2005. /3,/15 The fund received a LIPPER Leader award for
Preservation, and was rated 4 stars overall by MORNINGSTAR among 75 High
Yield Muni funds as of June 30, 2005. /16,/17
* Launched two new U.S. retail funds. Templeton Income Fund, an
income-oriented fund designed to capitalize on opportunities offered by
global equity and global fixed income markets, will be jointly managed by
the Templeton Global Equity and Franklin Templeton Fixed Income teams.
Franklin Mid Cap Value Fund, managed by the longstanding value equity team
led by Bill Lippman, rounds out Franklin's market cap-specific value
lineup.
* Launched two new Franklin Templeton Variable Insurance Product Trust
(FTVIPT) funds, the FTVIPT Franklin Flex Cap Growth Securities Fund and the
FTVIPT Franklin Large Cap Value Securities Fund.
* Franklin Templeton Portfolio Advisors, Inc. introduced a Multi Cap Growth
portfolio and a Mid Cap Growth portfolio for managed account investors.
-2-
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
* Franklin Value Group, a $50 billion umbrella for the firm's Franklin and
Mutual Series value investment products, was formed. It is led by Bill
Lippman and Peter Langerman.
* Total Societes d'Investissement a Capital Variable (SICAV) assets under
management exceeded $31 billion during the quarter.
* Assets under management in Belgium, Netherlands and Luxembourg (part of the
company's European region) crossed the $1 billion mark.
* Two new SICAV funds, Templeton Global Income Fund and Templeton Global
Equity Income Fund, were launched.
* The Franklin Templeton Investments Japan-based equity team began
sub-advising the Hong Kong-domiciled Franklin Templeton MPF Japan Fund, the
only fund with a Japan mandate managed by a local investment team in Japan.
* Internal research shows over 24% of U.S. retail financial advisors selling
Franklin Templeton funds sell three or more asset classes, an increase from
approximately 11% and 22% for the first and second fiscal quarters in 2005,
respectively.
* Franklin Templeton received the 2005 ASIANINVESTOR Achievement Award for
5-year risk-adjusted performance in the Global Fixed Income (unhedged)
category. Fiduciary Trust received the same award for 3-year risk-adjusted
performance.
* FINANZtest, a German publication, named Franklin Templeton the best
investment company in Germany out of 32 fund management companies based on
fund performance and transparency of fund information.
* Completed the initial offering of Franklin Sealand China Income Fund
raising the equivalent of approximately $82 million from investors.
-3-
FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
(Dollar amounts in thousands except per share data) THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30 JUNE 30
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% %
2005 2004 CHANGE 2005 2004 CHANGE
---- ---- ------ ---- ---- ------
OPERATING REVENUES
Investment management fees $642,034 $505,409 27% $1,801,191 $1,459,512 23%
Underwriting and distribution fees 386,950 282,852 37% 1,104,669 857,458 29%
Shareholder servicing fees 64,609 60,582 7% 192,088 183,644 5%
Consolidated sponsored investment products income,
net 1,306 1,136 15% 3,282 2,645 24%
Other, net 14,835 17,836 (17%) 45,707 53,217 (14%)
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TOTAL OPERATING REVENUES 1,109,734 867,815 28% 3,146,937 2,556,476 23%
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OPERATING EXPENSES
Underwriting and distribution 359,657 252,250 43% 1,018,455 769,035 32%
Compensation and benefits 232,971 193,532 20% 662,387 579,875 14%
Information systems, technology and occupancy 73,253 67,464 9% 209,866 205,525 2%
Advertising and promotion 36,845 31,139 18% 94,061 84,306 12%
Amortization of deferred sales commissions 29,361 24,688 19% 91,356 72,133 27%
Amortization of intangible assets 4,348 4,398 1% 13,108 13,201 (1%)
Provision for governmental investigations, proceedings
and actions (8,385) 21,500 N/A 33,658 81,500 (59%)
September 11, 2001 recovery, net -- -- -- -- (30,277) (100%)
Other 35,205 31,858 11% 104,202 92,122 13%
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TOTAL OPERATING EXPENSES 763,255 626,829 22% 2,227,093 1,867,420 19%
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OPERATING INCOME 346,479 240,986 44% 919,844 689,056 33%
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OTHER INCOME (EXPENSES)
Consolidated sponsored investment products
gains/(losses), net 4,402 (3,463) N/A 19,013 6,356 199%
Investment and other income 21,849 14,300 53% 87,814 59,437 48%
Interest expense (9,017) (7,832) 15% (25,245) (22,742) 11%
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OTHER INCOME, NET 17,234 3,005 474% 81,582 43,051 90%
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Income before taxes on income and cumulative effect
of an accounting change 363,713 243,991 49% 1,001,426 732,107 37%
Taxes on income 101,840 70,095 45% 278,290 217,903 28%
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INCOME BEFORE CUMULATIVE EFFECT OF AN ACCOUNTING
CHANGE, NET OF TAX 261,873 173,896 51% 723,136 514,204 41%
Cumulative effect of an accounting change, net of tax -- -- -- -- 4,779 (100%)
------------------------------------------------------------------------
NET INCOME $261,873 $173,896 51% $723,136 $518,983 39%
========================================================================
BASIC EARNINGS PER SHARE
Income before cumulative effect of an accounting
change $1.04 $0.70 49% $2.89 $2.06 40%
Cumulative effect of an accounting change -- -- -- -- 0.02 (100%)
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Net income $1.04 $0.70 49% $2.89 $2.08 39%
========================================================================
DILUTED EARNINGS PER SHARE /1
Income before cumulative effect of an accounting
change $1.00 $0.67 49% $2.78 $2.00 39%
Cumulative effect of an accounting change -- -- -- -- 0.02 (100%)
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Net income $1.00 $0.67 49% $2.78 $2.02 38%
========================================================================
DIVIDENDS PER SHARE $0.100 $0.085 18% $0.300 $0.255 18%
SPECIAL CASH DIVIDEND -- -- -- $2.000 -- N/A
-4-
FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30 JUNE 30
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% %
2005 2004 CHANGE 2005 2004 CHANGE
---- ---- ------ ---- ---- ------
AVERAGE SHARES OUTSTANDING (in thousands)
Basic 250,730 249,802 -- 250,417 249,032 1%
Diluted /1 263,175 261,325 1% 262,662 260,453 1%
OPERATING MARGIN /2 31% 28% 11% 29% 27% 7%
ASSETS UNDER MANAGEMENT (in millions)
Beginning of period $412,057 $351,642 17% $361,860 $301,857 20%
Sales 29,717 23,822 25% 91,015 73,483 24%
Reinvested distributions 1,900 1,224 55% 7,269 4,044 80%
Redemptions (22,013) (21,846) 1% (63,023) (57,649) 9%
Distributions (2,417) (1,730) 40% (9,216) (5,768) 60%
Acquisitions -- -- -- 83 878 (91%)
(Depreciation)/appreciation 6,159 (2,337) N/A 37,415 33,930 10%
END OF PERIOD $425,403 $350,775 21% $425,403 $350,775 21%
SIMPLE MONTHLY AVERAGE FOR PERIOD $416,001 $347,793 20% $400,340 $336,072 19%
/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."
/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
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30-JUN-05 31-MAR-05 % CHANGE 31-DEC-04 30-SEP-04 30-JUN-04
----------- ----------- -------- ----------- ---------- ----------
OPERATING REVENUES
Investment management fees $642,034 $592,674 8% $566,483 $511,116 $505,409
Underwriting and distribution fees 386,950 377,341 3% 340,378 293,464 282,852
Shareholder servicing fees 64,609 64,312 -- 63,167 60,419 60,582
Consolidated sponsored investment products
income, net 1,306 1,361 (4%) 615 874 1,136
Other, net 14,835 15,493 (4%) 15,379 15,859 17,836
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TOTAL OPERATING REVENUES 1,109,734 1,051,181 6% 986,022 881,732 867,815
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OPERATING EXPENSES
Underwriting and distribution 359,657 347,376 4% 311,422 266,076 252,250
Compensation and benefits 232,971 217,909 7% 211,507 189,563 193,532
Information systems, technology and
occupancy 73,253 69,808 5% 66,805 68,015 67,464
Advertising and promotion 36,845 31,108 18% 26,108 27,711 31,139
Amortization of deferred sales commissions 29,361 30,617 (4%) 31,378 26,760 24,688
Amortization of intangible assets 4,348 4,349 -- 4,411 4,403 4,398
Provision for governmental investigations,
proceedings and actions (8,385) 42,043 N/A -- 23,500 21,500
September 11, 2001 recovery, net -- -- -- -- -- --
Other 35,205 34,690 1% 34,307 33,935 31,858
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TOTAL OPERATING EXPENSES 763,255 777,900 (2%) 685,938 639,963 626,829
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OPERATING INCOME 346,479 273,281 27% 300,084 241,769 240,986
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OTHER INCOME (EXPENSES)
Consolidated sponsored investment products
(losses) gains, net 4,402 (1,552) N/A 16,163 (2,963) (3,463)
Investment and other income 21,849 38,576 (43%) 27,389 30,869 14,300
Interest expense (9,017) (8,241) 9% (7,987) (7,916) (7,832)
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OTHER INCOME, NET 17,234 28,783 (40%) 35,565 19,990 3,005
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Income before taxes 363,713 302,064 20% 335,649 261,759 243,991
Taxes on income 101,840 80,790 26% 95,660 74,078 70,095
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NET INCOME $261,873 $221,274 18% $239,989 $187,681 $173,896
==============================================================================
BASIC EARNINGS PER SHARE $1.04 $0.88 18% $0.96 $0.75 $0.70
DILUTED EARNINGS PER SHARE /3 1.00 0.85 18% 0.92 0.73 0.67
DIVIDENDS PER SHARE $0.100 $0.100 -- $0.100 $0.085 $0.085
SPECIAL CASH DIVIDEND -- 2.000 (100%) -- -- --
AVERAGE SHARES OUTSTANDING (in thousands)
Basic 250,730 250,299 -- 250,224 249,564 249,802
Diluted /3 263,175 263,046 -- 262,441 260,638 261,325
OPERATING MARGIN /4 31% 26% 19% 30% 27% 28%
EMPLOYEES 7,045 6,868 3% 6,779 6,696 6,557
BILLABLE SHAREHOLDER ACCOUNTS (in millions) 17.4 17.0 2% 15.9 15.3 15.9
/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.
-6-
FRANKLIN RESOURCES, INC.
PRELIMINARY SUMMARY BALANCE SHEET
(Dollar amounts and number of shares in thousands)
PRELIMINARY
JUNE 30, 2005 SEPTEMBER 30, 2004
------------- ------------------
ASSETS
Current assets $4,285,148 $4,044,212
Banking/finance assets 905,538 825,844
Non-current assets 3,337,877 3,358,079
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TOTAL ASSETS $8,528,563 $8,228,135
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $886,689 $921,115
Banking/finance liabilities 752,800 658,717
Non-current liabilities 1,497,352 1,465,430
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Total liabilities 3,136,841 3,045,262
Minority interest 90,184 76,089
Total stockholders' equity 5,301,538 5,106,784
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $8,528,563 $8,228,135
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ENDING SHARES OF COMMON STOCK OUTSTANDING 251,388 249,680
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-7-
ASSETS UNDER MANAGEMENT BY INVESTMENT OBJECTIVE
(in billions) 30-JUN-05 31-MAR-05 % CHANGE 31-DEC-04 30-SEP-04 30-JUN-04
--------------------------------------------------------------------------------
EQUITY
Global/international $168.0 $163.8 3% $155.7 $132.9 $128.6
Domestic (U.S.) 74.5 72.3 3% 73.3 66.4 66.3
--------------------------------------------------------------------------------
Total equity 242.5 236.1 3% 229.0 199.3 194.9
--------------------------------------------------------------------------------
HYBRID 73.3 69.1 6% 66.4 59.0 55.9
FIXED-INCOME
Tax-free 53.5 51.9 3% 51.8 51.3 49.9
Taxable:
Domestic (U.S.) 32.8 32.2 2% 32.5 31.3 30.1
Global/international 17.6 16.8 5% 16.3 14.2 13.6
--------------------------------------------------------------------------------
Total fixed-income 103.9 100.9 3% 100.6 96.8 93.6
--------------------------------------------------------------------------------
MONEY MARKET 5.7 6.0 (5%) 6.2 6.8 6.4
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TOTAL ENDING ASSETS 425.4 $412.1 3% $402.2 $361.9 $350.8
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SIMPLE MONTHLY AVERAGE ASSETS 416.0 $407.4 2% $381.0 $353.3 $347.8
================================================================================
ASSETS UNDER MANAGEMENT & FLOWS
(in billions) THREE MONTHS ENDED
30-JUN-05 31-MAR-05 % CHANGE 30-JUN-04 % CHANGE
--------- --------- -------- --------- --------
BEGINNING ASSETS UNDER MANAGEMENT $412.1 $402.2 2% $351.6 17%
U.S. RETAIL ASSETS
Beginning assets $250.8 $246.5 2% $218.5 15%
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Sales 14.3 15.1 (5%) 11.0 30%
Reinvested distributions 1.6 0.8 100% 1.1 45%
Redemptions (9.6) (9.1) 5% (10.0) (4%)
Distributions (2.2) (1.3) 69% (1.6) 38%
Acquisitions -- -- -- -- --
(Depreciation)/appreciation 5.4 (1.2) N/A (1.4) N/A
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Ending assets $260.3 $250.8 4% $217.6 20%
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OTHER ASSETS, INCLUDING INTERNATIONAL AND INSTITUTIONAL
Beginning assets $161.3 $155.7 4% $133.1 21%
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Sales 15.4 17.8 (13%) 12.8 20%
Reinvested distributions 0.3 0.3 -- 0.1 200%
Redemptions (12.4) (12.3) 1% (11.8) 5%
Distributions (0.3) (0.2) 50% (0.1) 200%
Acquisitions -- 0.1 (100%) -- --
(Depreciation)/appreciation 0.8 (0.1) N/A (0.9) N/A
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Ending assets $165.1 $161.3 2% $133.2 24%
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ENDING ASSETS UNDER MANAGEMENT $425.4 $412.1 3% $350.8 21%
TOTAL ASSETS UNDER MANAGEMENT
BEGINNING ASSETS $412.1 $402.2 2% $351.6 17%
----------------------------------------------------------------------------------------------------------------
Sales 29.7 32.9 (10%) 23.8 25%
Reinvested distributions 1.9 1.1 73% 1.2 58%
Redemptions (22.0) (21.4) 3% (21.8) 1%
Distributions (2.4) (1.5) 60% (1.7) 41%
Acquisitions -- 0.1 (100%) -- --
(Depreciation)/appreciation 6.1 (1.3) N/A (2.3) N/A
----------------------------------------------------------------------------------------------------------------
ENDING ASSETS $425.4 $412.1 3% $350.8 21%
----------------------------------------------------------------------------------------------------------------
Note: Institutional assets totaling approximately $33.5 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 June 30, 2005
were approximately $134.3 billion, of which high net-worth assets comprised $10.6 billion.
-8-
ASSETS UNDER MANAGEMENT & FLOWS BY INVESTMENT OBJECTIVE (in billions)
THREE MONTHS ENDED 30JUN-05 31-MAR-05 30-JUN-04
- ------------------ -------- --------- ---------
GLOBAL/INTERNATIONAL EQUITY
Beginning assets $163.8 $155.7 $126.7
---------------------------------------------------------------------------------------------------------
Sales 10.8 15.2 8.8
Reinvested distributions 0.3 0.2 0.1
Redemptions (7.1) (8.4) (6.3)
Distributions (0.3) (0.1) (0.2)
Acquisitions -- 0.1 --
Appreciation 0.5 1.1 (0.5)
---------------------------------------------------------------------------------------------------------
Ending assets 168.0 163.8 128.6
---------------------------------------------------------------------------------------------------------
DOMESTIC (U.S.) EQUITY
Beginning assets 72.3 73.3 66.0
---------------------------------------------------------------------------------------------------------
Sales 4.1 4.0 3.7
Reinvested distributions 0.4 -- 0.2
Redemptions (4.0) (3.5) (4.0)
Distributions (0.4) -- (0.2)
Acquisitions -- -- --
(Depreciation)/appreciation 2.1 (1.5) 0.6
---------------------------------------------------------------------------------------------------------
Ending assets 74.5 72.3 66.3
---------------------------------------------------------------------------------------------------------
HYBRID
Beginning assets 69.1 66.4 54.1
---------------------------------------------------------------------------------------------------------
Sales 4.3 5.3 3.1
Reinvested distributions 0.5 0.3 0.3
Redemptions (1.6) (1.9) (1.2)
Distributions (0.6) (0.4) (0.4)
Acquisitions -- -- --
(Depreciation)/appreciation 1.6 (0.6) --
---------------------------------------------------------------------------------------------------------
Ending assets 73.3 69.1 55.9
---------------------------------------------------------------------------------------------------------
TAX-FREE INCOME
Beginning assets 51.9 51.8 53.0
---------------------------------------------------------------------------------------------------------
Sales 1.7 1.4 1.1
Reinvested distributions 0.3 0.3 0.3
Redemptions (1.3) (1.3) (2.2)
Distributions (0.6) (0.6) (0.6)
Acquisitions -- -- --
Appreciation 1.5 0.3 (1.7)
---------------------------------------------------------------------------------------------------------
Ending assets 53.5 51.9 49.9
---------------------------------------------------------------------------------------------------------
TAXABLE FIXED-INCOME
Beginning assets 49.0 48.8 46.0
---------------------------------------------------------------------------------------------------------
Sales 5.6 4.9 4.2
Reinvested distributions 0.4 0.3 0.3
Redemptions (4.6) (3.9) (5.3)
Distributions (0.4) (0.4) (0.3)
Acquisitions -- -- --
(Depreciation)/appreciation 0.4 (0.7) (1.2)
---------------------------------------------------------------------------------------------------------
Ending assets 50.4 49.0 43.7
---------------------------------------------------------------------------------------------------------
MONEY MARKET
Beginning assets 6.0 6.2 5.8
---------------------------------------------------------------------------------------------------------
Sales 3.2 2.1 2.9
Reinvested distributions -- -- --
Redemptions (3.4) (2.4) (2.8)
Distributions (0.1) -- --
Acquisitions -- -- --
Appreciation -- 0.1 0.5
---------------------------------------------------------------------------------------------------------
Ending assets 5.7 6.0 6.4
---------------------------------------------------------------------------------------------------------
ENDING ASSETS UNDER MANAGEMENT $425.4 $412.1 $350.8
-9-
CONFERENCE CALL INFORMATION
- ---------------------------
On Thursday, July 28, 2005, Franklin Resources, Inc., [NYSE:BEN] will
release its third fiscal quarter 2005 financial results. Greg Johnson, president
and CEO of Franklin Resources, Inc., and Jim Baio, senior vice president and
chief financial officer, 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
August 11, 2005. The replay can also be accessed by calling (800) 642-1687 in
the U.S. or (706) 645-9291 internationally using access code #7748713, after
5:30 p.m. Eastern Time on July 28, 2005, through 11:59 p.m. Eastern Time on
August 11, 2005.
Franklin Resources, Inc. [NYSE:BEN], is a global investment management
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 $425 billion in assets under management as of June 30, 2005. 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 (other than Mutual Recovery), which are based on
Class Z shares. Class Z shares are offered to qualified investors only and
have no sales charges or 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 5/31/05 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.
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 U.S. retail mutual funds, and the groups
vary in size from 4 to 939 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., 6/30/05. Of the eligible Franklin Templeton
long-term mutual funds tracked by Lipper, 53, 44, 51 and 41 funds ranked in
the top quartile and 16, 24, 22 and 17 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., 6/30/05. Of the eligible Franklin Templeton
non-money market fixed income funds tracked by LIPPER, 33, 35, 32 and 28
funds ranked in the top quartile and 8, 5, 8 and 11 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., 6/30/05. Of the eligible Franklin Templeton equity
funds tracked by LIPPER, 20, 9, 19 and 13 funds ranked in the top quartile
and 8, 19, 14 and 6 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., 6/30/05. Of the eligible Mutual Series funds
tracked by LIPPER, 7, 3, 6 and 4 funds ranked in the top quartile and 0, 3,
0 and 0 funds ranked in the second quartile, for the one-, three-, five-
and 10-year periods, respectively, for their respective LIPPER peer groups.
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8. Source: LIPPER(R) Inc., 6/30/05. Franklin Income Fund Class A ranked 19 in
a universe of 237 funds in LIPPER'S "Income Funds" group for the one-year
period, 2 of 150 for the three-year period, 2 of 93 for the five-year
period and 4 of 25 for the 10-year period.
9. Source: LIPPER(R) Inc., 6/30/05. Templeton Growth Fund Class A ranked 2 in
a universe of 21 funds in LIPPER'S "Global Large-Cap Value Funds" group for
the one-year period, 6 of 21 for the three-year period, 2 of 16 for the
five-year period and 1 of 4 for the 10-year period.
10. Source: LIPPER(R) Inc., 6/30/05. Mutual Shares Fund Class Z ranked 111 in a
universe of 467 funds in LIPPER'S "Multi-Cap Value Funds" group for the
one-year period, 113 of 361 for the three-year period, 45 of 237 for the
five-year period, and 15 of 89 for the 10-year period.
11. Source: LIPPER(R) Inc., 6/30/05. Mutual Discovery Fund Class Z ranked 3 in
a universe of 49 funds in LIPPER'S "Global Multi-Cap Value Funds" group for
the one-year period, 18 of 44 for the three-year period, 4 of 27 for the
five-year period and 1 of 12 for the 10-year period.
12. Source: LIPPER(R) Inc., 6/30/05. Templeton Global Bond Fund Class A ranked
12 in a universe of 93 funds in LIPPER'S "Global Income Funds" group for
the one-year period, 7 of 84 for the three-year period, 2 of 64 for the
five-year period and 7 of 35 for the 10-year period.
13. Source: LIPPER(R) Inc., 6/30/05. Templeton World Fund Class A ranked 10 in
a universe of 61 funds in LIPPER'S "Global Multi-Cap Core Funds" group for
the one-year period, 18 of 50 for the three-year period, 4 of 37 for the
five-year period and 2 of 11 for the 10-year period.
14. Source: LIPPER(R) Inc., 6/30/05. Franklin Federal Tax-Free Income Fund
Class A ranked 26 in a universe of 281 funds in LIPPER'S "General Municipal
Debt Funds" group for the one-year period, 30 of 257 for the three-year
period, 57 of 225 for the five-year period and 30 of 146 for the 10-year
period.
15. Source: LIPPER(R) Inc., 6/30/05. Franklin High-Yield Tax-Free Income Fund
Class A ranked 15 in a universe of 78 funds in LIPPER'S "High Yield
Municipal Debt Funds" group for the one-year period, 18 of 71 for the
three-year period, 20 of 67 for the five-year period and 7 of 32 for the
10-year period.
16. Source: LIPPER(R) Inc., 6/30/05. A LIPPER LEADER 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. LIPPER ratings for Tax Efficiency reflect funds' historical
success in postponing taxable distributions relative to peers. 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, PRESERVATION AND TAX-EFFICIENCY 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. Not
Available indicates that there were not enough funds in a category to
constitute a class. FRANKLIN INCOME FUND, in LIPPER'S Income
classification, received the following ratings for the three-, five- and
10-year periods respectively: Total Return: LIPPER Leader [140], LIPPER
Leader [93], LIPPER Leader [25]; Preservation (in Mixed Equity asset
class): 2 [1008], LIPPER Leader [764], LIPPER Leader [335]; Consistent
Return: LIPPER Leader [150], LIPPER Leader [93], 2 [19]. TEMPLETON GROWTH
FUND, in LIPPER'S Global Large-Cap Value classification, received the
following ratings for the three-, five- and 10-year periods respectively:
Preservation (in Equity asset class): 2 [7708], LIPPER Leader [5624],
LIPPER Leader [1888]; 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: Total Return: LIPPER
Leader [29], 2 [26], LIPPER Leader [144]; Consistent Return: LIPPER Leader
[250], 2 [217], 2 [102]; MUTUAL SHARES FUND, in LIPPER'S Multi-Cap Value
Funds classification, received the following ratings for the three-, five-
and 10-year periods respectively: Preservation (in Equity asset class):
LIPPER Leader [7708], LIPPER Leader [5624], Not Available [Not Available];
FRANKLIN HIGH-YIELD TAX-FREE INCOME FUND, in LIPPER'S High Yield Municipal
Debt Funds classification, received the following ratings for the three-,
five- and 10-year periods respectively: Preservation (in Fixed Income asset
class): LIPPER Leader [3960], LIPPER Leader [3362], LIPPER Leader [2061];
MUTUAL DISCOVERY FUND, in LIPPER'S Global Multi-Cap Value Funds
classification, received the following ratings for the three-, five- and
10-year periods respectively: Consistent Return: LIPPER Leader [44], 2
[26], Not Available [Not Available]; Preservation (in Equity asset class):
LIPPER Leader [7708], LIPPER Leader [5624], Not Available [Not Available];
TEMPLETON WORLD FUND, in LIPPER'S Global Multi-Cap Core Funds
classification, received the following ratings for the three-, five- and
10-year periods respectively: Total Return: 2 [49], LIPPER Leader [37],
LIPPER Leader [11]; Consistent Return: LIPPER Leader [46], LIPPER Leader
[34], 2 [6]; TEMPLETON GLOBAL BOND FUND, in LIPPER'S Global Income Funds
classification, received the following ratings for the three-, five- and
10-year periods respectively: Total Return: LIPPER Leader [83], LIPPER
Leader [63], LIPPER Leader [35]; Consistent Return: LIPPER Leader [84],
LIPPER Leader [61], LIPPER Leader [28]. 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.
17. Source: [MORNINGSTAR](C) 6/30/05. 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
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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 243; 163; 63
Conservative Allocation funds for the respective three-, five- and 10-year
periods ended 6/30/05, as applicable. For the three-, five- and 10-year
periods ended 6/30/05, the MORNINGSTAR ratings were: FRANKLIN INCOME FUND
5, 5, 5. The following fund was rated against 293; 218; 80 World Stock
funds for the respective three-, five- and 10-year periods ended 6/30/05,
as applicable. For the three-, five- and 10-year periods ended 6/30/05, the
MORNINGSTAR ratings were: TEMPLETON GROWTH FUND 3, 4, 4. The following fund
was rated against 245; 219; 149 Muni National Long funds for the respective
three-, five- and 10-year periods ended 6/30/05, as applicable. For the
three-, five- and 10-year periods ended 6/30/05, the MORNINGSTAR ratings
were: FRANKLIN FEDERAL TAX-FREE INCOME FUND 3, 4, 4. The following fund was
rated against 828; 576 Large Value funds for the respective three- and
five-year periods ended 6/30/05, as applicable. For the three- and
five-year periods ended 6/30/05, the MORNINGSTAR ratings were: MUTUAL
SHARES FUND 4, 4. The following fund was rated against 293; 218; 80 World
Stock funds for the respective three-, five- and 10-year periods ended
6/30/05, as applicable. For the three-, five- and 10-year periods ended
6/30/05, the MORNINGSTAR ratings were: TEMPLETON WORLD FUND 3, 4, 4. The
following fund was rated against 123; 103; 53 World Bond funds for the
respective three-, five- and 10-year periods, as applicable. For the
three-, five- and 10-year periods ended 6/30/05, the MORNINGSTAR ratings
were: TEMPLETON GLOBAL BOND FUND 4, 4, 4. The following fund was rated
against 293; 218 World Stock funds for the respective three- and five-year
periods, as applicable. For the three- and five-year periods ended 6/30/05,
the MORNINGSTAR ratings were: MUTUAL DISCOVERY FUND 4, 5. The following
fund was rated against 75; 71; 35 High Yield Muni funds for the respective
three-, five- and 10-year periods, as applicable. For the three-, five- and
10-year periods ended 6/30/05, the MORNINGSTAR ratings were: FRANKLIN
HIGH-YIELD TAX-FREE INCOME FUND 3, 3, 4.
FORWARD-LOOKING STATEMENTS
Statements in this press release regarding Franklin Resources, Inc., 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 known and unknown 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'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, and Franklin's Form 10-Q filings.
* Strong competition from numerous and sometimes larger companies with
competing offerings and products could limit or reduce sales of our
products, potentially resulting in a decline in our market share,
revenues and net income.
* Changes in the distribution channels on which we depend could reduce
our revenues and hinder our growth.
* The amount or mix of our assets under management are subject to
significant fluctuations and could negatively impact our revenues and
income.
* Our increasing focus on international markets as a source of
investments and sales of investment products subject us to increased
exchange rate and other risks in connection with earnings and income
generated overseas.
* Poor investment performance of our products could affect our sales or
reduce the level of assets under management, potentially negatively
impacting our revenues and income.
* We could suffer losses in earnings or revenue if our reputation is
harmed.
* Our future results are dependent upon maintaining an appropriate level
of expenses, which are subject to fluctuation.
* We face risks, and corresponding potential costs and expenses,
associated with conducting operations and growing our business in
numerous foreign countries.
* Our ability to successfully integrate widely varied business lines can
be impeded by systems and other technological limitations.
* Any significant limitation or failure of our software applications and
other technology systems that are critical to our operations could
constrain our operations.
* Our inability to successfully recover should we experience a disaster
or other business continuity problem could cause material financial
loss, loss of human capital, regulatory actions, reputational harm or
legal liability.
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* Our ability to meet cash needs depends upon certain factors, including
our asset value, credit worthiness and the market value of our stock.
* Certain of the portfolios we manage, including our emerging market
portfolios, are vulnerable to market-specific political, economic or
other risks, any of which may negatively impact our revenues and
income.
* Our revenues, earnings and income could be adversely affected if the
terms of our investment management agreements are significantly
altered or these agreements are terminated by the funds we advise.
* Diverse and strong competition limits the interest rates that we can
charge on consumer loans.
* We are subject to extensive regulation domestically and abroad.
* 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 our profitability and future financial results.
* Civil litigation arising out of or relating to recently settled
governmental investigations or other matters as well as the legal
risks associated with our business could adversely impact our assets
under management, increase costs and negatively impact our
profitability and/or our future financial results.
* We depend on key personnel and our financial performance could be
negatively affected by the loss of their services.
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