frenklin temliton

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F R A N K L I N T E M P L E T O N

Founding Funds

Strategy

Founding Funds

Strategy


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Specialized Expertise

Each of our portfolio management groups operates autonomously,

relying on its own research and staying true to the unique invest-

ment disciplines that underlie its success.

Franklin. Founded in 1947, Franklin is a recognized leader in

fixed income investing and also brings expertise in growth- and

value-style U.S. equity investing.

Templeton. Founded in 1940, Templeton pioneered international

investing and, in 1954, launched what has become the industrys

oldest global fund. Today, with offices in over 25 countries,

Templeton offers investors a truly global perspective.

Mutual Series. Founded in 1949, Mutual Series is dedicated

to a unique style of value investing, searching aggressively for

opportunity among what it believes are undervalued stocks, as

well as arbitrage situations and distressed securities.

NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE

True Diversification

Because our management groups work independ-

ently and adhere to different investment approaches,

Franklin, Templeton and Mutual Series funds

typically have distinct portfolios. Thats why our

funds can be used to build truly diversified

allocation plans covering every major asset class.

Reliability You Can Trust

At Franklin Templeton Investments, we seek to

consistently provide investors with exceptional

risk-adjusted returns over the long term, as well

as the reliable, accurate and personal service that

has helped us become one of the most trusted

names in financial services.

Franklin Templetons distinct multi-manager

structure combines the specialized

expertise of three world-class investment

management groupsFranklin, Templeton

and Mutual Series.

Franklin Templeton InvestmentsGain From Our Perspective


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1FRANKLIN TEMPLETON FOUNDING FUNDS STRATEGY

Franklin Templeton Founding Funds Strategy combines

three value-oriented fundseach a cornerstone fund

with a 50-year track record run independently by the

Franklin, Templeton or Mutual Series management group

to create an investment portfolio offering diversification

across multiple asset classes and the potential for attractive,

long-term results.

The following pages illustrate a hypothetical combined

investment divided equally among Class A shares of the

three funds. The performance of the combined hypothetical

portfolio assumes rebalancing to an equal allocation of each

of the three funds on an annual basis. The allocations

and performance of the hypothetical investment are for

illustration only and do not constitute investment advice.You should consider your goals, risk tolerance and time horizon

when selecting investments or making asset allocation

decisions for your portfolio.

The Strategy

Franklin Income Fund . . . . . . . . . . . . . . . . .33 13%

Templeton Growth Fund . . . . . . . . . . . . . . . 3313%

Mutual Shares Fund . . . . . . . . . . . . . . . . . .33 13%

1. As of 12/31/10. Class A: Average annual total returns include reinvestment of dividends and capital gains at net asset value.

Focuses on undervalued dividend-paying stocks, convertible

securities and bonds across a variety of industries.

Introduced in 1948, seeks to maximize income while

maintaining prospects for capital appreciation

Provided positive average annual total returns in 57

of 58 rolling calendar five-year periods since inception

(without sales charge)1

Uninterrupted dividends for 62 calendar years (Class A)

Distributed capital gains in 56 of the past 62 calendar

years (Class A)

Pays dividends monthly and Class A had a 30-day

standardized yield of 4.86% as of February 28, 2011

Three FundsThree Distinct Value Perspectives

Seeks to invest primarily in undervalued stocks, and to a

lesser extent, distressed securities and merger arbitrage.

Introduced in 1949, adheres to a disciplined value

investment strategy

Provided positive annual total returns in 27 out of the

past 30 calendar years (without sales charge)1

Provided positive average annual total returns in 30 rolling

calendar five-year periods over the last 31 years (without

sales charge)1

Franklin Income Fund

Mutual Shares Fund

Searches worldwide for stocks selling at prices believed

to be low relative to managers appraisal of value.

Introduced in 1954, it is the oldest global mutual fund

in the industry

Follows a bottom-up, value-oriented, long-term approach

to investing

Provided positive average annual total returns in 49

of 52 rolling calendar five-year periods since inception

(without sales charge)1

Templeton Growth Fund


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2 FRANKLIN TEMPLETON FOUNDING FUNDS STRATEGY

An equal investment in Franklin Income Fund,

Templeton Growth Fund and Mutual Shares Fundmay help lower your overall portfolio volatility. For

the period shown, Founding Funds Strategy, based

on a hypothetical combined investment divided

equally among Class A shares of each fund, had:

A higher rate of return with less volatility

compared to equity markets3

A beta of 0.644

Diversification does not assure a profit or protect

against a loss.

Largest Equity Holdings

Pfizer Inc. 1.51%

Microsoft Corp. 1.47%

Vodafone Group PLC 1.43%

CVS Caremark Corp. 1.23%

Wells Fargo & Co. 1.22%

Bank of America Corp. 1.05%

Royal Dutch Shell 1.02%

Merck & Co. Inc. 1.01%

Amgen Inc. 0.90%

Nestle SA 0.90%

Total percentage of portfolio: 11.76%

Portfolio Allocation

Equity . . . . . . . . . . . 76.30%

Fixed Income . . . . . 19.86%

Cash . . . . . . . . . . . 3.84%

Total of 547 portfolio securities

Only four stocks common to all three funds Invested in 23 industries

The Benefits

Return

20%

15%

10%

5%

0%

0% 15%10%5% 20%

Risk

Founding FundsStrategy

S&P 500

Index MSCI

EAFE Index

BC Govt/

Credit Index

2. Based on the combined funds total net assets as of 12/31/10. Portfolio holdings may change. For the funds most recent portfolio holdings, please call Franklin Templeton Investmentat (800) DIAL BEN/(800) 342-5236 or visit franklintempleton.com.

1]Diversification2 (As of December 31, 2010)

2]A Record ofLow Relative Volatility

Invested in 27 countries

More than $91 billion in assets

Risk/Return Comparison3 (Without Sales Charges)

30-Years Ended December 31, 2010

Unless otherwise noted, strategy performance figures in this brochure reflect Class A and do not include the maximum

initial 4.25% sales charge for Franklin Income Fund and 5.75% sales charge for Templeton Growth Fund and Mutua

Shares Fund. If included, the returns would have been lower. Please see the back cover for each funds standardized

returns. Performance data represents past performance, which does not guarantee future results. Current performance

may differ from the figures shown. A funds investment return and principal value will change with market conditions, and

you may have a gain or a loss when you sell your shares. Please call Franklin Templeton Investments at (800) DIAL BEN/

(800) 342-5236 or visitfranklintempleton.comfor most recent month-end performance.


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In the last 30 years, the market has experienced dramatic upswings and downturns. During this time, Founding

Funds Strategy has proven to be a powerful combination for achieving steady growth over the long term.

For the 30-year period ended December 31, 2010, Founding Funds Strategy, without sales charges:

Produced a 11.11% average annual total return versus 10.71% for the S&P 500 Index3

Had positive total returns in 25 of 30 calendar years5

Outdistanced the U.S. stock market in 83% of the S&P 500 Indexs quarterly market downturns3

Founding Funds Strategy vs. S&P 500 Index

Average Annual Total Returns (Without Sales Charges)

Periods Ended December 31, 2010

If you had invested 1 Yr. Ago 3 Yrs. Ago 5 Yrs. Ago 10 Yrs. Ago 20 Yrs. Ago 30 Yrs. Ago

Founding Funds Strategy5 10.62% -3.12% 2.40% 5.41% 10.14% 11.11%

S&P 500 Index3 15.06% -2.86% 2.29% 1.41% 9.14% 10.71%

3. Source: 2011 Morningstar (S&P 500 Index represents large-cap stocks, MSCI EAFE Index represents foreign stocks, Barclays Capital Government/Credit Indexrepresents bonds). All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed;and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any useof this information. Index data represents average annual total returns and assume reinvestment of interest or dividends. The hypothetical combined investmentsperformance assumes reinvestment of dividends and capital gains at net asset value, and assumes rebalancing to an equal allocation of each of the three funds on an annualbasis. Risk is measured by the annualized standard deviation of monthly total returns. Standard deviation is a statistical measurement of the range of an investmentstotal returns. In general, a higher standard deviation means greater volatility. Indexes are unmanaged, and one cannot invest directly in an index.

4. Source: 2011 Morningstar. A measure of the combined funds volatility relative to the S&P 500 Index. A beta less than 1.00 indicates lower volatility than the index.Based on monthly returns over the 30 years ended 12/31/10.

5. These figures represent performance of a hypothetical combined investment over the periods indicated, include reinvestment of dividends and capital gains at net assetvalue, and assume rebalancing to an equal allocation of each of the three funds on an annual basis. They are for illustrative purposes only. Please see the back cover of thisbrochure for standardized performance figures of the funds composing Founding Funds Strategy.

3]Long-Term Performance

Rolling 5-Year Average Annual Total Returns (Without Sales Charges)Positive Total Returns in 33 of 34 5-Year Rolling Periods Since 1972

Founding Funds S&P 500

Dec.31Dec.31 Strategy5 Index3

19721977 13.25% -0.19%

19731978 18.28% 4.35%

19741979 26.54% 14.82%

19751980 24.37% 14.02%

19761981 16.77% 8.13%

19771982 17.77% 14.12%

19781983 20.34% 17.35%

19791984 16.07% 14.80%

19801985 16.60% 14.67%

19811986 20.04% 19.87%

19821987 16.86% 16.47%

19831988 15.51% 15.31%

19841989 16.75% 20.36%

19851990 9.66% 13.19%

19861991 11.78% 15.36%

19871992 13.62% 15.88%

19881993 14.39% 14.55%

Founding Funds S&P 500Dec.31Dec. 31 Strategy5 Index3

19891994 10.85% 8.70%

19901995 17.88% 16.59%

19911996 15.27% 15.22%

19921997 16.51% 20.27%

19931998 11.33% 24.06%

19941999 14.55% 28.56%

19952000 12.36% 18.33%

19962001 9.38% 10.70%

19972002 3.95% -0.59%

19982003 9.66% -0.57%

19992004 9.55% -2.30%

20002005 8.50% 0.54%

20012006 11.94% 6.19%

20022007 14.42% 12.83%

20032008 -1.13% -2.19%

20042009 1.65% 0.42%

20052010 2.40% 2.29%

BEST

WORST


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Founding Funds Strategy % Annual Total Returns (Without Sales Charges)7

73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90

-7.56 -5.65 32.13 41.05 14.59 14.88 32.25 21.17 2.92 19.59 27.93 10.41 23.99 19.02 4.54 20.76 16.45 -9.3


A hypothetical $10,000 investment made on December 31, 1972, divided equally among Class A shares of

Franklin Income Fund, Templeton Growth Fund and Mutual Shares Fund, with sales charges, would have

produced an impressive total return of 7,564.84% or $766,484 as of December 31, 2010.6 Please note that

this hypothetical investment does not take into account federal, state or municipal taxes. If taxes were taken

into account, the hypothetical values shown would have been lower.

6. Source: 2011 Morningstar (S&P 500 Index, MSCI EAFE Index and Barclays Capital Government/Credit Index). Indexes are unmanaged and include reinvestment of dividends or interest. One cannot invest directlyin an index. The hypothetical combined investments return includes reinvestment of dividends and capital gains, and assumes rebalancing to an equal allocation of each of the three funds on an annual basis

The Results

12/31/72

$1,000

$10,000

$1,000,000

$100,000

BlackMonday

Iranhostage

crisis

PersianGulf War

S&Lcrisis

Unemploymentat 40-year high

BerlinWall falls

Founding Funds Strategy

S&P 500 Index

BC Govt/Credit Index

MSCI EAFE Index

Growth of a $10,000 Investment6 (December 31, 1972December 31, 2010)

If the sales charge had been included, returns would have been lower.


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93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

2 24.90 -0.48 23.24 17.10 19.68 -0.51 14.78 11.92 2.38 -7.24 30.00 14.22 6.66 19.64 3.49 -37.36 31.22 10.62


A Few Words about Risk Stocks have historically outperformed other asset classes over the long term, but tend to fluctuate

more dramatically over the short term. Bonds are affected by changes in interest rates and the creditworthiness of their issuers

Bonds are particularly sensitive to interest rate movements; bond prices and thus the share prices of bond funds, generally move

in the opposite direction from interest rates. Thus, as the prices of bonds in a fund adjust to a rise in interest rates, the funds share

price may decline. Higher-yielding, lower-rated corporate bonds entail a greater degree of credit risk than investment-grade securities.

Foreign investing, especially in developing countries, carries additional risks such as currency and market volatility and politica

or social instability. Value securities may not increase in price as anticipated or may decline further in value. These and other risks

are discussed in each funds prospectus.

12/31/10

Subprime marketslowdown

9/11attacks

Dow Joneshits record

high: 4011.74

Technologymarket crashes

Founding FundsStrategy

$766,484

S&P 500 Index$351,522

MSCI EAFE Index$323,435

$185,468BC Govt/Credit Index

7. Source: 2011 Morningstar. Founding Funds Strategys one-year returns represent the year-over-year change in value of an investment made on 12/31/72 and include reinvestment of dividends andcapital gains at net asset value.


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8. The hypothetical combined investments average annual total returns include reinvestment of dividends and capital gains, are for illustrative purposes only, and assume rebalancing to an equal allocationof each of the three funds on an annual basis.

9. Sources: 2011 Morningstar, Dow Jones, Inc. The S&P 500 Index is a market capitalization-weighted index of 500 stocks designed to measure total U.S. equity market performance. MSCI EAFE Index ia free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of global developed markets, excluding the United States and Canada. The Dow JoneIndustrial Average is a price-weighted average of blue-chip stocks that are generally the leaders in their industry. Indexes are unmanaged and assume reinvestment of dividends. One cannot invest directlin an index.

See How Founding Funds Strategy Performed in Various Market Environments

Historically, the stock market has exhibited various periods of up, down and sideways movement. As shown in the tables below

Founding Funds Strategy has been competitive in all three types of market environments, compared to the major U.S. and globastock indexes.8, 9

U.S. Market Performance Dow Jones Industrial Average (12/31/9912/31/09)

In a Down Market In an Up Market In a Down Market 12/31/993/31/03 3/31/0310/31/07 10/31/072/28/09

S&P 500 Index9 -14.36% 16.13% -41.39%

MSCI EAFE Index9 -17.97% 28.19% -46.34%

Dow Jones Industrial Average9 -8.97% 15.44% -38.03%

Franklin Templeton Founding Funds0.96% 17.55% -39.21%

StrategyClass A (Without sales charges)8

Average Annual Total Returns

In a Sideways Market12/31/9912/31/09

S&P 500 Index9 -0.95%

MSCI EAFE Index9 1.58%

Dow Jones Industrial Average9 1.30%

Franklin Templeton Founding Funds 5.50%StrategyClass A (Without sales charges)8

12/99 12/01 12/03 12/05 12/07 12/09

12000

11497.12 10428.05

8000

4000

0

SIDEWAYS

DOWN DOWNUP

If the sales charge had been included, returns would have been lower.

Up, Down and Sideways

Market Performance


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The Power of Dollar-Cost AveragingRegular Investments May Help You Reach Your Long-Term Goals

Dollar-cost averaging is a proven investment technique that may help lower the average cost of the shares

you purchase. Even modest investments made regularly can make a difference when pursuing your long-

term objectives. By investing a fixed dollar amount at regular intervals, you buy more shares when the priceis low and fewer shares when the price is high. As a result, your average share cost may be less than the

average price per share. Dollar-cost averaging requires continuous investments in securities, regardless of

fluctuation in price levels, and investors should consider their financial ability to continue purchases through

periods of low price levels or in changing economic conditions. Such a plan does not assure a profit, nor

protect against a loss in a declining market.

The table below illustrates what would have happened if the maximum annual individual retirement plan

(IRA) contribution was put into a hypothetical investment, the Founding Funds Strategy, every year since

1974, the year IRAs were first available. As you can see, consistent, regular investments over time can make

a big difference.

Past performance does not guarantee future results. Please note that this hypothetical investment does not

take into account federal, state or municipal taxes. If taxes were taken into account, the hypothetical values

shown would have been lower.

Dollar-Cost Averaging with Founding Funds Strategy (With Sales Charges)10

10. The illustration represents performance of a hypothetical combined investment and is for illustrative purposes only. Breakpoints apply; please see prospectus for details.Figures assume reinvestment of dividends and capital gains at net asset value and assume rebalancing to an equal allocation of each of the three funds on an annual basis.

Contribution

Year Annual Investment Value at Year End

1974 $1,500 $1,341

1975 $1,500 $3,657

1976 $1,500 $7,179

1977 $1,500 $9,834

1978 $1,500 $13,000

1979 $1,500 $19,111

1980 $1,500 $24,940

1981 $1,500 $27,191

1982 $2,000 $34,844

1983 $2,000 $47,076

1984 $2,000 $54,154

1985 $2,000 $69,602

1986 $2,000 $85,214

1987 $2,000 $91,174

1988 $2,000 $112,523

1989 $2,000 $133,434

1990 $2,000 $122,744

1991 $2,000 $163,343

1992 $2,000 $187,504

Contribution

Year Annual Investment Value at Year End

1993 $2,000 $236,674

1994 $2,000 $237,500

1995 $2,000 $295,125

1996 $2,000 $347,886

1997 $2,000 $418,687

1998 $2,000 $418,511

1999 $2,000 $482,584

2000 $2,000 $542,266

2001 $2,000 $557,159

2002 $3,000 $519,524

2003 $3,000 $679,195

2004 $3,000 $779,151

2005 $4,000 $835,228

2006 $4,000 $1,003,918

2007 $4,000 $1,043,097

2008 $5,000 $656,500

2009 $5,000 $867,885

2010 $5,000 $965,464

Total $88,000 $965,464


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See How a Systematic Withdrawal Plan Works

A systematic withdrawal plan allows an investor to sell shares at regular intervals for income. In the example below,

a hypothetical, lump-sum purchase of $100,000 was made 30 years ago, on December 31, 1980, in the fundscomposing the Founding Funds Strategy, with sales charges. Beginning the following year, $6,000 of the accounts

value was withdrawn each year, increasing 3% annually to adjust for the cost of living. At the end of the 30-year period

although over a quarter of a million dollars had been withdrawn, the value of the investment would still have increased to

over $1 million.11 Please note that this hypothetical investment does not take into account federal, state or municipa

taxes. If taxes were taken into account, the hypothetical values shown would have been lower.

The results of such a program vary substantially

depending on investment performance during the

period the program is in effect. The rate or amoun

chosen for withdrawal determines the value

remaining at the end of the period. In a period o

declining market values, continued withdrawals

could eventually exhaust the principal.

11. Founding Funds Strategys performance includes reinvestment of dividend

and capital gains, and assumes rebalancing to an equal allocation of eachof the three funds on an annual basis. The figures represent performance of ahypothetical combined investment, are for illustrative purposes only, and assuma 3.5% sales charge (for initial purchases of $100,000 but less than $250,000)

The amounts withdrawn do not represent dividends or income but, rather, theproceeds from the sale of shares. Sufficient shares are sold from theshareholders account at the time of each withdrawal to provide for suchpayments. Investors participating in a systematic withdrawal plan shouldannually review with their financial advisor the results being obtained and thevalue of remaining shares. Based on this annual review, individuals caincrease or decrease the amount of withdrawals, as appropriate.

Investors should probably not begin a systematic withdrawal plan until aleast six months following the initial investment. Otherwise, investors couldreceive a portion of their initial investment, which most likely would not havehad sufficient time to appreciate to offset the sales charges incurred.

CONCERNED ABOUTBAD TIMING?

What if

this hypothetical Systematic

Withdrawal Plan was started

eight years earlier, on 12/31/72,

right before the brutal bear

market of 197374? On 12/31/10

the total amount withdrawn would

have been $414,958, and the

value left in the account would

have been $3,596,211.11

Period Ended Dec. 31 Annual Withdrawal Value at End of Period11

1980 $0 $96,536

1981 $6,000 $93,575

1982 $6,180 $105,909

1983 $6,365 $129,349

1984 $6,556 $136,484

1985 $6,753 $162,681

1986 $6,956 $186,890

1987 $7,164 $188,410

1988 $7,379 $220,369

1989 $7,601 $249,314

1990 $7,829 $218,243

1991 $8,063 $277,870

1992 $8,305 $306,942

1993 $8,555 $374,932

1994 $8,811 $364,387

1995 $9,076 $440,075

1996 $9,348 $505,996

1997 $9,628 $595,953

1998 $9,917 $583,022

1999 $10,215 $658,950

2000 $10,521 $726,943

2001 $10,837 $733,383

2002 $11,162 $669,091

2003 $11,497 $858,312

2004 $11,842 $968,541

2005 $12,197 $1,020,855

2006 $12,563 $1,208,743

2007 $12,940 $1,237,992

2008 $13,328 $762,118

2009 $13,728 $986,313

2010 $14,139 $1,076,905

$285,452 $1,076,905

Total Withdrawn Value Remaining

Are You

Looking for Income?


11/12


Investing Is EasyFranklin Templeton Investments Provides Service You Can Count On

Affordable investment opportunities

For most funds, start by investing as little as $1,000. Or, begin an Automatic Investment Plan, and your

initial and subsequent investments can be as low as $50. Fund shares are purchased at the offering price,which includes a sales charge.

Automatic dividend reinvestment

Dividends can be mailed to you or automatically reinvested in your account or in another Franklin

Templeton fund account within the same class, generally without any additional fees or sales charges.

Exchange shares between Franklin Templeton funds

Fund shares can be exchanged between most Franklin Templeton funds within the same class,

usually without any additional fees or charges.12

Easy access to your money

You may sell your shares at any time. Their value may be more or less than your original cost.

Monthly investment and distribution plans

The Automatic Investment Plan lets you electronically transfer monthly investments from your savings or

checking account to your Franklin Templeton fund account. Franklin Templeton also offers a Systematic

Withdrawal Plan that lets you receive fixed-amount checks from your account on a regular basis.

Discounts on sales charges

Shareholders who use a Letter of Intent or the combined purchase privileges based on Cumulative

Quantity Discounts may be eligible for sales charge discounts on Class A shares. Please see the

appropriate fund prospectus for details.

Convenient online transactions

Online Shareholder Services at franklintempleton.com allows you to manage your investments and fund

accounts 24 hours a day. You can purchase, exchange and sell fund shares, and opt for electronic

delivery of statements.

Registration for Online Shareholder Services is quick and easy. Just log on to franklintempleton.com

and follow the instructions.13

12. Most funds offer multiple share classes, subject to different fees and expenses. Certain exceptions and restrictions apply to the exchange program, as stated in theprospectus, and it may be modified or discontinued by the fund(s). Transfers between funds within a family, while incurring no additional transaction fees, may neverthelessresult in a taxable event.

13. If your account is registered under an Employer Identification Number (EIN) or Tax Identification Number (TIN), you may not have online account access. Please callShareholder Services at (800) 632-2301 for information about these types of accounts.


12/12

V A LU E B L E ND G R OW T H S E C TO R G L O BA L I N TE R N AT I O NA L H Y B RI D A S S E T A L L OC AT I O N F I X ED I N CO M E T A X -F R E E I N CO M E

Founding Funds Strategy vs. S&P 500 Index

Average Annual Total Returns (Periods Ended December 31, 2010)

Without Sales Charges

If you had invested 1 Yr. Ago 3 Yrs. Ago 5 Yrs. Ago 10 Yrs. Ago 20 Yrs. Ago 30 Yrs. Ago

Founding Funds Strategy14 10.62% -3.12% 2.40% 5.41% 10.14% 11.11%

S&P 500 Index15 15.06% -2.86% 2.29% 1.41% 9.14% 10.71%

Founding Funds Strategy performance figures above do not include the Class A maximum 5.75% sales charge (4.25% for Franklin Incom

Fund). If included, the returns would have been lower.

Class A with Maximum Sales Charge for Funds Composing Founding Funds Strategy

Total Annual1-Year 3-Year 5-Year 10-Year 20-Year 30-Year Operating Expenses

Franklin Income Fund16 8.21% 0.53% 4.91% 6.63% 9.94% 10.54% 0.65%

Templeton Growth Fund17 1.33% -9.17% -1.38% 3.62% 9.07% 10.26% 1.10%

Mutual Shares Fund18 5.02% -5.98% 0.19% 4.11% 10.16% 11.53% 1.20%

Class A 30-Day Standardized Yield (As of February 28, 2011)

Franklin Income Fund 4.86%

Performance data represents past performance, which does not guarantee future results. Current performance may differ from the figures show

The funds investment return and principal value will change with market conditions, and you may have a gain or a loss when you sell yo

shares. Please call Franklin Templeton Investments at (800) DIAL BEN/(800) 342-5236 or visitfranklintempleton.com for performance da

current to the most recent month-end.

14. The hypothetical combined investments average annual returns assume an investment divided equally among Class A shares of the funds, include reinvestment of dividends and capital gains at net asvalue and assume rebalancing to an equal allocation of each of the three funds on an annual basis. They are for illustrative purposes only.

15. Source: 2011 Morningstar. The index is unmanaged and assumes reinvestment of dividends. One cannot invest directly in an index.

16. On 5/1/94, the funds Class A shares implemented a Rule 12b-1 plan, which affects subsequent performance.

17. On 1/1/93, a plan of distribution was implemented for these shares under Rule 12b-1, which affects subsequent performance.

18. Prior to 11/1/96, only a single class of fund shares was offered without a sales charge or Rule 12b-1 expenses. Returns shown are a restatement of the original class to include both 12b-1 expenses and the currsales charges applicable to Class A shares as though in effect from the funds inception.

The funds offer other share classes, subject to different fees and expenses that will affect their performance.

This brochure must be preceded or accompanied by current Franklin Income Fund, Templeton Growth Fund and Mutual Shares Fund summa

prospectuses and/or prospectuses. Please carefully read the prospectuses before you invest or send money. Investors should carefully consid

a funds investment goals, risks, charges and expenses before investing. Performance information will be updated with a slipsheet eac

quarter containing standardized performance figures.

Symbols Class A Class C Class R Advisor/Class Z

Franklin Income Fund FKINX FCISX FISRX FRIAX

Templeton Growth Fund TEPLX TEGTX TEGRX TGADX

Mutual Shares Fund TESIX TEMTX TESRX MUTHX

< GAIN FROM OUR PERSPECTIVE>

UPD 05/11 AA XBVL 03

Franklin Templeton Distributors, Inc.

One Franklin Parkway,SanMateo, CA 94403-1906

(800) DIAL BEN (800) 342-5236

TDD/Hearing Impaired (800) 851-0637

franklintempleton.com

2011 F kli T l t I t t All i ht d

frenklin temliton

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