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“Bull markets are born on pessimism,grow on skepticism, mature on optimismand die on euphoria.”—Sir John Templeton,Templeton Funds Founder and Former Chairman

The pullback of the stock market in 2008 left a lasting impression on manyinvestors. The result: a hangover of anxiety about investing in equities andtrillions of dollars sitting in low-yielding savings instruments. 1It’s time to take stock of the current situation facing investors, the humanbehaviour that helped land us here and how investors can rebuild theirportfolios to reach their long-term goals.1] The Investor’s DilemmaSee why investors today face a difficult dilemma—at current yields, their investments inmany traditional fixed income vehicles are essentially at a standstill, while their long-terminvestment goals continue to require capital growth.2] How We Got HereLearn about the instinctive behaviours that impact how we make decisions. Having a greaterunderstanding of these behaviours may help you make better decisions when it comes toinvesting.3] What Most Investors Are MissingWhile it may feel like the economy is still struggling, there are many positive developmentsthat may surprise you.4]Taking the Next StepReview simple strategies for getting back into the stock market, at your own pace, with yourfinancial advisor and Franklin Templeton mutual funds.1. Money Market Accounts and CDs from the U.S.; Money Market Funds and GICs from Canada. As of 9/30/2013.franklintempleton.ca Time to Take Stock 1

2]How We Got HereWe’re Only HumanThe field of behavioural finance examines the psychological and behavioural variables that cancome in to play with investing. As humans, our decisions can be influenced by emotions, biases andassumptions, especially when it comes to money. Recognizing you may be subject to these factorsmay help you make better investment decisions.Availability BiasOur thinking is greatly influenced by what is personally mostrelevant, recent or dramatic. And little has been more dramaticthan the unprecedented events of the 2008 financial crisisthat continues to be at the forefront of investors’ minds.LINGERING PESSIMISM GUIDES PEOPLE’S MONEYEvidence that post-crisis pessimism is starting to fade is only nowbecoming apparent as shown below by the significant positiveinflows from equity funds so far in 2013.U.S. Equity Fund Net Flows 32008 2009 2010 2011 2012-$2 Billion-$23 Billion$161 Billion2013“The investor’s chiefproblem—and evenhis worst enemy—islikely to be himself.”—Benjamin Graham-$128 Billion-$153 Billion-$229 Billion3. Source: Investment Company Institute. As of 12/31/2013.franklintempleton.ca Time to Take Stock 3

The Disconnect Between Perception and RealityFranklin Templeton surveyed one thousand Americans in 2010, 2011, 2012 and 2013 and askedthem how the stock market finished at the end of the previous year. Roughly half of respondentsfor each survey answered that the stock market was down or flat.Perception—What U.S. Investors Believe HappenedPercentage ofSurvey RespondentsWho Said the StockMarket Was Downor Flat 466%200949%201070%201131%2012Reality—How the Market PerformedInvestors have continued to take money out of equity funds, in part due to the belief that thestock market has performed poorly in recent years. But has it? As shown in the chart below, whileU.S. stocks experienced a severe downturn in 2008, the next three years were positive, indicatinga misperception about the stock market’s performance.S&P 500 Annual Returns 526.5%15.1%16.0%2.1%20082009201020112012-37.0%4. Sources: The 2010 Franklin Templeton Global Investor Sentiment Survey, designed in partnership with ORC International, included 1,010 telephone responses from participants age 18 and older in theU.S. from 3/25/10 to 3/28/10. The 2011 Franklin Templeton Global Investor Sentiment Survey, designed in partnership with ORC International, included 1,049 online responses from participants age 18 andolder in the U.S. from 1/6/11 to 1/7/11. The 2012 Franklin Templeton Global Investor Sentiment Survey, designed in partnership with Duke University professor Dan Ariely and Qualtrics, included 1,142 onlineresponses from participants age 18 and older in the U.S. from 1/30/12 to 2/13/12. The 2013 Franklin Templeton Global Investor Sentiment Survey designed in partnership with ORC International. Included 501telephone respondents from participants aged 25 years and older in the U.S. with investable assets of $25,000 or greater from 1/14/13 to 1/25/13.5. Source: © 2013 Morningstar. 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 warrantedto be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Indexes are unmanaged and one cannotinvest directly in an index.4 Time to Take Stock franklintempleton.ca

Loss AversionStudies have shown that the pain of a loss is much stronger than the reward felt from a gain.In fact, the desire to avoid market losses has caused many investors to move their money out ofstocks and into low-yielding fixed income vehicles, trading potential market losses for potentialnegative real returns once the impact of inflation is factored in.PERCEIVED SAFETY MAY COME AT A COSTAs investors, we may make financial decisions to avoid the pain of loss. Investors’ reluctanceto get back into the stock market is evidence of this behaviour.However, this perceived safety may come at a cost. The chart below shows the average moneymarket fund yield over the past 10 years along with the inflation-adjusted yield. Although someinvestors may consider money market funds a “more secure” investment option while they waitout stock market volatility, they may not be aware of the potential erosion of their purchasingpower.Money Market Funds’ Average Yield Before and After Inflation 610-Year Period Ended December 31, 20134%2%0%0.38%-0.81%-2%Inflation-Adjusted-4%1/2004 6/2005 11/2006 4/2008 9/2009 2/2011 7/2012 12/2013The long wait. If you held your money in cash, it would take over181 years for your money to double 76. Sources: Money Market Funds – Morningstar Research Inc. as of December 31, 2013. Canadian Money Market Fund Yield of 0.38% is based on the Morningstar Money Market CAD Peer Group Average whichcontained 189 funds. Inflation – Bank of Canada, as of December 31, 2013. Based on Canadian Consumer Price Index year-over-year change.7. Average Time to Double Investment is calculated using the following formula: (Natural Log (2) / Natural Log (1+Yield)), Formula for Natural Log is LN. Amount earned on a 1-Year $10,000 investmentassumes the investment is made on the as of date below. As of December 31, 2013.franklintempleton.ca Time to Take Stock 5

HerdingAs social animals, it’s not easy to stand behind an opinion that differs from the majority. We areprogrammed to follow the crowd and tend to assume the consensus view to be correct. Unfortunately,when it comes to investing, herd mentality may significantly impact long-term results.The Problem of Going with the FlowIn the chart below, the orange line represents performance of the S&P 500 since December 31,1990 and the green shading represents flows by U.S. investors into equity funds. When the S&P 500performed well, there was an influx of money to equity funds (buying high)—and when the marketpulled back, investors withdrew their money from equities (selling low) and rushed into bond funds.U.S. Investors Following the Herd Historically Bought High and Sold LowS&P 500 Performance vs. Equity and Bond Fund Net New Flows 8S&P 500Equity & BondFund Flows$105,000S&P 500 PerformanceEquity Fund FlowsBond Fund FlowsBUYING HIGH$450 Billion$350 Billion$75,000$250 Billion$45,000$150 Billion$15,000$10,000Investment$50 Billion-$50 Billion-$15,000-$150 Billion-$45,000SELLING LOW12/1990 1994 1998 2002 2006 2010 12/2013-$250 Billion8. Sources: S&P 500: © 2013 Morningstar Research Inc.; Equity and Bond Fund Flows: Investment Company Institute. Flows are represented by monthly 12-month net new cash flows. Indexes are unmanagedand one cannot invest directly in an index. As at December 31, 2013.6 Time to Take Stock franklintempleton.ca

4]Taking the Next StepVolatility has kept many investors onthe sidelines in low-yielding investments.While “playing it safe” may make sensefor investors with short time horizons,this approach leaves long-terminvestors at risk of not achieving theirinvestment goals.Armed with the knowledge that we makedecisions based on emotion, and thatthere are many positive signs that pointto a potentially bright future for equities,now may be a good time to talk to yourfinancial advisor about stepping back intothe stock market.Strategies to Re-Enter theStock MarketStepEarn Income. Work with your financialadvisor to move a portion of your moneyout of fixed income investments andinto a balanced fund (a fund that investsin both stocks and bonds) with a focuson income.10 Time to Take Stock franklintempleton.ca

WALKBuild a Position. Move more confidentlyand develop a plan with your financialadvisor to systematically move your moneyoff the sidelines and back into equity funds.By building an equity position using periodicinvestments, you may be able to buy moreat market dips and less at market peaks.Periodic investing plans do not assure a profitand do not protect against a loss in a decliningmarket.RUNCapitalize on Opportunity. If you’re readyto take advantage of potential opportunitiesand move back into the stock marketbefore the rest of the herd, now may bean opportune time. Talk to your financialadvisor about a strategy that makes sensebased on your investment goals.No matter how you choose to get back into thestock market—stepping, walking or running—Franklin Templeton has the funds to getyou started.franklintempleton.ca Time to Take Stock 11

A Premier Investment Management OrganizationFor more than six decades, individuals and institutions around the world have looked toFranklin Templeton Investments 17 as a trusted partner in asset management. With an unwaveringfocus on investment excellence, we offer a unique combination of experience, global perspectiveand a consistent, disciplined approach to investing that has proven itself across market cycles.A globally diversified business 18 with:Over $875billion (USD)Assets under management65 +Years of ExperienceOffices in over 30countries around the world150 +Countries servedOur Global PresenceArgentina Australia Austria Bahamas Brazil Canada China COLOMBIA France Germany Hong Kong Hungary India ItalyJapan Luxembourg Malaysia Mexico Netherlands Poland Romania Russia Singapore slovakia South Africa South KoreaSpain Sweden Switzerland THAILAND Turkey United Arab Emirates United Kingdom United States URUGUAY Vietnam17. Franklin Resources, Inc. is a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investmentmanagement solutions managed by its Franklin, Templeton, Franklin Mutual Series, Fiduciary Trust, Darby and Franklin Bissett investment teams.18. As of December 31, 2013.12 Time to Take Stock franklintempleton.ca

The Expertise of Many. The Strength of One.Franklin Templeton’s distinct multi-manager structure combines the specialized expertise offour world-class investment management groups—Franklin, Templeton, Franklin MutualSeries and Franklin Bissett. Each of our portfolio management groups operates autonomously,relying on its own research and staying true to the unique investment disciplines that underlieits success.TEMPLETON ®FranklinFranklinBISSETT ®Founded in 1947,Franklin is arecognized leaderin fixed incomeinvesting and alsobrings expertisein growth- andvalue-style equityinvesting.FRANKLIN ® Founded in 1940, Founded in 1949,Templeton pioneeredinternationalinvesting and, in1954, launchedwhat has becomethe industry’s oldestglobal fund. Today,with offices inover 25 countries,Templeton offersinvestors a trulyglobal perspective.MUTUAL SERIES ® Founded in 1982—Franklin MutualSeries is dedicatedto a unique styleof value investing,searching aggressivelyfor opportunity amongwhat it believes areundervalued stocks,as well as arbitragesituations anddistressed securities.recognized leadersin Canadian equity,balanced and fixedincome investing,Franklin Bissett’sapproach to GARPfocuses on findingbusinesses that havegrowth supported bysustained profitability.TO LEARN MORE about Franklin Templeton mutual funds, talk to yourfinancial advisor today. A financial advisor can prove invaluable in helping youdefine your needs and narrowing the search for investments suitable to yourunique financial objectives.

For more than six decades, individuals and institutions around the world have looked to FranklinTempleton Investments as a trusted partner in asset management. We leverage the expertise ofmultiple, independent portfolio teams to deliver specialized expertise across a wide range of stylesand asset classes. Our experts are on the ground in over 30 countries, spotting investment ideasand potential risks firsthand. Collectively, they allow us to offer clients investment solutions shapedby local insight, global context, and a long-term investment horizon.Franklin Templeton Investments Corp.5000 Yonge Street, Suite 900Toronto, ON M2N 0A7Fax: (416) 364-1163Client Services Toll-free: (800) 387-0830www.franklintempleton.caFounding Member of The Canadian Coalition for Good GovernanceCanadian Offices: Calgary • Montreal • TorontoU.S. Offices: Ft. Lauderdale • Fort Lee • Los Angeles • Miami • New York City • Norwalk • Rancho CordovaSalt Lake City • San Mateo • Short Hills • St. Petersburg • Washington D.C. • WilmingtonInternational Offices: Abu Dhabi • Amsterdam • Beijing • Brussels • Buenos Aires • Cape Town • Caracas • ChennaiDubai • Dublin • Edinburgh • Frankfurt • Geneva • Hong Kong • Hyderbad • Istanbul • Johannesburg • LondonLuxembourg • Madrid • Melbourne • Mexico City • Milan • Moscow • Mumbai • Nassau • Paris • Poznan • Rio DeJaneiro • Sao Paulo • Seoul • Shanghai • Singapore • Stockholm • Sydney • Taipei • Tokyo • Vienna • Warsaw • ZurichNYSE: BEN201401061251Commissions, trailing commissions, management fees and expenses all may be associated with mutualfund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, theirvalues change frequently and past performance may not be repeated. Franklin Templeton Fixed IncomeGroup, a business unit of Franklin Templeton Investments Corp., combines the expertise of the FranklinAdvisors, Inc., and Fiduciary Trust Company International fixed income teams. Bissett InvestmentManagement is a division of Franklin Templeton Investments Corp.© 2014 Franklin Templeton Investments Corp. All rights reserved. TSCA BE 12/13