8/3/2019 Franklin Templeton - High Income Fund

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FRANKLIN

HIGH INCOME FUND

FIXED INCOMEAS OF 9/30/11

7.71%A

7.54%

30-Day Standardized Yield6Class

C

YIELDS (As of September 30, 2011)

0%

5%

10%

15%

20%

10/01 4/04 10/06 4/09

FRANKLIN HIGH INCOME FUNDCLASS A

HAS OFFERED A COMPETITIVE YIELD10-Year Period Ended September 30, 2011

NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE

Franklin High Income FundClass A30-Day Standardized Yield

Barclays CapitalU.S. Credit Index3

Barclays CapitalU.S. Aggregate Bond Index

Please remember, higher yields reflect the higher credit risks associated with the funds investments.

Without Sales ChargesWith Maximum Sales Charges5

AVERAGE ANNUAL TOTAL RETURNS (As of September 30, 2011)

verage Duration1,2: 4.6 years

verage Weighted Maturity1: 6.8 years

ividends: Monthly on or near the third business day

Class A: 0.77%; Class C: 1.27%

OTAL ANNUAL OPERATING EXPENSES

nception: 12/31/69

umber of Holdings1: 261

ssets: $3.5 billion

UND DATA

FHIRX

R

erformance data represents past performance, which

oes not guarantee future results. Current performance

may differ from figures shown. The funds investment

eturn and principal value will change with market

onditions, and you may have a gain or a loss when you

ell your shares. Please call Franklin Templeton

nvestments at (800) DIAL BEN/342-5236 or visit

ranklintempleton.com for the most recent

month-end performance.

FVHIXFCHIXFHAIX

MAXIMUM SALES CHARGES

Class A: 4.25% initial sales charge

Class C: 1% contingent deferred sales charge

(CDSC) in the first year only

C Advisor A

ymbol by Class:

UND GOAL

he fund seeks a high level of current income, with aecondary focus on capital appreciation, by investing

ubstantially in higher-yielding, lower-rated corporateonds.

6.047.90%5.43%0.91%6.04%7.90%5.43%-0.03%5/16/95C

7.81

Sinc

Incept

8.43%

10 Yrs

5.89%

5 Yrs

0.89%

1 Yr

7.69%

Since

Inception

7.97%

10 Yrs

5.00%

5 Yrs

A

Class

12/31/69

Inception

Date

-3.47%

1 Yr

1. As of 9/30/11. Holdings are subject to change. For updatedinformation, please call Franklin Templeton Investments at(800) DIAL BEN/342-5236 or visit franklintempleton.com.

2. Duration shown is the option-adjusted duration. Duration isan indication of a funds sensitivity to changes in interest rates.The option-adjusted formula takes into account embedded calloptions and redemption features that impact a bonds expectedcash flows, and thus its interest rate sensitivity.

3. Source: 2011 Morningstar. All issues included in theBarclays Capital U.S. Credit Index are rated investment grade.Indexes are unmanaged, and one cannot invest directly inan index.

4. Source: 2011 Morningstar. Indexes are unmanaged, andone cannot invest directly in an index.

5. Class A: Prior to 7/1/94, these shares were offered at alower initial sales charge; thus actual returns would havediffered. On 5/1/94, the fund implemented a Rule 12b-1 plan,which affects subsequent performance. Class C: Prior to1/1/04, these shares were offered with an initial sales charge;thus actual returns would have differed. The fund offers othershare classes, subject to different fees and expenses that willaffect their performance.

6. The 30-Day Standardized Yield reflects an estimated yield tomaturity. It should be regarded as an estimate of the fund's rateof investment income, and it may not equal the fund's actualincome distribution rate, which reflects the funds pastdividends paid to shareholders.

7. CFA and Chartered Financial Analyst are trademarksowned by CFA Institute.

8. Source: Morningstar, 6/30/11. The style box reveals ainvestment style. For credit quality of the bonds oMorningstar combines credit rating information provided fund companies (only using ratings assigned by a NatRecognized Statistical Rating Organization NRSRO) waverage default rate calculation to come up with a weaverage credit quality. The weighted-average credit qucurrently a letter that roughly corresponds to the scale ua leading NRSRO. Funds with a low credit quality styplacement are those whose weighted-average credit quless than BBB-; medium are those less than AA- but greequal to BBB-; and high are those of AA- or higher.classifying a bond portfolio, Morningstar first maps the Ncredit ratings of the underlying holdings to their respdefault rates (as determined by Morningstars analysis of

historical default rates). Morningstar then averages default rates to determine the average default rate for thebond fund. Finally, Morningstar maps this average defato its corresponding credit rating along a convex curvinterest-rate sensitivity, Morningstar obtains fromcompanies the average effective duration. GenMorningstar classifies a fixed-income funds interesensitivity based on effective duration of the MorningstaBond Index (MCBI), which is currently three yearsclassification of Limited will be assigned to those funds average effective duration is between 25% to 75% of Maverage effective duration; average effective duration be

75% to 125% of the MCBI will be classified as Moderatthose at 125% or greater of the MCBI will be classifExtensive. Shaded areas show the past 3 years of qudata. Past performance does not guarantee future res

8/3/2019 Franklin Templeton - High Income Fund

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FRANKLIN HIGH INCOME FUND FIXED INCOME

ranklin Templeton Distributors, Inc.ne Franklin Parkwayan Mateo, California 94403-190600) DIAL BEN/342-5236

DD (Hearing Impaired) (800) 851-0637anklintempleton.com 105 FF 09/11 UP 2011 Franklin Templeton Investments. All rights reserved.

GAIN FROM OUR PERSPECTIVE

Franklin Templetons distinct multi-manager structure combines the specialized expertise of three world-class

investment management groupsFranklin, Templeton and Mutual Series.

Specialized Expertise

Each of our portfolio management groups operates autonomously, relying on its own research and staying true

the unique investment disciplines that underlie its success.

Franklin. Founded in 1947, Franklin is a recognized leader in fixed income investing and also brings expert

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 investor

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 a

distressed securities.

2011 Morningstar, Inc. All rights reserved. The informationontained herein: (1) is proprietary to Morningstar and/or itsontent providers; (2) may not be copied or distributed; and3) is not warranted to be accurate, complete or timely. Neitherorningstar nor its content providers are responsible for any

amages or losses arising from any use of this information.

URATION ExtModd

QUALITY

High

Medium

Low

MORNINGSTAR STYLE BOX8

WHAT ARE THE RISKS?

he risks associated with higher-yielding, lower-rated

ecurities include higher risk of default and loss of

rincipal. Investment in foreign securities also involvespecial risks, including currency fluctuations, and

olitical and economic uncertainty. In addition, interestate movements will affect the funds share price and

eld. Bond prices generally move in the opposite

irection of interest rates. Thus, as the prices of bonds

n the fund adjust to a rise in interest rates, the funds

hare price may decline. Changes in the financial

trength of a bond issuer or in a bonds credit rating

may affect its value. The fund is actively managed but

here is no guarantee that the managers investmentecisions will produce the desired results. These and

ther risk considerations are discussed in the fundsrospectus.

nvestors should carefully consider a funds investment

oals, risks, charges and expenses before investing. Tobtain a summary prospectus and/or prospectus, which

ontains this and other information, talk to your financial

dvisor, call us at (800) DIAL BEN/342-5236 or visit

ranklintempleton.com. Please carefully read a

rospectus before you invest or send money.

ORTFOLIO MANAGERS7

hristopher J. Molumphy, CFA

ince 1991; joined Franklin in 1998

ric G. Takaha, CFA

ince 2005; joined Franklin in 1989

Historical

Current

PORTFOLIO BREAKDOWN9 (As of September 30, 2011)

MANAGERS PERSPECTIVE

Franklin High Income Fund follows a disciplined investment approach established over 30 years ago. We mai

invest in higher-yielding, lower-rated corporate bonds, issued by domestic companies. We examine specific

industries and individual companies in detail, researching the critical measurements of a companys long-term

performance such as financial structure, cash flow, earnings prospects, market share and strategic positioning

Christopher J. Molumphy, Portfolio Manager

-3.435.29%11.59%3.91%9.23%3.18%-22.54%44.33%13.14%-1.90%

2020032004200520062007200820092010YTD 2011

19199319941995199619971998199920002001

16.6-1.54%12.09% 18.67%1.52%-7.37%

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

0.48% 17.63%14.21%2.92%

CALENDAR YEAR TOTAL RETURNSCLASS A (Without Sales Charge)

Energy ...........................................................................20

Healthcare ....................................................................... 8

Finance ............................................................................ 6

Media Non Cable ............................................................. 5Technology ...................................................................... 4

Media Cable .................................................................... 4

Industrial .......................................................................... 4

Food and Beverage ......................................................... 4

Other .............................................................................39

Cash ................................................................................ 3

9. Holdings are subject to change. Due to rounding, thesum of portfolio holdings may not equal 100%. For updatedinformation, please call Franklin Templeton Investments at(800) DIAL BEN/342-5236 or visit franklintempleton.com.

10. Source: Morningstar, 9/30/11. For each fund with at least a3-year history, Morningstar calculates a risk-adjusted returnmeasure that accounts for variation in a funds monthly

performance (including the effects of all sales charges), placingmore emphasis on downward variations and rewardingconsistent performance. The top 10% of funds in each category

receive a Morningstar Rating of 5 stars, the next receive 4 stars, the next 35% receive 3 stars, the next receive 2 stars, and the bottom 10% receive 1 star. share class is counted as a fraction of one fund andseparately.) The fund received Morningstar Ratings of 3,4 stars for the 3-, 5- and 10-year periods, respectivelyperformance does not guarantee future results. MornRating is for Class A shares only; other classes madifferent performance characteristics.

MORNINGSTAR RATING10

As of September 30, 2011, the funds Class A shares received a 4-star overall Morningstar RatingTM, measurin

risk-adjusted returns against 505, 425 and 284 U.S.-domiciled High Yield Bond funds for the 3-, 5- and 10-yea

periods, respectively. A funds overall rating is derived from a weighted average of the performance figures

associated with its 3-, 5- and 10-year (if applicable) rating metrics.