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S I X  S I G M A  I N V E S T I N G W I T H  F R A N K L I N  T E M P L E T O N
Investment Return ,[object Object],20-Year Period Ended December 2007 1
Jumping Out of the Market Could Cost Money ,[object Object],The risk is missing the day the market begins recovering 10-Year Period Ended June 30, 2008 1 Period of Investment S&P 500 Index Average Annual Total Return Stayed fully invested 2.88% Missed the best 10 days -1.79% Missed the best 20 days -5.43% Missed the best 30 days -8.62% Missed the best 40 days -11.32%
Agenda ,[object Object],[object Object],[object Object]
W H A T  I S  S I X  S I G M A ?
Six Sigma ,[object Object],[object Object],[object Object],Six Sigma Statistical Measurement
Industry Defects ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Industries operating at 99% or a level below Six Sigma, could lead to the following results: 1, 2
Average vs. Variation 1 50% Improvement 20 15 10 30 5 17 2 5 12 4 ,[object Object],Existing Process Improved Process 16 Days Average Cycle 8 Days Average Cycle
Customer Complaints Rose 2 (-6) 8 (+9) 17 6 Days Early 9 Days Late Customer Expectation: 8 Days 1 ,[object Object],Improved Process 17 2 5 12 4 8 Days
Success   =  Results - Expectations
The Idea of Six Sigma  ,[object Object],[object Object],[object Object],Customers Feel the Variance, Not the Average
Reduce the Variance 1 ,[object Object],7 9 9 8 7 8 Days Delivery Time (In Days)
Six Sigma Review  ,[object Object],[object Object],[object Object]
S I X  S I G M A  I N V E S T M E N T  P R O C E S S
Investment Return ,[object Object],20-Year Period Ended December 2007 1
Types of Risk ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
What Is Expected? Average Annual Total Index Returns Since Inception 1 ,[object Object],[object Object],[object Object],[object Object],[object Object],For the Period Ended 12/31/07 Inception Average Annual Total Index Return S&P 500 Index  1929 9.16% Russell 2000    Index   1979 12.79% MSCI EAFE Index 1970 11.57% Lehman Brothers U.S. Aggregate Index   1976 8.55% Asset-Allocated Portfolio 2 1976 11.24%
Missed Expectations? 1-Year Holding Periods 1   ,[object Object],[object Object],[object Object],[object Object],[object Object],For the Period Ended 12/31/07 1976 1976 1970 1979 1929 Inception Average Annual Total Index Return +/- 20% of Average Annual Total Index Return S&P 500 Index 9.16% 3 of 79 Russell 2000    Index   12.79% 0 of 29 MSCI EAFE Index 11.57% 4 of 38 Lehman Brothers U.S. Aggregate Index 8.55% 10 of 32 Asset-Allocated Portfolio 2 11.24% 6 of 32
Missed Expectations? 5- and 10-Year Holding Periods  ,[object Object],[object Object],[object Object],[object Object],[object Object],For the Period Ended 12/31/07 1976 1976 1970 1979 1929 Inception Average Annual Total Index Return  Since Inception +/- 20% of Average Annual Total Index Return, 5-Year +/- 20% of Average Annual Total Index Return, 10-Year S&P 500 Index  9.16% 15 of 75 15 of 70 Russell 2000    Index   12.79% 7 of 25 11 of 20 MSCI EAFE Index 11.57% 9 of 34 4 of 29 Lehman Brothers  U.S. Aggregate Index   8.55% 13 of 28 11 of 23 Asset-Allocated Portfolio 2 11.24% 7 of 28 8 of 23
The Emotions of Investing ,[object Object],[object Object],[object Object],[object Object]
Six Sigma Investment Process ,[object Object],[object Object],Investors Feel the Variance, Not the Average
[object Object],[object Object],[object Object],[object Object],Types of Risk Management
Six Sigma Risk Analysis ,[object Object],[object Object]
Risk vs. Return Top 100 Domestic Equity Funds Based on Net Assets (Without Sales Charges) ,[object Object],[object Object],20-Year Period Ended June 30, 2008 1
Scenario A—Higher Return/Higher Risk Fund for 20 Years 13% Return, 21% Standard Deviation 13% 68% -21 +21 34% -8% 95% +21 -21 55% -29% 99.99966% +21 -21 76% -50%
11% Return, 11% Standard Deviation Scenario B—Lower Risk/Lower Return Fund for 20 Years 11%  TE SIX 68% -11 +11 22% 0% 95% +11 -11 33% -11% 99.99966% +11 -11 44% -22%
Putting Risk in Its Place 1 ,[object Object],[object Object],[object Object]
Six Sigma Validation ,[object Object],[object Object],[object Object]
Six Sigma Validation ,[object Object],[object Object]
Predicting the Future 1 ,[object Object],[object Object],[object Object]
The Draw-Down Problem 1 ,[object Object],[object Object],Assumption: $100,000 investment + 8% initial withdrawal that increases by 4% each year. Average Annual  Total Return % Since 12/31/72 Portfolio Return % Since 12/31/72 Income Payout Year Account Depleted Remaining Balance As of 12/31/07 Short Hills, NJ 15.24% 15.75% $589,218  N / A $5,594,980  Valley Forge, PA 13.02% 11.88% $589,218  N / A $323,824  Los Angeles, CA 12.29% 11.73% $589,218  N / A $240,068  Los Angeles, CA 12.86% 11.71% $589,218  N / A $230,149  Boston, MA 11.72% 11.69% $589,218  N / A $215,764  New York, NY 12.26% 11.44% $589,218  N / A $91,044  Philadelphia, PA 11.03% 10.99% $497,958  2004 $0  Montpelier, VT 11.76% 10.56% $399,943  2001 $0  Lisle, IL 11.22% 7.59% $198,196  1990 $0  Boston, MA 10.13% 3.34% $125,969  1985 $0
Words of Wisdom ,[object Object],[object Object]
S I X  S I G M A  I N V E S T I N G W I T H  F R A N K L I N  T E M P L E T O N
The Draw-Down Problem 1 Mutual Shares Fund ,[object Object],[object Object],Assumption: $100,000 investment + 8% initial withdrawal that increases by 4% each year. Average Annual  Total Return % Since 12/31/72 Portfolio Return %  Since 12/31/72 Income Payout Year Account Depleted Remaining Balance As of 12/31/07 15.24% 15.75% $589,218  N / A $5,594,980  Valley Forge, PA 13.02% 11.88% $589,218  N / A $323,824  Los Angeles, CA 12.29% 11.73% $589,218  N / A $240,068  Los Angeles, CA 12.86% 11.71% $589,218  N / A $230,149  Boston, MA 11.72% 11.69% $589,218  N / A $215,764  New York, NY 12.26% 11.44% $589,218  N / A $91,044  Philadelphia, PA 11.03% 10.99% $497,958  2004 $0  Montpelier, VT 11.76% 10.56% $399,943  2001 $0  Lisle, IL 11.22% 7.59% $198,196  1990 $0  Boston, MA 10.13% 3.34% $125,969  1985 $0
Mutual Series’ Investment Strategy ,[object Object]
Low Relative Risk ,[object Object],[object Object],Mutual Shares Fund vs. S&P 500 Index (Without Sales Charge)  Risk vs. Return Comparison 35-Year Period Ended June 30, 2008 1
The Value of Active Management ,[object Object],[object Object],[object Object],[object Object],Performance of Mutual Shares Fund  Without Sales Charge 1 With Maximum 5.75% Sales Charge 1 Class A Shares as of June 30, 2008 1-Year 3-Year 5-Year 10-Year 20-Year 35-Year Mutual Shares Fund–Class A 2 -19.47% 3.70% 8.21% 6.51% 10.76% 15.12% S&P 500 Index 3 -13.12% 4.41% 7.58% 2.88% 10.44%  10.92% 1-Year 3-Year 5-Year 10-Year 20-Year 35-Year Mutual Shares Fund–Class A 2 -24.09% 1.67% 6.93% 5.89% 10.43% 14.93%
How Much Risk Is Acceptable? Without Sales Charge as of June 30, 2008 0.92 1.00? 1.25? 3-Year Beta 3 … ,[object Object],[object Object],[object Object],[object Object],1-Year 3-Year 5-Year 10-Year 20-Year 35-Year Mutual Shares Fund–Class A 1 -19.47% 3.70% 8.21% 6.51% 10.76% 15.12% S&P 500 Index 2 -13.12% 4.41% 7.58% 2.88% 10.44%  10.92%
How Much Risk Is Acceptable? Without Sales Charge as of June 30, 2008 ,[object Object],[object Object],[object Object],[object Object],1-Year 3-Year 5-Year 10-Year 20-Year 35-Year Mutual Shares Fund–Class A 1 -19.47% 3.70% 8.21% 6.51% 10.76% 15.12% S&P 500 Index 2 -13.12% 4.41% 7.58% 2.88% 10.44%  10.92% Beta 3 —  0.92 0.87 0.66 0.63 0.62
Review ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
The Next Step ,[object Object],[object Object],[object Object],[object Object],[object Object],474 XINV To order, please call  1-800/223-2141
6SIG PPT 08/08 Please ask your clients to consider the investment objectives, risks, charges and expenses of the investment carefully before investing. The prospectus contains this and other information about the fund and can be obtained by contacting you, the financial professional. Instruct your clients to read the prospectus carefully before investing.

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Six Sigma Investing

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  • 2.  
  • 3. S I X S I G M A I N V E S T I N G W I T H F R A N K L I N T E M P L E T O N
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  • 7. W H A T I S S I X S I G M A ?
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  • 12. Success = Results - Expectations
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  • 16. S I X S I G M A I N V E S T M E N T P R O C E S S
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  • 27. Scenario A—Higher Return/Higher Risk Fund for 20 Years 13% Return, 21% Standard Deviation 13% 68% -21 +21 34% -8% 95% +21 -21 55% -29% 99.99966% +21 -21 76% -50%
  • 28. 11% Return, 11% Standard Deviation Scenario B—Lower Risk/Lower Return Fund for 20 Years 11%  TE SIX 68% -11 +11 22% 0% 95% +11 -11 33% -11% 99.99966% +11 -11 44% -22%
  • 29.
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  • 35. S I X S I G M A I N V E S T I N G W I T H F R A N K L I N T E M P L E T O N
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  • 44. 6SIG PPT 08/08 Please ask your clients to consider the investment objectives, risks, charges and expenses of the investment carefully before investing. The prospectus contains this and other information about the fund and can be obtained by contacting you, the financial professional. Instruct your clients to read the prospectus carefully before investing.

Editor's Notes

  1. Main Idea: Franklin Templeton branding slide.