5 Things You Need to Know to Ride out a Volatile Stock Market

5 THINGS YOU NEED TO KNOW TO RIDE OUT A VOLATILE STOCK MARKET

WATCHING FROM THE 1 SIDELINES MAY COST YOU

When markets become volatile, a lot of people try to guess when stocks will bottom out. In the meantime, they often park their investments in cash. But just as many investors The market are slow to recognize a retreating stock market, many also fail to see an upward trend in seems to be the market until after they have missed opportunities for gains. Missing out on these opportunities can take a big bite out of your returns. Consider that on average, for the 12 ‘‘up one day months following the end of a bear market, a fully invested stock portfolio had an average and down the total return of 37.1%. However, if an investor missed the first six months of the recovery by holding cash, their return would have been only 7.6%.1 next. I’d rather

The chart below is a hypothetical illustration showing the risk of trying to time the market. wait before By missing just a few of the stock market’s best single-day advances, you could put a real investing.” crimp in your potential returns.

Jumping in and out of the Market May Cost You 20 Years Ended December 31, 2020

Average Annual Total Return of S&P 500 Index2 Stayed Fully Invested 7.47%

Missed the 10 Best Days 3.36%

Missed the 20 Best Days Missed the Missed the 0.69% 30 Best Days 40 Best Days

-1.50%

-3.45%

This chart is for illustrative purposes only.

1. Source: © 2021 Ned Davis Research Group, Inc. Ned Davis Research defines a bear market as a 30% drop in the Dow Jones Industrial Average after 50 calendar days or a 13% decline after 145 calendar days. Reversals of 30% in the Value Line Geometric Index also qualify. As of 12/31/20, 29 bear markets were analyzed from 9/3/29 through 2/11/16. For illustrative purposes only. Indexes are unmanaged, and one cannot invest directly in an index. Important index provider notices and terms available at www.franklintempletondatasources.com. 2. Source: Standard & Poor’s. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges.

Not FDIC Insured | May Lose Value | No Bank Guarantee DOLLAR-COST AVERAGING MAKES IT 2 EASIER TO COPE WITH VOLATILITY

Most people are quick to agree that volatile markets may present buying opportunities for investors with a long-term horizon. But mustering the discipline to make purchases during a volatile market It’s hard to can be difficult. You can’t help wondering, “Is this really the right time to buy?” invest when Dollar-cost averaging can help reduce anxiety about the investment process. Simply put, dollar- stocks are cost averaging is committing a fixed amount of money at regular intervals to an investment. You ‘‘ buy more shares when prices are low and fewer shares when prices are high. And over time, this volatile.” your average cost per share may be less than the average price per share. Dollar-cost averaging involves a continuous, disciplined investment in fund shares, regardless of fluctuating price levels. Investors should consider their financial ability to continue purchases through periods of low price levels or changing economic conditions. Such a plan does not guarantee a profit or eliminate risk, nor does it protect against loss in a declining market.

Dollar-Cost Averaging at Work

Monthly Investment Shares Purchased Month Amount Share Price Each Month January $500 $9.00 55.6 February $500 $10.00 50.0 March $500 $8.00 62.5 April $500 $11.75 42.6 May $500 $12.25 40.8 The average cost of your shares would be June $500 $9.00 55.6 $0.23 less than the average price of your shares over that period. Figures are for Total $3,000 $60.00 307.1 illustrative purposes only.

Average Share Price: $10.00 ($60.00/6 purchases) Average Share Cost: $9.77 ($3,000/307.1)

NOW MAY BE A GREAT TIME 3 FOR A PORTFOLIO CHECKUP

Is your portfolio as diversified as you think it is? Meet with your financial professional to find out. Your portfolio’s weightings in different asset classes may shift over time as one I wonder investment performs better or worse than another. Together with your financial professional, you can re-examine your portfolio to see if you are properly diversified. You can also if I should determine whether your current portfolio mix is still a suitable match with your goals ‘‘be more and risk tolerance. diversified.”

WHY DIVERSIFY? BECAUSE WINNERS ROTATE. Perhaps nothing better illustrates the need for an asset allocation plan than the chart below, which shows how various asset classes performed on a year-by-year basis from 1999 through 2018. The best-performing asset class for each calendar year is at the top of each column. Please remember, past performance does not guarantee future results. See how different asset classes have performed over time.

ANNUAL TOTAL RETURNS OF KEY ASSET CLASSES 1999–20181 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Best Emerging Small Small Global Emerging Emerging Emerging Emerging Emerging Global Emerging Small Bonds Emerging Small Large Large Small Emerging Bonds Best Market Value Value Bonds Market Market Market Market Market Bonds Market Growth Market Growth Growth Growth Value Market Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks 66.41% 22.83% 14.02% 19.49% 56.28% 25.95% 34.54% 32.55% 39.82% 10.89% 79.02% 29.09% 7.84% 18.63% 43.30% 14.89% 5.52% 31.74% 37.75% 0.01% Small Bonds Bonds Bonds Small Small Foreign Foreign Foreign Bonds High Small Global Small Small Large Bonds High Large Large Growth Growth Value Stocks Stocks Stocks Yield Value Bonds Value Value Value Yield Growth Growth Stocks Stocks Stocks Bonds Stocks Stocks Stocks Stocks Bonds Stocks Stocks 43.09% 11.63% 8.44% 10.26% 48.54% 22.25% 14.02% 26.86% 11.63% 5.24% 54.22% 24.50% 6.35% 18.05% 34.52% 12.36% 0.55% 18.25% 27.44% -0.01% Hedge Large High High Small Foreign Hedge Small Global Hedge Small Emerging High Foreign Large Bonds Foreign Large Foreign Global Strategy Value Yield Yield Value Stocks Strategy Value Bonds Strategy Growth Market Yield Stocks Growth Stocks Value Stocks Bonds Ask your financial professional for a copy of Franklin Composite Stocks Bonds Bonds Stocks Composite Stocks Composite Stocks Stocks Bonds Stocks Stocks 31.29% 6.08% 5.80% 3.10% 46.03% 20.70% 9.27% 23.48% 10.95% -19.02% 34.47% 19.20% 5.47% 17.90% 32.75% 5.97% -0.39% 17.40% 25.62% -0.84% Large Hedge Hedge Hedge Foreign Large Large Large Hedge High Foreign Large Large Large Large Small Hedge Emerging Small High Growth Strategy Strategy Strategy Stocks Value Value Value Strategy Yield Stocks Value Growth Value Value Growth Strategy Market Growth Yield Stocks Composite Composite Composite Stocks Stocks Stocks Composite Bonds Stocks Stocks Stocks Stocks Stocks Composite Stocks Stocks Bonds 28.25% 4.98% 4.62% -1.44% 39.17% 15.71% 5.82% 20.80% 9.95% -26.17% 32.46% 15.10% 4.65% 17.68% 31.99% 5.60% -1.11% 11.60% 22.17% -2.37% Foreign Global Global Emerging Large Small Small Small Large Small Large Large Large High Foreign Small Small Small Large Hedge Stocks Bonds Bonds Market Value Growth Value Growth Growth Value Growth Growth Value Yield Stocks Value Growth Growth Value Strategy Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Stocks Bonds Stocks Stocks Stocks Stocks Composite 27.30% 1.59% -0.99% -6.00% 31.79% 14.31% 4.71% 13.35% 9.13% -28.92% 31.57% 15.05% -0.48% 14.71% 23.29% 4.22% -1.38% 11.32% 15.36% -3.52% Large High Emerging Small High High Small Hedge Small Large Large High Small Large Hedge Hedge Large Large Hedge Large Value Yield Market Value Yield Yield Growth Strategy Growth Growth Value Yield Growth Growth Strategy Strategy Value Growth Strategy Value Stocks Bonds Stocks Stocks Bonds Bonds Stocks Composite Stocks Stocks Stocks Bonds Stocks Stocks Composite Composite Stocks Stocks Composite Stocks 12.72% -5.21% -2.37% -11.43% 27.94% 11.95% 4.15% 12.89% 7.05% -34.92% 21.18% 14.42% -2.91% 14.61% 9.14% 2.98% -3.13% 6.89% 8.52% -8.95% High Foreign Small Foreign Large Global Large High Bonds Small Small Hedge Hedge Small High High Global Hedge Small Small Yield Stocks Growth Stocks Growth Bonds Growth Yield Growth Value Strategy Strategy Growth Yield Yield Bonds Strategy Value Growth Templeton’s (Lit. Bonds Stocks Stocks Stocks Bonds Stocks Stocks Composite Composite Stocks Bonds Bonds Composite Stocks Stocks Why Diversify? Because Winner’s Rotate 3.28% -13.96% -9.23% -15.66% 25.66% 10.35% 4.00% 11.92% 6.97% -38.54% 20.58% 10.25% -5.25% 14.59% 7.53% 1.86% -3.57% 5.45% 7.84% -9.31% Bonds Large Large Large Hedge Hedge Bonds Large High Large Hedge Foreign Small Hedge Bonds Global High Bonds Global Small Growth Value Value Strategy Strategy Growth Yield Value Strategy Stocks Value Strategy Bonds Yield Bonds Value Stocks Stocks Stocks Composite Composite Stocks Bonds Stocks Composite Stocks Composite Bonds Stocks -0.82% -22.08% -11.71% -20.85% 19.55% 9.05% 2.43% 11.01% 2.65% -39.22% 20.00% 8.21% -5.50% 6.37% -2.02% -0.48% -4.93% 2.65% 7.49% -12.86% Small Small Large Large Global Large High Global Large Foreign Bonds Bonds Foreign Bonds Emerging Emerging Small Global High Foreign Value Growth Growth Growth Bonds Growth Yield Bonds Value Stocks Stocks Market Market Value Bonds Yield Stocks Stocks Stocks Stocks Stocks Stocks Bonds Stocks Stocks Stocks Stocks Bonds -1.49% -22.43% -12.73% -23.59% 14.91% 6.13% 2.26% 6.12% 1.99% -43.06% 5.93% 6.54% -11.73% 4.21% -2.27% -1.82% -7.47% 1.60% 7.03% -13.36% Global Emerging Foreign Small Bonds Bonds Global Bonds Small Emerging Global Global Emerging Global Global Foreign Emerging Foreign Bonds Emerging Bonds Market Stocks Growth Bonds Value Market Bonds Bonds Market Bonds Bonds Stocks Market Stocks Market Stocks Stocks Stocks Stocks Stocks Stocks Stocks Worst -4.27% -30.61% -21.21% -30.26% 4.10% 4.34% -6.88% 4.33% -9.78% -53.18% 2.55% 5.17% -18.17% 1.65% -4.00% -4.48% -14.60% 1.51% 3.54% -14.25% Worst 1. Source: Morningstar. n Large growth stocks are represented by the S&P Growth Index; n Large value stocks are represented by the S&P 500 Value Index; n Small growth stocks are represented by the To take advantage of the strong returns of each year’s Code: ALLOC FL). Russell 2000 Growth Index; n Small value stocks are represented by the Russell 2000 Value Index; n Foreign stocks are represented by the MSCI EAFE Index; n Bonds are represented by the Bloomberg Barclays U.S. Aggregate Bond Index; n High yield bonds are represented by the Credit Suisse High Yield Index; n Emerging market stocks are represented by the MSCI Emerging Markets Index; n Global “winners,” it is important to develop a well-balanced portfolio bonds are represented by the FTSE World Government Bond Index; and n Hedge Strategies are represented by the HFRI Fund Weighted Composite Index. Indexes are unmanaged and one cannot invest with investments across all asset classes. Franklin Templeton, directly in an index. Index returns do not reflect any fees, expenses or sales charges. Past performance is no guarantee of future results. one of the largest mutual fund organizations in the United Diversification does not guarantee a profit or protect against loss. Certain asset classes carry relatively higher risks. Small capitalization stocks can be more volatile than large capitalization stocks. High-yield bonds have a higher risk States, offers a variety of professionally managed mutual of default and loss of principal compared to US investment grade bonds. Foreign investing involves special risks, including currency fluctuations, and political and funds that cover every major asset class. economic uncertainty. Emerging markets stocks involve heightened risks related to the same factors, in addition to those associated with their relatively small size and lesser liquidity. Investment in hedge strategies are speculative investments, entail significant risk and should not be considered a complete investment program. The indexes above do not represent the performance of any Franklin Templeton fund. For current performance of any Franklin Templeton fund, please visit franklintempleton.com or call (800) DIAL BEN®/342-5236. Not FDIC Insured | May Lose Value | No Bank Guarantee

2 5 Things You Need to Know to Ride out a Volatile Stock Market franklintempleton.com TUNE OUT THE NOISE AND GAIN 4 A LONGER-TERM PERSPECTIVE

Numerous television stations, websites and social media channels are dedicated to reporting investment news 24 hours a day, seven days a week. What’s more, there are With so many almost too many financial publications to count. While the media provides a valuable opinions about service, they typically offer a very short-term outlook. To put your own investment plan in a longer-term perspective and bolster your confidence, you may want to look at how ‘‘the market, different types of portfolios have performed over time. I don’t know who Hypothetical Performance of Asset Allocation Portfolios to listen to.” 20 Years Ended December 31, 20203

1-YEAR CUMULATIVE RETURNS (%) Growth of Average a $10,000 Annual Investment Total Return Best Worst 100% Stocks $40,110 7.19% 38.37 -37.95 80% Stocks | 20% Bonds $39,068 7.05% 31.52 -29.31 60% Stocks | 40% Bonds $36,789 6.73% 24.66 -20.67 40% Stocks | 40% Bonds | 20% Cash $29,504 5.56% 17.20 -12.72 20% Stocks | 60% Bonds | 20% Cash $26,189 4.93% 10.99 -4.09

The hypothetical asset allocation portfolios shown above are for illustrative purposes only. They do not represent the past or future portfolio composition or performance of any Franklin Templeton fund and are not intended as investment advice. We suggest working with your financial professional to see which allocation opportunities may be right for you.

For a more complete picture of how markets have performed over the decades, order a copy of Franklin Templeton’s 91 Years of Bulls and Bears brochure (Lit. Code: THEME BE).

To order literature, please visit franklintempleton.com, contact your financial professional or call Franklin Templeton at (800) DIAL BEN/342-5236.

BELIEVE YOUR BELIEFS 5 AND DOUBT YOUR DOUBTS

There are no real secrets to managing volatility. Most investors already know that the best way to navigate a choppy market is to have a good long-term plan and a well-diversified We’re portfolio. But sticking to these fundamental beliefs is sometimes easier said than done. When put to the test, you sometimes begin doubting your beliefs and believing your sticking to doubts, which can lead to short‑term moves that divert you from your long-term goals. ‘‘our long-term To keep a balanced perspective, we recommend that you contact your financial investment professional before making any changes to your portfolio. plan.”

3. Source: © 2021 Morningstar, Inc., 12/31/20. 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 use of this information. Past performance does not guarantee future results. Stock investments are represented by equal investments in the S&P 500 Index, Russell 2000® Index, and MSCI EAFE Index, representing large U.S. stocks, small U.S. stocks, and foreign stocks, respectively. Bonds are represented by the Bloomberg Barclays U.S. Aggregate Index. Cash equivalents are represented by the FTSE 3-Month U.S. Treasury Bill Index. Portfolios are rebalanced annually. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. franklintempleton.com 5 Things You Need to Know to Ride out a Volatile Stock Market 3 THE VALUE OF PROFESSIONAL ADVICE We believe investors can benefit from the expertise of a financial professional who can help you define your goals and needs, then identify investments that meet your financial objectives. To invest in Franklin Templeton funds or to learn more about our offerings, please contact your financial professional.

A FEW WORDS ABOUT ASSET ALLOCATION While asset allocation can be a valuable tool to help reduce volatility, all investments involve risk, including possible loss of principal. Typically, the more aggressive the investment or the greater the potential return, the more risk involved. Generally, investors should be comfortable with some fluctuation in the value of their investments, especially over the short term. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in a fund adjust to a rise in interest rates, that fund’s share price may decline. Foreign investing carries additional risks such as currency and market volatility and political or social instability; risks which are heightened in developing countries. Diversification does not guarantee a profit or protect against loss. A fund’s specific risks are described in greater detail in the prospectus.

Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information, talk to your financial professional, call us at (800) DIAL BEN/342-5236 or visit franklintempleton.com. Investors should carefully read a prospectus before they invest or send money.

Franklin Templeton Distributors, Inc. One Franklin Parkway San Mateo, CA 94403-1906 (800) DIAL BEN® / 342-5236 franklintempleton.com