"The market seems to be up one day and down the next. I'd rather wait before investing."

1.		Watching from the Sidelines May Cost You
		When markets become volatile, a lot of people get drawn into a game of trying to guess when stocks will bottom out. In the meantime, they often park their investments in cash. But just as many investors are slow to recognize a retreating stock market, many also fail to see an upward trend in 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 in the 12 months following the end of a bear market, a fully invested stock portfolio had an average total return of 32.1%. However, if an investor missed the first six months of the recovery by holding cash, their return would have been 7.1%.1 The table below illustrates the risk of trying to time the market. By missing just a few of the stock market's best single-day advances, you could put a real crimp in your potential returns.

1.

Source: Ned Davis Research. Ned Davis Research defines a bear market as a 30% drop in the Dow Jones Industrials after 50 calendar days or a 13% decline after 145 calendar days. Reversals of 30% in the Value Line Geometric Index also qualify. Twenty-six bear markets were analyzed from 9/3/29 through 10/9/02, including the most recent bear market which lasted from 3/19/02-10/9/02. In 92% of the 12-month periods following these bear markets, positive performance resulted, with 100% of the immediate (first) 6-month periods and 73% of the latter 6-month periods returning positive performance, based on the Standard & Poor's 500 Index.

2.

Source: Standard & Poor's Micropal. One cannot invest directly in an index.

"It's hard to invest when stocks are this volatile."

2.		Dollar-Cost Averaging Makes It Easier to Cope with Volatility
		Most people are quick to agree that volatile markets present buying opportunities for investors with a long-term horizon. But mustering the discipline to make purchases during a volatile market can be difficult. You can't help wondering, "Is this really the right time to buy?" Dollar-cost averaging can help reduce anxiety in the investment process. Simply put, dollar-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, but over time, 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 assure a profit and does not protect against loss in a declining market.

Average Share Price: US $10.00 (US $60.00/6 purchases)

Average Share Cost: US $9.77 (US $3,000/307.1)

The average cost of your shares would be US$0.23 less than the average share price over that period.

"I wonder if I should be more diversified."

3.		Now May Be a Great Time for a Portfolio Checkup
		Is your portfolio as diversified as you think it is? Meet with your financial advisor to find out. Your portfolio's weightings in different asset classes may shift over time as one investment performs better or worse than another. Together with your advisor, you can reexamine your portfolio to see if you are properly diversified, and you can also determine whether your current portfolio mix is still a suitable match with your goals and risk tolerance.

"With so many opinions about the market, you don't know who to listen to."

4.		Tune Out the Noise and Gain a Longer-Term Perspective
		Numerous television channels are dedicated to reporting investment news 24 hours a day, seven days a week. What's more, there are almost too many financial publications to count. While the media provide a valuable service, they typically offer a very short-term outlook. To put your own investment plan in a longer-term perspective and restore your confidence, it may help to look at how different types of portfolios have performed over time. As you can see below, while stocks may be more volatile, they've still outperformed income-oriented investments over longer time periods.

"We're sticking to our investment plan."

5.		Believe Your Beliefs 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 having a good long-term plan and a well-diversified 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 doubts. This can lead to short-term moves that divert you from your long-term goals. To keep from falling into this trap, you're your financial advisor before making any changes to your portfolio.

3.

Source: Standard & Poor's Micropal. Stocks are represented by an equal weighted composite of the S&P 500 Index, the Russell 2000 Index, and the MSCI EAFE Index; bonds are represented by the Lehman Brothers Aggregate Bond Index; and cash is represented by the P&R 90-Day U.S. TBill Index. Allocations are rebalanced every 12 months, and one cannot invest directly in an index.

4.

Rolling period cumulative returns are based on monthly index performance during the stated period.

A Few Words About Asset Allocation
While asset allocation can be valuable to help reduce volatility, all investments do involve some degree of risk. 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. A fund's specific risks are described in greater detail in the prospectus, and you should always read a fund's prospectus carefully before investing.

This material does not and will not constitute an offer of shares of any Franklin Templeton Investments fund. An investment in any fund entails risks which are described in its prospectus. Investors may not get back the full amount invested and the net asset value of an investment will fluctuate with market conditions. Exchange rate fluctuations, fund charges and taxes will affect the return to the investor. Past performance is no guarantee of future performance. Please read the current prospectus of any fund carefully before deciding to invest.

Past performance, when taken together with other factors such as investment strategy and risk characteristics, prevailing economic and market conditions, costs and charges, investment manager experience and other relevant factors, is a useful aid to making informed investment decisions. Investors should note, however, that past performance is no indicator of future results and investors should not use past performance information as the sole or principal reason for making an investment.

Any research and analysis contained in this material has been procured by Franklin Templeton Investments for its own purposes and is provided only incidentally. This material is for information purposes only and is not intended to be construed as a solicitation for the sale or endorsement of any particular investment. Any views expressed are the views of the investment manager. Views may change and are without regard to the specific investment objectives, financial situation, and particular needs of, and do not represent investment advice or personal recommendation to, any person.

Certain data and other information shown have been supplied by outside sources. While we consider that information to be reliable, we give no assurance that such data and information is accurate or complete.