Templeton Growth (Euro) Fund A (acc) EUR

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1 Templeton Growth (Euro) Fund A (acc) EUR Franklin Templeton Investment Funds Fund Manager Report Value Equity Product Details Fund Assets Fund Inception Date 09/08/2000 Number of Issuers 83 Bloomberg ISIN Base Currency Investment Style TEMGREU LX LU EUR Value Benchmark MSCI All Country World Index Morningstar Category Global Large-Cap Value Equity Asset Allocation 1 % Equity Cash & Cash Equivalents Fixed Income 0.00 Fund Description The Fund aims to achieve long-term capital appreciation by investing primarily in equity securities of companies worldwide, including emerging markets. Performance Data Discrete Annual Performance (%) as at 31/12/ /17-12/18 12/16-12/17 12/15-12/16 12/14-12/15 12/13-12/14 A (acc) EUR MSCI All Country World Index EUR Performance Net of Management Fees as at 31/12/2018 (Dividends Reinvested) (%) 2,3 Since Inception 1 Mth 3 Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs (09/08/2000) A (acc) EUR MSCI All Country World Index Calendar Year Returns (%) 40% 20% 0% -20% A (acc) EUR Past performance is not an indicator or a guarantee of future performance. Portfolio Manager Insight Performance Review QUARTERLY KEY PERFORMANCE DRIVERS Helped Hurt Stocks Sectors Countries Vestas Wind Systems A/S Materials (Stock Japan (Stock Communication Services Barrick Gold Corporation (Stock Selection, Canada (Stock Overweight) Wheaton Precious Metals Information Technology Denmark (Stock Selection, Corp (Underweight) Overweight) Coty Inc. Class A Financials (Stock United States (Stock Apache Corporation Health Care (Stock Israel Allergan plc Consumer Staples (Stock Netherlands (Stock Despite relative underperformance in the fourth quarter, we believe the health care sector offers growth possibilities through innovation and untapped market potential. Concerns persist about regulation and pricing in the global pharmaceutical industry, but history suggests that companies capable of innovating to provide products that address unmet medical needs can continue to thrive and profit. It is these kinds of companies in which we seek to invest. Weighing on relative results were shares of US-based cosmetics firm Coty, which slumped after the company announced a profit warning and the departure of both its chief executive officer and chairman. Conditions in the highly competitive cosmetics business have remained difficult, and Coty has been working to regain lost market share and improve operationally by consolidating production and distribution.

2 The stock price of Danish wind turbine manufacturer Vestas Wind Systems surged after the firm maintained full-year guidance in the face of tougher competition, signalling to analysts that management expects a strong finish to the year. We were encouraged by the stabilisation in pricing and strength in new orders, and continue to believe that Vestas is well-positioned to participate in the long-term growth of the wind turbine manufacturing industry. ONE-MONTH KEY PERFORMANCE DRIVERS Helped Hurt Stocks Sectors Countries Wheaton Precious Metals Corp Materials (Stock Canada (Stock KB Financial Group Inc. Sponsored ADR Germany Suntory Beverage & Food Ltd. Singapore (Overweight) Teva Pharmaceutical Industries Limited Sponsored ADR Health Care (Stock United States (Stock Perrigo Co. Plc Consumer Discretionary (Stock Israel (Overweight) Walgreens Boots Alliance Inc Consumer Staples (Stock France (Stock Shares of Israel-based generic drug-maker Teva Pharmaceutical Industries came under pressure due to concerns about a US probe into cartel pricing in the generics industry. Yet the investigation has been underway for more than two years, and drug pricing has almost always been a negative component of sales growth in the generics industry. Even after conservatively modelling in some liability related to this matter, we still believe the stock has represented potential value at recent levels. The stock price of global retail pharmacy Walgreens Boots Alliance declined after the company s chief executive officer spoke of challenging market conditions and announced a cost cutting campaign. We believe the downward stock-price movement was unjustified, and that the company is one of the best-positioned and innovative in the retail pharmacy space. Canadian metals streamer Wheaton Precious Metals benefitted from a favourable settlement agreement related to a Canadian tax audit that had weighed on the firm s shares for years. We have long believed Wheaton was likely to prevail in this matter and feel that the removal of uncertainty paves the way for wider recognition of Wheaton s unique, asset-light precious metals streaming model. Outlook & Strategy Looking ahead, we see scope for continued moderate global growth as China is likely to undertake stimulus measures and as the US Federal Reserve and European Central Bank navigate their respective economic cycles. While valuations look extended in some parts of the equity market (albeit less so following fourth-quarter weakness), we also see pockets of opportunity, particularly outside the United States. Volatility is likely to remain elevated given rising late-cycle risks, and the resultant dislocations should continue to present opportunities for disciplined stock-pickers. The policy backdrop is also an important consideration given nascent efforts to normalise what has been extraordinarily accommodative central bank policy. In security analysis, applying a low discount rate to high future cash flows maximises the net present value of an asset. That is effectively what central bank policies have done this cycle keep discount (i.e., interest) rates low and profit expectations high. Unsurprisingly, the effects have been most acute where expectations have been the highest: in the United States, due to President Trump s procyclical fiscal stimulus, and in the technology sector, due to optimistic growth assumptions and long-dated cash flows. It stands to reckon then that these would be the segments most vulnerable to a withdrawal of extraordinary stimulus. Going forward, we continue to believe that the process of monetary policy normalisation is likely to drive a rotation away from expensive growth stocks, to the benefit of beaten-down value shares. Portfolio Characteristics 4,5 Portfolio Price to Earnings (12 Month Trailing) 12.21x 15.47x Price to Book 1.22x 2.05x Price to Cash Flow 5.15x 9.95x Market Capitalisation (Millions in EUR) 67,573 94,702 Dividend Yield 3.55% 2.78% franklintempleton.lu 2

3 Portfolio Diversification Geographic Weightings vs. 1 EUROPE NORTH AMERICA ASIA MID-EAST/AFRICA CASH & CASH EQUIVALENTS Templeton Growth (Euro) Fund % 25% 50% 75% Sector Weightings vs. 1 Financials Health Care Communication Services Energy Industrials Consumer Staples Information Technology Consumer Discretionary Materials Utilities Real Estate Cash & Cash Equivalents Templeton Growth (Euro) Fund % 5% 10% 15% 20% 25% Top Ten Holdings 6 Top Holdings Sector % ROYAL DUTCH SHELL PLC Energy 2.43 ORACLE CORP Software & Services 2.40 SES SA Media & Entertainment 2.21 BP PLC Energy 2.03 SINGAPORE TELECOMMUNICATIONS LTD Telecommunication Services 2.03 SAMSUNG ELECTRONICS CO LTD Technology Hardware & Equipment 1.97 ROCHE HOLDING AG Pharmaceuticals, Biotechnology & Life Sciences 1.94 CITIGROUP INC Banks 1.85 STANDARD CHARTERED PLC Banks 1.83 SANOFI Pharmaceuticals, Biotechnology & Life Sciences 1.81 Supplemental Performance Statistics Supplemental Risk Statistics 7 3 Yrs 5 Yrs 10 Yrs Since Inception Standard Deviation (%) Templeton Growth (Euro) Fund Tracking Error (%) Information Ratio Beta Sharpe Ratio Templeton Growth (Euro) Fund Beta, Information Ratio and Tracking Error information are measured against the. franklintempleton.lu 3

4 Investment Team Portfolio Manager Years with Firm Years Experience Norman Boersma, CFA, Chief Investment Officer Tucker Scott, CFA, EVP, Portfolio Manager, Research Analyst Heather Arnold, CFA, EVP, Director of Research, Portfolio Manager, Research Analyst Templeton Global Equity Team Number of Members Average Years Experience Portfolio Managers/Analysts Research Analysts What Are the Key Risks? The value of shares in the Fund and income received from it can go down as well as up and investors may not get back the full amount invested. Performance may also be affected by currency fluctuations. Currency fluctuations may affect the value of overseas investments. The Fund invests mainly in equity and equity-related securities of companies around the world. Such securities have historically been subject to significant price movements that may occur suddenly due to market or company-specific factors. As a result, the performance of the Fund can fluctuate considerably over time. Other significant risks include: currency risk, emerging markets risk, liquidity risk, Shanghai-Hong Kong Stock Connect risk. For full details of all of the risks applicable to this Fund, please refer to the Risk Considerations section of the Fund in the current prospectus of Franklin Templeton Investment Funds. franklintempleton.lu 4

5 Important Legal Information This document does not constitute legal or tax advice nor is it investment advice or an offer for shares of Franklin Templeton Investment Funds (the Fund ). Subscriptions to shares of the Fund can only be made on the basis of the current prospectus and, where available, the relevant Key Investor Information Document, accompanied by the latest available audited annual report and the latest semi-annual report accessible on our website or which can be obtained, free of charge, from Franklin Templeton International Services, S.à r.l. - 8A, rue Albert Borschette, L-1246 Luxembourg. Past performance is not an indicator or a guarantee of future performance. The value of shares in the Fund and income received from it can go down as well as up, and investors may not get back the full amount invested. Investment in the Fund entails risks which are described in the Fund s prospectus and, where available, in the relevant Key Investor Information Document. Special risks may be associated with a Fund s investment in certain types of securities, asset classes, sectors, markets, currencies or countries and in the Fund s possible use of derivatives. References to particular industries, sectors or companies are for general information and are not necessarily indicative of a fund s holdings at any one time. Currency fluctuations may affect the value of overseas investments. When investing in a fund denominated in a foreign currency, your performance may also be affected by currency fluctuations. Where a Fund invests in emerging markets, this investment can be more risky than an investment in developed markets. No shares of the Fund may be directly or indirectly offered or sold to residents of the United States of America. The Fund is registered in Luxembourg. The Fund may be marketed in Luxembourg and other member states of the EEA, to professional investors only, on the basis of the passport regime set out in article 29 and following of the Law of 12 July The information provided is not a complete analysis of every material fact regarding any country, market, industry, security or fund. Because market and economic conditions are subject to change, comments, opinions and analyses are rendered as of the date of this material and may change without notice. A portfolio manager s assessment of a particular security, investment or strategy is not intended as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy; it is intended only to provide insight into the fund s portfolio selection process. Holdings are subject to change. In addition, it should not be assumed that any securities mentioned were or will prove to be profitable. Stocks mentioned in this report are not a solicitation to purchase those stocks, and are examples of some stocks which performed well. Not all stocks in the portfolio performed as well. For the most current information on the fund, please contact your Franklin Templeton marketing representative. Performance figures are not based on audited financial statements and assume reinvestment of interest and dividends. When comparing the performance of Franklin Templeton Investment Funds (the Fund ) with a benchmark index, it is important to note that the securities in which the Fund invests may be substantially different than those represented by the benchmark index. Furthermore, an investment in Franklin Templeton Investment Funds represents an investment in a managed investment company in which certain charges and expenses, including management fees, are applicable. These charges and expenses are not applicable to indices. Lastly, please note that indices are unmanaged and are not available for direct investment. 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. References to indexes are made for comparative purposes only and are provided to represent the investment environment existing during the time periods shown. The indices include a greater number of securities than those held in the Fund. An index is unmanaged and one cannot invest directly in an index. The performance of the index does not include the deduction of expenses and does not represent the performance of any Franklin Templeton fund. Past performance is not an indicator or a guarantee of future performance. CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. MSCI makes no warranties and shall have no liability with respect to any MSCI data reproduced herein. No further redistribution or use is permitted. This report is not prepared or endorsed by MSCI. Important data provider notices and terms available at: 1. Information is historical and may not reflect current or future portfolio characteristics. Percentage may not equal 100% due to rounding. All holdings are subject to change. 2. Source for all information is Franklin Templeton Investments. Benchmark related data provided by FactSet. Past performance is not an indicator or a guarantee of future performance. Periods greater than one year are shown as average annual total returns. Fund performance data include reinvested dividends, and is net of management fees. Sales charges, other commissions, taxes and other relevant costs to be paid by the investor are not included. The fund offers other share classes subject to different fees and expenses, which will affect their performance. Please see the prospectus for details. 3. When performance for either the portfolio or its benchmark has been converted, different foreign exchange closing rates may be used between the portfolio and its benchmark. 4. The portfolio characteristics listed are based on the fund s underlying holdings, and do not necessarily reflect the fund s characteristics. Due to data limitations all equity holdings are assumed to be the primary equity issue (usually the ordinary or common shares) of each security s issuing company. This methodology may cause small differences between the portfolio s reported characteristics and the portfolio s actual characteristics. In practice, Franklin Templeton s portfolio managers invest in the class or type of security which they believe is most appropriate at the time of purchase. The market capitalisation figures for both the portfolio and the benchmark are at the security level, not aggregated up to the main issuer. Source: Factset. Price ratio calculations for weighted average use harmonic means. Any exceptions to this are noted. Information is historical and may not reflect current or future portfolio characteristics. All holdings are subject to change. 5. The dividend yield quoted here is the yield on securities within the portfolio and should not be used as an indication of the income received from this portfolio. 6. Holdings of the same issuers have been combined. Top ten holdings information is historical and may not reflect current or future portfolio characteristics. All holdings are subject to change. The information provided is not a recommendation to purchase, sell, or hold any particular security. The securities identified do not represent the fund s entire holdings and in the aggregate may represent only a small percentage of such holdings. There is no assurance that securities purchased will remain in the fund, or that securities sold will not be repurchased. The portfolio manager for the fund reserves the right to withhold release of information with respect to holdings that would otherwise be included. 8. Information Ratio is a way to evaluate a manager s ability to outperform a benchmark in relation to the risk that manager is assuming, with risk defined as deviation from the benchmark. This measure is calculated by dividing the portfolio s excess return (portfolio return less the benchmark return) by the tracking error (derived by taking the standard deviation of the monthly differences between the portfolio return and the benchmark return over time). Franklin Templeton International Services, S.à r.l. 8A, rue Albert Borschette L-1246 Luxembourg franklintempleton.lu 2019 Franklin Templeton Investments. All rights reserved.