Templeton Global Bond Fund TAP INTO A WORLD OF OPPORTUNITY

Transcription

1 Templeton Global Bond Fund TAP INTO A WORLD OF OPPORTUNITY

2 Franklin Templeton Investments Gain From Our Perspective Franklin Templeton s distinct multi-manager structure combines the specialized expertise of four world-class investment management groups Franklin, Templeton, Franklin Mutual Series and Franklin Bissett. SPECIALIZED EXPERTISE Each of our portfolio management groups operates autonomously, relying on its own research and staying true to the unique investment disciplines that underlie its success. Franklin. Founded in 1947, Franklin is a recognized leader in fixed income investing and also brings expertise in growth- and valuestyle equity investing. Templeton. Founded in 1940, Templeton pioneered international investing and, in 1954, launched what has become one of the industry s oldest global funds.* Today, with offices in over 25 countries, Templeton offers investors a truly global perspective. Franklin Mutual Series**. Founded in 1949, Franklin 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 and distressed securities. TRUE DIVERSIFICATION Because our management groups work independently and adhere to different investment approaches, Franklin, Templeton, Franklin Mutual Series and Franklin Bissett funds typically have distinct portfolios. That s why our funds can be used to build truly diversified allocation plans covering every major asset class. RELIABILITY YOU CAN TRUST At Franklin Templeton Investments, we continuously seek to provide our shareholders with strong risk-adjusted returns over the long term, as well as the reliable, accurate and personal service that has helped us become one of the most trusted names in financial services. Franklin Bissett***. Founded in 1982, Franklin Bissett has provided high-quality investment management solutions that help individuals and institutions build and maintain wealth. With equity expertise across the market cap and yield spectrum and fixed income expertise across multiple sectors, Franklin Bissett s investment strategy seeks to deliver strong risk-adjusted returns over time. * The inception date of Series A of the Templeton Growth Fund, Ltd. is November 29, ** Franklin Mutual Series was previously named Mutual Series. *** Franklin Bissett Investment Management, previously named Bissett Investment Management, is part of Franklin Templeton Investments Corp.

3 The Strategy Searching the World for Global Bond, Currency and Interest Rate Opportunities FOR OVER 20 YEARS, TEMPLETON GLOBAL BOND FUND has scoured the globe for the best bond and currency values in order to meet its goal of providing current income with capital appreciation and growth of income. The fund invests predominantly in bonds of governments and government agencies located around the world, with a focus on investment grade securities. Simply stated, we strive to identify economic imbalances that may lead to opportunities across the three C s curve, currency and credit. 1] 2] 3] GLOBAL ECONOMIC OVERVIEW We take a top-down approach, analyzing various countries around the world and their respective economies, geopolitical risks, interest rates and currencies to find investment opportunities for the fund. The fund s flexibility to invest in any country or currency, including emerging markets, allows us to take advantage of prevailing macroeconomic trends. LOCAL MARKET RESEARCH Our quantitative and qualitative analysis is supplemented with on-the-ground research. In addition to our own travels and meetings with foreign government and bank officials, we leverage the resources of our offices around the world to provide us with additional local insight on the countries we are considering investing in. We believe this hands-on research is essential to our process and has enabled us to identify investment opportunities and risks over the years that a solely Canadian-based manager might miss. PORTFOLIO CONSTRUCTION We invest in a country s sovereign debt (credit) where we believe bonds are underpriced and country fundamentals offer the potential for price appreciation. We typically invest in local currencies, though we may hedge our currency exposure depending on valuations. We also take country interest rate (curve) environments into account. If rates are poised to rise, we ll invest in short duration debt. In this way, we actively manage interest rate risk on a country-by-country basis. And lastly, our investment decisions are ultimately driven by valuations and we don t necessarily adhere to the fund s benchmark, as the investment process is benchmark agnostic. To complement my Canadian-focused portfolio, I am looking to invest in a bond fund that strives to capitalize on opportunities in global fixed income markets. Templeton Global Bond Fund 1

4 The Benefits 1] 2] 3] EXPERIENCED MANAGEMENT TEAM Portfolio managers Michael Hasenstab and Sonal Desai have 19 and 20 years of industry experience between them and are backed by a large team of investment professionals from around the world. 1 FOREIGN MARKETS PROVIDE OPPORTUNITY The world s best-performing bond markets vary from year to year. While the Canadian bond market has performed well over the past 10 calendar years, adding global fixed income securities to a portfolio of domestic securities offers Canadian investors greater diversification and the potential for reduced volatility. 2 Please remember, diversification does not assure a profit or protect against a loss. SOLID PERFORMANCE WITH COMPETITIVE VOLATILITY Solid, long-term performance is important, but prudent investors are also concerned about volatility. The flexibility and wide variety of opportunities Templeton Global Bond Fund invests in around the world may help reduce overall portfolio volatility, while still providing solid performance over the long term. Please note that past performance does not guarantee future results. Risk/Return Profile 3 10-Year Period Ended December 31, 2013 Return 5% Templeton Global Bond Fund Series A JP Morgan Global Government Bond Index 0% 0% 5% 10% 15% Risk (Standard Deviation) 1. As of December 31, Source: 2013 Morningstar, Citigroup. Calendar years 2004 through Based on the annual total returns of individual country constituents that make up the Citigroup World Government Bond Index and other markets. 3. Source: Morningstar Direct, as of December 31, Indexes are unmanaged and one cannot invest directly in an index. 2 Templeton Global Bond Fund

5 4] GLOBAL PORTFOLIO DIVERSIFICATION As of December 31, 2013, the fund included investments in 23 countries, 16 currencies and 153 securities. 4 Global portfolio diversification may help provide a hedge against interest rate cycles, economic conditions and other domestic risks. As of December 31, 2013 Credit Quality Breakdown 4,5,6 Regional Breakdown 4,6 Americas % AAA AA- A A- BBB % 12.26% 13.69% 19.34% 18.09% USA % Non-USA Americas % Asia % Japan % Asia, Non-Japan % Europe/Africa % EMU % Non-EMU 7 Europe/Africa % Supranational % Cash and Cash Equivalents % BBB 7.53% Currency Breakdown 4,6 BBB- 5.30% Americas 61.25% U.S. Dollar 20.02% BB+ 5.16% Non-USA Americas 41.23% Asia % BB- 0.86% Japanese Yen 0.00% B+ 1.15% Asia, Non-Japan 37.98% Europe/Africa 0.76% B 3.82% Euro % Periphery Europe/Eastern Europe 19.02% CCC+ 0.07% Fund Data Distribution Frequency Maturity Duration 9 Total Assets Monthly 2.5 years 1.5 years $2.1 billion 4. Portfolio holdings may change. Due to rounding, the sum of portfolio holdings may not equal 100%. For the fund s most recent portfolio information, please call Franklin Templeton Investments at (800) or visit franklintempleton.ca. 5. Ratings shown are assigned by one or more Nationally Recognized Statistical Credit Rating Organizations ( NRSRO ), such as Standard & Poor s, Moody s and Fitch. The ratings are an indication of an issuer s creditworthiness and typically range from AAA or Aaa (highest) to D (lowest). When ratings from all three agencies are available, the middle rating is used; when two are available, the lowest rating is used; and when only one is available, that rating is used. Foreign government bonds without a specific rating are assigned the country rating provided by an NRSRO, if available. The NR category consists of ratable securities that have not been rated by an NRSRO. The N/A category consists of nonrateable securities (e.g., equities). Cash and equivalents (defined as bonds with stated maturities, or that can be redeemed at intervals of seven days or less) as well as derivatives are excluded from this breakdown. As a result, the chart does not reflect the fund s total net assets. 6. Due to rounding, the sum of portfolio holdings may not equal 100%. 7. EMU countries consist of Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Slovenia, Spain, Estonia, Cyprus, Slovakia and Malta. 8. A supranational is an entity formed by two or more central governments through international treaties to promote economic development for the member countries. 9. Duration shown is the option-adjusted duration. Duration is an indication of a fund s sensitivity to changes in interest rates. The option-adjusted duration formula takes into account embedded call options and redemption features that impact a bond s expected cash flow, and thus its interest rate sensitivity. Templeton Global Bond Fund 3

6 The Results A Strong Record of Success The combination of monthly income and capital growth has rewarded investors over time. For an investor who purchased $100,000 of Series A of this fund on its inception date, reinvesting all of the distributions, the value of the investment would have been $402,705 as of December 31, Combining Monthly Income with Capital Growth 10 July 15, 1988 December 31, 2013 $450,000 Gulf War January 1991 Asian Economic Crisis October 1997 Wor Sept $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $ Templeton Global Bond Series A Calendar Year Returns % 17.49% 11.14% 11.07% 11.31% -0.69% 11.93% 10.17% -0.88% 5.18% % 4.45% 4.45% 10. Source: Franklin Templeton Investments, as of December 31, Assume: Lump-sum investment of $100,000 into Templeton Global Bond Fund Series A on July 15, 1988, with all distributions either cashed or reinvested, as indicated. Distribution and market value figures net of MERs. Distributions are not guaranteed, and the proportion of income and return of capital will fluctuate depending on fund returns. Distributions are not an indication of performance, rate of return, or yield. Mutual fund distributions are not guaranteed and are set and may change at the discretion of Franklin Templeton Investments Corp. 4 Templeton Global Bond Fund

7 ld Trade Center Attacks ember 2001 Escalation of the Credit Crisis September 2008 European Debt Crisis October 2009 $402,705 Investment Value (Distributions Reinvested, Net of Fees) % -1.95% 3.50% -7.93% 13.38% -6.50% 24.05% 4.00% 8.28% 0.56% 7.74% 2.64% 11. Source: Morningstar Research Inc., as of December 31, All returns shown are net of fees. Templeton Global Bond Fund returns represent the year-over-year change in value of an investment and includes reinvestment of dividends. Performance data is shown rounded to the nearest hundredth. Past performance does not guarantee future results. Templeton Global Bond Fund 5

8 The Power of Dollar-Cost Averaging Regular Investments May Help You Reach Your Long-Term Goals Dollar-cost averaging is a proven investment technique that may help lower the average cost of the shares you purchase. For example, by investing a fixed dollar amount of $1,000 each month, you buy more shares when the price is low and fewer shares when the price is high. As a result, your average share cost may be less than the average price per share. $600,000 $500,000 An investor who invests $12,000 annually can take advantage of the fund s performance over time. 12 $596,981 Fund Market Value $400,000 $300,000 $306,000 Total Investment $200,000 $100,000 $ Total Investment Fund Market Value December Total Investment Fund Market Value 1988 $6,000 $6, $18,000 $18, $30,000 $35, $42,000 $52, $54,000 $70, $66,000 $91, $78,000 $102, $90,000 $127, $102,000 $153, $114,000 $164, $126,000 $185, $138,000 $177, $150,000 $197,785 December Total Investment Fund Market Value 2001 $162,000 $219, $174,000 $272, $186,000 $279, $198,000 $301, $210,000 $289, $222,000 $340, $234,000 $330, $246,000 $423, $258,000 $452, $270,000 $502, $282,000 $517, $294,000 $569, $306,000 $596,981 Average Unit cost = $9.49 Average price per Unit = $ Source: Franklin Templeton Investments, as of December 31, The illustration represents the performance of a hypothetical investment and is for illustrative purposes only. It does not represent the past or future performance of a Franklin Templeton mutual fund. All contributions are at month-end with the investment beginning on July 31, All information presented net of fees excludes any upfront sales charge; however, the standard fees are reflected in the fund performance. Past performance does not guarantee future results. 6 Templeton Global Bond Fund

9 Are You Looking for Income? Look for an Established Track Record of Distributions If you count on your investments to supplement your income, two of your biggest concerns may be capital preservation and reliability. Your standard of living depends on your ability to cover monthly bills and adapt to any unexpected expenses that may arise. Templeton Global Bond Fund has a history of paying income distributions to its investors on a regular basis, while growing the investment capital. In fact, the fund has paid out a distribution every month since making its first payment in August The table below shows a $100,000 investment at the fund s inception in July While the amount has varied from month to month (as shown below), these distributions have been paid out consistently over time. The fund has paid a high level of income without returning initial investor capital. Distribution Summary 13 As of December 31, 2013 DISTRIBUTIONS MARKET VALUE DISTRIBUTIONS Average Monthly Annual Cumulative Cashed Reinvested 1988 $683 $4,100 $4,100 $100,600 $104, $866 $10,391 $14,491 $94,800 $109, $1,020 $12,244 $26,735 $98,400 $129, $748 $8,973 $35,708 $99,600 $143, $770 $9,242 $44,950 $101,000 $159, $830 $9,958 $54,907 $102,200 $177, $471 $5,655 $60,562 $95,800 $176, $457 $5,486 $66,048 $101,400 $197, $510 $6,116 $72,164 $105,200 $217, $368 $4,419 $76,583 $99,800 $215, $175 $2,100 $78,683 $102,800 $226, $349 $4,193 $82,876 $88,000 $202, $158 $1,900 $84,776 $89,900 $211, $280 $3,364 $88,140 $90,400 $221, $301 $3,615 $91,754 $103,000 $261, $248 $2,972 $94,726 $98,000 $256, $339 $4,068 $98,794 $97,300 $265, $344 $4,127 $102,921 $85,600 $244, $398 $4,772 $107,693 $91,900 $277, $333 $3,999 $111,691 $82,000 $259, $418 $5,019 $116,711 $96,200 $321, $366 $4,388 $121,098 $95,600 $334, $507 $6,084 $127,183 $97,300 $362, $355 $4,257 $131,440 $93,600 $364, $341 $4,088 $135,527 $96,600 $392, $268 $3,212 $138,739 $136,507 $97,700 $395,350 TOTAL DISTRIBUTIONS Total Initial Investment $100,000 Paid Out To You $95,900 VALUE OF FUND ACCOUNT After Distributions Were Cashed $402,705 VALUE OF FUND ACCOUNT After Distributions Were Reinvested 13. Source: Franklin Templeton Investments, as of December 31, Funds and indices used: Templeton Global Bond Fund Series A. All distribution data and calculations are excluding capital gains to reflect the payment of income and cash received from underlying securities less any expenses. Amounts shown are net of all applicable fees. Past performance does not guarantee future results. Templeton Global Bond Fund 7

10 Performance Worthy of Recognition Despite some of the most challenging markets in recent memory, the fund has generated a positive return in 19 of the last 25 calendar years. It has also received solid ratings and awards from both Morningstar and Lipper. Lipper Rating for Total Return 14 Periods Ended December 31, YEAR 5-YEAR 10-YEAR OVERALL TM 15 Morningstar Rating HHHH Over multiple time periods, the fund s performance relative to its peer group has resulted in an overall 4-star Morningstar Rating. Compounded Returns 16 Periods Ended December 31, 2013 Inception Date 1-Year 3-Year 5-Year 10-Year Since Inception Templeton Global Bond Fund Series A 7/15/ % 3.61% 4.60% 4.61% 5.61% We allocate the fund s assets based upon our assessment of changing market, political and economic conditions as well as our evaluation of interest rates, exchange rates, yield spreads and credit risks. We also selectively invest in emerging markets after extensive analysis and consideration of each country s economic prospects and political risks. MICHAEL HASENSTAB, PH.D., SONAL DESAI, PH.D. 14. Source: Lipper, Inc. Lipper ratings for Total Return reflect funds historical total return performance relative to peers as of 12/31/2013. The ratings are subject to change every month and are based on an equal-weighted average of percentile ranks for the Total Return metrics over three-, five- and 10-year periods (if applicable). The highest 20% of funds in each peer group are named Lipper Leader or a score of 5 for Total Return, the next 20% receive a score of 4, the middle 20% are scored 3, the next 20% are scored 2, and the lowest 20% are scored 1. Templeton Global Bond Fund, in Lipper s Global Bond Global classification, received the following ratings for the three-, five-, 10-year and overall periods, respectively: Total Return: [3] (99 funds), [5] (75 funds), [5] (42 funds), and [5] (99 funds). Lipper Leader ratings are not intended to predict future results, and Lipper does not guarantee the accuracy of this information. More information is available at Thomson Reuters Copyright 2013, All Rights Reserved. 15. Source: Morningstar Research, Inc., as of December 31, All rights reserved. The information contained herein is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and 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. The Morningstar Risk-Adjusted Rating, commonly referred to as the Star Rating, relates the risk-adjusted performance of a fund to that of its category peers and is subject to change every month. The Star Rating is a measure of a fund s annualized historical excess return (excess is measured relative to risk-free investment in Canadian Government Treasury Bills) adjusted for the fund s historical risk. The overall Star Rating for a fund is a weighted combination of its three-, five- and 10-year ratings. Overall ratings are adjusted where a fund has less than five or 10 years history. A fund scoring in the top 10.01% to 32.5% of its fund category receives 4 stars. Templeton Global Bond Fund is rated within the Morningstar Canadian Global Fixed Income. All performance data refers to Series A units. Please refer to www. morningstar.ca for more details on the calculation of Morningstar Risk-Adjusted Ratings. For each of the three-, five- and 10-year performance periods, there were in total 69, 53 and 31 funds, respectively, in the Morningstar Canadian Global Fixed Income. Please refer to for the one-year information. 16. Source: Franklin Templeton Investments, as of December 31, Past performance does not guarantee future results. 8 Templeton Global Bond Fund

11 Templeton Global Bond Fund Reasons to Invest THE STRATEGY 1] 2] 3] Taking a top-down approach, the portfolio management team searches around the globe to find investment opportunities for the fund. Leverage the resources of our offices around the world that provide additional local insight on various countries and economies. Invest in countries where the investment team believes bonds are underpriced and country fundamentals offer the potential for price appreciations. THE BENEFITS 1] 2] 3] An experienced management team; Dr. Michael Hasenstab and Dr. Sonal Desai are backed by a large team of investment professionals from around the world. A record of low correlation relative to several asset classes.17 A well-diversified portfolio with investments in 23 countries, 16 currencies and 153 securities.18 THE RESULTS 1] 2] 3] A record of success for long-term investors with 5.61% compounded total return since inception as of December 31, Performance worthy of a 4-star overall Morningstar Rating and solid Lipper Leader results.14,15 The fund was named Best Global Fixed Income Fund in 2007, 2008, 2009, 2010, 2011 and Award-winning portfolio managers: Dr. Michael Hasenstab and Dr. Sonal Desai were named Fixed Income Manager of the Year in Templeton Global Bond Fund Codes Series A, F, I, O CDN$ USD$ Series A Front Series A DSC Series A Low Load Series F Series I Series O Templeton Global Bond Fund (Hedged) Series A, F, I, O CDN$ Series A Front 3712 Series A DSC 3714 Series A Low Load 3713 Series F 3715 Series I 3716 Series O As of December 31, Source: 2013 Morningstar, Inc. 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 is no guarantee of future results. Indexes are unmanaged, and one cannot invest directly in an index. 18. As of December 31, Morningstar Awards : Templeton Global Bond Fund Series A was named Best Global Fixed Income Fund in Canada in 2007, 2008, 2009, 2010, 2011 and In 2007, 2008, 2009, 2010, 2011 and 2013 there were 57, 62, 68, 78, 95 and 136 funds considered for the category award, respectively. Templeton Global Bond Fund 9

12 Franklin Templeton Investments Corp Yonge Street, Suite 900 Toronto, ON M2N 0A7 Fax: (416) (800) For more information on Templeton Global Bond Fund or Franklin Templeton solutions, please call (800) , speak to your investment advisor, or visit The information presented herein is considered reliable at the present time. However, we do not represent that it is accurate or complete, or that it should be relied upon as such. The information presented herein is not a recommendation or solicitation to buy or sell securities. Mutual fund distributions are not guaranteed, are set and may change at the discretion of Franklin Templeton Investments Corp. Unlike fixed income securities, there is no obligation to distribute any fixed amount, and reductions in, or suspensions of, distributions may occur that would reduce yield. Distributions are not an indication of performance, rate of return, or yield. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. The indicated rates of return are historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Bissett Investment Management is part of Franklin Templeton Investments Corp Investors should carefully consider a fund s investment risks, fees and expenses before investing. To obtain a prospectus, which contains this and other information, talk to your investment advisor, call us at (800) or visit franklintempleton.ca Franklin Templeton Investments Corp. All rights reserved. 704 INVE 12/13