Templeton Emerging Markets Group. Franklin Templeton Investment Funds Templeton Asian Growth Fund - A (acc) USD. Data as of 31 December 2017

Transcription

1 Templeton Emerging Markets Group Data as of 31 December 2017 Franklin Templeton Investment Funds - A (acc) USD

2 Table of Contents Investment Capabilities Overview...3 Templeton Emerging Markets Investment Offices... 4 Templeton Emerging Markets Group...5 Templeton Emerging Markets Research Team... 6 Templeton s Investment Philosophy...7 Templeton s Investment Process...8 Summary...14 What are the Key Risks?...15 Sector Allocation...16 Geographic Allocation...17 Top Ten Holdings...18 Portfolio Characteristics...19 Discrete Performance Historical Performance...21 Calendar Year Returns Performance Risk Statistics Management Profile...24 Glossary...26 Important Disclosures

3 Investment Capabilities Overview 2 Equity FRANKLIN TEMPLETON INVESTMENTS Total Combined Assets Under Management : US$753.8 Billion 5 Fixed Income 8 Multi-Asset Solutions 11 Alternatives AUM US$327.7 Billion US$289.0 Billion US$130.0 Billion US$15.3 Billion CAPABILITIES Value Government Income Commodities Deep Value Municipals Real Return Infrastructure Core Value Corporate Credit Balanced/Hybrid Real Estate Blend Bank Loans Total Return Hedge Funds GARP Securitised Target Date/Risk Private Equity Growth Multi-Sector Absolute Return Convertibles Currencies Tactical Asset Allocation Sector Sukuk Managed Volatility Shariah Smart Beta INVESTMENT Templeton Global Equity Group (1940) Franklin Templeton Fixed Income Group (1970) Franklin Templeton Multi-Asset Solutions (1996) Franklin Real Asset Advisors (1984) TEAMS Franklin Equity Group (1947) Templeton Global Macro (1986) Franklin SystematiQ (2011) Darby Overseas Investments (1994) Franklin Mutual Series (1949) Franklin LAM-Fixed Income (1993) K2 Advisors (1994) Templeton Emerging Markets Group (1987) Pelagos Capital Management (2005) Franklin LAM-Equity (1993) Source: Franklin Templeton Investments (FTI), as of 31 December 2017, based on latest available data. Total combined Assets Under Management (Total AUM) combines U.S. and non-u.s. AUM of the investment management subsidiaries of the parent company, Franklin Resources, Inc. (FRI) [NYSE: BEN], a global investment management organisation operating as FTI. Only selected business entities within FTI claim compliance with the GIPS standards as described in the table of contents if applicable. Total and platform AUM includes discretionary and non-discretionary accounts, including pooled investment vehicles, separate accounts and other vehicles. Total and platform AUM may also include advisory accounts with or without trading authority. In addition, assets for which certain FTI advisers provide limited asset allocation advisory services, and assets that are not allocated to FTI products are not included in the AUM figures shown. Franklin Templeton Multi-Asset Solutions may invest in various investment platforms advised by a number of investment advisory entities within FTI. Platform AUM reported for FT Multi-Asset Solutions therefore may include certain AUM separately reported under each utilised investment platform. Total AUM also includes assets managed by certain FTI advisers that do not form part of the selected investment platforms shown. As a result, the combined platform AUMs may not equal Total AUM and may be calculated and reported separately for regulatory or other purposes under each investment adviser. Each local asset manager may be considered as an entity affiliated with or associated to FTI by virtue of being a direct or indirect wholly-owned subsidiary of FRI, an entity or joint venture in which FRI owns a partial interest, which may be a minority interest, or a third party asset management company to which investment advisory services have been delegated by an FTI adviser. 3

4 0275 Templeton Emerging Markets Investment Offices NEW YORK Gregory Van Beek, CFA LONDON Carlos Hardenberg FRANKFURT Claus Born, CFA WARSAW Krzysztof Musialik, CFA Marcin Lewczuk, CFA BUCHAREST Adrian Cighi Calin Metes, CFA Dan Gheorghe Daniel Naftali Grzegorz Konieczny Johan Meyer Oana Truta SEOUL Jay Choi, CFA Steve Chae SHANGHAI Chris Liu, CFA Roger Chu, CFA SAN MATEO Purav Jhaveri, CFA, FRM Stephen Dover, CFA Seasoned Team with Diverse Background 20+ Offices Over 50 Investment Professionals¹ VIENNA Matjaz Schroll ISTANBUL Can Ozdogar Erman Kalkandelen MEXICO CITY Rodolfo Ramos Cevallos, CFA HONG KONG Allan Lam, CPA Bryan Wong, CFA Claudius Tsang, CFA Eddie Chow, CFA Eric Mok, CFA Jordan Pong, CFA Michael Chu, CFA Tom Wu Victor Lee, ACCA BANGKOK Alex Manoonpol Sumetha Lewchalermwong, CFA Collaborative Culture Ongoing Team Discussions Weekly Peer Review Meetings Semi-annual Team Conferences HO CHI MINH CITY Mike Nguyen, CFA Thi Thu Lam Nguyen RIO DE JANEIRO Gustavo Stenzel, CFA Marcos Mundim, CFA BUENOS AIRES Santiago Petri 1. Investment professionals include research analysts, portfolio managers, directors and CIO. As of 31 December CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. Analysts names in alphabetical order by first name. DUBAI Ahmed Awny, CFA Alexey Ilin, CFA David Haglund Kapil Chadha CAPE TOWN Danesh Ranchhod, CFA KUALA LUMPUR Edward Pang, CFA Gerald Sheah, CFA Zafir Shukor MUMBAI Vikas Chiranewal, CFA SINGAPORE Chetan Sehgal, CFA Chuan Wei Ong Gervin Yang Richard Piliero Sri Sari Tek Khoan Ong, CFA 4

5 3456 Templeton Emerging Markets Group Stephen Dover Head of Equities and CIO Templeton Emerging Markets Group and Franklin Local Asset Management Director of Research Tek Khoan Ong Director of Global Emerging Markets/Small Cap Strategies Chetan Sehgal Director of Asia Strategies Allan Lam Director of Frontier Markets Strategy Carlos Hardenberg Director of Specialty Strategies Grzegorz Konieczny Over 50 investment professionals¹ located in 20+ offices globally Additional Resources Product Management Performance Analytics & Investment Risk (PAIR) Trading As of 31 December Investment professionals include research analysts, portfolio managers, directors and CIO. 5

6 4085 Templeton Emerging Markets Research Investment Team PUBLIC EQUITY BANGKOK Alex Manoonpol: Thailand Sumetha Lewchalermwong, CFA: Thailand BUCHAREST Adrian Cighi: Romania Calin Metes, CFA: Romania Dan Gheorghe: Romania, Kazakhstan Daniel Naftali: Romania Johan Meyer: Romania Oana Truta: Romania, Greece BUENOS AIRES Santiago Petri: Materials, Argentina, Chile, Colombia, Mexico, Peru CAPE TOWN Danesh Ranchhod, CFA: Sub-Saharan Africa DUBAI Ahmed Awny, CFA: North Africa, Middle East Alexey llin, CFA: Energy, Russia David Haglund: North Africa, Middle East FRANKFURT Claus Born, CFA: Europe HO CHI MINH CITY Mike Nguyen, CFA: Vietnam, Bangladesh, India, Pakistan, Sri Lanka Thi Thu Lam Nguyen: Vietnam, Philippines TEMPLETON PRIVATE EQUITY PARTNERS BUCHAREST Grzegorz Konieczny Stephen Dover, CFA Head of Equities and CIO Templeton Emerging Markets Group and Franklin Local Asset Management DUBAI Kapil Chadha As of 31 December CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. HONG KONG Allan Lam, CPA: Director of Asia Strategies Bryan Wong, CFA: China, Hong Kong Eddie Chow, CFA: Energy, China, Hong Kong, Taiwan Eric Mok, CFA: Technology, China, Hong Kong, Taiwan Jordan Pong, CFA: Technology, Hong Kong, Macau, Taiwan Michael Chu, CFA: China, Hong Kong Tom Wu: Director of Portfolio Administration; Deputy Director of Research; Financials (Greater China) ISTANBUL Can Ozdogar: Turkey Erman Kalkandelen: Turkey HONG KONG Claudius Tsang, CFA Victor Lee, ACCA KUALA LUMPUR Edward Pang, CFA: Malaysia, Singapore Gerald Sheah, CFA: Malaysia Zafir Shukor: Malaysia, Singapore LONDON Carlos Hardenberg: Director of Frontier Markets Strategy MEXICO CITY Rodolfo Ramos Cevallos, CFA: Mexico, Colombia, Panama, Peru MUMBAI Vikas Chiranewal, CFA: India NEW YORK Gregory Van Beek, CFA RIO DE JANEIRO Gustavo Stenzel, CFA: South America Marcos Mundim, CFA: Brazil SAN MATEO Purav Jhaveri, CFA, FRM: Managing Director Stephen Dover, CFA: Head of Equities SEOUL Jay Choi, CFA: Korea Steve Chae: Korea SHANGHAI Chris Liu, CFA: China Roger Chu, CFA: China SINGAPORE Chetan Sehgal, CFA: Director of Global Emerging Markets/Small Cap Strategies Gervin Yang: Internet Sri Sari: Indonesia, Singapore Tek Khoan Ong, CFA: Director of Research WARSAW Krzysztof Musialik, CFA: Pharmaceuticals/Biotechnology, Poland Marcin Lewczuk, CFA: Poland, Czech Republic, Hungary, Ukraine SINGAPORE Chuan Wei Ong Richard Piliero Tek Khoan Ong, CFA VIENNA Matjaz Schroll 6

7 0279 Templeton s Investment Philosophy Philosophy A time-tested investment philosophy built upon a disciplined, yet flexible, long-term approach to value-oriented emerging markets investing which allows Templeton to look beyond short-term news, noise, and emotion. Value Orientation Patient Investment Outlook Bottom-Up Approach Value Our goal is to identify those companies that appear to be trading at a discount to what our estimation indicates as their projected future intrinsic value, which, over time, may produce strong share price return. Patience On a short-term basis, stocks may overreact to news and noise. On a longterm basis, we believe markets are efficient and patience may reward those who have identified undervalued stocks. Bottom-Up We identify value through rigorous fundamental analysis, proprietary screens, and a worldwide network of experienced research resources. Research is done on a company-by-company basis in different countries and industries to determine what we consider its economic worth to be based on projected future earnings, cash flow, asset value potential, and material environmental, social and governance (ESG) factors. 7

8 0477 Templeton s Emerging Investment Markets Process Investment Process TEMPLETON S BOTTOM-UP STOCK SELECTION PROCESS STEP 5 Evaluation and Attribution Analysis Portfolio Maintenance STEP 4 Portfolio Construction STEP 3 Peer Review STEP 2 In-Depth Fundamental Analysis STEP 1 Identify Potential Bargains Attribution Analysis Ongoing Valuation Analysis Disciplined Sell Methodology Weekly Peer Review and Risk Analytics Investment Restrictions and Guidelines Continual Review Process Peer Review and Analysts Set Final Target Price Action List Inclusion ( Securities) 1 Quantitative Analysis Qualitative Analysis Sector and Country Input Emerging Markets Database Initial Screening (3,000 4,000 Securities) 1 Global Contacts Master List (25,000 Securities) 1 1.This is a general depiction of Templeton's methodology and may not reflect the exact methodology for selecting eligible investments for this particular portfolio. 8

9 0477 STEP 1 Identify Potential Bargains Does this stock meet our criteria in terms of valuation, size, and liquidity? Is this stock a potential Templeton bargain within the global universe, its sector, and on a historical basis? Templeton Emerging Markets Process The research process begins with the Master List a proprietary database of approximately 25,000 emerging markets companies 1 Analysts have primary country or sector responsibilities, resulting in comprehensive emerging markets research coverage Analysts are responsible for scrutinising the integrity and quality of each country by conducting a Country Entry Study focusing on the following: Regulatory, accounting standards and taxes Banking, monetary, fiscal transparency and foreign exchange controls Compliance to legal framework Custodial establishments: registration, trade and settlement procedures Foreign investment limitations Conformity with ESG norms STEP 5 Evaluation and Attribution Analysis Portfolio Maintenance STEP 4 Portfolio Construction STEP 3 Peer Review STEP 2 In-Depth Fundamental Analysis STEP 1 Identify Potential Bargains Templeton Emerging Markets Strengths A deep and experienced research team, which is the key to the Templeton process While our philosophy remains unchanged, continual improvement and refinement of our investment process is part of the Templeton culture Our 60+ years of global investing has allowed us to build an extensive network of local contacts around the world RESULT Approximately 25,000 securities are narrowed down to 3,000 4,000 stocks that warrant further analysis. 1 1.This is a general depiction of Templeton's methodology and may not reflect the exact methodology for selecting eligible investments for this particular portfolio. 9

10 0477 STEP 2 In-Depth Fundamental Analysis Is this stock a Templeton Emerging Markets Action List candidate? Is the stock trading at a substantial discount to what our research indicates the company may be worth over the long term? Templeton Emerging Markets Process Conduct comprehensive fundamental analysis to assess a company s longterm value Quantitative Analysis: Historical audited financial statements Five-year forecasts based on projected future normalised earnings, cash flow, or asset value potential Qualitative Analysis: Understanding the business, its management quality, ownership structure, ESG practices, and commitment to creating shareholder value Global peers comparison relative valuation, competitive position Company visits tour facilities and interview management Action List consideration identify potential candidates to include in our dynamic list of companies that we consider the best investment opportunities Proprietary EMDB research database provides centralised hub to facilitate comprehensive research efforts STEP 5 Evaluation and Attribution Analysis Portfolio Maintenance STEP 4 Portfolio Construction STEP 3 Peer Review STEP 2 In-Depth Fundamental Analysis STEP 1 Identify Potential Bargains Templeton Emerging Markets Strengths Within the framework of Templeton s disciplined, long-term approach, our analysts look beyond short-term noise to estimate the long-term economic worth of a company Our bottom-up fundamental analysis, industry knowledge, and access to company management drive original research RESULT 3,000 4,000 investment ideas are narrowed down to securities comprising the Templeton Emerging Markets Action List. 1 1.This is a general depiction of Templeton's methodology and may not reflect the exact methodology for selecting eligible investments for this particular portfolio. 10

11 0477 STEP 3 Peer Review Has analysis met Templeton Emerging Markets standards? Does recommendation pass the peer review process? Templeton Emerging Markets Process Review of Investment Proposal: Weekly Peer Review Discussion Company/Industry overviews and investment thesis Financial model highlights and assumptions Team-Driven Decision Making The analysis of every company includes: Designated reviewer (backup analyst) Sector analyst (where applicable) Regional research team discussion Portfolio managers Price Limit Determination Based on feedback from Review Team, analysts set their final recommendation with target price STEP 5 Evaluation and Attribution Analysis Portfolio Maintenance STEP 4 Portfolio Construction STEP 3 Peer Review STEP 2 In-Depth Fundamental Analysis STEP 1 Identify Potential Bargains Templeton Emerging Markets Strengths A collaborative team culture that leverages the experience of the entire Emerging Markets Equity Group produces comprehensive research insights RESULT Analyst stock recommendation is included in the Templeton Emerging Markets Action List. 11

12 0477 STEP 4 Portfolio Construction What do we consider to represent the best combination of stocks for creating a diversified portfolio with the greatest appreciation potential? Does greater value exist in another stock idea? Templeton Emerging Markets Process 1 RESEARCH The Action List includes all updated recommendations from analysts and forms the basis for individual portfolios. Macro and sector research provides portfolio-level context to supplement stocklevel research. PORTFOLIO CONSTRUCTION Taking into consideration the investment objective and guidelines, the portfolio is built with attention to diversification and risk levels. General characteristics of a typical Templeton emerging markets portfolio include 2 : Broad sector and geographical representation A management style that seeks low turnover and aims to be fully invested³ STEP 5 Evaluation and Attribution Analysis Portfolio Maintenance STEP 4 Portfolio Construction STEP 3 Peer Review STEP 2 In-Depth Fundamental Analysis STEP 1 Identify Potential Bargains Templeton Emerging Markets Strengths Our portfolio construction process seeks to reduce portfolio turnover While our philosophy remains unchanged, continual improvement and refinement to our investment process is part of the Templeton culture RESULT A diversified Templeton emerging markets portfolio which combines the appreciation potential of our best ideas with the risk benefits of diversification. 1.This is a general depiction of Templeton's methodology and may not reflect the exact methodology for selecting eligible investments for this particular portfolio. 2. At the portfolio level, characteristics will be tailored based on the objectives, parameters and risks of the specific portfolio. For product-specific risk information, please consult each portfolio s legal offering and/or other documents. 3. A Templeton portfolio is fully invested when no more than 5% of its total assets are in cash. 12

13 0477 STEP 5 Evaluation and Attribution Analysis, Portfolio Maintenance What are the performance contributors/detractors? Templeton Emerging Markets Process 1 Disciplined sell methodology Stock price exceeds our estimation of fair value Greater value potential exists in another security Fundamental change occurs at the company to alter our forecasts Weekly Review Analysts monitor valuations, portfolio managers ensure diversification, and, together, they review price targets Team reviews portfolio for adherence to investment objectives Semi-annual Meetings Portfolio managers assess and evaluate methodology, resources, internal efficiencies, and Team discusses portfolio-related themes such as company-specific issues, country-related issues, and global industry trends in detail STEP 5 Evaluation and Attribution Analysis Portfolio Maintenance STEP 4 Portfolio Construction STEP 3 Peer Review STEP 2 In-Depth Fundamental Analysis STEP 1 Identify Potential Bargains Templeton Emerging Markets Strengths Templeton s investment process combines the benefits of both individual and team portfolio management Templeton s global trading desk and its extensive leveraging of technology has consistently added value by reducing trading costs and market impact RESULT The portfolio continually reflects Templeton Emerging Markets Group s best investment ideas. 1.This is a general depiction of Templeton's methodology and may not reflect the exact methodology for selecting eligible investments for this particular portfolio. 13

14 Summary - A (acc) USD As of 31 December 2017 Morningstar Category Investment Style Asia ex Japan Equity Core Value Fund Inception Date 16 April 1991 Share Class Inception Date 14 May 2001 Benchmark Base Currency for Fund Base Currency for Share Class MSCI All Country Asia ex-japan Index USD USD Total Net Assets (USD) 4,839,235, Portfolio Turnover 27.99% Asset Allocation Equity: 99.73% Number of Issuers 52 Total Expense Ratio 2.21% Cash & Cash Equivalents: 0.27% Summary of Investment Objective The Fund aims to achieve long-term capital appreciation by investing primarily in equity securities listed in Asia (excluding Australia, New Zealand and Japan). Portfolio Manager(s) Allan Lam Eric Mok, CFA Fund Identifiers ISIN Code LU SEDOL Code Bloomberg Code Fund Ratings (31 December 2017) Overall Morningstar Rating ««Hong Kong Hong Kong TEMFRBI LX The Portfolio Turnover is calculated over a 12-month period as at the end of the fiscal year (30 June 2017). Holdings of the same issuer have been combined. 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. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change. The fund offers other share classes subject to different fees and expenses, which will affect their performance. Please see the prospectus for details. Past performance is not an indicator or a guarantee of future performance. 14

15 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 securities of companies located in or doing significant business in Asia. Emerging markets have historically been subject to significant price movements, frequently to a greater extent than equity markets globally. As a result, the performance of the Fund can fluctuate significantly over relatively short time periods. Other significant risks include: currency risk, emerging markets risk, liquidity risk, operational 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. 15

16 Sector Allocation vs. MSCI All Country Asia ex-japan Index As of 31 December 2017 Financials Energy Consumer Discretionary Industrials Materials Information Technology Real Estate Consumer Staples Health Care Telecommunication Services Utilities Cash & Cash Equivalents 0% 8% 16% 24% 32% 40% MSCI All Country Asia ex-japan Index Portfolio % Index % Over/Under % Financials Banks Insurance Diversified Financials Energy Consumer Discretionary Automobiles & Components Retailing Media Consumer Durables & Apparel Consumer Services Industrials Capital Goods Transportation Commercial & Professional Services Materials Information Technology Technology Hardware & Equipment Software & Services Semiconductors & Semiconductor Equipment Real Estate Consumer Staples Food & Staples Retailing Food, Beverage & Tobacco Household & Personal Products Health Care Health Care Equipment & Services Pharmaceuticals, Biotechnology & Life Sciences Telecommunication Services Utilities Cash & Cash Equivalents Weightings as percent of total. Percentage may not total 100% due to rounding. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change. 16

17 Geographic Allocation vs. MSCI All Country Asia ex-japan Index As of 31 December 2017 China Indonesia Thailand South Korea Hong Kong Pakistan Taiwan India Singapore Portfolio % Index % Over/Under % Asia China Indonesia Thailand South Korea Hong Kong Pakistan Taiwan India Singapore Malaysia Philippines Others Europe Others Cash & Cash Equivalents Emerging Markets Exposure Russia Malaysia Philippines 0% 7% 14% 21% 28% 35% MSCI All Country Asia ex-japan Index Emerging markets exposure is based on the countries included in the MSCI Emerging Markets Index. Weightings as percent of total. Percentage may not total 100% due to rounding. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change. 17

18 Top Ten Holdings As of 31 December 2017 Name of Issuer Country Industry % of Total ALUMINUM CORP OF CHINA LTD China Materials 7.92 BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LTD China Automobiles & Components 6.80 BANK RAKYAT INDONESIA PERSERO TBK PT Indonesia Banks 6.08 BANK DANAMON INDONESIA TBK PT Indonesia Banks 6.01 OIL & GAS DEVELOPMENT CO LTD Pakistan Energy 4.48 UNITED TRACTORS TBK PT Indonesia Energy 3.83 KASIKORNBANK PCL Thailand Banks 3.64 SIAM COMMERCIAL BANK PCL Thailand Banks 3.50 DAIRY FARM INTERNATIONAL HOLDINGS LTD Hong Kong Food & Staples Retailing 3.47 ASTRA INTERNATIONAL TBK PT Indonesia Automobiles & Components 3.45 Total The Ten Largest Holdings represent the ten largest holdings of the fund as of the date indicated. These securities do not represent all of the securities purchased, sold or recommended for advisory clients, and the reader should not assume that investment in the securities listed was or will be profitable. All portfolio holdings are subject to change. Holdings of the same issuer have been combined. The portfolio manager for the fund reserves the right to withhold release of information with respect to holdings that would otherwise be included in the top 10 holdings list. 18

19 Portfolio Characteristics vs. MSCI All Country Asia ex-japan Index As of 31 December 2017 Portfolio Price to Earnings (12-mo Trailing) 15.41x 15.24x Price to Cash Flow 7.67x 10.11x Price to Book 1.55x 1.77x Dividend Yield 2.27% 2.09% Market Capitalisation (Millions USD) 27,108 94,922 Market Capitalisation Breakdown in USD Portfolio % <2.0 Billion Billion Billion Billion Billion >50.0 Billion 7.02 Index Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change. 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 dividend yield quoted here is the yield on securities within the Fund s portfolio and should not be used as an indication of the income received from this portfolio. The market capitalisation figures for both the portfolio and the benchmark are the security level, not aggregated up to the main issuer. Source: FactSet. Price Ratio calculations for the weighted average use harmonic means. Any exceptions to this are noted. Market capitalisation statistics are indicated in the base currency for the portfolio presented. Past performance is not an indicator or a guarantee of future performance. 19

20 Discrete Performance - A (acc) USD As of 31 December 2017 Discrete Annual Performance (%) Inception Date - A (acc) USD Net of Fees MSCI All Country Asia ex-japan Index /16 12/17 12/15 12/16 12/14 12/15 12/13 12/14 12/12 12/13 All performance data shown is in the Fund currency stated and net of management fees. Sales charges and other commissions, taxes and other relevant costs paid by the investor are not included in the calculations. Performance data may represent blended share class performance, e.g., hybrid created from an A (dis) share class which was converted to A (acc). The fund offers other share classes subject to different fees and expenses, which will affect their performance. Please see the prospectus for details. 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. Past performance is not an indicator or a guarantee of future performance. Current performance may differ from figures shown. Currency fluctuations may affect the value of overseas investments. When investing in a fund denominated in a foreign currency, performance may also be affected by currency fluctuations. Please visit franklintempleton.lu for current performance. 20

21 Historical Performance - A (acc) USD As of 31 December 2017 Annualised Total Returns (%) Inception Date 1 Yr 3 Yrs 5 Yrs 10 Yrs - A (acc) USD Net of Fees MSCI All Country Asia ex-japan Index Since Incept Cumulative Performance (%) Inception Date 1 Mth 3 Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs - A (acc) USD Net of Fees MSCI All Country Asia ex-japan Index Since Incept All performance data shown is in the Fund currency stated and net of management fees. Sales charges and other commissions, taxes and other relevant costs paid by the investor are not included in the calculations. Performance data may represent blended share class performance, e.g., hybrid created from an A (dis) share class which was converted to A (acc). The fund offers other share classes subject to different fees and expenses, which will affect their performance. Please see the prospectus for details. 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. Past performance is not an indicator or a guarantee of future performance. Current performance may differ from figures shown. Currency fluctuations may affect the value of overseas investments. When investing in a fund denominated in a foreign currency, performance may also be affected by currency fluctuations. Please visit franklintempleton.lu for current performance. 21

22 Calendar Year Returns - A (acc) USD As of 31 December % % % % -62% A (acc) USD Net of Fees MSCI All Country Asia ex-japan Index All performance data shown is in the Fund currency stated and net of management fees. Sales charges and other commissions, taxes and other relevant costs paid by the investor are not included in the calculations. Performance data may represent blended share class performance, e.g., hybrid created from an A (dis) share class which was converted to A (acc). The fund offers other share classes subject to different fees and expenses, which will affect their performance. Please see the prospectus for details. 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. Past performance is not an indicator or a guarantee of future performance. Current performance may differ from figures shown. Currency fluctuations may affect the value of overseas investments. When investing in a fund denominated in a foreign currency, performance may also be affected by currency fluctuations. Please visit franklintempleton.lu for current performance. 22

23 Performance Risk Statistics - A (acc) USD As of 31 December 2017 Performance Risk Statistics 1 Yr 3 Yrs* 5 Yrs* 10 Yrs* 15 Yrs* Standard Deviation (%): - A (acc) USD MSCI All Country Asia ex-japan Index Tracking Error (%)^^ Information Ratio^^ Beta^^ Sharpe Ratio The base currency of a fund determines the risk-free rate index used in calculating certain risk statistics on this page. A fund that is based in USD uses the US T-Bill Index as the risk free rate return, a EUR-based fund uses the Euro 3-Month T-Bill Index, a GBP-based fund uses the UK Treasury Bills 3 Month Index, a JPY-based fund uses the Japan Financing Bill 3 Month Index, and an AUD-based fund uses the Australia T-Note 3 Month Index. ^^Measured against the MSCI All Country Asia ex-japan Index. *Annualised. Past performance is not an indicator or a guarantee of future performance. 23

24 Management Profile ALLAN LAM, CPA Senior Executive Vice President, Senior Managing Director Director of Asia Strategy Templeton Emerging Markets Group Templeton Asset Management Ltd. Hong Kong Allan Lam is a senior executive vice president, senior managing director, and the Director of Asia Strategy for the Templeton Emerging Markets Group. In this capacity, he focuses on the design, implementation and ongoing refinement of Asian equity strategies across individual portfolios. Prior to joining Franklin Templeton in 1987, Mr. Lam was an auditor for KPMG Peat Marwick, CPA, and Deloitte Touche Tohmatsu, CPA. He entered the financial services industry in Mr. Lam holds a B.A., magna cum laude, in accounting with a minor in computer science from Rutgers University (U.S.). He is a qualified member of the American Institute of Certified Public Accountants, a past member of the Listing Committee of the Hong Kong Exchanges for the full tenure of six years, and a current financial advisor to an education fund for the Hong Kong Government. 24

25 Management Profile ERIC MOK, CFA Senior Vice President, Senior Executive Director Portfolio Manager Templeton Emerging Markets Group Templeton Asset Management, Ltd. Hong Kong Eric Mok is a senior vice president, senior executive director, and portfolio manager of Templeton Asian equity strategies. He also has research responsibilities for companies in the technology sector across global emerging markets as well as companies in China and Taiwan. He started his career in financial services industry and joined Franklin Templeton in Mr. Mok holds an M.S. in investment management from The Hong Kong University of Science and Technology and a B.S. in actuarial science and economics from the University of Toronto. He is a Chartered Financial Analyst (CFA) charterholder, speaks English, Cantonese and Mandarin. 25

26 Glossary Beta: A measure of the magnitude of a portfolio's past share-price fluctuations in relation to the ups and downs of the overall market (or appropriate market index). The market (or index) is assigned a beta of 1.00, so a portfolio with a beta of 1.20 would have seen its share price rise or fall by 12% when the overall market rose or fell by 10%. Dividend Yield: The annual dividend received on an equity security as a percentage of the price. For a portfolio, the value represents a weighted average of the stocks it holds. It should not be used as an indication of the income received from this portfolio. Information Ratio: In investing terminology, the ratio of expected return to risk. Usually, this statistical technique is used to measure a manager's performance against a benchmark. This measure explicitly relates the degree by which an investment has beaten the benchmark to the consistency by which the investment has beaten the benchmark. Market Capitalisation: A determination of a company's value, calculated by multiplying the total number of company stock shares outstanding by the price per share. Price to Book: The price per share of a stock divided by its book value (i.e., net worth) per share. For a portfolio, the value represents a weighted average of the stocks it holds. Price to Cash Flow: Supplements price/earnings ratio as a measure of relative value for a stock. For a portfolio, the value represents a weighted average of the stocks it holds. Price to Earnings (12-mo Trailing): The share price of a stock, divided by its per-share earnings over the past year. For a portfolio, the value represents a weighted average of the stocks it holds. Sharpe Ratio: To calculate a Sharpe ratio, an asset's excess returns (its return in excess of the return generated by risk-free assets such as Treasury bills) are divided by the asset's standard deviation. Standard Deviation: A measure of the degree to which a fund's return varies from the average of its previous returns. The larger the standard deviation, the greater the likelihood (and risk) that a fund's performance will fluctuate from the average return. Tracking Error: Measure of the deviation of the return of a fund compared to the return of a benchmark over a fixed period of time. Expressed as a percentage. The more passively the investment fund is managed, the smaller the tracking error. 26

27 Important Disclosures This document is intended to be of general interest only and does not constitute legal or tax advice nor is it an offer for shares or invitation to apply for shares of the Luxembourg-domiciled SICAV Franklin Templeton Investment Funds (the Fund ). Nothing in this document should be construed as investment advice. Given the rapidly changing market environment, Franklin Templeton Investments disclaim responsibility for updating this material. Subscriptions to shares of the Fund can only be made on the basis of the current prospectus of the Fund, accompanied by the latest available audited annual report and the latest semi-annual report if published thereafter. An investment in the Fund entails risks which are described in the Fund's prospectus. 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. Past performance is not an indicator or a guarantee of future performance. 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. In emerging markets, the risks can be greater than in developed markets. Investments in derivative instruments entail specific risks that may increase the risk profile of the fund and are more fully described in the Fund s prospectus. If the fund invests in a specific sector or geographical area, the returns may be more volatile than a more diversified fund. No shares of the Fund may be directly or indirectly offered or sold to residents of the United States of America. Shares of the Fund are not available for distribution in all jurisdictions and prospective investors should confirm availability with their local Franklin Templeton Investments representative before making any plans to invest. Opinions expressed are the author s at publication date and they are subject to change without prior notice. Any research and analysis contained in this document has been procured by Franklin Templeton Investments for its own purposes and is provided to you only incidentally. A copy of the latest prospectus, the annual report and semi-annual report, if published thereafter can be found, on our website: or can be obtained, free of charge, from the address below. Issued by Franklin Templeton Investments (ME) Limited, authorized and regulated by the Dubai Financial Services Authority. Dubai office: Franklin Templeton Investments, The Gate, East Wing, Level 2, Dubai International Financial Centre, P.O. Box , Dubai, U.A.E., Tel.: Fax: References to indices are made for comparative purposes only and are provided to represent the investment environment existing during the time periods shown. 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 Franklin Templeton Investments. All rights reserved. CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. 27

28 Important Disclosures (continued) Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. All MSCI data is provided as is. The Fund described herein is not sponsored or endorsed by MSCI. In no event shall MSCI, its affiliates or any MSCI data provider have any liability of any kind in connection with the MSCI data or the Fund described herein. Copying or redistributing the MSCI data is strictly prohibited. 28