Templeton Global Bond Fund

Transcription

1 Product Profile Fourth Quarter 2017 FUND CHARACTERISTICS (AS OF 12/31/17) Fund Inception Date 7/15/88 Series O Inception Date 6/18/01 Distribution Frequency Monthly Benchmark (CAD) JP Morgan Global Government Bond Index Total Net Assets All Series $1,909 million Number of Holdings 139 FUND DESCRIPTION The Fund seeks to achieve high current income with capital appreciation by investing primarily in fixed income securities and preferred shares issued around the world. The Fund may not invest more than 25% of the total value of the invested assets (excluding cash) in a particular industry. PERFORMANCE DATA Compounded Returns for Periods Ended December 31, 2017 (%) 3Mths* 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Incept (6/18/01) JP Morgan Global Government Bond Index The indicated rates of return are the Series O historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account investment management fees, sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Compounded Returns for Periods Ended December 31, 2017 (%) Mths* 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Incept Calendar Year Returns As of December 31, 2017 (%) Series O investors do not pay any of the management fees within the fund but instead pay a separate management and administration fee that they negotiate directly with Franklin Templeton Investments Corp. To qualify to purchase or hold Series O units an investor must meet minimum investment requirements as set out in the fund s current prospectus. For more details on the management and administration fee, please read the prospectus. Performance is presented in Canadian dollars and is gross of fees (before management and custodial fees) of Series O units of the Fund. Taking into account such fees would result in lower rates of return. *Cumulative Total Returns. For information related to the Fund Characteristics and Performance Data sections, please see Explanatory Notes. 1of5

2 PORTFOLIO DIVERSIFICATION (AS OF 12/31/17) Fund Quality Weightings 30% % % % AAA AA A- BBB BBB- BB+ BB B B- Cash Geographic Allocation Currency Allocation ASIA ASIA EX-JAPAN India Indonesia South Korea Philippines JAPAN AMERICAS NON-US AMERICAS Brazil Mexico Argentina Colombia Peru USA MIDDLE EAST / AFRICA Ghana South Africa EUROPE NON-EMU EUROPE Republic of Serbia Ukraine EMU EUROPE SUPRANATIONAL OTHER ST CASH AND CASH EQUIVALENTS AMERICAS NON-U.S. DOLLAR Mexican Peso Brazilian Real Argentine Peso Colombian Peso Peru Nuevo Sol U.S. DOLLAR ASIA ASIA EX-JAPAN Indian Rupee Indonesian Rupiah Philippine Peso South Korean Won JAPANESE YEN MIDEAST/AFRICA Ghanaian Cedi South Africa Rand EUROPE Euro NON-EURO % 6% 13% 20% 27% 34% 0% 14% 28% 42% 56% 70% Quality Weightings: Ratings shown are assigned by one or more Nationally Recognized Statistical 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. Cash includes equivalents, which may be rated. Derivatives are excluded from this breakdown. Please note that the definition of cash in this document may not match the definition of cash and cash equivalents listed in the fund facts or management reports of fund performance for the fund, which includes bonds that have a remaining term to maturity of 365 days or less that are issued by certain governments, supranational agencies or financial institutions and have a designated rating (as defined in Canadian securities law). As such, the cash amounts listed may differ. For information related to the Portfolio Diversification section, please see Explanatory Notes. 2of5

3 PORTFOLIO CHARACTERISTICS (AS OF 12/31/17) Fund vs. Fund Benchmark Average Duration Yrs 7.87 Yrs Average Weighted Maturity 3.63 Yrs 9.82 Yrs PERFORMANCE RISK STATISTICS (As of 12/31/17) Performance Risk Statistics 3 Yrs 5 Yrs 10 Yrs Standard Deviation (%) Alpha (%) Beta Sharpe Ratio Information Ratio Tracking Error (%) R-Squared (%) The indicated rates of return are the Series O historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account investment management fees, sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. GLOSSARY Risk vs. Return 10-Year Period Ended 12/31/17 Return 12% 9% 9 6% 6 3% 3 0% 0 0% 0 5% 5 10% 15% 20% 25% Risk (Standard Deviation) Alpha: Alpha measures the difference between a fund's actual returns and its expected returns given its risk level as measured by its beta. A positive alpha figure indicates the fund has performed better than its beta would predict. In contrast, a negative alpha indicates a fund has underperformed, given the expectations established by the fund's beta. Some investors see alpha as a measurement of the value added or subtracted by a fund's manager. Average Duration: Also known as 'effective' or 'Macaulay' duration it is a measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. Duration is expressed as a number of years. It's an indication of an issue's coupon relative to its maturity. Rising interest rates mean falling bond prices; declining interest rates mean rising bond prices. The bigger the duration number, the greater the interest-rate risk; (or reward for bond prices). The weighted average duration of a fund reflects the effective duration of the underlying issues, based on the size of each holding. This value differs with 'Modified Duration' which is modified for the market (dirty) price of an issue. Average Weighted Maturity: An estimate of the number of years to maturity, taking the possibility of early payments into account, for the underlying holdings. The calculation uses the weighted average time to the receipt of all future cash flows for all holdings. Also known as 'average life' for fixed-term products. The weighted average maturity of a fund reflects the maturity of the underlying issues, based on the size of each holding. Benchmark: An unmanaged group of securities whose overall performance is used as a standard to measure investment performance. 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%. 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. R-Squared: A measure of how much of a portfolio's performance can be explained by the returns from the overall market (or a benchmark index). If a portfolio's total return precisely matched that of the overall market or benchmark, its R-squared would be 100. If a portfolio's return bore no relationship to the market's returns, its R-squared would be 0. 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. For information related to the Portfolio Characteristics and Performance Risk Statistics sections, please see Explanatory Notes. 3of5

4 INVESTMENT PHILOSOPHY AND PROCESS Investment Philosophy We believe that applying a fundamental, research-driven approach focused on identifying potential sources of total return (current income and capital appreciation) worldwide and seeking to capitalize on global interest rates and currency trends provides the best potential for solid risk-adjusted returns. The strategy is run independently of its benchmark, allowing the manager to hold only the positions it believes have the best potential to maximize risk-adjusted returns. This is a high alpha seeking strategy that invests globally and may include allocations to both developed and emerging markets. INVESTMENT PHILOSOPHY AND PROCESS Investment Strategy Long-Term, Opportunistic Value Approach Long-term, fundamentally driven investment focus Total return approach that is not benchmark driven Identify economic imbalances that may lead to value opportunities in: Yield curve Currencies Sovereign credit Active positioning across these three areas Precisely isolate desired exposures Risk budget composition will shift based on relative attractiveness during global economic and credit cycles Investment Process Unconstrained Global Research Lenses Worldview Three Potential Sources of Alpha Portfolio Construction and Implementation Large and expanding set of countries with bond and currency opportunities Macro Models/Analysis In-Depth Country Analysis Local Asset Management* Perspective Yield Curve Ideas Currency Ideas Sovereign Credit Ideas Identification of High-Conviction Opportunities Risk Modeling Management Team Trading GLOBAL BOND PORTFOLIO Feedback Feedback Review/Performance Attribution *This unit is comprised of investment professionals located in affiliates of and joint venture partners with Franklin Templeton Investments. The Local Asset Management Group is not a part of, but does share research with, the Franklin Templeton Fixed Income teams. INVESTMENT AND MANAGEMENT TEAM (AS OF 12/31/17) Management Team Years with Firm Years Experience Michael Hasenstab, Ph.D., Chief Investment Officer Sonal Desai, Ph.D., Director of Research 8 24 Franklin Templeton Fixed Income Number of Members Average Years Experience Portfolio Managers Portfolio Managers/Analysts Research Analysts Traders Additional Resources Local Asset Management Quantitative Global Fixed Income Franklin Resources Inc. is a holding company that together with its various subsidiaries, operates as Franklin Templeton Investments. Franklin Templeton Fixed Income Group is a global team specializing in fixed income investing, which draws on the expertise of a number of Franklin Templeton Investments affiliates. Franklin Advisers, Inc. is the sub-advisor of the Fund; Franklin Templeton Investments Corp. is the portfolio advisor. 4of5

5 EXPLANATORY NOTES FUND CHARACTERISTICS Number of Holdings: All portfolio holdings are subject to change. PERFORMANCE DATA All performance data herein is for Series O units. Source for Index: FactSet. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. PORTFOLIO DIVERSIFICATION Quality Weightings/Geographic Allocation/Currency Allocation: Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change. Geographic and Currency Allocation: Portfolio weights reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors. PORTFOLIO CHARACTERISTICS The portfolio characteristics listed are based on the fund's underlying holdings, and do not necessarily reflect the fund's characteristics. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change. The figures shown for Average Duration and Average Weighted Maturity reflect certain derivatives held in the portfolio (or their underlying reference assets). PERFORMANCE RISK STATISTICS Risk vs. Return: Risk is measured by the annualized standard deviation of monthly total returns. Performance of the fund does not include sales charges (if applicable), but it does include distributions and capital gains reinvested at net asset value. Source for Index: FactSet. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. Franklin Templeton Institutional is part of Franklin Templeton Investments Corp. (FTIC). Returns represent past performance. Past performance does not guarantee future results and may not be repeated. Series O investors do not pay any of the management fees within the fund but instead pay a separate management and administration fee that they negotiate directly with FTIC. To qualify to purchase or hold Series O units an investor must meet minimum investment requirements as set out in the fund's current prospectus. For more details on the management and administration fee, please read the prospectus. Performance is presented in Canadian dollars and is gross of fees (before management and custodial fees) of Series O units of the Fund. Taking into account such fees would result in lower rates of return. Franklin Templeton Institutional 200 King Street West, Suite 1500 Toronto, Ontario, M5H 3T4 Toll-free: , Fax: institutionalinvest@franklintempleton.ca Website: Franklin Templeton Investments Corp. All rights reserved. 259 PPE 12/17 5of5