Franklin Templeton Shariah Funds Templeton Shariah Global Equity Fund - A (acc) USD

Transcription

1 Templeton Global Equity Group Data as of 31 March 2018 Franklin Templeton Shariah Funds - A (acc) USD

2 Table of Contents Investment Capabilities Overview...4 Sector Allocation...26 Franklin Templeton Investments A Trusted, Long-Term Partner in Investment...5 Management Geographic Allocation...27 W e Consider Sustainability in All That W e Do...6 Exceptional Asset Management Combined with Customised Shariah Compliant...7 Investment Solutions Top Ten Holdings...28 Portfolio Characteristics...29 Discrete Performance Extensive Shariah Compliance Resources...8 Historical Performance...31 W hy Invest in a Shariah Global Equity Fund?...9 Calendar Year Returns Basic Building Block of a Shariah-Compliant Asset Allocation Performance Risk Statistics Amanie International Shariah Supervisory Board...11 Supplemental Information...34 Templeton Global Equity Group Focus on Core Competencies...12 Templeton Global Equity Group Value Investors Focused on Seeking Long-Term Capital Growth for Our Clients Templeton Global Equity Group Value Investors Focused on Seeking Long-Term Capital Growth for Our Clients The Templeton Investment Philosophy Templeton Global Equity Group Organisational Structure...15 Bottom-Up Stock Pickers: Global Focus Uncovers the Best Opportunities Across...16 Sectors and Geographies Management Profiles Management Profile...39 Appendix...41 Collaboration with Financial Experts Across Franklin Templeton...42 Templeton s Valuation-Driven Investment Process Risk Management Templeton Global Equity Group...43 Templeton s Valuation-Driven Investment Process...18 An Integrated Global Trading Platform...44 Performance and Characteristics...23 Important Information...45 Summary...24 Glossary...46 W hat are the Key Risks?...25 Important Information...47 Important Disclosures

3 Table of Contents (continued) GIPS Performance Presentation

4 Investment Capabilities Overview FRANKLIN TEMPLETON INVESTMENTS Total Combined Assets Under Management : US$737.5 Billion 2 AUM Equity 5 Fixed Income US$315.0 Billion CAPABILITIES Value Deep Value Core Value Blend GARP Growth Convertibles Sector Shariah Smart Beta INVESTMENT Templeton Global Equity Group (1940) TEAMS Franklin Equity Group (1947) Franklin Mutual Series (1949) Franklin Templeton Emerging Markets Equity (1987) 8 Multi-Asset Solutions US$290.0 Billion Government Municipals Corporate Credit Bank Loans Securitised Multi-Sector Currencies Sukuk Franklin Templeton Fixed Income Group (1970) Templeton Global Macro (1986) Franklin LAM-Fixed Income (1993) 11 US$124.0 Billion Income Real Return Balanced/Hybrid Total Return Target Date/Risk Absolute Return Tactical Asset Allocation Managed Volatility Franklin Templeton Multi-Asset Solutions (1996) Franklin SystematiQ (2011) Alternatives US$16.2 Billion Commodities Infrastructure Real Estate Hedge Funds Private Equity Franklin Real Asset Advisors (1984) Darby Overseas Investments (1994) K2 Advisors (1994) Pelagos Capital Management (2005) Source: Franklin Templeton Investments (FTI), as of 31 March 2018, 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. 4

5 5889 Investments Trusted, Long-Term Partner in Investment Franklin Templeton Investments A A Trusted, Long-Term Partner in Investment Management Management Investment excellence Diverse investment solutions across multiple asset classes Time-tested investment disciplines plus exceptional research enables strong long-term performance potential Integrated, comprehensive and proven approach to investment risk management Committed to environmental, social and governance (ESG) investment integration Global perspective, local expertise Pioneer in global investing, with track record of innovation Unmatched breadth and depth of global presence Deep experience and long-term commitment to the markets we enter Strength and experience 70 years of navigating well through all market cycles Global business diversified by investment objective, geography and client type Values-driven culture guides how we work 5

6 5888 ESGConsider and Corporate Sustainability We Sustainability in All That We Do Guides How We Work Our primary objective is to deliver exceptional investment management through an active fundamental approach while always acting in the best interests of our clients and shareholders As a fiduciary, we recognize that ESG considerations are a driver of long-term investment performance and thus affect our business and the companies we invest in Our approach to ESG is one of the many strengths of our organization ESG considerations at the corporate level that impact our business: Environmental Impact Social Factors Governance Energy usage Diversity and inclusion Anti-money laundering Greenhouse gases Talent management Code of ethics/conduct Waste/recycling (attracting, retaining top talent) Charitable giving Water consumption Customer privacy and data security Employee volunteering Compliance Executive compensation Enterprise risk management ESG investment integration 6

7 1641 Exceptional Asset Management Combined with Customised Shariah Compliant CustomisedSolutions Shariah-Compliant Investment Solutions Investment As the world s largest cross-border fund manager, Franklin Templeton Investments has offices in over 30 countries and manages over US$2.37 billion in Shariah-compliant assets1 Franklin Templeton Investments combines the breadth and depth of our global asset management capabilities with the expertise of focused investment management teams which operate independently For clients who seek adherence to the investment principles of Islamic law, we apply our management expertise in combination with the knowledge and advice of Shariah scholars to offer our clients customised Shariah-compliant portfolios across a wide range of asset classes and strategies, including global, regional and local equities, and fixed income (sukuk) Named Best Islamic Asset Management House (Institutional) in Malaysia by The Asset Triple A Islamic Finance Awards in 2014, 2015, 2016 and 2017 Won Fund House of the Year award in Malaysia from AsianInvestor in 2014 Named Most Outstanding Islamic Asset Management Company in Malaysia by the Kuala Lumpur Islamic Finance Forum (KLIFF) in November Previously won the award in 2012 as the first foreign asset manager in Malaysia Won The Most Outstanding Islamic Fund Manager, 14th KLIFF Islamic Finance Awards 2017 Won Best Overall Islamic Asset Management Company at IFN Islamic Investor Awards in 2014 and 2015 Won Best Islamic Asset Management Company in Asia at IFN Islamic Investor Awards 2014 Received first-ever Failaka Islamic Award for The Best Sukuk Fund (1-Year) 2 1. As of 31 March This award was given in 2010 to The Sukuk Fund as of 31 January

8 1642 Extensive Shariah Shariah Compliance Compliance Resources Resources Extensive Independent Endorsement from Esteemed Board of Scholars Our portfolios are independently reviewed and endorsed by the Amanie International Shariah Supervisory Board The Amanie scholars provide initial approval on investment objectives and strategy of the funds, as well as ongoing supervisory and monitoring services to ensure continuous adherence and validation to internationally accepted Shariah principles and standards World-Class Screening Technology To ensure Shariah compliance, we leverage best-in-class technology utilising criteria established by our screening provider to: Screen approximately 40,000 global securities Examine the business activities of each company Evaluate selected financial ratios according to prescribed algorithms Identify and cleanse non-compliant income in a manner consistent with Shariah law Comprehensive, Integrated Risk Management Each portfolio team employs a highly disciplined investment philosophy and process designed to comprehensively measure and manage risk The teams also leverage analysis and insight from a worldwide network of locally-based risk management specialists 8

9 2999 Invest in in aa Shariah Shariah Global Global Equity Fund? Fund? Why Invest Basic Building Block of a Shariah-Compliant Asset Allocation A diversified Shariah Global Equity fund is a great complement for Shariah-compliant portfolios as it can increase returns compared to an all-global sukuk portfolio. Opportunity to Capitalise on Shariah-Compliant Investment Ideas Worldwide Investing in a Shariah Global Equity fund provides easy access to Shariah-compliant global investment opportunities. Shariah Compliance with a Strong Governance Framework A UCITS-compliant Shariah Global Equity fund provides international passportability and a strong governance framework1. 1. Undertaking for the collective investment of transferable securities UCITS coordinates the distribution and management of unit trusts amongst countries within the European Union. 9

10 3000 Basic Building Block of a Shariah-Compliant Asset Allocation Shariah Global Equities Can Provide Diversification Benefits A 50% allocation to Global Shariah equities would have increased returns of an all-global sukuk portfolio. Growth of US$10,000 Over the Last 5 Years As of 31 March 2018 $16, % Global Shariah Equity 7.50% p.a. $14,000 50% Global Shariah Equity/50% Global Sukuk 5,65% p.a. 100% Global Sukuk $12,000 3,55% p.a. $10,000 $8,000 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Mar FactSet Research Systems Inc. All rights reserved. The information contained herein: (1) is proprietary to FactSet Research Systems Inc. and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither FactSet Research Systems Inc. nor its content providers are responsible for any damages or losses arising from any use of this information. Source: S&P and MSCI as of 31 March Global Sukuk as represented by the Dow Jones Sukuk Index; Shariah Global Equities as represented by the MSCI AC World Islamic Index. Returns are in USD. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI. Past performance is not an indicator or a guarantee of future performance. 10

11 1643 Amanie International International Shariah Shariah Supervisory Supervisory Board Board Amanie SHEIKH DR. MOHAMED ALI ELGARI CHAIRMAN Kingdom of Saudi Arabia Dr. Mohamed Ali Elgari is a Professor of Islamic Economics and the former Director of the Centre for Research in Islamic Economics at King Abdul Aziz University in Saudi Arabia. He is an advisor to many Islamic financial institutions throughout the world and is also on the Shariah board of the Dow Jones Islamic index. He is also a member of the Islamic Fiqh Academy as well as the Islamic Accounting and Auditing Organisation for Islamic Financial Institution (AAOIFI). Dr. Elgari has written several books on Islamic banking. He graduated from the University of California with a Ph.D. in Economics. DR. MUHAMMAD AMIN ALI QATTAN Kuwait Dr. Muhammad Amin Ali Qattan has a Ph.D. in Islamic Banking from Birmingham University and is himself a lecturer as well as a prolific author of texts and articles on Islamic economics and finance. He currently is the Director of Islamic Economics Unit, Centre of Excellence in Management at Kuwait University. Dr. Qattan also serves as the Shariah adviser to many reputable institutions such as Ratings Intelligence, Standard & Poor s Shariah indices, Al Fajer Retakaful, amongst others. He is a highly regarded Shariah scholar and is based in Kuwait. DR. MOHD DAUD BAKAR DR. OSAMA AL DEREAI Malaysia Qatar Dr. Mohd Daud Bakar is the founder and group chairman of Amanie Advisors, a global boutique Shariah advisory firm with offices located in Kuala Lumpur, Dubai, Luxembourg, Cairo, Kazakhstan, Oman, Australia, South Korea and Dublin. He is also the founder and chairman of Amanie Nexus Sdn Bhd (Kuala Lumpur). Prior to this, he was the deputy vice-chancellor at the International Islamic University Malaysia. He received his first degree in Shariah from University of Kuwait in 1988 and obtained his Ph.D. from University of St. Andrews, United Kingdom in In 2002, he went on to complete his external Bachelor of Jurisprudence at University of Malaya. He has published a number of articles in various academic journals and has made many presentations in various conferences both local and overseas. Dr. Mohd Daud is currently the chairman of the Shariah Advisory Council of the Central Bank of Malaysia, the SACSC and the Shariah Supervisory Council of Labuan Financial Services Authority. He is also a member of the Shariah Board of Dow Jones Islamic Market Index (New York), Oasis Asset Management (Cape Town, South Africa), The National Bank of Oman, Financial Guidance (USA), BNP Paribas (Bahrain), Morgan Stanley (Dubai), Jadwa-Russell Islamic Fund (Kingdom of Saudi Arabia), Bank of London and Middle East (London), Noor Islamic Bank (Dubai), Islamic Bank of Asia (Singapore), and in other financial institutions both local and abroad. Apart from that, Dr. Mohd Daud is also actively advising, locally and overseas, on capital markets product structuring such as sukuk. Dr. Osama Al Dereai is a Shariah scholar from Qatar. He has extensive experience in teaching, consulting and research in the field of Islamic finance. He received his bachelor s degree specialising in the Science of Hadeth Al Sharef from the prestigious Islamic University of Madinah (Saudi Arabia). He obtained his master s degree from the International Islamic University Malaysia and was later conferred his Doctorate in Islamic Transactions from the University of Malaya. Dr. Al Dereai is a Shariah board member of various financial institutions which include the First Leasing Company, Barwa Bank, First Investment Company and Ghanim Al Saad Group of Companies amongst others. 11

12 2878 Templeton Global Equity Group Focus on Core Competencies Templeton s investment approach is highly disciplined and maintains a keen focus on core competencies Since the founding of the firm in the 1940s, we have adhered to our long-term investment philosophy of finding the best bargains We offer strategies where the universe is large enough that we can offer an unconstrained portfolio: Global Equity Non-U.S. Equity Regional Equity Small Cap Equity Balanced Total AUM by Mandate Total AUM by Distribution Channel As of 31 March 2018 As of 31 March 2018 Global1 Retail US$50 billion US$55 billion Non-U.S. Institutional US$34 billion US$42 billion Other2 US$13 billion 1. Global includes global balanced mandates. 2. Other includes regional and single country mandates and global and international small cap. 12

13 2879 Templeton Global Equity Group Value Investors Focused on Seeking Long-Term Long-Term Capital Growth Growth for Our for Clients Capital Our Clients TEMPLETON GLOBAL EQUITY GROUP What Sets Us Apart LONG-TERM PERSPECTIVE DISCIPLINED, REPEATABLE PROCESS adherence to valuation-driven philosophy and process that have navigated every market cycle over seven decades five-year horizon takes advantage of short-term price volatility to reveal long-term investment opportunities RIGOROUS BOTTOM-UP STOCK SELECTION everyone an analyst in a broadly experienced research team, identifying undervalued stocks across global industries FORTITUDE TO BE DIFFERENT conviction to purchase out-of-favour securities and patience to wait for value recognition 13

14 2880 The Templeton Investment Philosophy We Utilise a Disciplined, Consistent Approach Based on Three Timeless Principles of Investing Value Uncover bargains seeking companies trading at large discounts to their business value Business value based on normalised earnings, cash flow or asset value potential Flexible approach in a disciplined framework The best bargains are those stocks having the lowest prices in relation to possible earning power of future years. Sir John Templeton October 1957 Patience Rolling five-year time horizon focused on normalised business value Long-term focus takes advantage of short-term price volatility to reveal investment opportunities Patience allows time for value recognition and has historically resulted in low turnover Bottom-up stock picking Build portfolios with undervalued securities identified through research process Portfolio structure reflects where we are finding value across sectors and regions Portfolio management process seeks to buy pessimism and sell optimism 14

15 2881 Templeton Global Equity Group Organisational Structure CHAIRMAN Dr. Sandy Nairn, CFA 33 Years Industry Experience EDINBURGH, UNITED KINGDOM CHIEF INVESTMENT OFFICER Norman Boersma, CFA 32 Years Industry Experience DIRECTOR OF BUSINESS DEVELOPMENT C. Reed Hutchens, CFA 30 Years Industry Experience NASSAU, BAHAMAS FORT LAUDERDALE, UNITED STATES DIRECTOR OF PORTFOLIO MANAGEMENT DIRECTOR OF RESEARCH Antonio T. Docal, CFA 38 Years Industry Experience Heather Arnold, CFA 34 Years Industry Experience FORT LAUDERDALE, UNITED STATES NASSAU, BAHAMAS North America 17 PM/Analysts 5 Analysts Europe 3 PM/Analysts 3 Analysts Asia 5 PM/Analysts 3 Analysts Australia 2 PM/Analysts 38 Portfolio Managers & Research Analysts Average 20 Years of Industry Experience Average 14 Years with Templeton Speak 14 Languages Stable Team/ Historically Low Turnover Investment team information is as of 1 May CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. 15

16 2906 Bottom-Up Stock Pickers: Global Focus Uncovers the Best Opportunities Across Global Focus Uncovers the Best Opportunities Across Sectors and Geographies Sectors and Geographies Director of Research: Heather Arnold, CFA GLOBAL SECTOR TEAMS CONSUMERS Joanne Wong Herbert Arnett Ferdinand Cheuk Harlan Hodes Peter Moeschter Katherine Owen Maggie Wong FINANCIALS Auto Components Media Internet Software/Services Small Cap Media Automobiles Small Cap & Asian Consumer Goods Beverages/Food Products Household/Personal Products Retail Household Durables Textiles & Apparel Casinos & Gaming INDUSTRIALS Peter Wilmshurst European Banks MENA Banks Paul de Josselin Australian Banks Asian Banks James Harper Global Insurance Matthew Nagle U.S. Banks Warren Pustam Diversified Financials Latin American Banks Small Cap Financials Maggie Wong Global Real Estate Heather Waddell Martin Cobb Harlan Hodes Clara Lee Suzanne Livingston Tian Qiu Tina Sadler MATERIALS / ENERGY Small Cap Cyclicals Small Cap Capital Goods Commercial Services & Supplies Trading Company & Distributors Small Cap Cyclicals Machinery Machinery Aerospace & Defence Transportation Building & Construction Materials Engineering & Construction Electrical Equipment Industrial Conglomerates Martin Cobb Chris Peel Suzanne Bateman Maarten Bloemen Bhavesh Bombaywala Craig Cameron Peter Morris Tina Sadler Tucker Scott David Tuttle Chemicals Integrated Oil Metals & Mining Alternative Energy Energy E&P Oil Refiners Alternative Energy Asian Energy Energy Equipment & Services Building & Construction Materials Metals & Mining Paper & Forest Products INFORMATION TECHNOLOGY Peter Nori UTILITIES HEALTH CARE Katherine Owen Craig Cameron Martin Cobb Mohan Kandiah Providers & Services Health Care Global Pharmaceuticals Biotechnology Equipment & Supplies Generic Manufacturers/ Specialty Pharma TELECOM SERVICES Peter Moeschter European Utilities North/South American Utilities Craig Cameron Asian Utilities Herbert Arnett Hsung Khoo Matthew Nagle Peter Wilmshurst U.S. Telecom European Telecom Latin American Telecom Global Telecom Equipment Asian, Australian Telecom Ferdinand Cheuk Matthew Nagle Chris Peel Heather Waddell Semiconductor Equipment & Products Asian Technology Electronic Manufacturing Services/Component Manufacturers Technology Hardware & Peripherals Software IT Services & Consulting Consumer Electronics/ Office Electronics ADDITIONAL RESOURCES Research Technology Group Global Research Library Junior Research Analysts Investment Risk Management Group ESG Resources Global Trading Platform Product Management Group Franklin Templeton Emerging Markets Equity & Templeton Global Macro As of 31 March Note: Sector team leaders in blue boldface. Environmental, Social and Governance (ESG) Coordinator in green boldface. CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. 16

17 Templeton s Valuation-Driven Investment Process 17

18 2940 Templeton s Valuation-Driven Investment Process 1 Identify Potential Bargains Experienced analysts Focus on global industry sectors Quantitative and qualitative assessment Identify material ESG issues 2 In-Depth Fundamental Analysis 3 Five-year financial forecasts Presentation of investment thesis Investment parameters Ongoing valuation analysis Management/supplier/ competitive evaluation Investment debate and critique: Devil s Advocate Industry and sector framework Ongoing ESG Monitoring Build and diversify portfolio Disciplined sell methodology Long-term approach: 20% historical turnover1 Weekly peer review and risk analytics Upside/downside return quantification Recommendation of Bargain List candidates Research Team Evaluation ESG Devil s Advocate Director of Research approval 4 Bottom-Up Portfolio Construction 5 Portfolio Monitoring and Risk Management TEMPLETON S BOTTOM-UP STOCK SELECTION PROCESS The above chart is for illustrative and discussion purposes only. 1. Historical turnover is based on Templeton Global Equity Group s overall experience, over a five-year period ended 31 March 2018, and is not intended to reflect the historical turnover of the fund. Please see the fund s fiscal year-end turnover on the Portfolio Summary slide. The turnover is a byproduct of Templeton s long-term approach to managing portfolios, but various factors, such as a portfolio s specific investment parameters and market or economic conditions may cause actual portfolio turnover to vary. For more information regarding an individual strategy s or fund s historical turnover ratio please contact your Franklin Templeton representative. 18

19 2940 A Bottom-Up Research Process Leverages Global Capabilities Across Market Cap Spectrum 1. Identify Potential Bargains Global focus Analysts are aligned by 2. In-Depth Fundamental Analysis Develop research models Revenue drivers; growth sectors globally Unconstrained investable potential Assessment of ESG factors universe Fundamental and quantitative assessment Price/Earnings Price/Book Value Price/Cash Flow on long-term risk/return Operating costs Capital expenditures Capital allocation Retained capital Competitor analysis Identify material ESG issues Environmental Social Governance Five-year financial forecasts Emphasis on future earnings Most attractively valued Upside/downside return companies based on valuation potential Cash flow potential quantification 3. Research Team Evaluation Presentation of investment thesis Valuation history Business outlook relative to global industry Why we believe business is undervalued Opportunities and risks Capital strength appraisal Bargain List Rigorous investment team debate Team vetting generates best thinking Devil s Advocate critique ESG Devil s Advocate Director of Research approval Recommendation of Bargain List candidates The above chart is for illustrative and discussion purposes only. 19

20 2940 Lifecycle of a Templeton Stock VALUATION SOURCE OF FUNDS LIST Fully valued stocks recommended for sale CORE LIST Attractively priced stocks with potential for significant price upside BARGAIN LIST Stocks priced at a significant discount to our estimation of their future business value TIME Templeton s research platform is designed to track securities through their valuation lifecycle. The above chart is intended solely to illustrate the ideal interplay between the Bargain List, Core List and Source of Funds List over an anticipated holding period but there is no guarantee any Templeton stock will follow this lifecycle. The chart is hypothetical and is not intended to represent an actual Templeton portfolio, or any stock purchased or sold by Templeton. 20

21 2940 Bottom-Up Portfolio Construction Step 4 Portfolio Manager Stock Selection Decisions & Oversight Approved Database Sector Analyst Portfolios Source of Funds List Securities on Proprietary Database Core List Analysts highest-conviction holdings per sector Portfolio-Specific Features Mandate parameters Geographic/sector constraints Portfolio cash flow TEMPLETON GLOBAL OR NON-U.S. PORTFOLIO Approximately 100 Securities1 Bargain List SELL Historically low turnover, which may result in lower transaction costs DISCIPLINE The above chart is for illustrative and discussion purposes only. The turnover is a byproduct of Templeton s long-term approach to managing portfolios, but various factors, such as a portfolio s specific investment parameters and market or economic conditions may cause actual portfolio turnover to vary. For more information regarding an individual strategy s or fund s historical turnover ratio please contact your Franklin Templeton representative. Portfolio managers purchase securities from the approved Templeton database of securities which was derived from the investable universe of approximately 10,000 equity securities. 1. Although the typical Templeton Global or Non-U.S. equity portfolio holds approximately 100 securities, individual portfolios may vary, depending on various factors, such as portfolio size or investment strategy. 21

22 2940 Portfolio Monitoring and Risk Management Step 5 TEMPLETON GLOBAL EQUITY GROUP Ongoing Valuation Analysis Disciplined Sell Methodology Research team closely monitors investment thesis including ESG factors and updates forecasts and recommendations: Stocks placed on the Source of Funds List and sold if: Sector Team Meetings Meet monthly to review main holdings, best ideas and sector analyst portfolios, discuss sector drivers and trends, and vet potential new bargains Greater value exists in another similar security, or Price meets/exceeds our estimation of full value, or Fundamental change in our investment thesis occurs Industry Reviews Industry analysis reports and stock holdings formally reviewed twice a year by each analyst to the full investment team Analyst Database Reviews All stocks under analysts coverage also formally reviewed on a rotating weekly schedule Integrated Risk Approach Stock-specific risk is addressed primarily through our research discipline and team vetting process Ongoing assessment of material ESG issues provides another way to quantify potential downside risk Portfolio risk is managed through sector and geographic diversification and weekly peer review process Investment Risk Management Group an independent team of risk specialists reporting directly to the CEO performs a risk oversight function and can consult with the portfolio managers to provide unbiased risk insights The above chart is for illustrative and discussion purposes only. 22

23 Performance and Characteristics 23

24 Summary - A (acc) USD As of 31 March 2018 Summary of Investment Objective The Fund seeks long-term capital growth by investing primarily in Shariah compliant equity securities of companies of any nation, including Emerging Markets. The Fund s managers believe that greater value can be found by looking at companies globally rather than by limiting oneself to a single market. Morningstar Category Islamic Global Equity Investment Style Value Fund Inception Date 10 September 2012 Share Class Inception Date 10 September 2012 Benchmark MSCI AC World Islamic Index Base Currency for Fund USD Base Currency for Share Class USD Total Net Assets (USD) 92,085, Fund Identifiers Portfolio Turnover 17.33% ISIN Code LU Asset Allocation Equity: 97.91% SEDOL Code B7W8SW8 Cash & Cash Equivalents: 2.09% Bloomberg Code TSGEAAU LX Number of Issuers 104 Total Expense Ratio 1.90% Portfolio Manager(s) Alan Chua, CFA Singapore Peter Wilmshurst, CFA Australia Fund Ratings (31 March 2018) Overall Morningstar Rating ««The Portfolio Turnover is calculated over a 12-month period as at the end of the fiscal year (31 October 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. 24

25 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 Shariah-compliant 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: emerging markets risk, currency risk, liquidity risk, Shariah compliance 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. 25

26 Sector Allocation vs. MSCI AC World Islamic Index As of 31 March 2018 Health Care Energy Information Technology Materials Industrials Consumer Discretionary Consumer Staples Telecommunication Services Utilities Real Estate Financials Cash & Cash Equivalents 0% 6% 12% 18% 24% MSCI AC World Islamic Index 30% Health Care Pharmaceuticals, Biotechnology & Life Sciences Health Care Equipment & Services Energy Information Technology Technology Hardware & Equipment Software & Services Semiconductors & Semiconductor Equipment Materials Industrials Capital Goods Transportation Commercial & Professional Services Consumer Discretionary Retailing Automobiles & Components Consumer Durables & Apparel Consumer Services Media Consumer Staples Food, Beverage & Tobacco Household & Personal Products Food & Staples Retailing Telecommunication Services Utilities Real Estate Financials Diversified Financials Banks Cash & Cash Equivalents Portfolio % Index % Over/Under % 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. 26

27 Geographic Allocation vs. MSCI AC World Islamic Index As of 31 March 2018 Asia Europe North America Australia / New Zealand Latin America / Caribbean Mid-East / Africa Cash & Cash Equivalents 0% 9% 18% 27% 36% MSCI AC World Islamic Index 45% Asia Japan China South Korea Hong Kong Singapore Thailand Taiwan Others Europe United Kingdom Germany France Switzerland Denmark Italy Portugal Ireland Netherlands Others North America United States Canada Australia / New Zealand Australia New Zealand Latin America / Caribbean Others Mid-East / Africa Others Cash & Cash Equivalents Emerging Markets Exposure Portfolio % Index % Over/Under % 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. 27

28 Top Ten Holdings As of 31 March 2018 Name of Issuer Country Industry ROYAL DUTCH SHELL PLC United Kingdom Energy 2.93 SAMSUNG ELECTRONICS CO LTD South Korea Technology Hardware & Equipment 2.32 INTEL CORP United States Semiconductors & Semiconductor Equipment 2.26 TENCENT HOLDINGS LTD China Software & Services 2.24 BP PLC United Kingdom Energy 2.11 GALP ENERGIA SGPS SA Portugal Energy 1.52 SIEMENS AG Germany Capital Goods 1.51 TELEFONICA DEUTSCHLAND HOLDING AG Germany Telecommunication Services 1.49 TOTAL SA France Energy 1.44 CHINA MEDICAL SYSTEM HOLDINGS LTD China Pharmaceuticals, Biotechnology & Life Sciences 1.41 Total % of 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. 28

29 Portfolio Characteristics vs. MSCI AC World Islamic Index As of 31 March 2018 Price to Earnings (12-mo Trailing) Price to Cash Flow Price to Book Dividend Yield Market Capitalisation (Millions USD) Market Capitalisation Breakdown in USD <2.0 Billion Billion Billion Billion Billion >50.0 Billion Portfolio Index 17.52x 9.42x 1.63x 2.51% 75, x 10.23x 2.16x 2.58% 82,119 Portfolio % 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. 29

30 Discrete Performance - A (acc) USD As of 31 March 2018 Discrete Annual Performance (%) - A (acc) USD Net of Fees MSCI AC World Islamic Index Inception Date 03/17 03/18 03/16 03/17 03/15 03/16 03/14 03/15 03/13 03/ 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. 30

31 Historical Performance - A (acc) USD As of 31 March 2018 Annualised Total Returns (%) - A (acc) USD Net of Fees Inception Date 1 Yr 3 Yrs 5 Yrs Since Incept Inception Date 1 Mth 3 Mths YTD 1 Yr 3 Yrs 5 Yrs Since Incept MSCI AC World Islamic Index Cumulative Performance (%) - A (acc) USD Net of Fees MSCI AC World Islamic 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. 31

32 Calendar Year Returns - A (acc) USD As of 31 March % % % % -8% YTD A (acc) USD Net of Fees MSCI AC World Islamic 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. 32

33 Performance Risk Statistics - A (acc) USD As of 31 March 2018 Performance Risk Statistics 1 Yr 3 Yrs* 5 Yrs* - A (acc) USD MSCI AC World Islamic Index Beta^^ Sharpe Ratio Standard Deviation (%): Tracking Error (%)^^ Information 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 AC World Islamic Index. *Annualised. Past performance is not an indicator or a guarantee of future performance. 33

34 2942 Supplemental Information is a new product and, accordingly, only has a short performance history. Returns for the Templeton Shariah Global Equity Composite are shown to provide historical information that Templeton believes is relevant to an investor considering and are provided as supplemental information. The composite consists of all discretionary institutional separate accounts with similar investment objectives of the Fund. Performance is shown gross and net of investment management fees. Mutual fund performance would be lower if fund expenses and sales charges were reflected. The historical performance of the composite is not the performance of the Fund, and should not be viewed as a substitute for the Fund s own performance. Nor is the historical performance of the composite necessarily indicative of how the Fund would have performed in the past or will perform in the future. The Fund s actual performance may vary significantly from the past performance of the composite. 34

35 2942 Historical Performance Templeton Shariah Global Equity Composite As of 31 March 2018 Annualised Total Returns (%) Templeton Shariah Global Equity Composite Gross of Fees (USD) 1 Yr Templeton Shariah Global Equity Composite Net of Fees (USD) MSCI AC World Islamic Index (USD) 3 Yr 5 Yr Since Incept Inception Date Cumulative Total Returns (%) Qtr 1 Yr 3 Yr 5 Yr Since Incept Templeton Shariah Global Equity Composite Net of Fees (USD) MSCI AC World Islamic Index (USD) Inception Date Templeton Shariah Global Equity Composite Gross of Fees (USD) Mth Please see accompanying full performance presentation prepared in accordance with the Global Investment Performance Standards (GIPS ). Please also see the Important Information page in the Appendix. is a new product and, accordingly, only has a short performance history. Returns for the Templeton Shariah Global Equity Composite are shown to provide historical information that Templeton believes is relevant to an investor considering and are provided as supplemental information. The composite consists of all discretionary institutional separate accounts with similar investment objectives of the Fund. Performance is shown gross and net of investment management fees. Mutual fund performance would be lower if fund expenses and sales charges were reflected. The historical performance of the composite is not the performance of the Fund, and should not be viewed as a substitute for the Fund s own performance. Nor is the historical performance of the composite necessarily indicative of how the Fund would have performed in the past or will perform in the future. The Fund s actual performance may vary significantly from the past performance of the composite. Performance data is shown rounded to the nearest hundredth. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. Past performance is not an indicator or a guarantee of future performance. 35

36 2942 Calendar Year Returns Templeton Shariah Global Equity Composite As of 31 March % % 30% 25% % % % % 0% % -10% YTD Templeton Shariah Global Equity Composite Gross of Fees (USD) MSCI AC World Islamic Index (USD) Please see accompanying full performance presentation prepared in accordance with the Global Investment Performance Standards (GIPS ). Please also see the Important Information page in the Appendix. is a new product and, accordingly, only has a short performance history. Returns for the Templeton Shariah Global Equity Composite are shown to provide historical information that Templeton believes is relevant to an investor considering and are provided as supplemental information. The composite consists of all discretionary institutional separate accounts with similar investment objectives of the Fund. Performance is shown gross and net of investment management fees. Mutual fund performance would be lower if fund expenses and sales charges were reflected. The historical performance of the composite is not the performance of the Fund, and should not be viewed as a substitute for the Fund s own performance. Nor is the historical performance of the composite necessarily indicative of how the Fund would have performed in the past or will perform in the future. The Fund s actual performance may vary significantly from the past performance of the composite. Performance data is shown rounded to the nearest hundredth. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. Past performance is not an indicator or a guarantee of future performance. 36

37 2879 Templeton Global Equity Group Value Investors Focused on Seeking Long-Term Long-Term Capital Growth Growth for Our for Clients Capital Our Clients TEMPLETON GLOBAL EQUITY GROUP What Sets Us Apart LONG-TERM PERSPECTIVE DISCIPLINED, REPEATABLE PROCESS adherence to valuation-driven philosophy and process that have navigated every market cycle over seven decades five-year horizon takes advantage of short-term price volatility to reveal long-term investment opportunities RIGOROUS BOTTOM-UP STOCK SELECTION everyone an analyst in a broadly experienced research team, identifying undervalued stocks across global industries FORTITUDE TO BE DIFFERENT conviction to purchase out-of-favour securities and patience to wait for value recognition 37

38 Management Profiles 38

39 Management Profile ALAN CHUA, CFA Executive Vice President Portfolio Manager/Research Analyst Templeton Global Equity Group Templeton Asset Management Limited Singapore Singapore Alan Chua is an executive vice president and research analyst for the Templeton Global Equity Group, as well as a portfolio manager for a number of institutional and retail clients based in and outside Singapore. He has global research responsibilities for the machinery industry, as well as country research coverage of Japan. Prior to joining Franklin Templeton in 2000, Mr. Chua was an associate director with UBS Asset Management and a senior corporate relationship officer for Deutsche Bank. He entered the financial services industry in Mr. Chua holds a B.Sc. in economics from the University of Oregon and an M.B.A. from the London Business School. He is a Chartered Financial Analyst (CFA) charterholder. 39

40 Management Profile PETER WILMSHURST, CFA Executive Vice President Portfolio Manager, Research Analyst Templeton Global Equity Group Franklin Templeton Investments Australia Limited Melbourne, Victoria, Australia Peter Wilmshurst is an executive vice president in the Templeton Global Equity Group with research responsibility for banks in Europe, and Asian telecommunications companies. He is also the coordinator for the financials sector team and the portfolio manager of a number of Templeton's global portfolios. Prior to joining Franklin Templeton in 1998, Mr. Wilmshurst was an equity portfolio manager and analyst with Norwich Investment Management in Australia and an actuary at MLC Life Company. He entered the financial services industry in Mr. Wilmshurst holds a bachelor of economics degree and a master of economics degree from Macquarie University (Australia). He qualified as a Fellow of the Institute of the Actuaries of Australia and as a Fellow of the Financial Services Institute of Australia. Mr. Wilmshurst is a Chartered Financial Analyst (CFA) charterholder and a past president of the CFA Society of Melbourne. 40

41 Appendix 41

42 2883 Collaboration Experts Across Across Franklin Franklin Templeton Templeton Collaboration with with Financial Financial Experts Fixed Income Templeton Global Macro expertise on macroeconomic and currency trends Investment Risk Management Analysts and Portfolio Managers in 16 Locations Consultants and Analysts in 20 Locations TEMPLETON GLOBAL EQUITY 38 Analysts, Portfolio Managers Franklin Templeton Emerging Markets Equity and Franklin Local Asset Management teams perspective and insights on local business conditions and economic and political risks Franklin Templeton Emerging Markets Equity Analysts and Portfolio Managers in 20 Locations Local Asset Management Analysts and Portfolio Managers in 15 Locations As of 31 March