Diversified Fixed Income Expertise for Today s Investor

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1 Diversified Fixed Income Expertise for Today s Investor

2 The Importance of Diversification Diversification is an investment strategy that shouldn t just apply to equities Most Canadian portfolios are predominantly composed of domestic bonds offering little diversification and even less defense against rising interest rates Fixed Income Sectors Perform Differently in Different Interest Rate Environments (from December 1986 to December 2016) Average Returns (%) Canadian Long-Term Bonds Government Bonds Canadian Government Bonds Sovereigns Canadian Bond Universe Long-Term Bonds G7 Sovereign Bonds Inv-Grade Corporate Bonds Canadian Corporate Bonds Mortgage-Based Securities Municipal Bonds Canadian Provincial & Municipal Bonds Periods of... FALLING Interest Rates RISING Interest Rates High Yield Bonds Emerging Market Sovereign Debt Treasury Bill Bank Loans Source: Morningstar Research Inc. and Bloomberg as of December 31, Returns are in each benchmark's indicated currency. Periods of rising/falling interest rates are defined as calendar years when rates on the 10-year Treasury rose/fell more than 50 basis points between December 1986 and December Average returns for each asset class only includes the years where data is available. Bank Loans, Credit Suisse Leveraged Loan Index USD; Canadian Bond Universe, FTSE TMX Canada Universe Bond Index CAD; Canadian Corporate Bonds, FTSE TMX Canada All Corp Universe TR CAD; Canadian Government Bonds, FTSE TMX Canada Government Bond Index CAD; Canadian Provincial & Municipal Bonds, BofAML Canadian Provincials & Municipal Bonds TR CAD; Emerging Market Sovereign Debt, Bloomberg Barclays Emerging Market Debt TR USD; G7 Sovereign Debt, Bloomberg Barclays Global G7 TR; High Yield Bonds, Credit Suisse First Boston High Yield USD; Sovereigns, Citi World Government Bond Index USD; Corporate Bonds, Barclays Capital Credit TR USD; Government Bonds, Bloomberg Barclays Government TR USD; Mortgage-Backed Securities, Bloomberg Barclays MBS TR USD; Municipal Bonds, Bloomberg Barclays Municipal TR USD; T-Bills, Bloomberg Barclays Treasury Bills TR USD;, Barclays Capital Treasury Inflation Protected Securities TR USD.

3 As a Result, Winning Sectors Will Tend to Rotate % 40.6% 31.0% 8.5% 16.4% % % % % 14.2% Best -5.3% 38.7% 23.0% 7.0% 13.4% 12.2% 13.3% 17.2% MORTGAGE- 21.7% 6.1% -5.9% MORTGAGE- 35.5% 14.0% 6.7% 11.7% 7.0% 6.8% MORTGAGE- 15.6% 21.5% 6.1% MORTGAGE- -7.8% 28.1% 5.4% 4.2% 11.0% 6.9% 5.2% 14.4% 21.0% 2.0% MORTGAGE- -9.3% 22.1% -1.5% 2.8% 9.7% 4.6% 4.6% 14.2% 20.0% 1.7% -10.8% 22.0% -4.1% 0.8% 9.6% 4.4% 4.0% 13.0% 19.5% 1.1% MORTGAGE % 21.2% -5.4% 0.0% 9.0% 3.6% 3.9% 11.3% 19.0% -1.8% -10.9% 6.6% MORTGAGE % MORTGAGE- -0.1% MORTGAGE- 8.9% MORTGAGE- 0.3% 2.4% 11.0% 18.2% -1.9% -12.3% 6.4% -12.9% -0.3% 8.1% -0.2% 2.3% 9.1% 15.6% -2.5% -12.9% -7.7% -14.8% -3.0% 4.3% -0.6% -1.2% 8.8% 14.0% -3.1% -13.6% -10.9% -17.0% -5.0% 2.6% -2.1% -2.5% 8.5% 3.5% -3.2% Worst Source: Morningstar Research as of December 31, All returns shown in Canadian dollars. n Emerging market bonds, Barclays Capital Emerging Market TR; n municipal bonds, Bloomberg Barclays Municipal TR; n investment-grade corporate bonds, Bloomberg Capital Credit TR; n government bonds, Bloomberg Barclays Government TR; n mortgage-backed securities, Bloomberg Barclays Mortgage-Backed TR; n Treasury Inflation Protected Securities (), Bloomberg Barclays Treasury Inflation Protected Securities TR; n global bonds, Citi World Government Bond Index; n high yield bonds, Credit Suisse High Yield; n floating loans, Credit Suisse Leveraged Loan; n Canadian bonds, FTSE TMX Canada Universe Bond Index; n T-Bill, Bloomberg Barclays Treasury Bills TR. franklintempleton.ca Diversified Fixed Income Expertise for Today s Investor 1

4 Specialists From the Start Franklin Templeton s Fixed Income capabilities emerged from six distinct sector specialist groups that came together to form Franklin Templeton Fixed Income Group and Templeton Global Macro. This resulted in: Deep knowledge of opportunities and risks associated with sectors or regions A truly multi-dimensional market perspective developed through shared sector and regional expertise and insight Franklin Templeton Fixed Income MORTGAGE SPECIALISTS, CORPORATE CREDIT SPECIALISTS QUANTITATIVE ANALYSTS MUNICIPAL BOND SPECIALISTS LOCAL SPECIALISTS / SOVEREIGN DEBT SPECIALISTS BANK LOAN SPECIALISTS Franklin Templeton Fixed Income Group Global Chief Investment Officer A 24/7 global trading platform Globally unified risk management policies and procedures Templeton Global Macro Employs a global, unconstrained approach Global macro expertise leveraged across multiple investment platforms Franklin is founded 1940 Templeton is founded based Franklin High Income Fund 1 is launched, pre-dating the index by 15 years based Franklin California Tax-Free Income Fund 2 is launched, pre-dating the index by 3 years 2000 Franklin Templeton acquires Franklin Bissett 2001 Integration of fixed income specialist groups under one global infrastructure, Franklin Templeton Fixed Income Group 1992 Franklin Resources acquires Templeton 2015 Launch of Templeton Global Macro, a distinct group that provides global macro views to both and equity teams 1982 Franklin Bissett Investment Management is founded 1988 Templeton Global Bond Fund is launched in Canada 1. Canadian launch: February Not available for sale in Canada. 2 Diversified Fixed Income Expertise for Today s Investor franklintempleton.ca

5 Complete Market Access All Within Your Reach Diversification across multiple geographic regions can help today s investors build wealth while reducing their risk exposure and Franklin Templeton Fixed Income can provide: First-hand, on-the-ground expertise that allows for a better assessment of the risks and opportunities in each market Shared proprietary research across the entire capital structure that provides global insight to local markets Franklin Templeton Fixed Income Over C$374 billion in assets managed globally 170+ specialists Offices in 13 countries Our Globally Diversified Business Over C$962 billion in assets globally Offices in over 30 countries around the world Over 65 years of experience Clients and customers in over 170 countries Our Global Presence AMERICAS Bogota 3 Boston Buenos Aires Calgary Coral Gables Dublin Fort Lauderdale Los Angeles Mexico City Montreal Nassau New York City Rancho Cordova Ridgefield Park Rio de Janeiro Salt Lake City San Mateo Sao Paulo Short Hills St. Petersburg Stamford 4 Toronto Washington, D.C. Wilmington EUROPE, MIDDLE EAST, AFRICA Amsterdam Brussels Bucharest Budapest Cape Town Dubai Edinburgh Florence Frankfurt Geneva Istanbul Leeds London Luxembourg Madrid Milan Padua Paris Poznan Rome Stockholm Warsaw Zurich ASIA PACIFIC Bangkok Beijing Chennai Ho Chi Minh City 3 Hong Kong Hyderabad Kuala Lumpur Melbourne Mumbai Seoul Shanghai 3 Singapore Sydney Tokyo As of June 30, Joint venture partners with Franklin Templeton Investments. 4. Majority ownership interest. Franklin Resources, Inc. is a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management solutions managed by its Franklin, Templeton, Franklin Mutual Series, Fiduciary Trust, Darby and Franklin Bissett investment teams. franklintempleton.ca Diversified Fixed Income Expertise for Today s Investor 3

6 A Solution for Any Need Franklin Bissett Franklin Bissett Canadian Short Term Canadian Government Franklin Bissett Franklin Bissett Franklin Strategic Franklin High Templeton Franklin Quotential Bond Fund Bond Fund Core Plus Bond Fund Corporate Bond Fund Income Fund Income Fund Global Bond Fund Fixed Income Portfolio Opportunity Set Canadian short-term Pure government bond allocation Canadian core plus Diversified Canadian and Global multi-sector Global high-yield Global government Actively managed portfolio of to complement core holdings global multi-sector global credit multi-sector Portfolio Jeffrey Johnson, CFA, MBA Tom O Gorman, CFA Tom O Gorman, CFA Adrienne Young, CFA Chris Molumphy, CFA, MBA Chris Molumphy, CFA, MBA Michael Hasenstab, Ph.D. Stephen Lingard, CFA, MBA Manager(s) Darcy Briggs, CFA, CPA, CGA, FRM Darcy Briggs, CFA, CPA, CGA, FRM Darcy Briggs, CFA, CPA, CGA, FRM Darcy Briggs, CFA, CPA, CGA, FRM Roger Bayston, CFA Glenn Voyles, CFA Sonal Desai, Ph.D. Michael Greenberg, CFA Patricia O Connor, CFA, CPA, MBA 1 Risk Rating Low Risk Low Risk Low Risk Low Risk Low Risk Low to Medium Risk Low to Medium Risk Low Risk Why Invest A defensive strategy to help Active exposure to all levels to Core strategy with a multi-sector Pure credit strategy for added Global multi-sector strategy Pure high-yield bond exposure Investing in global government Multi-asset fund-of-fund reduce interest rate, liquidity Canadian government bonds approach to capitalize on the alpha to core bond holdings leveraging the best ideas from for added alpha to core bond bond opportunities for higher strategy benefiting from different and credit risks Low correlation to equity holdings broader CDN & global market Flexibility to invest in highquality and high-yield bonds for Tactical sector exposure for High-yielding bonds tend to Low correlation to Canadian sectors and geographies a large team of sector specialists holdings income investment styles, Portfolio yield typically equivalent to help reduce portfolio volatility opportunities to that of longer-duration core Stable monthly distributions with Total return approach, balancing enhanced returns and manage enhanced returns and reduced outperform in a rising rate equity and fixed-income strategy Exposure to low-correlated fixedincome for reduced volatility Canadian bond strategies potential for quarterly top-ups low volatile income with capital volatility volatility environment for reduced portfolio volatility A good complement to equity and appreciation Stable monthly distributions Enhanced income through Enhanced income through Enhanced income through other fixed-income investments Stable monthly distributions with with potential for quarterly regular monthly distributions monthly distributions monthly distributions due to its low correlation potential for quarterly top-ups top-ups 2 Duration (Years) Credit Rating High yield Currency Hedge Global exposure actively hedged to N/A Global exposure actively hedged Global exposure actively hedged to Portfolio largely hedged back Portfolio largely hedged back to Strategic hedges used to isolate Both at underlying fund the Canadian dollar to the Canadian dollar the Canadian dollar to the Canadian dollar the Canadian dollar desired exposures and portfolio levels Benchmark FTSE TMX Cda Short Term Overall FTSE TMX Cda All Government FTSE TMX Cda Universe FTSE TMX Cda All Corporate Bloomberg Barclays US Aggregate Credit Suisse First Boston JP Morgan Global Government 50% FTSE TMX Canada Bond Index, Bond Index Bond Index Bond Index Bond Index Bond Index (US$) High Yield Index (US$) Bond Index (CDN$) 50% Barclays Multiverse (Hdg to CDN$) Asset Mix 3 Canadian Corporate % Canadian Provincial % Canadian Corporate % Canadian Corporate % High Yield Corporates % High Yield Fixed Income % Local Currency Government/ Corporate Investment Grade 26.59% Canadian Provincial % Canadian Federal % Canadian Provincial % US Corporate % Bank Loans % Equity % Agency Bonds % Canadian Provincial % Canadian Federal % Canadian Municipal % Canadian Federal % US Federal % Investment Grade Corp % Cash & Cash Equivalents 2.02% Non-Local Currency Sovereign Developed % US Corporate % Cash & Cash Equivalents -0.16% US Corporate % Bank Loans % AMBS/CMBS/RBS % Sovereign Bonds % Corporate High Yield % US Federal % Canadian Municipal % Foreign Federal % US Treasuries % Supranational % Canadian Federal % Canadian Municipal % US Federal % Canadian Federal % International Bonds % Derivatives % Sovereign Emerging % Bank Loans % Bank Loans % Cash & Cash Equivalents 0.32% Collateralized Cash & Cash Equivalents 31.53% Securitized % Foreign Federal % Foreign Federal % Loan Obligations % Bank Loan % Cash & Cash Equivalents 0.08% Cash & Cash Equivalents -0.06% Municipal Bonds % Municipal Bonds % Other % Equity % Cash & Cash Equivalents 4.12% Other % Cash & Cash Equivalents 10.30% Asset Allocation Up to 30% global, up to 75% All Canadian Up to 30% global, up to 75% Up to 30% global & No limit on high yield & global All high yield & no limit on global 25% limit on high yield 25% 75% domestic Limits corporate & up to 25% high yield corporate & up to 25% high yield 25% high yield and 25% 75% foreign Size CDN$ 459 million CDN$ 380 million CDN$ 2.3 billion CDN$ 204 million CDN$ 624 million CDN$ 25 million CDN$ 2.2 billion CDN$ 3 million CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. As of March 31, For more information about the risk rating and specific risks that can affect the fund s returns, see the Investment risk classification methodology section of the fund s simplified prospectus. 2. The figures shown for Duration may reflect certain derivatives held in the portfolio (or their underlying reference assets). 3. Asset Mix figures may 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 derivatives, unsettled trades or other factors. 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. Investment Solutions Franklin Templeton brings together some of the world s foremost experts. Its specialized team approach better enables it to isolate and limit risk exposure while seeking out the best opportunities from around the world. FRANKLIN TEMPLETON FIXED INCOME SOLUTIONS Fund Name/Inception Date Fund Composition Fund Description Franklin Bissett Canadian Short Term Bond Fund December 22, 2003 Franklin Bissett Core Plus Bond Fund August 1, 1986 Franklin Bissett Corporate Bond Fund December 18, 2006 Franklin Bissett Canadian Government Bond Fund November 14, 2016 Franklin Strategic Income Fund February 17, 2003 Franklin High Income Fund February 17, 2003 Templeton Global Bond Fund July 15, 1988 Canadian short-term Broad Canadian Canadian corporate Canadian government Global multi-sector Global high-yield Global government A defensive strategy to help reduce interest rate, liquidity and credit risks Portfolio yield typically equivalent to that of longer duration core Canadian bond strategies A good complement to equity and other investments due to its low correlation Core strategy with a multisector approach to capitalize on the broader CDN & global market opportunities Total return approach, balancing low volatile income with capital appreciation Stable monthly distributions with potential for quarterly top-ups Pure credit strategy for added alpha to core bond holdings Flexibility to invest in high quality and high-yield bonds for enhanced returns and manage volatility Stable, above average monthly distributions with potential for quarterly top-ups Active exposure to all levels of Canadian government bonds Low correlation to equity holdings to help reduce portfolio volatility Stable monthly distributions with potential for quarterly top-ups Global multi-sector strategy leveraging the best ideas from a large team of sector specialists Tactical sector exposure for enhanced returns and reduced volatility Enhanced income through regular monthly distributions Pure high-yield bond exposure for added alpha to core bond holdings High-yielding bonds tend to outperform in a rising rate environment Enhanced income through monthly distributions Investing in global government bond opportunities for higher income Low correlation to Canadian equity and strategy for reduced portfolio volatility Monthly income distributions FRANKLIN QUOTENTIAL PORTFOLIOS Fund Name/Inception Date Target Asset Mix Fund Description Franklin Quotential Fixed Income Portfolio November 14, % Fixed income Tactical asset allocation across multiple sectors Fund-of-fund strategy benefiting from different investment styles, fixed-income asset classes and geographies Franklin Quotential Diversified Income Portfolio February 17, % Fixed income, 30% Equity Actively managed portfolio of multi-sector and dividend-paying equities Extensive diversification designed to weather interest rate movements and take advantage of pricing and yield differentials between government and corporate bond issuers Franklin Templeton Fixed Income For more details on our solutions review our Fixed Income Solutions Overview Flyer (FIXOV FLYE) 4 Diversified Fixed Income Expertise for Today s Investor franklintempleton.ca

7 Franklin Templeton Investments Gain From Our Perspective At Franklin Templeton Investments, we re dedicated to one goal: delivering exceptional asset management for our clients. By bringing together multiple, world-class investment teams in a single firm, we re able to offer specialized expertise across styles and asset classes, all supported by the strength and resources of one of the world s largest asset managers. This has helped us to become a trusted partner to individual and institutional investors across the globe. Focus on Investment Excellence At the core of our firm, you ll find multiple independent investment teams each with a focused area of expertise from traditional to alternative strategies and multi-asset solutions. And because our portfolio groups operate autonomously, their strategies can be combined to deliver true style and asset class diversification. All of our investment teams share a common commitment to excellence grounded in rigorous, fundamental research and robust, disciplined risk management. Decade after decade, our consistent, research-driven processes have helped Franklin Templeton earn an impressive record of strong, long-term results. Global Perspective Shaped by Local Expertise In today s complex and interconnected world, smart investing demands a global perspective. Franklin Templeton pioneered international investing over 60 years ago, and our expertise in emerging markets spans more than a quarter of a century. Today, our investment professionals are on the ground across the globe, spotting investment ideas and potential risks firsthand. These locally based teams bring in-depth understanding of local companies, economies and cultural nuances, and share their best thinking across our global research network. Strength and Experience Franklin Templeton is a global leader in asset management serving clients in over 170 countries.* We run our business with the same prudence we apply to asset management, staying focused on delivering relevant investment solutions, strong long-term results and reliable, personal service. This approach, focused on putting clients first, has helped us to become one of the most trusted names in financial services. * As of 12/31/16. Clients are represented by the total number of shareholder accounts.

8 Franklin Templeton Investments Canada 200 King Street West, Suite 1500 Toronto, ON M5H 3T4 fax (866) (800) For more than six decades, individuals and institutions around the world have looked to Franklin Templeton Investments as a trusted partner in asset management. We leverage the expertise of multiple, independent portfolio teams to deliver specialized expertise across a wide range of styles and asset classes. Our experts are on the ground in over 30 countries, spotting investment ideas and potential risks firsthand. Collectively, they allow us to offer clients investment solutions shaped by local insight, global context, and a long-term investment horizon. NYSE: BEN Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus or fund facts document before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Franklin Templeton Solutions (FTS) is a global team dedicated to global portfolio-based solutions, which draws on the expertise of a number of Franklin Templeton affiliates. In Canada, the advisor to the Canadian FTS mandates is Fiduciary Trust Company of Canada. Franklin Bissett Investment Management is a part of Franklin Templeton Investments Canada. Franklin Templeton Investments Canada is a business name used by Franklin Templeton Investments Corp Franklin Templeton Investments Corp. All rights reserved. FIX BE 07/17