Emerging Markets Equity Data as of 31 August 2018 Franklin Templeton Investment Funds - I (acc) USD
Table of Contents Summary...3 What are the Key Risks?...4 Discrete Performance... 5 Historical Performance...6 Calendar Year Returns...7 Portfolio Characteristics...8 Top Ten Holdings... 9 Geographic Allocation...10 Sector Allocation...11 Performance Attribution by Country...12 Performance Attribution by Sector...13 Performance Attribution by Security...14 Performance Risk Statistics... 15 Glossary...16 Important Disclosures...17 2
Summary - I (acc) USD Morningstar Category Investment Style Asia ex Japan Equity Core Value Fund Inception Date 16 April 1991 Share Class Inception Date 30 January 2004 Benchmark Base Currency for Fund Base Currency for Share Class MSCI All Country Asia ex-japan Index USD USD Net Assets (USD) 3,686,704,307.00 Portfolio Turnover 27.99% Asset Allocation Equity: 98.20% Number of Issuers 50 Expense Ratio 1.21% Cash & Cash Equivalents: 1.80% 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) Sukumar Rajah Eric Mok, CFA Fund Identifiers ISIN Code LU0181996454 SEDOL Code 7743115 Bloomberg Code Fund Ratings (31 August 2018) Singapore Hong Kong TEMFAIA LX Overall Morningstar Rating «««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. 2018. 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. 3
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. 4
Discrete Performance - I (acc) USD Discrete Annual Performance (%) Inception Date - I (acc) USD Net of Fees 30.1.2004-3.37 29.09 9.81-27.05 22.73 MSCI All Country Asia ex-japan Index 3.04 25.19 13.27-15.82 21.54 08/17 08/18 08/16 08/17 08/15 08/16 08/14 08/15 08/13 08/14 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. When performance for either the portfolio or its benchmark has been converted, different foreign exchange closing rates may be used between the portfolio and its benchmark. 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. 5
Historical Performance - I (acc) USD Annualised Performance (%) Inception Date 1 Yr 3 Yrs 5 Yrs 10 Yrs - I (acc) USD Net of Fees 30.1.2004-3.37 11.05 4.17 6.18 9.56 MSCI All Country Asia ex-japan Index 3.04 13.47 8.37 6.93 9.30 Since Incept Cumulative Performance (%) Inception Date 1 Mth 3 Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs - I (acc) USD Net of Fees 30.1.2004-0.21-5.68-8.57-3.37 36.97 22.64 82.08 278.56 MSCI All Country Asia ex-japan Index -1.00-4.82-4.73 3.04 46.11 49.48 95.43 265.96 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. When performance for either the portfolio or its benchmark has been converted, different foreign exchange closing rates may be used between the portfolio and its benchmark. 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. 6
Calendar Year Returns - I (acc) USD 107% 105.35 72.53 65% 23% -8.57-4.73 30.88 42.08 20.72 5.76-26.08-8.90 8.31 5.11-6.86 3.33 17.47 22.70-14.02-17.07 31.37 19.93-59.76-52.23-19% -61% YTD 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 - I (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. When performance for either the portfolio or its benchmark has been converted, different foreign exchange closing rates may be used between the portfolio and its benchmark. 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. 7
Portfolio Characteristics vs. MSCI All Country Asia ex-japan Index Portfolio Price to Earnings (12-mo Trailing) 13.49x 13.51x Price to Cash Flow 7.39x 9.02x Price to Book 1.75x 1.62x Dividend Yield 2.60% 2.48% Market Capitalisation (Millions USD) 123,680 80,937 Market Capitalisation Breakdown in USD Portfolio % <2.0 Billion 5.12 2.0-5.0 Billion 15.06 5.0-10.0 Billion 15.19 10.0-25.0 Billion 18.13 25.0-50.0 Billion 5.30 >50.0 Billion 41.20 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. 8
Top Ten Holdings Name of Issuer Country Industry % of ALIBABA GROUP HOLDING LTD China Software & Services 9.10 SAMSUNG ELECTRONICS CO LTD South Korea Technology Hardware & Equipment 8.36 TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD Taiwan Semiconductors & Semiconductor Equipment 7.17 BANK DANAMON INDONESIA TBK PT Indonesia Banks 6.00 TENCENT HOLDINGS LTD China Software & Services 5.41 BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LTD China Automobiles & Components 4.79 PTT EXPLORATION & PRODUCTION PCL Thailand Energy 3.85 HDFC BANK LTD India Banks 3.27 KASIKORNBANK PCL Thailand Banks 3.18 OIL & GAS DEVELOPMENT CO LTD Pakistan Energy 3.03 54.15 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. 9
Geographic Allocation vs. MSCI All Country Asia ex-japan Index China Indonesia South Korea Thailand Taiwan India Hong Kong Portfolio % Index % Over/Under % Asia 98.20 100.00-1.80 China 32.21 34.92-2.70 Indonesia 12.75 2.25 10.50 South Korea 12.71 16.66-3.94 Thailand 11.94 2.72 9.23 Taiwan 9.16 13.82-4.66 India 9.10 10.52-1.42 Hong Kong 5.69 11.15-5.47 Pakistan 4.42 0.07 4.35 Singapore 0.20 3.91-3.72 Malaysia 0.00 2.80-2.80 Philippines 0.00 1.18-1.18 Others 0.01 0.00 0.01 Cash & Cash Equivalents 1.80 0.00 1.80 Pakistan Singapore Malaysia Philippines Cash & Cash Equivalents 0% 8% 16% 24% 32% 40% MSCI All Country Asia ex-japan 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. 10
Sector Allocation vs. MSCI All Country Asia ex-japan Index Information Technology Financials Energy Consumer Discretionary Industrials Materials Consumer Staples Health Care Real Estate Telecommunication Services Utilities Cash & Cash Equivalents 0% 8% 16% 24% 32% 40% MSCI All Country Asia ex-japan Index Portfolio % Index % Over/Under % Information Technology 36.18 31.16 5.02 Software & Services 16.68 15.01 1.67 Technology Hardware & Equipment 12.33 9.48 2.85 Semiconductors & Semiconductor Equipment 7.17 6.67 0.50 Financials 23.58 22.98 0.60 Banks 21.28 15.05 6.23 Insurance 2.31 5.39-3.09 Diversified Financials 0.00 2.54-2.54 Energy 11.03 4.86 6.17 Consumer Discretionary 9.25 8.57 0.68 Automobiles & Components 7.19 3.21 3.98 Media 1.03 0.27 0.76 Retailing 0.78 1.37-0.59 Consumer Durables & Apparel 0.26 1.39-1.13 Consumer Services 0.00 2.33-2.33 Industrials 6.96 6.50 0.46 Capital Goods 5.33 4.80 0.53 Transportation 1.63 1.55 0.08 Commercial & Professional Services 0.00 0.15-0.15 Materials 4.35 4.89-0.54 Consumer Staples 2.84 4.86-2.02 Food & Staples Retailing 2.84 0.75 2.09 Food, Beverage & Tobacco 0.00 2.77-2.77 Household & Personal Products 0.00 1.34-1.34 Health Care 1.65 3.14-1.49 Pharmaceuticals, Biotechnology & Life Sciences 1.65 2.51-0.86 Health Care Equipment & Services 0.00 0.63-0.63 Real Estate 1.53 5.99-4.45 Telecommunication Services 0.84 3.91-3.07 Utilities 0.00 3.16-3.16 Cash & Cash Equivalents 1.80 0.00 1.80 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. 11
Performance Attribution by Country vs. MSCI All Country Asia ex-japan Index 1 September 2017-31 August 2018 Thailand Taiwan South Korea Indonesia Philippines India Malaysia Hong Kong Pakistan China 1.13 0.57 0.33 0.26 0.07-0.13-0.16-0.26-0.30-5.95 5 Largest Contributors PORTFOLIO (%) INDEX (%) ATTRIBUTION EFFECTS (%) Average Weight Return Average Weight Return Allocation Effect Selection Effect Effect Thailand 16.04 14.19 2.64 15.31 1.58-0.44 1.13 Taiwan 4.53 12.86 13.27 6.64 0.20 0.37 0.57 South Korea 13.29 7.41 17.17 3.53-0.13 0.46 0.33 Indonesia 16.14 1.76 2.41-9.21-1.58 1.84 0.26 Philippines - - 1.20-4.50 0.07 0.00 0.07 5 Largest Detractors India 4.26 9.95 9.82 7.12 0.38-0.51-0.13 Malaysia - - 2.71 9.98-0.16 0.00-0.16 Hong Kong 6.37 1.81 11.57 3.18-0.02-0.24-0.26 Pakistan 5.81-2.93 0.09-16.36-0.98 0.68-0.30-6.0-2.0 2.0 China 31.37-18.86 34.90 0.12 0.07-6.02-5.95 Effect (%) Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change. Source: FactSet. Important data provider notices and terms available at www.franklintempletondatasources.com. Allocation Effect is the portion of excess return attributed to region/country allocation decisions. Selection Effect is the portion of excess return attributed to security selection decisions within the region/country and the product of the difference between the region/country portfolio and index weight times the difference between region/country portfolio and index return. Effect is the sum of the Allocation and Selection Effects and represents the excess return by region/country. Performance attribution is calculated in the base currency of the fund. Past performance is not an indicator or a guarantee of future performance. 12
Performance Attribution by Sector vs. MSCI All Country Asia ex-japan Index 1 September 2017-31 August 2018 PORTFOLIO (%) INDEX (%) ATTRIBUTION EFFECTS (%) Energy Financials 0.60 2.64 Average Weight Return Average Weight Return Allocation Effect Selection Effect Effect Energy 17.10 24.89 4.37 22.40 1.59 1.05 2.64 Real Estate 0.53 Financials 19.69 4.20 23.29 3.22 0.13 0.47 0.60 Consumer Staples Telecommunication Services Utilities 0.09 0.03-0.06 Real Estate 3.40 19.18 5.91 0.30 0.11 0.43 0.53 Consumer Staples 3.63 17.06 4.59 11.05-0.02 0.11 0.09 Telecommunication Services 0.45-45.34 3.99-8.04 0.51-0.47 0.03 Utilities - - 2.96 5.45-0.06 0.00-0.06 Health Care -0.34 Health Care 1.14 6.21 2.63 27.74-0.29-0.05-0.34 Information Technology -0.34 Information Technology 19.89 2.43 31.90 4.34-0.56 0.22-0.34 Industrials -0.62 Industrials 12.98-8.97 6.77-7.04-0.71 0.09-0.62 Materials Consumer Discretionary Cash & Other Net Assets -2.78-4.13 0.01 Materials 7.99-33.46 4.57 2.86-0.17-2.61-2.78 Consumer Discretionary 12.78-32.54 9.02-5.52 0.03-4.16-4.13 Cash & Other Net Assets 0.95 - - - 0.01 0.00 0.01-5.0-1.0 3.0 Effect (%) Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change. Source: FactSet. Important data provider notices and terms available at www.franklintempletondatasources.com. Allocation Effect is the portion of excess return attributed to sector allocation decisions. Selection Effect is the portion of excess return attributed to security selection decisions within the sector and the product of the difference between the sector portfolio and index weight times the difference between sector portfolio and index return. Effect is the sum of the Allocation and Selection Effects and represents the excess return by sector. Performance attribution is calculated in the base currency of the fund. Past performance is not an indicator or a guarantee of future performance. 13
Performance Attribution by Security vs. MSCI All Country Asia ex-japan Index 1 September 2017-31 August 2018 PTT EXPLORATION & PRODUCTION PCL YANZHOU COAL MINING CO LTD LOTTE CONFECTIONERY CO PTT PCL BANK DANAMON INDONESIA SAMSUNG HEAVY INDUSTRIES CO LTD BEC WORLD PUBLIC CO LTD CHINA INTERNATIONAL MARINE CONTAINERS GROUP CO LTD ALUMINUM CORP OF CHINA LTD BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LTD 1.43 0.91 0.78 0.70 0.61-0.83-1.20-1.45-2.61-2.71 5 Largest Contributors PORTFOLIO (%) INDEX (%) Average Weight Return Average Weight Return Effect PTT EXPLORATION & PRODUCTION PCL 3.06 70.81 0.11 71.24 1.43 YANZHOU COAL MINING CO LTD 1.58 22.15 0.05 21.41 0.91 LOTTE CONFECTIONERY CO 0.29 127.09 0.03-36.77 0.78 PTT PCL 1.96 35.34 0.34 36.39 0.70 BANK DANAMON INDONESIA 5.61 15.48 0.03 15.34 0.61 5 Largest Detractors SAMSUNG HEAVY INDUSTRIES CO LTD 2.42-25.35 0.05-24.86-0.83 BEC WORLD PUBLIC CO LTD 1.52-55.52 0.00-12.44-1.20 CHINA INTERNATIONAL MARINE CONTAINERS GROUP CO LTD 2.62-46.34 0.00-30.01-1.45 ALUMINUM CORP OF CHINA LTD 6.04-42.98 0.05-42.82-2.61 BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LTD 6.15-38.44 0.15-38.44-2.71-3.0 0.0 3.0 Effect (%) Holdings of the same issuer have been combined. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change. Source: FactSet. Important data provider notices and terms available at www.franklintempletondatasources.com. Effect reflects the excess return by security as compared to the index. Performance attribution is calculated in the base currency of the fund. Performance attribution is calculated in the base currency of the fund. Past performance is not an indicator or a guarantee of future performance. 14
Performance Risk Statistics - I (acc) USD Performance Risk Statistics 1 Yr 3 Yrs* 5 Yrs* 10 Yrs* Standard Deviation (%): - I (acc) USD 12.60 13.21 14.01 22.00 MSCI All Country Asia ex-japan Index 11.82 13.41 13.70 20.74 Tracking Error (%)^^ 5.08 6.79 7.33 7.31 Information Ratio^^ -1.26-0.36-0.57-0.10 Beta^^ 0.98 0.86 0.88 1.00 Sharpe Ratio -0.39 0.78 0.26 0.27 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. When performance for either the portfolio or its benchmark has been converted, different foreign exchange closing rates may be used between the portfolio and its benchmark. ^^Measured against the MSCI All Country Asia ex-japan Index. *Annualised. Past performance is not an indicator or a guarantee of future performance. 15
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. 16
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 (FTIF). Nothing in this document should be construed as investment advice. Opinions expressed are the author's at publication date and they are subject to change without prior notice. Subscriptions to shares of FTIF can only be made on the basis of the current prospectus and where available, the relevant Key Investor Information Document, accompanied by the latest available audited annual report and the latest semi-annual report if published thereafter. The value of shares in FTIF 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. An investment in FTIF entails risks which are described in FTIF's prospectus and where available, in the relevant Key Investor Information Document. Risks in emerging markets may be higher than in developed markets. Investments in derivative instruments involve specific risks more fully described in the Fund's prospectus. No shares of FTIF may be directly or indirectly offered or sold to residents of the United States of America. Shares of FTIF 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. 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. References to particular industries, sectors or companies are for general information and are not necessarily indicative of a fund's holding at any one time. Please consult your financial advisor before deciding to invest. A copy of the latest prospectus and where available, the relevant Key Investor Information Document, the annual report and semi-annual report, if published thereafter can be found, on our website www.franklintempleton.it or can be obtained, free of charge, from Franklin Templeton International Services S.à r.l., Succursale Italiana. Issued by Franklin Templeton International Services S.à r.l., Succursale Italiana, Corso Italia, 1-20122 Milano - Tel: +39 0285459 1- Fax: +39 0285459 222 Tool Free number: 800915919 2018 Franklin Templeton Investments. All rights reserved. CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. 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. 17