Franklin ActiveQuant Canadian Fund Series A Product Profile Fourth Quarter 2017 FUND CHARACTERISTICS (AS OF 12/31/17) Fund Inception Date 9/20/04 Morningstar Category Canadian Equity Total Net Assets All Series $445 million THIRD-PARTY FUND DATA Overall Morningstar Rating «««As of December 31, 2017 the fund s Series A received a 3 star overall Morningstar Rating, measuring risk-adjusted returns against 407, 314 and 143 Canadian Equity funds over the 3, 5 and 10 year periods, respectively. A fund s overall rating is based on a risk-adjusted return measure that accounts for variation in monthly excess performance. FUND CODES Series CAD Series A Front 1096 Series A DSC 1098 Series A Low Load 1097 Series F 1099 Series I 3361 Series O 2000 Series PF 3882 Corporate Class CAD Series A Front 2021 Series A DSC 2023 Series A Low Load 2022 Series F 2024 Series I 3360 Series O 2025 FUND DESCRIPTION The fund seeks long-term capital appreciation by investing primarily in a diversified portfolio of Canadian securities. PERFORMANCE DATA Compounded Returns for Periods Ended December 31, 2017 (%) Since Incept 3Mths* 1 Yr 3 Yrs 5 Yrs 10 Yrs (9/20/04) Franklin ActiveQuant Canadian Fund 2.02 3.65 3.17 8.45 4.05 7.26 Management Expense Ratio (as of 6/30/17 incl. HST) 2.28% The indicated rates of return are the historical annual compounded total returns including changes in share or unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Please call Franklin Templeton Client Services at 1.800.387.0830 or visit www.franklintempleton.ca for the most recent month-end performance. Compounded Returns for Periods Ended December 31, 2017 (%) 20 10 0 39-1 2.02 3.65 3.17 3 Mths* 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Incept Franklin ActiveQuant Canadian Fund Series A Calendar Year Returns As of December 31, 2017 (%) 3.65 12.52-5.83 13.76 20.06 7.61 8.45-5.01 4.05 20.43 34.03 7.26-39.88 Effective April 3, 2017, Franklin Bissett All Canadian Focus Fund has been renamed Franklin ActiveQuant Canadian Fund. Beginning in January 2017, investors switching between Corporate Class funds will trigger a capital gain or loss at the time of the switch due to certain changes in the income tax laws made by the federal government in 2016. -41 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Franklin ActiveQuant Canadian Fund Series A *Cumulative Total Returns. For information related to the Third-Party Fund Data and Performance Data sections, please see Explanatory Notes. 1of5
PORTFOLIO DIVERSIFICATION (AS OF 12/31/17) Top Ten Holdings Issuer Name Industry % of Total Toronto-Dominion Bank Banks 3.17 Dollarama Inc Retailing 3.05 Quebecor Inc Media 3.00 Royal Bank of Canada Banks 2.90 Bank of Montreal Banks 2.89 Open Text Corp Software & Services 2.88 Canadian Natural Resources Limited Energy 2.75 Magna International Inc Automobiles & Components 2.74 National Bank of Canada Banks 2.73 Constellation Software Inc Software & Services 2.70 Total 28.82 Sector Weightings vs. Benchmark (% of Equity) Sector Overweight/Underweight (% of Equity) Financials 28.44 34.59 Financials -6.15 Energy 15.55 19.67 Energy -4.12 Consumer Discretionary 5.44 13.98 Consumer Discretionary 8.54 Industrials 10.02 9.54 Industrials 0.48 Consumer Staples 3.66 9.48 Consumer Staples 5.82 Information Technology 3.23 8.26 Information Technology 5.03 Telecommunication Services 7.39 4.72 Telecommunication Services 2.67 Materials 4.25 11.50 Materials -7.24 Utilities 2.63 3.78 Utilities -1.15 Real Estate 0.00 2.92 Real Estate -2.92 Health Care 0.00 0.97 Health Care -0.97 0% 8% 16% 24% 32% 40% Franklin ActiveQuant Canadian Fund S&P/TSX Composite Index Portfolio Allocation -9% -5% 0% 5% 9% % Equity 97.57 Cash & Cash Equivalents 2.43 For information related to the Portfolio Diversification section, please see Explanatory Notes. 2of5
PORTFOLIO CHARACTERISTICS (AS OF 12/31/17) Fund vs. S&P/TSX Composite Index Fund Benchmark Fund Benchmark Market Capitalization (Millions) 37,529 48,165 Median Market Capitalization (Millions) 23,468 3,346 Historical 3 Yr Sales Growth 6.89% 3.49% Historical 3 Yr EPS Growth 5.07% 1.73% Return on Equity 14.12% 11.86% Operating Margin 14.26% 16.68% Net Margin 13.82% 15.82% Price to Earnings (12-month Forward) 16.02x 16.45x P/E to Growth 1.05x 1.03x Price to Book 2.47x 1.93x (As of 12/31/17) Performance Risk Statistics 3 Yrs 5 Yrs 10 Yrs Standard Deviation (%) 6.94 7.06 13.16 Alpha (%) -2.35 1.07-0.30 Beta 0.85 0.84 0.94 Sharpe Ratio 0.38 1.09 0.23 Information Ratio -1.04-0.05-0.13 Tracking Error (%) 3.30 3.49 4.54 R-Squared (%) 79.89 78.46 88.44 The indicated rates of return are the historical annual compounded total returns including changes in share or unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Please call Franklin Templeton Client Services at 1.800.387.0830 or visit www.franklintempleton.ca for the most recent month-end performance. GLOSSARY Alpha: Alpha measures the difference between a fund's actual returns and its expected returns given its risk level as measured by its beta. A positive alpha figure indicates the fund has performed better than its beta would predict. In contrast, a negative alpha indicates a fund has underperformed, given the expectations established by the fund's beta. Some investors see alpha as a measurement of the value added or subtracted by a fund's manager. Benchmark: An unmanaged group of securities whose overall performance is used as a standard to measure investment performance. Beta: A measure of the magnitude of a portfolio's past share-price fluctuations in relation to the ups and downs of the overall market (or appropriate market index). The market (or index) is assigned a beta of 1.00, so a portfolio with a beta of 1.20 would have seen its share price rise or fall by 12% when the overall market rose or fell by 10%. EPS Growth: Earning Per Share. The portion of a company's profit allocated to each outstanding share of common stock. Serves as an indicator of a company's profitability. Historical 3 Yr Sales Growth: The rate at which sales have increased for the fund's underlying holdings over the last three years. 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 Capitalization: A determination of a company's value, calculated by multiplying the total number of company stock shares outstanding by the price per share. Net Margin: The ratio of net profits to revenues for a company or business segment that shows how much of each dollar earned by the company is translated into profits. Operating Margin: A measurement of what proportion of a company's revenue is left over after paying for variable costs of production such as wages, raw materials, etc. P/E to Growth: A ratio used to determine a stock's value while taking into account earnings growth. For a portfolio, the value represents a weighted average of the stocks it holds. PricetoBook: 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 Earnings (12-month Forward): A measure of the price to earnings ratio for a stock using the forecasted earnings for the next 12 months. For a portfolio, the value represents a weighted average of the stocks it holds. R-Squared: A measure of how much of a portfolio's performance can be explained by the returns from the overall market (or a benchmark index). If a portfolio's total return precisely matched that of the overall market or benchmark, its R-squared would be 100. If a portfolio's return bore no relationship to the market's returns, its R-squared would be 0. Return on Equity: A measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested. 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. For information related to the Portfolio Characteristics section, please see Explanatory Notes. 3of5
INVESTMENT AND MANAGEMENT TEAM (AS OF 12/31/17) Franklin ActiveQuant U.S. Corporate Class Management Team Years with Firm Years Experience Garey Aitken, CFA 19 26 Jason Hornett, CFA 20 22 Izabel Flis 16 16 CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. 4of5
EXPLANATORY NOTES THIRD-PARTY FUND DATA Source: Morningstar 12/31/17.The Morningstar Rating for funds, or star rating, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five- and 10-year (if applicable) Morningstar Ratings metrics. The weights are 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three- year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Please refer to www.morningstar.ca for more details on the 1-year data and on the calculation of Morningstar Risk-Adjusted Ratings. 2018 Morningstar, Inc. All rights reserved. The information contained herein is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and 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. PERFORMANCE DATA The fund offers other series subject to different fees and expenses, which will affect their performance. STANDARD & POOR S, S&P and S&P 500 are registered trademarks of Standard & Poor s Financial Services LLC. Standard & Poor s does not sponsor, endorse, sell or promote any S&P index-based product. PORTFOLIO DIVERSIFICATION Top Ten Holdings: 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. The portfolio manager for the fund reserves the right to withhold release of information with respect to holdings that would otherwise be included. Sector Weightings/Sector Overweight/Underweight: Weightings as percent of total. Percentage may not equal 100% due to rounding. Information is historical and may not reflect current or future portfolio characteristics. PORTFOLIO CHARACTERISTICS 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 market capitalization figures for both the portfolio and the benchmark are at the security level, not aggregated up to the main issuer. All portfolio holdings are subject to change. 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 Investments Canada is a business name used by Franklin Templeton Investments Corp. Franklin Templeton Investments Canada 200 King Street West, Suite 1500 Toronto, ON M5H 3T4 Client Services Toll-free: 1.800.387.0830 Fax: 1.866.850.8241 franklintempleton.ca 2018 Franklin Templeton Investments Corp. All rights reserved. 1096 PPE 12/17 5of5