Product Profile Product Details 1,2 Fund Assets $1,505,713,043.43 Fund Inception Date 11/29/1954 Number of Issuers 92 Base Currency Morningstar Category Distribution Frequency Risk Classification 3 Low Low to Medium Medium Medium to High CAD Global Equity Annually High Fund Codes 4 Fund CAD USD Series A Front TML700 TML702 Series A (Hedged) Front TML3623 Series A DSC TML732 TML102 Series A (Hedged) DSC TML3625 Series A Low Load TML648 TML649 Series A (Hedged) Low TML3624 Load Series F TML740 TML750 Series F ADM TML5023 TML5045 Series I TML780 TML795 Series O TML165 TML175 Series PF TML3817 TML3818 Series PF ADM TML5094 TML5116 Corporate Class CAD USD Series A Front TML350 TML351 Series A DSC TML352 TML353 Series A Low Load TML614 TML615 Series F TML354 TML355 Series F ADM TML5151 TML5174 Series I TML356 TML357 Series O TML358 TML359 Series PF TML3754 TML3755 Series PF ADM TML5191 TML5206 Series I and V closed to new investors as of November 22, 2016. 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. Fund Description This Fund seeks to achieve long-term capital appreciation by investing primarily in equity securities of companies around the world and fixed income securities issued by governments or companies of any country. The Fund may invest in any country or industry in any proportion. Performance Data 5 Average Annual Total Returns 6 (%) Since Inception 3 Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs (11/24/2000) Series F 1.59 3.46 7.83 9.09 10.93 9.26 4.96 Management Expense Ratio (as of 04/30/2018 incl. HST) 1.37% 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 security holder 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. 15% 10% 5% 0% Series F 1.59 3.46 3 Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Inception Calendar Year Returns (%) 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Series F 12.81 4.14 12.42 10.26 37.03 15.76-4.15 3.85 12.19-29.31 Portfolio Manager Insight 7 7.83 Market Review Global equity markets overall closed 2018 s third quarter with an advance in US-dollar terms. However, trade relations continued to worry many investors, in particular surrounding China. Some observers took cheer in promising trade negotiations, such as the European Union (EU) and Japan agreeing to create one of the world s biggest liberalised trade zones. Additionally, negotiations that 1. Series F is available to investors participating in programs that do not require Franklin Templeton to incur distribution costs in the form of trailing commissions to dealers. As a consequence, the management fee on Series F is lower than on Series A. 2. All holdings are subject to change. Holdings of the same issuers have been combined. 3. Each fund is assigned an investment risk rating in one of the following categories: low, low to medium, medium, medium to high or high risk. The risk ratings were determined using a methodology that assesses a fund s historical volatility risk as measured by the standard deviation of fund performance. However, just as a fund s historical performance may not be indicative of its future returns, a fund s historical volatility may not be indicative of its future volatility. In addition, other types of risk may exist that can affect a fund s returns. Please read the prospectus for more information on fund risk ratings. 4. ADM refers to the Investment Advisory Services Fee purchase option for series F,FT, PF, PF(Hedged), and PFT. Please see the simplified prospectus for further details. 5. The fund offers other series subject to different fees and expenses, which will affect their performance. 6. Periods shorter than one year are shown as cumulative total returns. 7. The information provided is not a complete analysis of every material fact regarding any country, market, industry, security or fund. Because market and economic conditions are subject to change, comments, opinions and analyses are rendered as of the date of this material and may change without notice. A portfolio manager s assessment of a particular security, investment or strategy is not intended as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy; it is intended only to provide insight into the fund s portfolio selection process. Holdings are subject to change. 9.09 10.93 9.26 4.96
continued through the last day of the quarter added Canada to a US-Mexico trade deal initially announced in late August. Developed-market stocks, as measured by MSCI indices, recorded an overall rise ahead of a global equity index, while the emerging- and frontier-market groupings retreated. However, performance was widely dispersed on a country level. In developed markets, the US stock market s performance throughout the third quarter increasingly separated itself from the rest of its developed-market peers. Robust corporate earnings, high business and consumer confidence, multi-decade low unemployment, and strength in other economic indicators all supported US equities. The US Federal Reserve continued gradually normalising monetary policy with an interest-rate increase in September. Its projections imply an additional rate hike in 2018 with more in 2019. Japan s economy expanded noticeably above its initial reading for the second quarter. In Europe, though strong corporate earnings early in the period and promising trade talks buoyed sentiment, US trade rhetoric and economic turmoil in Turkey weighed on investor outlooks for the region. Uncertainty surrounding Britain s exit from the EU and the Italian government s budget plans also sparked apprehension at times. In Asian emerging markets, the China-US trade dispute continued to dominate sentiment, while some regional markets also saw volatility on concerns of contagion from Turkey. In July, China announced measures intended to stimulate domestic consumption amidst the intensifying trade skirmish. This announcement also was taken as supporting exports from several Latin American countries and lifted some regional equities during the third quarter. Brazilian and Mexican stock markets also flourished on strong corporate earnings reports, as well as the trade agreement between the United States and Mexico. However, most Latin American stock markets were dragged down by ongoing global trade uncertainty, a rising US dollar, and fears of contagion from the economic woes of Argentina. Outlook & Strategy Market conditions remain challenging for value investors. Despite eight rate hikes by the Fed since 2016, real interest rates in the United States and elsewhere remain pinned near historic lows. Typically, when interest rates are low, the net present value of long-dated cash flows increases and stocks with good growth visibility command a premium. Low interest rates also have coincided with periods of low economic growth, and the laws of supply and demand ensure that when growth is scarce, many investors will pay more for it. What s more, during this unusual cycle, low rates have been accompanied by quantitative easing, an unconventional policy tool that through the expansion of the money supply created artificial and largely indiscriminate demand for risk assets. This has coincided with the rise of passive investing. Many passive products are weighted by market capitalisation, without regard for fundamentals. As the wave of liquidity created by central bankers flowed into the market, these popular products have helped funnel ever more capital into the growth stocks that dominate indices. Ultimately, we view these conditions as unsustainable. Many central banks led by the Fed are raising interest rates and withdrawing liquidity, at least partly due to concerns about the distortive impact of their policies on financial markets. Meanwhile, the same passive structures that amplified the outperformance of widely owned and highly liquid growth stocks on the way up may well amplify their underperformance on the way down. On the rare occasions over the past century when value has underperformed to the degree it has done so recently, it has gone on to outperform over the following two years. While extraordinary circumstances have delayed the process of value recognition in our portfolios, we have every confidence that an eventual, and substantial, reversal in trend should lie ahead. Portfolio Characteristics 8 Portfolio MSCI All Country World Index Price to Earnings (12 Month Trailing) 14.39x 18.43x Price to Book 1.45x 2.36x Price to Cash Flow 6.49x 11.75x Market Capitalization (Millions in CAD) 121,791 171,405 8. 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 capitalisation figures for both the portfolio and the benchmark are at the security level, not aggregated up to the main issuer. Source: Factset. Price ratio calculations for weighted average use harmonic means. Any exceptions to this are noted. Information is historical and may not reflect current or future portfolio characteristics. All holdings are subject to change. franklintempleton.ca 2
Portfolio Diversification Top Ten Holdings 9 Top Holdings Sector Country % ORACLE CORP Software & Services United States 2.91 BP PLC Energy United Kingdom 2.32 ROYAL DUTCH SHELL PLC Energy United Kingdom 1.98 COMCAST CORP Media & Entertainment United States 1.97 ALLERGAN PLC Pharmaceuticals, Biotechnology & Life United States 1.91 Sciences SAMSUNG ELECTRONICS CO LTD Technology Hardware & Equipment South Korea 1.88 SANOFI Pharmaceuticals, Biotechnology & Life France 1.74 Sciences SOFTBANK GROUP CORP Telecommunication Services Japan 1.66 AXA SA Insurance France 1.56 STANDARD CHARTERED PLC Banks United Kingdom 1.52 Geographic Weightings vs. MSCI All Country World Index 10 EUROPE NORTH AMERICA ASIA MID-EAST/AFRICA CASH & CASH EQUIVALENTS Templeton Growth Fund, Ltd. MSCI All Country World Index 1.48 1.03 0.00 3.37 17.30 20.16 22.36 35.17 37.61 58.10 0% 25% 50% 75% Sector Weightings vs. MSCI All Country World Index 11 Financials Health Care Communication Services Energy Information Technology Industrials Consumer Staples Materials Consumer Discretionary Utilities Real Estate Cash & Cash Equivalents Templeton Growth Fund, Ltd. MSCI All Country World Index 2.80 2.90 1.71 2.74 3.37 0.00 5.59 5.52 5.02 5.38 6.73 7.12 7.67 8.92 9.67 9.02 10.58 11.75 11.55 10.88 15.65 17.15 17.96 20.29 0% 5% 10% 15% 20% 25% 9. Holdings of the same issuers have been combined. Top ten holdings information is historical and may not reflect current or future portfolio characteristics. All holdings are subject to change. The information provided is not a recommendation to purchase, sell, or hold any particular security. The securities identified do not represent the fund s entire holdings and in the aggregate may represent only a small percentage of such holdings. There is no assurance that securities purchased will remain in the fund, or that securities sold will not be repurchased. The portfolio manager for the fund reserves the right to withhold release of information with respect to holdings that would otherwise be included. 10,11. Information is historical and may not reflect current or future portfolio characteristics. Percentage may not equal 100% due to rounding. All holdings are subject to change. franklintempleton.ca 3
Largest Sector Contributors vs. MSCI All Country World Index 12 (%) Communication Services 0.77 Energy 0.23 Consumer Discretionary 0.02 Contributors/detractors data shown is for the period from 07/01/2018 to 09/30/2018. Largest Sector Detractors vs. MSCI All Country World Index 13 (%) Industrials -0.34 Materials -0.32 Financials -0.30 Information Technology -0.22 Health Care -0.21 Asset Allocation 14 Equity 96.63 Cash & Cash Equivalents 3.37 0% 20% 40% 60% 80% 100% 120% Supplemental Performance Statistics 3 Yrs 5 Yrs 10 Yrs Since Inception Standard Deviation (%) 9.64 10.18 11.91 12.85 Tracking Error (%) 4.10 3.74 3.88 4.43 Information Ratio -0.86-0.92-0.43-0.01 Beta 1.03 1.06 1.06 1.03 Sharpe Ratio 0.87 1.00 0.71 0.24 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 security holder 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. Investment Philosophy Templeton utilises a disciplined, consistent approach based on three timeless principles of investing: Value Patience Bottom-up stock picking Our flexible approach is applied within a disciplined framework and seeks to identify companies trading at large discounts to their business value. Our long-term focus gives us a framework to take advantage of price volatility to reveal potential longterm investment opportunities. Patience allows for potential long-term value recognition. Our portfolio management process seeks to buy pessimism and sell optimism. We build portfolios spanning regions and sectors made up of securities identified through this process. 12,13. Past performance is not an indicator or a guarantee of future performance. Information is historical and may not reflect current or future portfolio characteristics. All holdings are subject to change. Source: FactSet. Important data provider notices and terms available at www.franklintempletondatasources.com. Total Effect represents the excess return by sector as compared to the index. Performance attribution is calculated in the base currency of the fund. 14. Information is historical and may not reflect current or future portfolio characteristics. Percentage may not equal 100% due to rounding. All holdings are subject to change. 15. Beta, Information Ratio and Tracking Error information are measured against the MSCI All Country World Index. 16. Information Ratio is a way to evaluate a manager s ability to outperform a benchmark in relation to the risk that manager is assuming, with risk defined as deviation from the benchmark. This measure is calculated by dividing the portfolio s excess return (portfolio return less the benchmark return) by the tracking error (derived by taking the standard deviation of the monthly differences between the portfolio return and the benchmark return over time). franklintempleton.ca 4
Investment Process 17 1 2 3 4 5 Identify Potential Bargains Experienced analysts Focus on global industry sectors Quantitative and qualitative assessment Identify material ESG issues In-Depth Fundamental Analysis Five-year financial forecasts Management/supplier/ competitive evaluation Upside/downside return quantification Recommendation of Bargain List candidates Research Team Evaluation Presentation of investment thesis Investment debate and critique: Devil s Advocate ESG Devil s Advocate Director of research approval Bottom-Up Portfolio Construction Investment parameters Industry and sector framework Build and diversify portfolio Long-term approach: 20% historical turnover TEMPLETON S BOTTOM-UP STOCK SELECTION PROCESS Portfolio Monitoring and Risk Management Ongoing valuation analysis Ongoing ESG monitoring Disciplined sell methodology Weekly peer review and risk analytics 17. Historical turnover is based on Templeton s experience as a Firm, over a five-year period as of most recent quarter end. The turnover is a byproduct of Templeton s long-term approach to managing portfolios, but various factors, such as a portfolio s specific investment guidelines and market or economic conditions may cause actual portfolio turnover to vary. Investment Team Portfolio Manager Years with Firm Years Experience Heather Arnold, CFA, EVP, Director of Research, Portfolio Manager, 13 34 Research Analyst Tucker Scott, CFA, EVP, Portfolio Manager, Research Analyst 22 26 Norman Boersma, CFA, Chief Investment Officer 26 32 Templeton Global Equity Team Number of Members Average Years Experience Portfolio Managers/Analysts 27 23 Research Analysts 11 12 Additional Resources Investment Risk Management Group Group Global Research Library Junior Research Analysts Global Portfolio Compliance 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%. 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. Market capitalization is expressed in millions of CAD. Price to Book Value: 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 returns vary from the average of its previous returns. The larger the standard deviation, the greater the likelihood (and risk) that performance will fluctuate from the average return. Tracking Error: Measure of the deviation of the return of a product compared to the return of a benchmark over a fixed period of time. Expressed as a percentage. The more passively the investment is managed, the smaller the tracking error. franklintempleton.ca 5
Important Legal Information CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. MSCI makes no warranties and shall have no liability with respect to any MSCI data reproduced herein. No further redistribution or use is permitted. This report is not prepared or endorsed by MSCI. Important data provider notices and terms available at: www.franklintempletondatasources.com Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. 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 Tel: 800.387.0830 Fax: 866.850.8241 franklintempleton.ca 2018 Franklin Templeton Investments. All rights reserved. 740 PPE 09/18