Templeton Growth (Euro) Fund A (acc) EUR Franklin Templeton Investment Funds Fund Manager Report Value Equity Product Details Fund Assets 7,571,530,676.32 Fund Inception Date 09.08.2000 Number of Issuers 92 Bloomberg ISIN Base Currency Investment Style Overall Morningstar Rating TM 2 TEMGREU LX LU0114760746 EUR Value Benchmark MSCI All Country World Index Morningstar Category Global Large-Cap Value Equity Asset Allocation 1 % Equity 94.61 Cash & Cash 4.93 Equivalents Fixed Income 0.46 Fund Description The fund aims to achieve long-term capital appreciation by investing primarily in equity securities of companies worldwide, including emerging markets. Key Points Global equity markets advanced in US-dollar terms during the fourth quarter of 2017. Investors mainly focused on continued indications of positive economic growth from several regions and expectations surrounding tax reform in the United States. Emerging stock markets, as measured by MSCI indices, collectively topped their developed-market peers during the fourth quarter. In the fourth quarter, stock selection and an overweight allocation in the health care sector hurt results relative to the benchmark index. Stock selection in the industrials and information technology sectors further undermined relative performance. Conversely, an overweight allocation and stock selection in the energy sector supported relative results. Stock selection in the financials sector also lifted relative performance. From a regional standpoint, stock-specific weakness and unfavourable allocations in both Europe (in which the fund was overweight) and the United States (underweight) detracted during the quarter. Weak returns in China and Japan pressured relative performance in Asia overall, though an overweight in South Korea contributed. Performance Data Performance Net of Management Fees as at 31.12.2017 (Dividends Reinvested) (%) 3 1 Mth 3 Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Inception (09.08.2000) A (acc) EUR 1.04 1.21 1.80 1.80 4.91 9.65 4.34 3.26 MSCI All Country World Index 0.93 4.20 9.47 9.47 10.17 13.50 7.31 3.45 Calendar Year Returns (%) 100% 50% 0% 1.80 9.47 10.21 11.73 9.34 2.91 10.51 19.23 24.21 18.11 18.22 15.01-3.62-3.75 21.08 13.35 25.22 31.19-50% -40.33-38.83 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 A (acc) EUR Past performance is not an indicator or a guarantee of future performance. Portfolio Manager Insight Market Review Global equity markets advanced in US-dollar terms during the fourth quarter of 2017. Investors mainly focused on continued indications of positive economic growth from several regions and expectations surrounding tax reform in the United States. The International Monetary Fund in October upgraded its forecast for global growth in 2017 and 2018. However, it cautioned that recovery from the 2007 2009 global financial crisis remains incomplete, and that latent risks could return as central banks pivot away from extensive stimulus. Emerging stock markets, as measured by MSCI indices, collectively topped their developed-market peers during the fourth quarter. In emerging markets, China s third-quarter annual gross domestic product (GDP) growth was in line with consensus expectations. The World Bank lifted its forecast for China s 2017 GDP, while expecting somewhat decelerated growth in 2018 and 2019 due to domestic policy tightening. South Korea s third-quarter GDP grew year-on-year, and the country s central bank raised interest rates for the first time in six years during November. Brazil s third-quarter GDP also rose year-onyear, and the country s central bank cut its benchmark interest rate in October and December, bringing it to an all-time low. Mexico s third-quarter annualised GDP growth was the weakest since 2013.
In the United States, a major tax bill was signed into law in December that featured a significant reduction in the corporate tax rate. The US Federal Reserve (Fed) raised short-term interest rates during the same month, the latest in a series of well-flagged moves. The Fed also maintained its forecast of three rate increases in 2018. Meanwhile, third-quarter US GDP came in ahead of consensus estimates. In other developed markets, the European Central Bank raised its forecast for eurozone GDP growth in 2017 and through 2020, though it expects growth to moderate after 2017. In early November, the Bank of England hiked its benchmark interest rate for the first time in 10 years. Japan s second preliminary third-quarter GDP reading indicated a stronger-than-expected pace of growth compared to the previous quarter and on an annualised basis. Performance Review During the fourth quarter, Templeton Growth (Euro) Fund trailed its benchmark, the (in euros). Markets maintained a risk-on bias during the three-month review period, with cyclical sectors like energy, information technology (IT) and consumer discretionary leading returns while traditionally defensive sectors like utilities, telecommunication services and health care fared poorly. The fund was reasonably well positioned to take advantage of some sector trends during the quarter under review, though stock selection notably detracted. As we discuss in the outlook section of this report, we believe the quantitative easing programmes of major central banks that have manipulated asset prices and frustrated the efforts of bottom-up stockpickers and which we regard as financial repression are unsustainable. The process of reversing these policies is already underway. It is unlikely to be an easy reversal, though ultimately the impending transition of this mature cycle should support the beleaguered value stocks that have lagged over the course of this historically anomalous period of experimental policy. Turning to the fund s performance, health care was the most significant sector detractor during the quarter, pressured both by stock selection and an overweight in the weak, defensive sector. US pharmaceutical firm Allergan was the biggest detractor from this sector, with its shares declining on concerns about competition from generics. Despite the market s excessive focus on product-specific headwinds, we estimate Allergan as a whole has one of the industry s most durable drug portfolios when it comes to exclusivity and patent protection. The company also boasts an industryleading research and development (R&D) pipeline that, in conjunction with its base businesses, should continue to drive strong earnings and free cash flow growth over our investment horizon. More generally, continued concerns about generic competition, increasing regulatory and political scrutiny on pricing, and a consolidating payer industry all broadly pressured the health care sector throughout 2017. We view such concerns as both myopic and overstated. Generic competition is a fact of life in the pharmaceutical industry, and one best addressed through innovation, which has accelerated following the doubling of R&D investment over the last 30 years. In our analysis, the regulatory and political concerns about pricing ignore data indicating prescription drugs represent a relatively modest portion of US health care costs and actually lower costs elsewhere in the health care system. Moreover, the structure of the pharmacy benefits management industry has long been oligopolistic, and drug companies are accustomed to dealing with it; thus we think a bit more merger and acquisition activity in the industry would be unlikely to meaningfully change bargaining power dynamics. The overblown concerns have depressed valuations such that the sector today has rarely been cheaper historically on free cash flow multiples, according to our analysis. It is rare to find highly cash-generative, innovative businesses with enormous growth potential trading in deep value territory, but we see select biotechnology and specialty pharmaceutical firms offering just such potential opportunities. Stock selection in the industrials sector also pressured the fund s relative performance in the fourth quarter. UK defence contractor BAE Systems was the biggest detractor from the sector, declining on concerns about potential weakness in UK defence spending amidst Brexit uncertainty and recovering Labour Party momentum. While such concerns look fully discounted in BAE s quarter-end share price, we actually see limited impact from these factors on the company, which sources a substantial amount of revenue outside its home country. Additionally, the United Kingdom has reiterated its commitment to defence spending of 2% of GDP, and BAE s business with the British government involves multi-year programmes that are fully contracted and funded; delays likely would only make such contracts more expensive for the United Kingdom in the long term. In the overseas segment where the company makes most of its sales, BAE continues to report solid progress amidst a gradually strengthening global defence spending environment. Most notably, in December, Qatar signed a deal to buy 24 Eurofighter Typhoon jets earlier in the fall, and this should have positive read-through for BAE s shares. Continued progress addressing the firm s pension deficit could also support the shares in the intermediate term. Stock selection in the IT and consumer discretionary sectors also detracted from the fund s relative results. From the former sector, shares of Chinese search giant Baidu came off of record highs after the firm forecasted lower-than-expected revenue amidst rising competition at its core search business and ancillary growth franchises like video, food delivery and driverless cars. Baidu s core search business appears to be underearning its potential, and the company has traded at a significant discount to industry peers. However, it is addressing its margin pressures by divesting or restructuring loss-making operations, as well as pursuing structurally attractive long-term growth opportunities largely ignored by the market. From the consumer discretionary sector, shares of Luxembourg-based satellite and network services provider SES declined after management delivered a second consecutive quarter of disappointing results, citing one-off headwinds and delayed revenues attributable to a changing business model. The string of disappointing results cast doubts on management s credibility and led to a de-rating of the shares. We see the decline as implying the stock is trading at replacement cost for a business with very high barriers to entry and valuable orbital satellite slots that cannot be replicated. Add to that solid dividend and free cash flow yields along with a contract backlog equivalent to four years of revenue, and we believe the stock has remained undervalued. Turning to contributors, the fund s energy allocation outperformed relative to the benchmark thanks to stock selection and a significant overweighting. UK integrated oil major BP finished amongst the fund s top contributors, as did US oil services firm Helmerich & Payne. BP reported an encouraging increase in profits and cash flow. It also announced plans to buy back shares in a sign it had put past incidents behind it and emerged stronger from an industry-wide downturn. A rising oil price and strong sector performance largely benefitted our decision to maintain overweight energy exposure despite price volatility that accompanied fears of a supply glut earlier in the year. As we have discussed, we expected the oil price would climb towards US$60 per barrel, beyond which it could remain relatively range-bound as price-sensitive swing producers in the North American shale fields brought supply swiftly back on line. Barring any exogenous shocks, we therefore expect renewed supply above US$60 per barrel will likely cap further significant price appreciation, and we look to selectively reduce exposure at this point in the cycle. Strong stock selection in financials also positively contributed, led by South Korean lender KB Financial Group. Its shares rallied on a healthy macroeconomic backdrop and improving earnings prospects following the first South Korean interest-rate hike in six years. Similar to South Korea, Europe also has been benefitting from a stronger economic upcycle and the prospect of incrementally tighter monetary policy, and we remain constructive on our select banking, asset management, and insurance holdings in Europe. From a regional standpoint, stock-specific weakness and unfavourable allocations in both Europe (in which the fund was overweight) and the United States (underweight) detracted during the quarter. Weak returns in China and Japan pressured relative performance in Asia overall, though an overweight in South Korea contributed. www.franklintempleton.co.za 2
Portfolio Positioning During the quarter, the fund was most overweight relative to the benchmark in the energy, health care and financials sectors, and it was most underweight in the consumer staples, industrials and information technology sectors. Outlook & Strategy After a false dawn in 2016, value lagged growth by the most in nearly two decades in 2017, marking the tenth year out of the past 11 that global growth has bested global value. At times like this, it may be tempting for some value investors to relax their discipline and buy the expensive stocks that have been working. Yet, countering that impulse is decades of market history suggesting that starting-point valuation is virtually all that really matters when it comes to long-term results. Meanwhile, financial repression from the world s central banks appears to have forced investors farther out the risk spectrum to chase yield and growth in a market offering little of either. We view this as unsustainable for two main reasons. First, many consider zero interest-rate policies and quantitative easing to have favoured capital at the expense of labour, deepening inequality and disadvantaging the majority of the electorate, whose opinions matter in a democracy. Second, financial repression could fuel potentially destabilising asset price bubbles. Overvaluation appears to be largely concentrated in fixed income markets, as well as the growth-oriented and bond proxy stocks that have dominated this cycle. We do not know how the process of policy normalisation by central banks will evolve. Nonetheless, we do believe this mature cycle will eventually change, and with it the conditions that have been so hostile to value investing. We would not want to own the leaders of the last cycle during this transition. But the stocks left behind the companies whose long-term earnings and cash flow potential we believe have been overlooked and undervalued by a narrowly focused market might be best positioned for the reversals we view as likely to unfold in the future. One-Month Performance Review The fund outperformed the benchmark in the month of December (both in euros). Performance trends that dominated during the fourth quarter (and most of 2017) remained largely intact in December, with cyclical stocks leading defensives. The fund benefitted primarily from stock selection during the month, though favourable allocations also bolstered performance. The fund s energy allocation outperformed. Additionally, we were encouraged to see beleaguered health care stocks begin to recover during the month and contribute to the fund s relative and absolute gains. Relative weakness during the period was concentrated amongst telecommunication services and consumer discretionary holdings. From a regional standpoint, outperformance was concentrated amongst the fund s US holdings, while Asian and European holdings delivered modest absolute gains but lagged the benchmark. Portfolio Characteristics 4,5 Portfolio Price to Earnings (12 Month Trailing) 17.24x 20.55x Price to Book Value 1.55x 2.34x Price to Cash Flow 7.73x 12.18x Market Capitalisation (Millions in EUR) 91,613 93,368 Dividend Yield 2.53% 2.28% Portfolio Diversification Top Sector Contributors 6 Total Sector Effect (%) Financials 0.20 Energy 0.19 Real Estate 0.04 Top Security Contributors 6,7 Security Total Effect (%) TWENTY-FIRST CENTURY FOX 0.35 INC KB FINANCIAL GROUP INC 0.21 GENERAL ELECTRIC CO 0.15 HELMERICH & PAYNE INC 0.15 COTY INC 0.14 Top Sector Detractors 6 Total Sector Effect (%) Health Care -1.30 Industrials -0.38 Information Technology -0.30 Telecommunication Services -0.24 Consumer Discretionary -0.20 Top Security Detractors 6,7 Security Total Effect (%) SES SA -0.47 ALLERGAN PLC -0.42 RWE AG -0.25 GILEAD SCIENCES INC -0.22 BAE SYSTEMS PLC -0.19 Contributors/detractors data shown is for the period from 01.10.2017 to 31.12.2017. Past performance is not an indicator or a guarantee of future performance. www.franklintempleton.co.za 3
Geographic Weightings vs. 1 NORTH AMERICA EUROPE ASIA MID-EAST/AFRICA CASH & CASH EQUIVALENTS 1.86 1.15 0.00 4.93 18.15 18.16 21.63 35.40 39.66 55.33 0% 25% 50% 75% Sector Weightings vs. 1 Financials 22.11 18.74 Health Care 16.25 10.68 Information Technology 13.05 18.09 Energy 12.42 6.38 Consumer Discretionary 11.77 12.01 Telecommunication Services 5.67 3.02 Industrials 5.14 10.86 Materials 4.00 5.50 Consumer Staples 2.55 8.75 Utilities 2.11 2.90 Real Estate 0.00 3.07 Cash & Cash Equivalents 4.93 0.00 0% 5% 10% 15% 20% 25% Templeton Growth (Euro) Fund Templeton Growth (Euro) Fund Top Ten Holdings 8 Top Holdings Sector % SAMSUNG ELECTRONICS CO LTD Technology Hardware & Equipment 2.43 ROYAL DUTCH SHELL PLC Energy 2.34 CITIGROUP INC Banks 2.14 ORACLE CORP Software & Services 2.02 TWENTY-FIRST CENTURY FOX INC Media 1.95 TEVA PHARMACEUTICAL INDUSTRIES LTD Pharmaceuticals, Biotechnology & Life Sciences 1.86 BP PLC Energy 1.84 KINGFISHER PLC Retailing 1.84 AMGEN INC Pharmaceuticals, Biotechnology & Life Sciences 1.81 STANDARD CHARTERED PLC Banks 1.74 Supplemental Performance Statistics 3 Yrs 5 Yrs 10 Yrs Since Inception Standard Deviation (%) Templeton Growth (Euro) Fund 13.11 11.16 13.93 13.30 11.57 9.83 13.31 14.00 Tracking Error (%) 3.83 3.88 3.93 4.92 Information Ratio 10-1.38-1.00-0.75-0.00 Beta 1.05 1.03 0.99 0.88 Sharpe Ratio Templeton Growth (Euro) Fund 0.42 0.89 0.28 0.13 0.93 1.41 0.52 0.13 9. Beta, Information Ratio and Tracking Error information are measured against the. www.franklintempleton.co.za 4
Investment Team Portfolio Manager Years with Firm Years Experience Norman Boersma, CFA, Chief Investment Officer 26 32 Tucker Scott, CFA, EVP, Portfolio Manager, Research Analyst 21 26 Heather Arnold, CFA, EVP, Director of Research, Portfolio Manager, 13 34 Research Analyst James Harper, CFA, EVP, Portfolio Manager, Research Analyst 10 25 Templeton Global Equity Team Number of Members Average Years Experience Portfolio Managers/Analysts 27 23 Research Analysts 12 11 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 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: currency risk, emerging markets risk, liquidity risk, Shanghai-Hong Kong Stock Connect 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. www.franklintempleton.co.za 5
Important Legal Information Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. CIS are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees and charges and maximum commissions is available on request from Franklin Templeton International Services S.à r.l., 8A rue Albert Borschette, L-1246 Luxembourg. Commission and incentives may be paid and if so, would be included in the overall costs. Franklin Templeton Investment Funds ( FTIF ) are priced on a forward basis and prices are calculated daily. FTIF does not provide any guarantee either with respect to the capital or the return of a portfolio. FTIF is regulated in Luxembourg and the FTIF sub-funds available for public sale in South Africa are approved by the Financial Services Board. Investments in foreign securities may expose the fund to risks such as potential constraints on liquidity and repatriation of funds, macroeconomic, political, foreign exchange, tax, settlement and potential limitations on the availability of market information. For full information on all the risks applicable to this fund, please refer to the fund s prospectus. Franklin Templeton Investments SA (PTY) Ltd ( FTISA ) is an authorised Financial Services Provider. FTISA is a Member of the Association for Savings & Investment SA (ASISA). Copies of the latest prospectus, Minimum Disclosure Document (MDD) and the latest annual and semi-annual reports of FTIF are available on the website www.franklintempleton.co.za or may be obtained free of charge from Franklin Templeton International Services S.à r.l., 8A rue Albert Borschette, L-1246 Luxembourg or your local FTI representative. Performance is calculated as a lump-sum and is quoted in USD or in the base currency of the fund and its respective share classes currencies. Performance is calculated for the portfolio, individual investor performance may differ as a result of initial fees, the actual investment date, the date of reinvestment and dividend withholding tax. Annualised performance is the fund s total return expressed as an annual equivalent percentage rate over the time period listed. 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. In emerging markets, the risks can be greater than in developed markets. Investments in derivative instruments entail specific risks that may increase the risk profile of the fund. Past performance is not an indicator or a guarantee of future performance. 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. In addition, it should not be assumed that any securities mentioned were or will prove to be profitable. Stocks mentioned in this report are not a solicitation to purchase those stocks, and are examples of some stocks which performed well. Not all stocks in the portfolio performed as well. For the most current information on the fund, please contact your Franklin Templeton marketing representative. Performance figures are not based on audited financial statements and assume reinvestment of interest and dividends. When comparing the performance of Franklin Templeton Investment Funds (the Fund ) with a benchmark index, it is important to note that the securities in which Franklin Templeton Investment Funds invests may be substantially different than those represented by the benchmark index. Furthermore, an investment in Franklin Templeton Investment Funds represents an investment in a managed investment company in which certain charges and expenses, including management fees, are applicable. These charges and expenses are not applicable to indices. Lastly, please note that indices are unmanaged and are not available for direct investment. Certain data and other information shown have been supplied by outside sources. While we consider that information to be reliable, we give no assurance that such data and information is accurate or complete. References to indexes are made for comparative purposes only and are provided to represent the investment environment existing during the time periods shown. The indices include a greater number of securities than those held in the Fund. An index is unmanaged and one cannot invest directly in an index. The performance of the index does not include the deduction of expenses and does not represent the performance of any Franklin Templeton fund. Past performance is not an indicator or a guarantee of future performance. 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 1. 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. 2. 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. 3. Source for all information is Franklin Templeton Investments. Benchmark related data provided by FactSet. Past performance is not an indicator or a guarantee of future performance. Periods greater than one year are shown as average annual total returns. Fund performance data include reinvested dividends, and is net of management fees. Sales charges, other commissions, taxes and other relevant costs to be paid by the investor are not included. The fund offers other share classes subject to different fees and expenses, which will affect their performance. Please see the prospectus for details. 4. 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 Franklin Templeton Investments Kildare House The Oval, 1 Oakdale Road Newlands, Cape Town, 7700 South Africa Tel.: +27 (21) 831 7400 Fax.: +27 (21) 831 7422 www.franklintempleton.co.za 2018 Franklin Templeton Investments. All rights reserved.
subject to change. 5. The dividend yield quoted here is the yield on securities within the portfolio and should not be used as an indication of the income received from this portfolio. 6. 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. 7. Top Security Contributors and Top Security Detractors are holdings based on the last one month period for rolling months or on the last three months period for quarter end months. These securities do not represent all the securities purchased, sold or recommended for advisory clients, and the reader should not assume that investment in the security listed was or will be profitable. Holdings are subject to change, holdings of the same issuer have been combined. The information provided is not a recommendation to purchase, sell or hold any particular security. The security identified does not represent the Fund s entire holdings and in the aggregate, may represent a small percentage of such holdings. There is no assurance that security purchased will remain in the Fund, or that security sold will not be repurchased. 8. 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. 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). Franklin Templeton Investments Kildare House The Oval, 1 Oakdale Road Newlands, Cape Town, 7700 South Africa Tel.: +27 (21) 831 7400 Fax.: +27 (21) 831 7422 www.franklintempleton.co.za 2018 Franklin Templeton Investments. All rights reserved.