Franklin Bissett Canadian Short Term Bond Fund Series F Product Profile First Quarter 2018 FUND CHARACTERISTICS (AS OF 3/31/18) Fund Inception Date 12/22/03 Distributions Monthly Morningstar Category Canadian Short Term Fixed Income Total Net Assets All Series $558 million THIRD-PARTY FUND DATA Overall Morningstar Rating «««««As of March 31, 2018 the fund s Series F received a 5 star overall Morningstar Rating, measuring risk-adjusted returns against 193, 138 and 54 Canadian Short Term Fixed Income 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 DESCRIPTION The Fund seeks high current income and preservation of capital by investing primarily in Canadian fixed income securities, including Canadian federal and provincial government bonds, corporate bonds, debentures and short-term notes. The Fund may also invest in securities backed by mortgages or other financial assets and dividend-paying shares of Canadian companies. The Fund may invest in foreign fixed income securities. The average weighted term to maturity of the Fund s investments is five years or less. PERFORMANCE DATA Compounded Returns for Periods Ended March 31, 2018 (%) Franklin Bissett Canadian Short Term Bond Fund Management Expense Ratio (as of 12/31/17 incl. HST) 0.78% 3Mths* 1 Yr 3 Yrs 5 Yrs 10 Yrs Compounded Returns for Periods Ended March 31, 2018 (%) Since Incept (12/22/03) 0.16 0.28 1.06 1.77 2.73 3.00 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. FUND CODES Series CAD Series F 1015 Series PF 3827 10 0 0.16 0.28 1.06 1.77 2.73 3.00-10 3 Mths* 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Incept Franklin Bissett Canadian Short Term Bond Fund Calendar Year Returns As of March 31, 2018 (%) 12 6 0 5.67 5.98 3.92 2.69 2.99 2.41 2.72 1.25 1.24 1.40 0.16 YTD 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Franklin Bissett Canadian Short Term Bond Fund 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. *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 3/31/18) Fund Quality Weightings 30% 24.02 22.15 20.21 20% 28.83 10% 3.35 0.91 0.46 0.01 0.07 0% AAA AA A BBB BB B CCC D NR Geographic Weightings (% of Total) Sector Weightings vs. Benchmark (% of Total) Canada 78.29 Financial 28.50 21.31 United States 10.99 Provincial 18.09 17.46 Offset Germany United Kingdom Australia Netherlands Belgium 7.33 1.25 1.08 0.72 0.27 0.22 Federal Energy Communication Real Estate Industrial Infrastructure Securitization 2.63 6.62 2.82 4.82 1.83 4.77 1.70 3.34 1.15 2.46 1.14 10.90 16.18 48.84 Marshall Islands 0.02 Municipals 2.40 1.13 Other 0.01 Bank Loans 1.67 0.00 ST Cash and Cash Equivalents -0.19 Cash 0.24 0.00-1% 18% 37% 56% 75% 94% Franklin Bissett Canadian Short Term Bond Fund Series F FTSE TMX Canada Short Term Overall Bond Index Portfolio Allocation 0% 15% 30% 45% 60% % Corporate Bonds 61.42 Provincial Bonds 18.09 Federal Bonds 16.18 Municipal Bonds 2.40 Bank Loans 1.67 Cash and Equivalents 0.24 Please note that 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. For information related to the Portfolio Diversification section, please see Explanatory Notes. 2of5
PORTFOLIO CHARACTERISTICS (AS OF 3/31/18) Fund vs. FTSE TMX Canada Short Term Overall Bond Index Fund Benchmark Average Duration 2.76 Yrs 2.69 Yrs Average Weighted Maturity 4.94 Yrs 2.83 Yrs YieldtoWorst 2.86% 2.17% Average Coupon 3.38% 2.59% (As of 3/31/18) Performance Risk Statistics 3 Yrs 5 Yrs 10 Yrs Standard Deviation (%) 1.77 1.70 1.68 Alpha (%) 0.38 0.20 0.10 Beta 1.13 1.01 0.89 Sharpe Ratio 0.27 0.61 1.08 Information Ratio 0.33 0.22-0.15 Tracking Error (%) 1.18 0.94 0.81 R-Squared (%) 56.36 69.63 78.39 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. Average Coupon: The average interest rate stated on the securities held by a portfolio. Average Duration: A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. Duration is expressed as a number of years. Average Weighted Maturity: An estimate of the number of years to maturity, taking the possibility of early payments into account, for the underlying holdings. 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%. 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. 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. 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. YieldtoWorst: The yield to maturity if the worst possible bond repayment takes place. If market yields are higher than the coupon, the yield to worst would assume no prepayment. If market yields are below the coupon, the yield to worst would assume prepayment. In other words, yield to worst assumes that market yields are unchanged. Normally this value is not aggregated since it varies but if a weighted average value is used for a Fund then the figure will reflect the values of the underlying issues, based on the size of each holding. For information related to the Portfolio Characteristics section, please see Explanatory Notes. 3of5
INVESTMENT PHILOSOPHY AND PROCESS 1. Truly active portfolio management, focusing on Canada with potential for enhanced returns through global diversification 2. Superior long-term performance can be achieved by investing in bonds having favourable risk/return characteristics and backed by quality management with a whole stakeholder approach 3. Focus on interest rate risk alone is insufficient; successful fixed income investors also must be vigilant in managing credit risk and reinvestment risk 4. Consistent, superior absolute, relative and risk-adjusted performance INVESTABLE UNIVERSE 1 2 3 Formulate Macroeconomic & Sector Views Interest rates Growth and inflation Fiscal and monetary policy Country outlook Volatility Sector fundamentals and valuation Define Portfolio Strategy Duration position Yield curve position Sector allocation Country allocation Currency allocation Risk Monitoring, Portfolio Rebalancing and Sell Discipline Determine Portfolio Suitability Relative value analysis Duration and curve impacts Diversification and concentration issues Sector weight changes Individual credit analysis Solid financials and fundamentals Quality management Liquidity Business-specific risks FRANKLIN BISSETT PORTFOLIO The above chart is for illustrative and discussion purposes only. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. INVESTMENT AND MANAGEMENT TEAM (AS OF 3/31/18) Franklin Bissett Canadian Short Term Bond Fund Management Team Years with Firm Years Experience Darcy Briggs, CFA 13 24 Jeffrey Johnson 18 21 Franklin Bissett Fixed Income Group Number of Members Average Years Experience Portfolio Managers 1 28 Portfolio Manager/Analysts 4 20 Traders 1 4 CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. Franklin Bissett Investment Management, part of Franklin Templeton Investments Corp. 4of5
EXPLANATORY NOTES THIRD-PARTY FUND DATA Source: Morningstar 3/31/18.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. PORTFOLIO DIVERSIFICATION Quality Weightings: Ratings shown are assigned by one or more Nationally Recognized Statistical Rating Organizations ( NRSRO ), such as Standard & Poor s, Moody s and Fitch. The ratings are an indication of an issuer s creditworthiness and typically range from AAA or Aaa (highest) to D (lowest). When ratings from all three agencies are available, the middle rating is used; when two are available, the lowest rating is used; and when only one is available, that rating is used. Foreign government bonds without a specific rating are assigned the country rating provided by an NRSRO, if available. The NR category consists of rateable securities that have not been rated by an NRSRO. Cash and equivalents as well as derivatives are excluded from this breakdown. As a result, the chart does not reflect the fund's total net assets. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change. Geographic Weightings, Sector Weightings and Portfolio Allocations: Portfolio weights 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. PORTFOLIO CHARACTERISTICS The portfolio characteristics listed are based on the fund's underlying holdings, and do not necessarily reflect the fund's characteristics. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change. The figures shown for Average Duration, Average Weighted Maturity, Yield to Worst and Average Coupon reflect certain derivatives held in the portfolio (or their underlying reference assets). 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. 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. 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. 1015 PPE 03/18 5of5