Templeton Emerging Markets Small Cap Fund Class A, C

Templeton Emerging Markets Small Cap Fund Class A, C Value Equity Product Profile Product Details 1 Fund Assets $1,006,954,613.92 Fund Inception Date 10/02/2006 Number of Issuers 132 Investment Style Benchmark Lipper Classification Morningstar Category Dividend Frequency Third-Party Fund Data Overall Morningstar Rating TM Class A 2 Value MSCI Emerging Markets Small Cap Index Emerging Markets Funds Diversified Emerging Mkts Annually in December CUSIP NASDAQ Symbol Class A 880 19R 732 TEMMX Class C 880 19R 724 TCEMX Class A Class C Maximum Sales Charges 5.75% initial sales charge 1.00% contingent deferred sales charge (CDSC) in the first year only Total Annual Operating Expenses With Waiver Without Waiver Class A 1.97% 1.98% Class C 2.72% 2.73% As of 06/30/2018 the fund s Class A shares received a 4 star overall Morningstar Rating, measuring risk-adjusted returns against 688, 489 and 203 U.S.-domiciled Diversified Emerging Mkts mutual funds and exchange traded funds over the 3-, 5- and 10- year periods, respectively. A fund s overall rating is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) rating metrics. Fund Description The fund seeks long-term capital appreciation by investing at least 80% of its net assets in securities of small-cap companies located in emerging-market countries. Performance Data 3,4 Average Annual Total Returns 5,6 (%) 3 Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Inception Class A - With Sales -12.18-11.30-3.27 2.28 4.45 4.23 4.43 Charges Class A - Without -6.82-5.89 2.60 4.32 5.70 4.85 4.96 Sales Charges Class C - With -8.01-7.24 0.81 3.55 4.91 4.10 4.23 Sales Charges Class C - Without -7.08-6.31 1.81 3.55 4.91 4.10 4.23 Sales Charges MSCI Emerging -8.54-8.35 5.96 2.85 4.63 4.74 6.58 Markets Small Cap Index 10% 0% -10% -20% -6.82-5.89-8.54-8.35-12.18-11.30 3 Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Inception Class A - With Sales Charges Class A - Without Sales Charges -3.27 2.60 5.96 4.32 4.45 5.70 4.23 4.85 4.43 4.96 2.28 2.85 4.63 4.74 6.58 Performance data represents past performance, which does not guarantee future results. Current performance may differ from figures shown. The fund s investment return and principal value will change with market conditions, and you may have a gain or a loss when you sell your shares. Please call Franklin Templeton Investments at (800) DIAL BEN/342-5236 or visit franklintempleton.com for the most recent month-end performance. The fund has a fee waiver associated with any investment it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through 07/31/2018. Fund investment results reflect the fee waiver; without this waiver, the results would have been lower. Calendar Year Returns (% Without Sales Charges) 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Class A 31.30 3.35-7.11 2.85 4.73 27.86-27.59 30.30 104.53-60.36 Class C 30.35 2.58-7.78 2.16 4.01 26.80-27.98 29.32 103.30-60.66 MSCI Emerging Markets Small Cap Index 34.22 2.56-6.57 1.34 1.35 22.60-26.96 27.48 114.32-58.10 If the sales charge had been included, the returns would have been lower. 1. All holdings are subject to change. Holdings of the same issuers have been combined. 3. The fund offers other share classes subject to different fees and expenses, which will affect their performance. Please see the prospectus for details. 4. Source for Index: FactSet. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. 5. Periods shorter than one year are shown as cumulative total returns. 6. Since inception return for the benchmark is calculated to the fund inception date. Not FDIC Insured May Lose Value No Bank Guarantee

Portfolio Manager Insight 7 Performance Review QUARTERLY KEY PERFORMANCE DRIVERS HELPED HURT Fila Korea is one of the leading sportswear companies in South Korea. It also licenses the Fila brand around the world and owns a stake in US golf product manufacturer Acushnet. Shares of Fila Korea benefitted from a solid earnings growth trend, driven by the company s efforts to revitalize its domestic business and expand in China. Steady financial results from Acushnet also buoyed the stock. In China, the portfolio benefitted from an overweight position in Baozun as the e-commerce solutions provider s first-quarter earnings climbed on the back of stronger revenues. In contrast, rising inflation, a depreciating currency, high interest rates and political turmoil drove down equity prices in Turkey. Outlook & Strategy Emerging markets suffered a setback in the first half of 2018 precipitated by investor concerns over rising US interest rates, US dollar strengthening and rising trade tensions, particularly between the United States and China. However, we do not foresee a derailment in EM macro fundamentals, which should continue to grow at a strong pace. Historically, we have seen sharp market gyrations (typically downwards) in both EM equities and currencies ahead of tightening by the US Federal Reserve. However, during the actual implementation of previous US rate hikes, EM currencies have often appreciated, as have equities illustrating that markets tend to price in a worst-case scenario prior to the event. While trade tensions have prompted a cautious EM outlook over the short term, we believe intra-em trade has become more important in recent years, and rising protectionism may further pivot focus towards greater regional agreements. Despite the expected market volatility, we maintain a constructive view of EM small-cap companies, supported by what we believe are attractive valuations, strong earnings growth potential and solid fundamentals. 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. Portfolio Characteristics 8,9,10 Stocks Sectors Countries Fila Korea Ltd Consumer Discretionary (Stock Selection) South Korea (Stock Selection) Baozun Inc Sponsored ADR Class A Health Care (Stock Selection) China (Stock Selection) Uni-President China Holdings Ltd. Industrials (Underweight) South Africa (Lack of Exposure) Redington India Ltd. Information Technology (Stock Selection) Taiwan (Stock Selection, Underweight) Vincom Retail JSC Real Estate (Stock Selection) Turkey (Overweight) Reysas Gayrimenkul Yatirim Ortakligi A.S. Consumer Staples (Stock Selection) Vietnam (Off-benchmark exposure) Portfolio Price to Earnings (12 Month Trailing) 14.08x 18.12x Price to Book Value 1.71x 1.44x Price to Cash Flow 10.73x 9.99x Market Capitalization (Millions in USD) 2,539 1,261 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 capitalization 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. 9. Source: FactSet. Price ratio calculations for weighted average use harmonic means. Any exceptions to this are noted. 10. Source for Index: FactSet. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. franklintempleton.com 2

Portfolio Diversification Top Ten Holdings 11 Top Holdings Sector Country % BAJAJ HOLDINGS & INVESTMENT Diversified Financials India 3.86 LTD BAOZUN INC Software & Services China 3.27 FILA KOREA LTD Consumer Durables & Apparel South Korea 2.63 APOLLO TYRES LTD Automobiles & Components India 2.37 MEDY-TOX INC Pharmaceuticals, Biotechnology & Life South Korea 2.01 Sciences HOA PHAT GROUP JSC Materials Vietnam 1.96 SUNNY OPTICAL TECHNOLOGY Technology Hardware & Equipment China 1.85 GROUP CO LTD TATA CHEMICALS LTD Materials India 1.72 LUK FOOK HOLDINGS Retailing Hong Kong 1.60 INTERNATIONAL LTD FEDERAL BANK LTD Banks India 1.50 Geographic Weightings vs. 12,13 China India South Korea Taiwan Vietnam Russia Hong Kong Turkey Thailand Egypt Brazil United States Sri Lanka Switzerland Mexico Indonesia Saudi Arabia Philippines Poland United Arab Emirates United Kingdom Czech Republic Peru Malaysia Hungary Georgia Austria Pakistan Chile Nigeria Cash & Cash Equivalents 0.95 1.19 6.02 3.21 2.93 2.89 2.76 3.47 0.69 2.61 4.86 1.83 1.60 1.53 1.49 Templeton Emerging Markets Small Cap Fund 11.37 10.58 14.11 17.44 15.24 15.54 18.81 20.20 1.39 3.01 1.35 2.41 1.16 0.87 1.10 0.95 1.04 0.45 0.99 0.95 0.05 0.88 0.09 0.80 0.75 3.33 0.13 0.73 0.64 0.55 0.51 0.78 0.44 1.46 0.17 4.76 0% 25% Sector Weightings vs. 14,15 19.63 Consumer Discretionary 16.25 18.35 Information Technology 17.73 14.42 Health Care 8.58 14.21 Financials 9.60 10.76 Consumer Staples 7.08 7.37 Materials 11.85 6.86 Industrials 13.98 2.58 Real Estate 7.57 0.64 Energy 2.31 0.39 Telecommunication Services 1.16 0.05 Utilities 3.88 4.76 Cash & Cash Equivalents 0% 5% 10% 15% 20% 25% Templeton Emerging Markets Small Cap Fund 11. 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 portfolio manager for the fund reserves the right to withhold release of information with respect to holdings that would otherwise be included. 12,14. 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. 13,15. Source for Index: FactSet. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. franklintempleton.com 3

Asset Allocation 16 Equity 95.24 Cash & Cash Equivalents 4.76 0% 20% 40% 60% 80% 100% 120% Supplemental Performance Statistics Supplemental Risk Statistics 17,18 Class A 3 Yrs 5 Yrs 10 Yrs Standard Deviation (%) 11.87 11.30 22.85 Tracking Error (%) 5.90 5.84 6.64 Information Ratio 0.25 0.18 0.02 Beta 0.75 0.77 0.93 Sharpe Ratio 0.31 0.47 0.20 Performance data represents past performance, which does not guarantee future results. Current performance may differ from figures shown. The fund s investment return and principal value will change with market conditions, and you may have a gain or a loss when you sell your shares. Please call Franklin Templeton Investments at (800) DIAL BEN/342-5236 or visit franklintempleton.com for the most recent month-end performance. 5-Year Risk vs. Return as of 06/30/2018 19,20 Class A Without Sales Charges vs. Return (%) 8 6 4 2 0 0 10 20 30 40 Risk (Standard Deviation) (%) Templeton Emerging Markets Small Cap Fund If the sales charge had been included, the returns would have been lower. Investment Philosophy Templeton s approach is based on presence on the ground a network of local offices, onsite company research visits, and more than a decade of pioneering new emerging markets and investment opportunities. The advantage in our process comes from our inhouse investment research capabilities, the length of our track record, and the independence of the emerging markets team and process. Templeton s approach to the market is founded on three tenets: Value, Patience, and Bottom-Up stock selection. Value We seek companies trading at a substantial discount to what our research indicates the company may be worth. Patience Security prices can fluctuate more widely than underlying security values. In our opinion, market efficiencies should recognize and correct these security prices over time. Bottom-Up We identify value through rigorous fundamental analysis of a company s business to determine what we consider its economic worth to be based on future earnings potential, cash flow or asset value potential. Templeton s investment process involves five steps and is designed to add value for investors over the long term. 16. 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. 17. Beta, Information Ratio and Tracking Error information are measured against the. 18. 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). 19. Risk is measured by the annualized standard deviation of monthly total returns. Performance of the fund does not include sales charges (if applicable), but it does include dividends and capital gains reinvested at net asset value. 20. Source for Index: FactSet. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. franklintempleton.com 4

Investment Process STEP 1 Identify stocks for potential purchase STEP 2 Analyze securities STEP 3 Evaluate securities with research team STEP 4 Construct portfolio STEP 5 Manage and maintain portfolio Investment Team Portfolio Manager Years with Firm Years Experience Chetan Sehgal, CFA, Senior Management Director, Director of Portfolio 23 23 Management, Emerging Mark 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 USD. 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.com 5

What Are The Risks? All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in emerging markets, of which frontier markets are a subset, involve heightened risks related to the same factors, in addition to those associated with these markets smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Because these frameworks are typically even less developed in frontier markets, as well as various factors including the increased potential for extreme price volatility, illiquidity, trade barriers and exchange controls, the risks associated with emerging markets are magnified in frontier markets. Small cap company stocks have historically had more price volatility than large-company stocks, particularly over the short term. All investments in the fund should be thought of as long-term investments that could experience significant price volatility in any given year. The fund is designed for the aggressive portion of a well-diversified portfolio. These and other risk considerations are discussed in the fund s prospectus. Important Legal Information Investors should carefully consider a fund s investment goals, risks, charges and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information, talk to your financial advisor, call us at (800) DIAL BEN/342-5236 or visit franklintempleton.com. Please carefully read a prospectus before you invest or send money. 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 2. Source: Morningstar, 06/30/2018. For each mutual fund and exchange traded fund with at least a 3-year history, Morningstar calculates a Morningstar Rating based on how a fund ranks on a Morningstar Risk-Adjusted Return measure against other funds in the same category. This measure takes into account variations in a fund s monthly performance, and does not take into account the effects of sales charges and loads, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each 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 weights are: 100% 3-year rating for 36-59 months of total returns, 60% 5-year rating/40% 3-year rating for 60-119 months of total returns, and 50% 10-year rating/30% 5-year rating/20% 3-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 3-year period actually has the greatest impact because it is included in all three rating periods. The Fund s Class A shares received a Morningstar Rating of 3, 4 and 4 star(s) for the 3-, 5- and 10-year periods, respectively. Morningstar Rating is for the named share class only; other classes may have different performance characteristics. Past performance is not an indicator or a guarantee of future performance. Franklin Templeton Distributors, Inc. One Franklin Parkway San Mateo, CA 94403-1906 (800) DIAL BEN/342-5236 franklintempleton.com 2018 Franklin Templeton Investments. All rights reserved. 426 PP 06/18