Franklin MENA Fund

Franklin Templeton Investment Funds

Franklin MENA Fund - A (acc) USD

Franklin Templeton Emerging Markets Equity

Data as of 30 June 2019

For professional investor use only. Not for distribution to retail investors.

Franklin MENA Fund

2


Table of Contents

Why Consider This Fund?.................................................................................4

Why Consider This Fund?...................................................................................................... 5

Franklin Templeton Overview...........................................................................6

Investment Capabilities Overview............................................................................................7

Local Insights from a Global Leader........................................................................................ 8

Our Goal Is to Be “Best in Each Country”................................................................................9

Franklin Templeton Emerging Markets Equity (Public and Private Equity)—Global

Offices

.................10

One of the Most Experienced Investment Teams in the MENA Region................................... 11

Investment Philosophy and Process..............................................................12

MENA Coverage Requires More Depth................................................................................. 13

Investment Philosophy and Approach....................................................................................14

Active Search for Alpha-Generating Investment Opportunities across MENA..........................15

Stock Selection Is Driven by Proprietary Fundamental Research............................................16

Portfolio Construction............................................................................................................17

Investment Risk Management at Franklin Templeton.............................................................18

What is MENA?.................................................................................................19

MENA’s Role in the Global Economy Is Rising...................................................................... 20

Largely Under-Represented in Global Portfolios.....................................................................21

Investment Diversity and Flexibility within MENA....................................................................22

Why Invest in MENA?......................................................................................23

1. Strong Balance Sheets Prevail Three Years From Oil Price Collapse..................................24

2. Focus on Growth Returns After Two Years Of Consolidation..............................................25

3. Corporate Earnings Outlook Improving.............................................................................. 26

4. MENA Equities Can Offer Value and Have Provided Attractive Dividend Yields...................27

5. Liquidity Environment to be Transformed by MSCI Inclusion...............................................28

2018 Country Themes...........................................................................................................29

2018 Sector Themes.............................................................................................................30

Overview and Outlook for the Next Decade............................................................................31

Fund Characteristics........................................................................................32

Summary..............................................................................................................................33

What are the Key Risks?......................................................................................................34

Sector Allocation...................................................................................................................35

Performance Attribution by Sector.........................................................................................36

Geographic Allocation...........................................................................................................37

Performance Attribution by Country.......................................................................................38

Franklin MENA Fund

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Table of Contents (continued)


Top Ten Holdings..................................................................................................................39

Portfolio Characteristics........................................................................................................40

Discrete Performance........................................................................................................... 41

Historical Performance..........................................................................................................42

Calendar Year Returns......................................................................................................... 43

Performance Risk Statistics.................................................................................................. 44

The Active Management Advantage...................................................................................... 45

Appendix............................................................................................................46

Access to a Worldwide Network of Research, Trading and Risk Professionals........................47

Decision-Making Forums...................................................................................................... 48

Robust Research Infrastructure.............................................................................................49

Proprietary Market Analytics................................................................................................. 50

Case Study: RAK Ceramics..................................................................................................51

Management Profile..............................................................................................................52

Glossary...............................................................................................................................57

Important Disclosures...........................................................................................................58

4

Why Consider This Fund?

Franklin MENA Fund


• The Middle East & North Africa (MENA) region offers exposure to rapidly growing economies with real Gross Domestic Product (GDP) growthestimated to be 3.5% in 20191

• Growth outlook is supported by strong fundamentals—healthy balance sheets, low debt levels, continued government spending and an ambitious reform agenda

• MENA equities are largely under-represented in global portfolios compared to their GDP contribution

• A great diversifier—historically, the MENA region has had lo correlations with major asset classes

• The MENA region offers attractive valuations with some of the highest dividend yields globally

1. Source: International Monetary Fund, World Economic Outlook Database, October 2018.2. Source: Franklin Templeton Investments, as of 31 December 2018.

Tomorrow’s EmergingMarkets Growth Story

A Great Complement to Your Portfolio

3015

• We have one of the most experienced portfolio management teams in the MENA region with an average of 17 years of industry expertise2

• Our broad research coverage helps to identify the best equityopportunities across MENA countries, one of the most under-researched regions in the world

Experienced MENA Specialists on the Ground

Franklin MENA Fund

5


Why Consider This Fund?

6

Franklin Templeton Overview

Franklin MENA Fund


Source: Franklin Templeton Investments (FTI), as of 30 June 2019, based on latest available data. Total combined Assets Under Management (Total AUM) combines U.S. and non-U.S. AUM of the investment management subsidiaries of the parent

company, Franklin Resources, Inc. (FRI) [NYSE: BEN], a global investment management organisation operating as FTI. Only selected business entities within FTI claim compliance with the GIPS standards as described in the table of contents if

applicable. Total and platform AUM includes discretionary and non-discretionary accounts, including pooled investment vehicles, separate accounts and other vehicles. Total and platform AUM may also include advisory accounts with or without trading

authority. In addition, assets for which certain FTI advisers provide limited asset allocation advisory services, and assets that are not allocated to FTI products are not included in the AUM figures shown. Franklin Templeton Multi-Asset Solutions may

invest in various investment platforms advised by a number of investment advisory entities within FTI. Platform AUM reported for FT Multi-Asset Solutions therefore may include certain AUM separately reported under each utilised investment platform.

Total AUM also includes assets managed by certain FTI advisers that do not form part of the selected investment platforms shown. As a result, the combined platform AUMs may not equal Total AUM and may be calculated and reported separately for

regulatory or other purposes under each investment adviser. Each local asset manager may be considered as an entity affiliated with or associated to FTI by virtue of being a direct or indirect wholly-owned subsidiary of FRI, an entity or joint venture in

which FRI owns a partial interest, which may be a minority interest, or a third party asset management company to which investment advisory services have been delegated by an FTI adviser.


7

Franklin MENA Fund

Investment Capabilities Overview

FRANKLIN TEMPLETON

Total Combined Assets Under Management: US$715.2 Billion

2

Equity

5

Fixed Income

8

Multi-Asset Solutions

11

Alternatives

AUM

US$289.2 Billion US$269.8 Billion US$116.0 Billion US$42.2 Billion

CAPABILITIES

•

Value

•

Government

•

Multi-Asset Income

•

Commodities

•

Deep Value

•

Municipals

•

Diversified Outcome-Oriented

•

Infrastructure

•

Core Value

•

Corporate Credit

•

Risk Premia

•

Real Estate

•

Blend

•

Bank Loans

•

Smart Beta

•

Hedge Funds

•

GARP

•

Securitised

•

Balanced Allocation

•

Private Equity

•

Growth

•

Multi-Sector

•

Target Date/Risk

•

Private Debt

•

Convertibles

•

Currencies

•

Model Portfolios

•

Sector

•

Sukuk

•

Inflation Protection

•

Shariah

•

Managed Volatility

•

Smart Beta

INVESTMENT

•

Templeton Global Equity Group (1940)

•

Franklin Templeton Fixed Income Group (1970)

•

Franklin Templeton Multi-Asset Solutions (1948)

•

Franklin Real Asset Advisors (1984)

TEAMS

•

Franklin Equity Group (1947)

•

Templeton Global Macro (1986)

•

Franklin Systematic (2011)

•

Darby Overseas Investments (1994)

•

Franklin Mutual Series (1949)

•

Franklin LAM-Fixed Income (1993)

•

K2 Advisors (1994)

• Franklin Templeton Emerging Markets Equity (1987) •

Pelagos (2005)

•

Franklin LAM-Developed Markets Equity (1993)

•

Benefit Street Partners (2008)

•

Edinburgh Partners (2003)

What Sets Us Apart

1. Source: Franklin Templeton Investments as of 30 June 2019.

Local Insights from a Global Leader

Access to Locally Sourced Ideas & Insights

Broad Research Capabilities Worldwide

Strength of a GlobalAsset Management Leader

• Local investment professionals who are based in the country or region where assets are managed

• Specialisation and focus on a single region to develop deep knowledge and unique insights

• First-hand knowledge of local market dynamics as investment teams are embedded in their region’s local business practices

• Real-time response to local market events

• Networks of local business contacts

• Extensive on-the-ground asset management capabilities in 35countries1 to identify the best investment opportunities in eachcountry or region

• In-depth research across all markets—developed, emerging and frontier—and market capitalisation for unparalleled insights into the markets we invest in

• Access to investment opportunities beyond the mainstream and often before they are recognised by the broader market

• Franklin Templeton was establishedin 1947

• Manages US$715 billion of assets1

• Credit ratings among the highest of any asset management company

• Large research platform that operates seamlessly across the globe

• Comprehensive 24/7 coverage and support of key operations such as trading, risk analysis, legal, technology, operations, clientservice and other key business services

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Franklin MENA Fund

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Local Insights from a Global Leader

Five Key Reasons for Local Asset Management:

4007

A global company is “local” everywhere.

Most investments are local due to domestic biases.

Locally managed domestic products typically possess strong competitive advantages.

Finding the right balance of global practice and local knowledge is key.

Access todomestic growthis often not found in global portfolios.

Franklin MENA Fund

9


Our Goal Is to Be “Best in Each Country”

As of 30 June 2019.CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.1. Investment professionals include research analysts, portfolio managers, directors and CIO.

0275

Seasoned Team withDiverse Background• 16 Countries• Over 80 Investment

Professionals¹

BUCHARESTAdrian CighiCalin Metes, CFADan GheorgheDaniel NaftaliJohan MeyerMarius Dan

SEOULJay Choi, CFAJay JungJin Soo YookJung Ku KangMoo Il JungSo Hyun Lee, CFASteve ChaeSung Sik Oh

BUENOS AIRESClaus Born, CFASantiago Petri

MUMBAIAbhishek SahooKeyur Vora, CFA

SINGAPOREChetan Sehgal, CFAChuan Wei OngManish AgarwalManraj Sekhon, CFARichard PilieroSukumar RajahTek Khoan Ong, CFAVikas Chiranewal, CFAYi Ping LiaoYu-Jen Shih, CFA

ISTANBULCan OzdogarCan OzguzelCem ErkulDamla YildizDeger AtayErman KalkandelenErsan AkgulGokhan ArikocMustafa Aydemir

HONG KONGBryan Wong, CFAChris LeungClaudius Tsang, CFAEddie Chow, CFAEric Mok, CFAJordan Pong, CFALeslie ChowMichael Chu, CFATom WuVictor Lee, ACCA

HO CHI MINH CITYMike Nguyen, CFAThi Thu Lam Nguyen

CAPE TOWNDanesh Ranchhod, CFA

DUBAIAhmed Awny, CFAAlexey Ilin, CFA Bassel KhatounDavid HaglundKapil ChadhaKarim Abbas, CFANikhil Arora, CFASalah Shamma

RIO DE JANEIROGustavo Stenzel, CFAMarcos Mundim, CFA

KUALA LUMPUREdward Pang, CFAIsmar Izhar

WARSAWKrzysztof Musialik, CFA

SAO PAULOAndre BanksEduardo BoppEduardo CotrimFrederico Sampaio, CFAGuilherme SansivieroVitor Perito, CFA

HYDERABADJagadishwar Pasunoori

CHENNAIAkhil KalluriAnand Radhakrishnan, CFAHari Shyamsunder, CFAJanakiraman Rengaraju, CFAKiran SebastianKrishna Prasad, CFALakshmikanth ReddyMurali YerramRajasa K.Roshi Jain, CFASandeep ManamSaurabh Das, CFASrikesh NairSwagato Ghosh Varun SharmaVinod Bansal, CFA

NEW YORKGregory Van Beek, CFA

VIENNAMatjaz Schroll

EDINBURGHAndrew Ness

SHANGHAIJason ZhuTony SunVivian ChenSealand J.V.

Franklin MENA Fund

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Franklin Templeton Emerging Markets Equity (Public and Private Equity)—Global

Offices

Broad Research Coverage in One of the Most Under-Researched Regions in the World• Average industry experience of MENA Equity portfolio management team members is 17 years1

• On-the-ground investment experts are dedicated to the MENA region with access to all markets, including Saudi Arabia

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute. Investment professionals include portfolio managers, analysts and traders. 1. Franklin Templeton Investments, as of 31 March 2018.

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Franklin MENA Equity Team

Investment Team Responsibility Countries

Bassel Khatoun Chief Investment Officer Saudi Arabia, Oman, Tunisia, Morocco, Lebanon

Salah Shamma Portfolio Manager Egypt, Qatar, Bahrain, UAE

Karim Abbas, CFA Sr. Analyst Kuwait, Jordan

Nikhil Arora, CFA Sr. Analyst Egypt, Qatar, Bahrain

Jagadishwar Pasunoori, CFA Analyst UAE, Kuwait, Jordan

Keyur Vora, CFA Analyst Saudi Arabia, Oman, Tunisia

Global Integrated Platform

Global Risk Management Compliance Trading Product Management

Franklin MENA Fund

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One of the Most Experienced Investment Teams in the MENA Region

12

Investment Philosophy and Process

Franklin MENA Fund


1,368Companies listed in MENA region

262Companies covered by at least

1sell-side analyst

372Companies included

in S&P Pan Arab Composite Index


7sell-side analysts

Creates significant bottom-up

opportunities


4sell-side analysts

3021

More Than Half of the Stocks in S&P Pan Arab Composite Index Have Little or No Research Coverage• Fund investments are based solely on proprietary in-depth research which includes a financial model and an

investment recommendation.

Franklin MENA Fund

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MENA Coverage Requires More Depth

Investment Philosophy• We believe that a disciplined investment approach founded on in-depth, proprietary research will deliver alpha over a full

market cycle

Investment Universe• We focus on equity securities of companies in the Middle East and North African countries (“MENA”), including, but not limited to

Bahrain, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Tunisia and the United Arab Emirates (UAE)

Investment Approach• Long-term investment horizon

– Target high-quality businesses with a sustainable competitive advantage

• Focus on undervalued stocks with attractive growth prospects

– Identify companies that are trading at a significant discount to intrinsic value with a particular focus on cash flow generation

• Bottom-up investment approach based on proprietary, fundamental research

– In-depth coverage of over 150 stocks in the region, across the market capitalisation spectrum

• Focus on building high-conviction, concentrated portfolios

– 30–40 stock holdings, constituting “best ideas” only

• Disciplined risk management

– Regular portfolio monitoring aligns risk with conviction and ensures that risks are recognised and intentional

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Franklin MENA Fund

14


Investment Philosophy and Approach

1. Franklin Templeton Investments (ME) Limited.

A Bottom-Up-Driven Investment Process

Idea Generation

• Comprehensive research coverage on country level

• Local presence in the market positions us advantageously to identify potential opportunities

• Quantitative and qualitative screens filter ideas that warrant further analysis

Due Diligence

• In-depth fundamentalstock research to analyse business models, competitive landscape, financials and valuations

• Consistent valuationframework across team

• Over 300 companyinteractions per year breeds conviction in outlook

Review Panel

• 360-degree review of stock recommendations leverages experience of whole team

• A disciplined approach ensures consistency in terms of how we look at investments across different countries

• Approved ideas are included in team’s “Buy List”

Portfolio Construction

• Ranking model identifies highest conviction “Buy List” ideas based on quantitative and qualitative factors

• Security sizing is determined by stock conviction as well as risk alignment

Over 1,300Companies Listed in MENA

150+FTIME1 Stock Coverage

40–60Stocks on Research Buy List

30–40 Stocks in Portfolio

Franklin MENA Portfolio

Integrated and ongoing risk management

1. 2. 3. 4.

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Franklin MENA Fund

15


Active Search for Alpha-Generating Investment Opportunities across MENA

Focus on Best-Quality Measures and Highest Upside Potential

Business and Strategy Analysis• Understand business operations

• Research industry value chain and competitive landscape

• Debate strategy and market positioning

• Identify competitive edge

Financial Analysis• Project main revenue drivers

• Analyse Return on Invested Capital (ROIC)

• Project cashflow

• Valuation—Discounted Cash Flow (DCF), sum of parts, Net Asset Value (NAV) and relative valuation

Management Due Diligence• Asset management quality

– Vision– Past decisions– Disclosure and transparency

• Understand corporate governance

360-Degree Review• Leverage the experience of the

whole team

• Use a disciplined approach to ensure consistency in terms of how we look at investments across different countries

Research Buy List

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Franklin MENA Fund

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Stock Selection Is Driven by Proprietary Fundamental Research

Driven by Stock Conviction and Risk Alignment

3024

Research Buy List

30–40 Stocks40–60 Stocks

Ranking Model Risk Management

Quantitative Factors• Fair value upside• Relative valuation

matrix• Valuation safety

margins

Qualitative Factors• Management quality• Corporate governance• Level of conviction in

assumptions

Security Sizing• Top-down risk

alignment• Active weight against

benchmark• Liquidity factors

Franklin MENA

Portfolio

Ongoing Risk AnalysisEngage with independent risk specialists to ensure that risks are recognisedand intentional

Franklin MENA Fund

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Portfolio Construction

As stewards of our clients’ capital, we are constantly searching for greater transparency into the drivers of investment risk in our strategies and assuring alignment with investment team convictions and client expectations.

Investment risk management at Franklin Templeton:

As of 30 June 2019.

Investment Risk Management at Franklin Templeton

• Begins with the portfolio

management team’s research

process and the assessment of

market and active risk

• Is supported by integrated risk

analytics for the portfolio

management team’s use

• Is strengthened by the independent

Investment Risk Management

Group that reports directly to

the CEO

• Serves multiple stakeholders

including investors, portfolio

managers, fund boards and

regulators

• Is powered by actionable insights

from 20+ risk consultants with an

average of 18+ years experience and

90+ risk analysts located around

the globe

• Combines a mosaic of analytics,

oversight protocols and

collaborative consultation with

portfolio managers

Integrated Independent Insightful

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Franklin MENA Fund

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Investment Risk Management at Franklin Templeton

19

What is MENA?

Franklin MENA Fund


MENA Economic Indicators

1. FT Middle East and North Africa (MENA) region comprises 11 countries: Bahrain, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Tunisia and the United Arab Emirates. 2. Nominal GDP/Total Population: International Monetary Fund, World Economic Outlook Database, October 2018. There is no assurance that any projection, estimate or forecast will be realised. 3. Market Capitalisation: Bloomberg, April 2019.4. Bloomberg, S&P Dow Jones Indices, December 2018. 5. Total Reserves: Sovereign Wealth Fund Institute, November 2018. Bloomberg Reserves: Bahrain and Egypt as of 30/9/2018, Jordan as of 30/9/2017, Kuwait and Qatar as of 31/12/2018, other MENA countries as of 31/12/2017.Important data provider notices and terms available at www.franklintempletondatasources.com.

MENA Region

Gulf Cooperation Council (GCC) North Africa Levant (countries bordering the eastern Mediterranean Sea)

Bahrain GDP 2018e US$39bn Mkt Cap US$21bn Listed Companies: 44

Tunisia GDP 2018e US$42bn Mkt Cap US$8bn Listed Companies: 87

Morocco GDP 2018e US$118bn Mkt Cap US$60bn Listed Companies: 76

Lebanon GDP 2018e US$57bn Mkt Cap US$7bn Listed Companies: 10

United Arab Emirates GDP 2018e US$433bn Mkt Cap US$254bn Listed Companies: 136

Kuwait GDP 2018e US$145bn Mkt Cap US$93bn Listed Companies: 167

Oman GDP 2018e US$82bn Mkt Cap US$17bn Listed Companies: 117

Qatar GDP 2018e US$188bn Mkt Cap US$154bn Listed Companies: 46

Jordan GDP 2018e US$42bn Mkt Cap US$28bn Listed Companies: 224

Egypt GDP 2017 US$249bn Mkt Cap US$50bn Listed Companies: 259

Saudi Arabia GDP 2018e US$770bn Mkt Cap US$557bn Listed Companies: 202

MENA’s economy is 8th largest economyof the world.

Total Population2 Nominal GDP (2018e)2 Market Capitalisation3 Listed Companies4 Total Reserves5

215 Million US$2.2 Trillion US$1.3 Trillion 1,368 US$3.4 Trillion

• MENA’s1 GDP has more than doubled over the last decade to US$2.2 trillion2

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Franklin MENA Fund

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MENA’s Role in the Global Economy Is Rising

1. FT Middle East and North Africa (MENA) region comprises 11 countries: Bahrain, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Tunisia and the United Arab Emirates. 2. GDP data: International Monetary Fund, World Economic Outlook Database, October 2018. 3. Index data: FactSet, MSCI, S&P. 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. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. Important data provider notices and terms available at www.franklintempletondatasources.com.

MENA Equity Representation Remains Very Low Compared with GDP Contribution• Long-term growth potential of the region and development of its capital markets will increase representation over time

MENA representsonly 0.2%3 of the MSCI All Country World and FM Index

MENA represents only 2.0%3 of the MSCI EM and FM Index

MENA1 GDP as a % of WORLD GDP:2

2.6% or US$2.2tn

MENA1 GDP as a % of Emerging Market GDP:2

5.9% or US$2.2tn

MENA: 2.6% (US$2.2tn) Emerging Markets (ex-MENA): 40.8% (US$34.6tn) Developed Markets: 56.6% (US$48.0tn)

MENA: 5.9% (US$2.2tn) Emerging Markets (ex-MENA):

94.1% (US$34.6tn)

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Largely Under-Represented in Global Portfolios

1. Bloomberg, International Monetary Fund, U.S. Energy Information Administration. Qatar, Egypt and UAE data as of 2015, other MENA countries as of 2016.2. Bloomberg, 31 March 2019. Important data provider notices and terms available at www.franklintempletondatasources.com.

59 6171 77 78

9097 99 100 100 100

41 3929 23 22

10 3 1

0%

20%

40%

60%

80%

100%

Kuwait Qatar Oman UAE KSA Egypt Bahrain Tunisia Morocco Lebanon Jordan

Non-Oil GDP as % Total GDP Oil GDP as % Total GDP

7.56%

3.01%

2.96%2.38%

0.95% 0.75% 0.61% 0.59% 0.56%

B-B

BB

B+

BBB-

A-

AA-AA AA

0

5

10

15

20

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Lebanon Egypt Oman Bahrain Morocco SaudiArabia

Qatar Kuwait Abu Dhabi

5-Year CDS Sovereign Bond Credit Rating

AAAAA+AAAA-A+AA-BBB+BBBBBB-BB+BBBB-B+BB-CCC+CCCCCC-CCCD

CDS Spreads Credit Rating

Oil and Non-Oil GDP Breakdown of MENA Countries1

Oil and Non-Oil GDP as a percentage of nominal GDP2015–2016

CDS Spreads and Credit Ratings As of 31 March 20192

3027

The MENA Region Offers • Eleven countries at different stages of economic development and with varying economic dynamics

– The “oil story myth”—only six out of 11 countries are oil exporters• Wide span of credit ratings creates opportunities for different risk appetites

• Low correlation between MENA countries

Franklin MENA Fund

22


Investment Diversity and Flexibility within MENA

23

Why Invest in MENA?

Franklin MENA Fund


Reserves and SWF Assets vs. Fiscal Balance (% of GDP)1 Average Gross Government Debt (% of GDP)1

2014 and 2017 Estimate

Substantial Sovereign Assets and Very Low Debt Levels in Spite of Reserve Drawdowns and Increased Debt Issuance• Sovereign wealth funds’ (SWF) assets combined with reserves still stand at US$2.9 trillion, over 200%1 of the GCC region’s GDP

• Low indebtedness across the GCC and MENA region relative to Emerging and Developed economies creates space to manage structural reform initiatives and support government spending and economic growth

1. IMF World Economic Outlook Database, October 2017; SWF Institute.There is no assurance that any projection, estimate or forecast will be realised. Important data provider notices and terms available at www.franklintempletondatasources.com.

443%

345%

255%

201% 192% 182%

106%

33% 31% 29% 27% 26% 18% 15% 14%0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

500%10%

27%

40%

105%

26%

42%

48%

105%

0% 20% 40% 60% 80% 100% 120%

GCC

MENA

EM

DM

2014 2017

3031

Franklin MENA Fund

24


1. Strong Balance Sheets Prevail Three Years From Oil Price Collapse

*Compound Annual Growth Rate.1. Ministry of Finance of Saudi Arabia.2. MEED (Middle East Economic Digest) data as obtained from Arqaam Capital. There is no assurance that any projection, estimate or forecast will be realised.

2016

• GCC governments reduced spending by 6% YoY

• Initiation of reduction in energy subsidies in GCC region

• Allowances and bonuses reduced for Saudi government employees

• Saudi Arabia saved US$27 billion through project efficiency reviews

• Oman reduced subsidy bill by 64%

• Oman hiked expat visa fees

2017

• Saudi Arabian government spending increased by 12% after two years of contraction. Bonuses and allowances reinstated for government employees

• National Bank of Abu Dhabi (NBAD) merger with First Gulf Bank (FGB)

• Excise on select goods and white land tax (levy on undeveloped plots of land)in Saudi Arabia

• Levies on expats and their dependents set in SaudiArabia

• Corporate tax ratesincreased from 12% to 15% in Oman

• Imposition of withholding tax and royalty on telecom companies in Oman

2018

• Saudi Arabia announced largest budget on record for 2018. Capex to increase by 14% to US$55 billion1

• Saudi Arabian sovereign funds plan US$35 billion1 in off-budget spending

• Stimulus for the private sector in Saudi Arabia worth US$19 billion1

• Saudi Aramco IPO

• Saudi Arabia and UAE introduce VAT

• Electricity tariffs for SaudiArabian consumers doubled; gasoline prices hiked by over 80%

...and Beyond

• Project pipeline worth US$1.3 trillion2 across the GCC

• US$500 billion NEOM city project in Saudi Arabia

• Dubai Expo 2020• Qatar FIFA 2022• Stimulus for housing in

Saudi Arabia worth US$22 billion

• Privatisation of Saudi Arabia’s state assets

• Achieve fiscal balance by 2023 (Saudi Arabia)

• Kuwait consideringimposing 10% corporate tax rate

Pro-growth measures

Reforms

Govt. Expenditure Growth(%) -6.1% -4.0% +5.5% +3.1% (CAGR* 2018–2021)

Fiscal Balance as % GDP -11.1% -5.9% -4.6% -1.7% (avg. 2019–2021)

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Franklin MENA Fund

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2. Focus on Growth Returns After Two Years Of Consolidation

Signs of Growth in the GCC• Non-oil GDP growth troughed in 2016, and has been recovering since

• IMF’s 2018 estimate of non-oil GDP growth is based on oil price assumption of US$49/barrel – high potential for upward revision

– Saudi Arabia projects a non-oil GDP growth rate of 3.7% in its 2018 budget1, vs. IMF’s estimate of 1.3%2

• Earnings CAGR* of 11.4% over 2017e–2019e (estimates), vs. -1.0% over 2014–2017e

*Compound Annual Growth Rate.1. Ministry of Finance of Saudi Arabia.2. International Monetary Fund, as of 14 December 2017 (http://www.imf.org/en/Publications/Policy-Papers/Issues/2017/12/14/pp121417gcc-economic-outlook-and-policy-challenges).3. Bloomberg, earnings for S&P GCC Large Mid Cap Index, as of 15 January 2018.Important data provider notices and terms available at www.franklintempletondatasources.com. There is no assurance that any projection, estimate or forecast will be realised. Past performance is not an indicator or guarantee of future performance.

6265

9

9.5

10

10.5

11

11.5

12

12.5

Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2017 Jan-2018Rolling 1yr Forward EPS

26.2%

34.6%

-2.2% 9.5

%

-1.9%

-6.2%

-4.5% 8.5

% 11.3% 12

.3%

5.2%

7.0%

5.5% 5.7%5.3%

3.8%

1.8%

2.6% 2.4%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019eEarnings Growth (% Y/Y, RHS) Non-Oil GDP Growth (% Y/Y)

GCC Region Non-Oil GDP Growth2 and Earnings Growth3

% YoY

Based on US$49/bbloil price assumption

GCC Rolling 1yr Forward EPS estimate3

% YoY

GCC earnings trended upward during the last year

Franklin MENA Fund

26


3. Corporate Earnings Outlook Improving

Price-to-Earnings Ratio (NTM)1 and Dividend Yield Comparisons

1. Price-to-Earnings (P/E) Ratio measures the forward P/E, based on earnings forecasted for the next 12 months (NTM) as of 19 December 2017.2. Source: Bloomberg. MENA is represented by the S&P Pan Arab Composite Large Mid Cap Index as of 2 January 2018.3. Source: MSCI via Bloomberg. Emerging Markets are represented by the MSCI Emerging Markets Index; Developed Markets are represented by the MSCI World Index; USA is represented by the MSCI USA Index as of 2 January 2018.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. There is no assurance that any projection, estimate or forecast will be realised. Important data provider notices and terms available at www.franklintempletondatasources.com. Past performance is not an indicator or guarantee of future performance.

6266

MENA2 Emerging Markets3 Developed Markets3 United States3

P/E 12.3x < 13.2x 17.3x 18.8x

Div. Yield 4.3% > 2.6% 2.7% 1.9%

MENA Equities Cheaper vs. EM, Although Historically It Has Traded at a Premium

12.313.212.7

11.9

9.0

10.0

11.0

12.0

13.0

14.0

15.0

16.0

17.0

Jan-2012 Jul-2012 Jan-2013 Jul-2013 Jan-2014 Jul-2014 Jan-2015 Jul-2015 Jan-2016 Jul-2016 Jan-2017 Jul-2017 Jan-2018

S&P Pan Arab MSCI EM S&P Pan Arab Avg MSCI EM Avg

Franklin MENA Fund

27


4. MENA Equities Can Offer Value and Have Provided Attractive Dividend Yields

*Foreign Ownership Limit.1. EFG Hermes calculations for potential contribution of potential events in MENA region, as of January 2018. MSCI country weights obtained via MSCI as of 31 December 2017. Blue and gray bars represent the current allocation in MSCI EM Index.2. Bloomberg, MSCI.3. Source: Franklin Templeton Investments. There is no assurance that any projection, estimate or forecast will be realised. 4. Deutsche Bank; reports all titled "MENA Equity Flows" published on 11 December 2017, 11 January 2017, 11 January 2016, 7 January 2015 and 6 January 2014.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. Past performance is not an indicator or guarantee of future performance.

3032

135

644

333

658 681 712

877

53

220

186 50

0100200300400500600700800900

1000

MENAcurrent

UAE/QatarFOL*

increases

Saudi Arabia’sinclusion

in EM

AramcoIPO

Kuwait'sinclusion

in EM

MENA'spotentialweight

in MSCIEM Index

Russia EmergingEurope

Brazil SouthAfrica

India

Performance Of Markets Before And After Inclusion In MSCI EM Index2

T = Date of inclusion, T-24M implies 24 months prior to inclusion in MSCI EM Index

MENA To Progress Towards A Meaningful Representation In MSCI EM Index (basis points)1

Catalysts lined up over next 2 years(estimated potential impact on MENA's weight in MSCI EM Index)

519%

130%

237%

73%29%

146%

9%

97%55% 32%

0%

100%

200%

300%

400%

500%

Russia Malaysia UAE Qatar PakistanT-24M T-12M

MENA representation in EM indices set to increase substantially• MENA countries are undertaking capital market reforms, such as

improving market accessibility and infrastructure, to facilitate higher foreign participation in their equity markets:

– Saudi Arabia: Potential MSCI EM upgrade candidate in June 2018, with potential inclusion into MSCI EM Index effective May 2019. Trading rules and QFI (Qualified Foreign Investor) requirements significantly relaxed. Saudi Aramco’s IPO preparation

– Qatar: Included in FTSE EM in 2016; measures to improve liquidity being studied such as stock splits; FOL increases to 49% vs. 25% in progress

– Kuwait: Upgraded to Secondary Emerging Market by FTSE, inclusion in FTSE EM Index to become effective in September 2018

Inclusion into global benchmarks has been preceded by period of strong market performance historically• Back-testing of 20 market promotions to MSCI EM status since

1994 indicates strong returns (55–67% in median case) in the 1 to 2 years prior to promotion, driven by investor inflows1

• UAE and Qatar returned 97% and 55% respectively in 12 months prior to inclusion2

• US$80 billion3 inflows expected in MENA over next couple of years vs. US$14 billion inflows collectively over 2013–20174

Franklin MENA Fund

28


5. Liquidity Environment to be Transformed by MSCI Inclusion

Important data provider notices and terms available at www.franklintempletondatasources.com.

EGYPTOVERWEIGHT

SAUDI ARABIAOVERWEIGHT

UAEOVERWEIGHT

QATARUNDERWEIGHT

• GDP growth for FY2018/191 estimated at 5.5%2, up from 4.8%2 in FY2017/18; supported by years of under-investment and expanding population

• In our view, there is an attractiveinvestment landscape after adoption of flexible exchange rate regime in November 2016. Expected capital inflows, tourism revival and export competitiveness may promote growth and job creation

• Foreign currency reserves reached record high of US$37 billion3 in December 2017; import coverage of 7 months3

• We expect monetary easing to follow inflation moderation, spurring private sector credit growth (16.1% estimated in FY18/19 vs. 10.5% in FY17/18) 4

• Production ramp-up at Zohr and Western Nile Delta fields are likely to improve gas availability for industrials

• Risks to political stability from presidentialelection are likely to be limited, in our view

• Estimated 2018 P/E of 10.3x5 with solid earnings growth of 19.2%5

• Saudi’s long-awaited upgrade to MSCI EM will be a transformative event. Saudi Aramco IPO is expected to attract significant investor interest and fund flows

• Saudi Arabia has one of the world’s youngest populations, growing at a healthy rate (2.6% in 2017)6

• Non-oil activity, estimated to recover to 3.7% in 2018 vs. 1.5% in 20177, aided by government spending

— Announced largest budget in Saudi Arabian history, spending up 10% yoy;

— Government capital expenditure to increase 14%;

— US$13 billion bonus package supports consumer incomes;

— Sovereign funds plan US$35 billion7 in off-budget spending;

— US$500 billion NEOM city project kicks off

• Fiscal deficit declined to 8.9% in 2017 from 12.6% in 20167, on increase in oil and non-oil revenues; expected to drop further to 7.3%7

• Positive social reforms, such as women allowed to drive and grant of cinema licenses after 35 years

• Share of oil GDP (30%)8 likely to drop further driven by robust non-oil GDP growth (3.4% in 2018)9

• Federal expenditure to grow by 5.6%10 in 2018, with Dubai expenditure growing 19.5%11 led by 47% increase in infrastructure spending as part of Expo 2020 ramp-up

• Dubai to lead UAE’s growth, while more oil-dependent Abu Dhabi to focus on new investment plans:

— Strategy to transform Dubai into an international knowledge hub, adding US$44 billion to GDP by 203012;

— Continued evolution and diversification of tourism sector,Louvre and amusement parks;

— Expansion of airports and logistics sectors supported by global growth

• Well-capitalised banks with average capital adequacy ratio of 18.7%13, high dividend yields and improved liquidity

• Abu Dhabi plans to list at least four large state-backed entities in 2018

• Increased isolation due to GCC-led trade blockade and political stand-off has increased political risk premium

• High sovereign reserves have helped weather the blockade so far, but growth prospects look muted

• Declining expat population impacting consumption

• Real GDP growth expected to reach 3.1%14 in 2018 (non-oil growth expected to be 4.7%)14, reflecting significant government stimulus

• US$200 billion infrastructure spending in anticipation of FIFA 2022 World Cup in Qatar15

• Valuations have de-rated but justified by limited earnings visibility

• Headwinds prevail at the stock level, deteriorating liquidity and margin compression is impacting banks

• Lack of diversity within Qatari market limits exposure to high growth areas of the economy

1. Egyptian FY ends on 30 June. 4. CI Capital research, report titled ‘Egypt Natural Gas Outlook’, 8 January 2018.7. Ministry of Finance, Saudi Arabia.10. Ministry of Finance, UAE as of 7 November 2017.13. Central Bank, as of 30 November 2017.

2. Ministry of Finance, Egypt as of 15 April 2018.5. Bloomberg, as of 12 January 2018.8. Minister of Economy, UAE, data for FY 2017.11. Department of Finance, Emirate of Dubai as of 10 December 2017.14. IMF, GCC Outlook, December 2017.

3. Central Bank of Egypt.6. Argaam: https://www.argaam.com/en/article/articledetail/id/518542.9. IMF, UAE Article IV Consultation Press Release, July 2017.12. Govt. of Dubai, Dubai Industrial Strategy – 2030 UAE.15. Reuters.com, “Qatar to spend up to $205bn on infrastructure overfive years—QNB”, 4 February 2014.

3036

Franklin MENA Fund

29


2018 Country Themes

• Overweight domestically-driven sectors with high structural growth, as well as supportive government policy—insurance, healthcare, logistics and select consumer plays

• Region home to a young and growing population of nearly 200 million1 people whose living standards and consumption needs are evolving

• We favour domestic plays, wherein supportive demographics and improving spending trends underlie an exciting demand story

• Low healthcare penetration level coupled with ambitious government drive to improve service quality and insurance coverage

• High margins are typical (compared with other EM consumers) due to low product penetration

• Within the retail sector, we prefer companies with pricing power to combat VAT and potential wage inflation pressures (from Saudisation)

• Consumer stimulus package in Saudi and reversal of allowance cuts should be supportive of incomes

• Attracted to products that demonstrate demand resilience in a low oil price environment

• Current market valuations discount long-term growth potential

• Increased government and private spending to drive decent credit growth in select countries. Interest rate cuts expected in Egypt as inflation moderates, likely to spur private sector credit growth

• Infrastructure spending to be channeled through banking system resulting in increasing loan/GDP penetration

• Development of new banking products to drive retail penetration levels

• Margin compression has subsided in certain countries, with significant upside potential from a rising interest rate environment as a result of a large share of non-interest bearing deposits

• Banks in the region remain well provisioned against non-performing loans and are expected to see limited impact on account of IFRS 9 implementation

• Bank capitalisation levels above regulators’ stringent requirements, with potential for increased lending or capital return. Overcapitalised Saudi banks are estimated to have increased dividends by 48%2 in 2017 and can maintain/increase payouts

• Liquidity concerns have eased with higher oil prices and consequently lower crowding out from government

• Valuations remain attractive to us in key markets

1. International Monetary Fund, World Economic Outlook Database, October 2017. 2. Morgan Stanley Research. As of 17 January 2018.3. Middle East Economic Digest (MEED), data as obtained from Arqaam Capital as of 2 January 2018.Important data provider notices and terms available at www.franklintempletondatasources.com.

DOMESTIC REFORM/CONSUMEROVERWEIGHT FINANCIALS SELECTIVE

• We believe that government spending on infrastructure will be resilient in the medium-term, however may be curtailed in the short-term

• Infrastructure projects tendered aggregate to US$1.3 trillion3

• We expect strategic projects to continue over longer time-frames whilst non-core projects will likely be shelved

• Sectors that are directly or indirectly exposed to project spending such as materials and construction are likely to face working capital challenges

• Improved global growth outlook as well as higher commodity reference prices may provide support in some sectors

• However, additional supply is expected to pressure global sectors (chemicals) and over-supply/high inventory is a challenge for domestic sectors (Saudi Arabian cement)

• Materials manufacturers will likely come under pressure as a result of government policies to reduce/remove energy subsidies (Saudi Arabia/Oman), although that time-frame has been extended further

• Saudi Arabian government payment of over-dues to contractors relieves short-term stress

CONSTRUCTION/MATERIALSUNDERWEIGHT

3037

Franklin MENA Fund

30


2018 Sector Themes

• Currently, MENA GDP represents about 2.9% (5.9%) of the world’s (emerging markets) GDP. However, average exposure to MENA in global indexes is much lower with 0.2% (2.6%).1 We expect this material disconnect to change as the region’s capital markets develop

• The MENA region offers one of the strongest stories in a challenging global context—exciting emerging market type growth coupled with credit ratings comparable to the strongest developed markets

• Attractive yields and compelling valuations have attracted investor inflows into the region as investors begin to recognise some of the opportunities available

• We believe that there is a compelling case for the continued outperformance of MENA equities as the region establishes itself as a single, identical subset within the global emerging market universe

1. GDP data: International Monetary Fund, World Economic Outlook Database, October 2018. Index data: FactSet, MSCI, S&P. 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. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. Important data provider notices and terms available at www.franklintempletondatasources.com.

3038

Franklin MENA Fund

31


Overview and Outlook for the Next Decade

32

Fund Characteristics

Franklin MENA Fund


Franklin MENA Fund

33

Fund Identifiers

ISIN Code LU0352132103

SEDOL Code B2QHPX6

Bloomberg Code FTMNAUS LX


As of 30 June 2019

Summary

Portfolio Manager(s)

Bassel Khatoun U. Arab Emir.

Salah Shamma U. Arab Emir.

Fund Ratings (30 June 2019)

Overall Morningstar Rating™

«««

Summary of Investment Objective

The Fund aims to achieve long-term capital appreciation by investing primarily in

equity securities of companies across the entire market capitalisation spectrum in the

Middle East and North Africa (MENA) region, including, but not limited to Bahrain,

Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Tunisia and

the United Arab Emirates.

Morningstar Category™ Africa & Middle East Equity

Investment Style Blend

Fund Inception Date 16 June 2008

Share Class Inception Date 16 June 2008

Benchmark S&P Pan Arab Composite Large Mid Cap

KSA Capped at 30% Index

Base Currency for Fund USD

Base Currency for Share Class USD

Total Net Assets (USD) 95,640,244.58

Portfolio Turnover 121.01%

Asset Allocation Equity: 97.80%

Cash & Cash Equivalents: 2.20%

Number of Issuers 45

Total Expense Ratio 2.58%

The Portfolio Turnover is calculated over a 12-month period as at the end of the fiscal year (31 December 2018).

Holdings of the same issuer have been combined.

© Morningstar, Inc. 2019. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) 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.

Percentage may not total 100% due to rounding.

Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.

The fund offers other share classes subject to different fees and expenses, which will affect their performance. Please see the prospectus for details.

Past performance is not an indicator or a guarantee of future performance.


Franklin MENA Fund

34

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 located in or doing significant business in the MENA (Middle East and North Africa)

region. Such emerging markets have historically been subject to significant price movements, frequently to a greater extent than equity markets globally. As a result, the

performance of the Fund can fluctuate considerably over time.

Other significant risks include: emerging markets risk, currency risk, liquidity risk, operational 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.

What are the Key Risks?


Franklin MENA Fund

35

Weightings as percent of total. Percentage may not total 100% due to rounding. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.


Cash & Cash Equivalents

Utilities

Communication Services

Materials

Energy

Health Care

Consumer Staples

Industrials

Consumer Discretionary

Real Estate

Financials

0% 14% 28% 42% 56% 70%

Sector Allocation

Franklin MENA Fund

S&P Pan Arab Composite Large Mid Cap KSA Capped at 30% Index

Portfolio % Index % Over/Under %

Financials 42.83 64.75 -21.92

Banks 36.98 63.03 -26.05

Diversified Financials 3.35 0.70 2.65

Insurance 2.51 1.03 1.47

Real Estate 12.35 5.70 6.65

Consumer Discretionary 11.39 0.99 10.40

Retailing 8.08 0.52 7.57

Consumer Services 3.31 0.48 2.83

Industrials 9.53 5.28 4.25

Transportation 8.36 2.26 6.11

Capital Goods 1.16 3.03 -1.86

Consumer Staples 8.06 1.72 6.34

Food, Beverage & Tobacco 8.06 1.69 6.37

Household & Personal Products 0.00 0.03 -0.03

Health Care 5.95 0.19 5.76

Health Care Equipment & Services 5.95 0.17 5.77

Pharmaceuticals, Biotechnology & Life Sciences 0.00 0.01 -0.01

Energy 3.99 0.86 3.13

Materials 2.01 10.14 -8.14

Communication Services 1.70 8.85 -7.15

Telecommunication Services 1.70 8.85 -7.15

Utilities 0.00 1.52 -1.52

Cash & Cash Equivalents 2.20 0.00 2.20

Franklin MENA Fund

vs. S&P Pan Arab Composite Large Mid Cap KSA Capped at 30% Index

As of 30 June 2019

Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.Source: FactSet. Data is calculated as a percentage of total including cash and other net assets but excluding fixed income. Note: Selection Effect includes Currency and Interaction Effect. Total Effect represents the opportunity cost of investment decisions in a group relative to the overall benchmark.Past performance is not an indicator or a guarantee of future performance.

Franklin MENA Fund vs. S&P Pan Arab Composite Large Mid Cap KSA Capped at 30% Index 31 May 2016–31 May 2019

3.06

1.92

1.87

1.81

1.52

0.91

-0.50

-0.63

-0.90

-1.70

-1.82

-1.10

-3.00 0.00 3.00 6.00

Health Care

Financials

Communication Services

Consumer Discretionary

Industrials

Real Estate

Utilities

Information Technology

Materials

Energy

Consumer Staples

Cash & Other Net Assets

Total Effect (%)

PORTFOLIO (%) INDEX (%) ATTRIBUTION EFFECTS (%)

Average Weight

Total Return

Average Weight

Total Return

AllocationEffect

Selection Effect

Total Effect

Health Care 4.66 56.63 0.55 -18.74 -1.16 4.22 3.06

Financials 35.27 79.07 55.00 60.79 -3.10 5.01 1.92

Communication Services 2.66 23.84 11.51 15.53 1.89 -0.02 1.87

Consumer Discretionary 11.99 30.44 1.56 5.25 -3.45 5.26 1.81

Industrials 14.23 43.70 6.09 22.96 -0.44 1.96 1.52

Real Estate 10.04 -4.92 8.02 -15.45 -0.60 1.52 0.91

Utilities 2.09 -6.69 1.85 0.56 -0.10 -0.39 -0.50

Information Technology 0.54 -20.69 0.00 0.00 -0.63 0.00 -0.63

Materials 4.35 28.01 12.06 41.36 -1.01 0.11 -0.90

Energy 3.38 -32.89 0.96 9.45 0.07 -1.74 -1.70

Consumer Staples 8.56 15.61 2.40 6.78 -1.32 -0.50 -1.82

Cash & Other Net Assets 2.24 68.20 0.00 0.00 -1.07 -0.03 -1.10

Total 100.00 43.60 100.00 39.15 -10.92 15.38 4.45

3347

Franklin MENA Fund

36


Performance Attribution by Sector

Franklin MENA Fund

S&P Pan Arab Composite Large Mid Cap KSA Capped at 30% Index

Cash & Cash Equivalents

Lebanon

Oman

Jordan

Bahrain

Morocco

Qatar

Egypt

Kuwait

Saudi Arabia

United Arab Emirates

0% 6% 12% 18% 24% 30%

37

Franklin MENA Fund

Weightings as percent of total. Percentage may not total 100% due to rounding. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.


Geographic Allocation

Portfolio % Index % Over/Under %

Mid-East / Africa 97.80 100.00 -2.20

United Arab Emirates 29.06

14.77

14.28

Saudi Arabia 28.44

29.32

-0.88

Kuwait 18.67

18.47

0.20

Egypt 18.13

4.69

13.44

Qatar 3.50

19.64

-16.15

Morocco 0.00

4.40

-4.40

Bahrain 0.00

2.86

-2.86

Jordan 0.00

2.13

-2.13

Oman 0.00

1.70

-1.70

Lebanon 0.00

1.23

-1.23

Others 0.00 0.78 -0.78

Cash & Cash Equivalents 2.20 0.00 2.20

Franklin MENA Fund


As of 30 June 2019

Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.Source: FactSet. Data is calculated as a percentage of total including cash and cash equivalents but excluding fixed income. Note: Selection Effect includes Currency and Interaction Effect. Total Effect represents the opportunity cost of investment decisions in a group relative to the overall benchmark.Past performance is not an indicator or a guarantee of future performance.

Franklin MENA Fund vs. S&P Pan Arab Composite Large Mid Cap KSA Capped at 30% Index31 May 2016–31 May 2019

8.21

1.14

0.92

0.81

0.63

0.54

0.52

0.30

0.17

-0.46

-7.24

-1.09

-8.00 -1.00 6.00 13.00

Egypt

Lebanon

Morocco

Jordan

Oman

United Arab Emirates

Kuwait

Tunisia

Bahrain

Qatar

Saudi Arabia

Cash and Cash Equivalents

Total Effect (%)

PORTFOLIO (%) INDEX (%) ATTRIBUTION EFFECTS (%)

Average Weight

Total Return

Average Weight

Total Return

Allocation Effect

Selection Effect

Total Effect

Egypt 19.97 66.03 4.78 7.98 -1.13 9.34 8.21

Lebanon 0.20 6.94 1.98 -20.03 1.01 0.13 1.14

Morocco 0.00 17.75 5.39 19.98 0.62 0.30 0.92

Jordan 0.00 0.00 2.74 7.77 0.81 0.00 0.81

Oman 1.74 -5.61 2.74 -10.39 0.49 0.13 0.63

United Arab Emirates 24.19 21.14 18.44 18.04 -1.47 2.01 0.54

Kuwait 12.94 93.48 13.28 72.41 -0.58 1.10 0.52

Tunisia 0.00 0.00 0.72 1.88 0.30 0.00 0.30

Bahrain 0.00 0.00 2.83 40.24 0.17 0.00 0.17

Qatar 7.00 15.52 16.84 31.56 0.87 -1.34 -0.46

Saudi Arabia 31.72 28.22 30.27 64.53 0.80 -8.04 -7.24

Cash and Cash Equivalents

2.24 68.20 0.00 0.00 -1.07 -0.01 -1.09

Total 100.00 43.60 100.00 39.15 0.81 3.64 4.45

3346

Franklin MENA Fund

38


Performance Attribution by Country

Franklin MENA Fund

39

The Ten Largest Holdings represent the ten largest holdings of the fund as of the date indicated. These securities do not represent all of the securities purchased, sold or recommended for advisory clients, and the reader should not assume that

investment in the securities listed was or will be profitable. All portfolio holdings are subject to change.

Holdings of the same issuer have been combined.

The portfolio manager for the fund reserves the right to withhold release of information with respect to holdings that would otherwise be included in the top 10 holdings list.


Name of Issuer Country Industry % of Total

National Bank of Kuwait K.S.C. Kuwait Banks 9.15

Al Rajhi Bank Saudi Arabia Banks 7.32

Samba Financial Group Saudi Arabia Banks 4.81

Emirates NBD Bank (P.J.S.C) United Arab Emirates Banks 4.53

DP World PLC United Arab Emirates Transportation 3.67

Abu Dhabi Commercial Bank United Arab Emirates Banks 3.55

Emaar Malls PJSC United Arab Emirates Real Estate 3.38

NMC Health PLC United Arab Emirates Health Care Equipment & Services 2.82

Commercial International Bank (Egypt) SAE Egypt Banks 2.54

Gulf Bank K.S.C. Kuwait Banks 2.51

Total 44.26

Top Ten Holdings

Franklin MENA Fund

As of 30 June 2019

Franklin MENA Fund


As of 30 June 2019

Franklin MENA Fund

40

Portfolio Characteristics

Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.

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 the security level, not aggregated up to the main issuer.

Source: FactSet. Price Ratio calculations for the weighted average use harmonic means. Any exceptions to this are noted. The IBES Estimated 3-5 Year EPS Growth uses simple weighted average means; there can be no assurance that the

estimated figure will be realised. Market capitalisation statistics are indicated in the base currency for the portfolio presented.



Portfolio Index

Historical 3 Yr Sales Growth 13.53% 12.01%

Estimated 3-5 Yr EPS Growth 12.00% 7.02%

Price to Earnings (12-mo Forward) 11.49x 12.62x

P/E to Growth 1.07x 1.56x

Price to Earnings (12-mo Trailing) 13.07x 13.17x

Price to Cash Flow 8.51x 8.20x

Price to Book 1.76x 1.75x

Market Capitalisation (Millions USD) 10,509 21,904

Market Capitalisation Breakdown in USD Portfolio %

<2.0 Billion 36.97

2.0-5.0 Billion 13.23

5.0-10.0 Billion 14.93

10.0-25.0 Billion 25.54

25.0-50.0 Billion 9.33

Franklin MENA Fund

41

Discrete Performance

Discrete Annual Performance (%)

Inception

Date

06/18

06/19

06/17

06/18

06/16

06/17

06/15

06/16

06/14

06/15

Franklin MENA Fund - A (acc) USD—Net of Fees 16.6.2008 3.76 12.70 15.41 -24.11 0.72

S&P Pan Arab Composite Large Mid Cap KSA Capped at 30% Index 13.21 10.56 15.10 -16.41 -2.20

All performance data shown is in the Fund currency stated and net of management fees. Sales charges and other commissions, taxes and other relevant costs paid by the investor are not included in the calculations.

Performance data may represent blended share class performance, e.g., hybrid created from an A (dis) share class which was converted to A (acc).


When performance for either the portfolio or its benchmark has been converted, different foreign exchange closing rates may be used between the portfolio and its benchmark.

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. Past performance is not an indicator

or a guarantee of future performance. Current performance may differ from figures shown. Currency fluctuations may affect the value of overseas investments. When investing in a fund

denominated in a foreign currency, performance may also be affected by currency fluctuations. Please visit www.franklinresources.com/countries for current performance.



As of 30 June 2019

Annualised Total Returns (%)

Inception

Date 1 Yr 3 Yrs 5 Yrs 10 Yrs

Since

Incept

Franklin MENA Fund - A (acc) USD—Net of Fees 16.6.2008 3.76 10.52 0.62 5.41 -2.96

S&P Pan Arab Composite Large Mid Cap KSA Capped at 30% Index 13.21 12.16 2.89 5.97 -0.39

Franklin MENA Fund

Historical Performance


As of 30 June 2019









42

Cumulative Performance (%)

Inception

Date 1 Mth 3 Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs

Since

Incept

Franklin MENA Fund - A (acc) USD—Net of Fees 16.6.2008 1.13 1.13 11.66 3.76 34.96 3.16 69.33 -28.20

S&P Pan Arab Composite Large Mid Cap KSA Capped at 30% Index 2.23 2.87 11.57 13.21 41.06 15.33 78.61 -4.21

Franklin MENA Fund

43









Calendar Year Returns


As of 30 June 2019

YTD 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

-17%

-4%

9%

22%

35%

11.66

11.57

2.39

11.59

12.75

3.93

-5.43

9.08

-11.03 -14.19

9.06

5.58

34.00

24.87

8.11

6.97

-15.35 -12.66

18.14

19.91

2.19

13.65

S&P Pan Arab Composite Large Mid Cap KSA Capped at 30% IndexFranklin MENA Fund - A (acc) USD—Net of Fees

Franklin MENA Fund

44

The base currency of a fund determines the risk-free rate index used in calculating certain risk statistics on this page. A fund that is based in USD uses the US T-Bill Index as the risk free rate return, a EUR-based fund uses the Euro 3-Month T-Bill

Index, a GBP-based fund uses the UK Treasury Bills 3 Month Index, a JPY-based fund uses the Japan Financing Bill 3 Month Index, and an AUD-based fund uses the Australia T-Note 3 Month Index.


^^Measured against the Hybrid: MSCI Arabian Markets SA Capped 20% until 29 September 2010 then S&P Pan Arab Composite Large Mid Cap KSA Capped at 30%.

*Annualised.



As of 30 June 2019

Performance Risk Statistics

1 Yr 3 Yrs* 5 Yrs* 10 Yrs*

Standard Deviation (%):

Franklin MENA Fund - A (acc) USD 11.62 9.38 14.33 14.05

Hybrid: MSCI Arabian Markets SA Capped 20% until 29

September 2010 then S&P Pan Arab Composite Large

Mid Cap KSA Capped at 30%

9.31 7.87 12.40 12.77

Tracking Error (%)^^ 6.05 5.13 6.10 5.57

Information Ratio^^ -1.56 -0.32 -0.37 -0.10

Beta^^ 1.07 1.00 1.05 1.01

Sharpe Ratio 0.13 0.97 -0.02 0.35


Performance Risk Statistics

Source: FactSet, S&P. Important data provider notices and terms available at www.franklintempletondatasources.com.Past performance is not an indicator or a guarantee of future performance.

Capitalising on MENA Stock OpportunitiesTop 10 Contributors to Performance (Relative to the Benchmark Index)12-Month Period Ended 31 March 2019

0.71 0.83

2.02

4.27

8.48

1.752.22

3.90

1.66

0.120.00 0.00 0.22

1.46

5.73

0.580.19

2.34

0.07

2.11

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

Cleopatra HospitalCompany

Cairo Investment &Real Estate

Development

Egypt KuwaitHolding Co. SAE

Samba FinancialGroup

Al Rajhi Bank Qatar GasTransport Co.

Bupa Arabia forCooperative

Insurance Co.

NationalCommercial Bank

CJSC

Juhayna FoodIndustries

Emaar Properties(P.J.S.C)

Secu

rity W

eight

Cleopatra Hospital Company

Cairo Investment & Real Estate

Development

Egypt Kuwait Holding Co. SAE

Samba Financial Group Al Rajhi Bank Qatar Gas

Transport Co.

Bupa Arabia for Cooperative

Insurance Co.

National Commercial Bank

CJSC

Juhayna Food Industries

Emaar Properties (P. J. S. C.)

Total Return 93.96 75.10 65.85 51.32 44.81 44.71 33.74 26.90 21.16 9.85

Average Fund Weight Average Index Weight

The stock allocation of Franklin MENA Fund differs greatly from its benchmark.

3042

Franklin MENA Fund

45


The Active Management Advantage

46

Appendix

Franklin MENA Fund


1. Includes individuals that are not employees of Franklin Resources, Inc. (FRI) or wholly owned subsidiaries of FRI. However, these individuals are part of our joint venture or strategic partnership relationships worldwide and are an integral component of our overall fixed income research efforts.2. This unit is comprised of investment professionals located in affiliates of and joint venture partners with Franklin Templeton Investments. 3. Includes the Templeton Global Equity Group and the Templeton Emerging Markets Equity Group.As of 31 March 2019.

4711

174 Global Fixed Income Professionals:■ Global Fixed Income Offices

♦ Fixed Income Local AssetManagement (LAM) Offices2

121 Global Equity Professionals: Global Equity Offices3

Cape Town

Fort Lauderdale

♦ Buenos Aires

■ San Mateo

■ New York

Toronto

Edinburgh

■ London Bucharest

♦ Dubai Istanbul

Vienna

♦ Mumbai

♦ São Paulo

Rio de Janeiro♦ Kuala Lumpur

Ho Chi Minh City

♦ Seoul

♦Shanghai1 Hong Kong

♦ Melbourne

■ Singapore

Bangkok

♦ Calgary

♦ Mexico City Nassau

♦ Warsaw Frankfurt

♦ Hyderabad

Chennai

Franklin MENA Fund

47


Access to a Worldwide Network of Research, Trading and Risk Professionals

3040

ANALYST MEETINGS

• Weekly• Review of company models, assumptions

and analysis• Review PM/analyst stock recommendations

STRATEGY MEETINGS

• Weekly• Market performance review• Analysis of market trends• Asset allocation review

INVESTMENT COMMITTEE MEETINGS

• Monthly• Performance review/attribution• Risk and compliance review• General investment theme discussion

WEEKLY

MONTHLY

OUTPUT/RESULT

• Company investment note• Decision on inclusion/exclusion of

companies in portfolio

• Weekly portfolio allocation sheet (decisions on allocation and rationale)

• Monthly strategy note• Investment Committee meeting

documents

Franklin MENA Fund

48


Decision-Making Forums

MENA Research Portal• All proprietary research found on

FT MENA Research Portal

• Preserves our intellectual capital

• Streamlines workflow between analysts and PM in different locations

• Quick filter, search and drill down into all company/macro research

• Full and easy access to entire research history and analyst recommendation of all coverage securities

• Access to research via Email/Portal/App

• Live up to date alerts notify PM’s of any research/recommendation change

Source: © 2016 FactSet Research Systems Inc. All Rights Reserved. The information contained herein: (1) is proprietary to FactSet Research Systems Inc. and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither FactSet Research Systems Inc. nor its content providers are responsible for any damages or losses arising from any use of this information.Past performance is not an indicator or a guarantee of future performance.

4561

Franklin MENA Fund

49


Robust Research Infrastructure

Source: © 2016 FactSet Research Systems Inc. All Rights Reserved. The information contained herein: (1) is proprietary to FactSet Research Systems Inc. and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither FactSet Research Systems Inc. nor its content providers are responsible for any damages or losses arising from any use of this information.Past performance is not an indicator or a guarantee of future performance.

4562

MENA Market Analytics

• All FT Analyst forecasts are incorporated into technology platforms

• Allows scalability for future growth and technology changes

• View research alongside live market data

• Compare analyst forecasts/recommendations against consensus and other analysts

• Aggregate proprietary company forecasts and metrics to get in-house market/country metrics

Franklin MENA Fund

50


Proprietary Market Analytics

These case studies represent certain examples of the investment manager’s best-performing investments; other investments made by the investment manager, which were not as successful or that lost money, are not shown. The investments may or may not be currently held by portfolios managed by the investment manager. The case studies are not representative of the overall performance of the portfolios managed by the investment manager as is demonstrated by those portfolios’ past performance numbers. These case studies are being shown only as examples of what the investment manager is seeking to achieve in managing the portfolio, but are not necessarily indicative of what has actually been achieved with all of the investments or will be achieved going forward. This is not a complete analysis of every material fact regarding an industry, security or investment and should not be viewed as an investment recommendation. The actions taken with respect to these investments, and their performance, may not be representative of other advice or investments. Factual statements are taken from sources considered reliable, but have not been independently verified for completeness or accuracy by the fund’s manager or its affiliates. These opinions may not be relied upon as investment advice or an offer for a particular security or as an indication of trading intent for any portfolio.1. April 2013.Past performance is not an indicator or a guarantee of future performance.

3043

World’s Largest Ceramics Manufacturer

Business Model Financials Valuation

World’s Largest Ceramics Manufacturer• Annual production capacity of ceramic tiles:

117 million sqm• 20 million (4.5 million) pieces of tableware

(bath ware)

Huge Distribution Network• Offers the widest range of products to its

end-users in over 160 countries

Benefits from Economies of Scale• Consistently produces high-quality products

at lower unit costs in 10 manufacturing facilities (5 in UAE and 1 each in Bangladesh, China, India, Iran and Sudan)

Strong Balance Sheet• High dividend payout ratio of 50% led to

a yield in excess of 12%1

Significant Shareholder Value Creation• Focus on research and development

has strengthened brand positioning and recognition as the company continuously introduces industry firsts such as luminous, anti-microbial and anti-slip tiles

Overlooked by the Market• Falling into the small- to mid-cap space

with zero sell-side coverage, the company traded at 4.6x price earnings and 0.58x price to book

Upside Potential on Total Return• Our ROIC-based DCF valuation showed

upside in excess of 130%

High Return on Invested Capital• The enterprise value/replacement cost

of the company’s capacity was at an unjustifiable 0.7x, exceeding its cost of capital

Franklin MENA Fund

51


Case Study: RAK Ceramics

BASSEL KHATOUNManaging Director, Director of Portfolio Management Frontier and MENAFranklin Templeton Emerging Markets EquityFranklin Templeton Investments (ME) LtdDubai, United Arab Emirates

Bassel Khatoun is the Managing Director, Director of Portfolio Management for Frontier and MENA at Franklin Templeton Investments.

Mr. Khatoun is responsible for the investment process, research and performance of the Frontier and MENA team. He is a portfolio manager for the Templeton Frontier Markets Fund and the Franklin MENA Fund. Mr. Khatoun is a member of the Emerging Markets Equity management committee which setsthe overall strategy for the group, provides guidance and thought leadership, coordinates appropriate resources and coverage, and leverages the group's expertise to add value across its products. He is a board member of Franklin Templeton Investments (ME), formerly Algebra Capital, and has been with the firm since 2007.

He joined Algebra Capital in April 2007 as an equity portfolio manager and was an integral member of the team. During his employment at Algebra Capital, Mr. Khatoun was involved in the establishment of the firm's flagship equity funds and was a member of the Equity Investment Committee.

Prior to this, Mr. Khatoun worked in the investment banking division of Citigroup in London, where he was involved in a range of mergers and acquisitions and corporate finance transactions across the European and emerging markets financial institutions sector.

Mr. Khatoun holds a B.A. degree with 1st class honors in Philosophy, Politics and Economics (PPE) from Oxford University. He is FSA registered in the U.K.

Franklin MENA Fund


52

Management Profile

PURAV A. JHAVERI, CFA, FRMManaging DirectorInvestment Strategy/Portfolio ManagerFranklin Templeton InvestmentsSan Mateo, California, United States

Purav A. Jhaveri is a managing director - investment strategy/portfolio manager for Templeton Emerging Markets Group (TEMG) and Franklin Local Asset Management (LAM). He is responsible for supporting the investment functions of the locally managed and distributed products in Australia, Brazil, Canada, China, the Middle East and North Africa, Europe, India, Japan, Malaysia, Mexico, South Korea, Vietnam and the United Kingdom. Local asset management refers to the strategic investments that Franklin Templeton has made in local asset management companies around the world in order to leverage the expertise of well-qualified investment and financial services professionals who have first-hand knowledge of their domestic markets.

Mr. Jhaveri has been in the investment industry since 1994. Prior to serving in his current role, Mr. Jhaveri was a portfolio manager with Franklin Templeton's local asset management group in Mumbai, India and a research analyst with the Templeton Emerging Markets Group in Mumbai, India. Prior to joining FranklinTempleton, he was an investment advisor and research analyst at ANZ Grindlays Bank. He was previously with Unit Trust of India as a research analyst.

Mr. Jhaveri has an M.B.A. from The Wharton School of the University of Pennsylvania. He earned his master's in management from Narsee Monjee Institute ofManagement Studies, University of Bombay and his bachelor of commerce degree from Jaihind College, University of Bombay. Mr. Jhaveri has a Financial Risk Manager (FRM) certification from Global Association of Risk Professionals. He is a Chartered Financial Analyst (CFA) charterholder.

Franklin MENA Fund

Management Profile


53

SALAH SHAMMAHead of Investment-MENA EquityFranklin Templeton Emerging Markets EquityFranklin Templeton Investments (ME) LimitedDubai, United Arab Emirates

Salah Shamma is the head of Investment and portfolio manager at Franklin Templeton Investments (ME) Limited.

Mr. Shamma has been in the investment industry since 2002 and joined Algebra Capital in January 2007 as an equity portfolio manager. The firm is now known as Franklin Templeton Investments (ME) Limited, in the Middle East-North Africa (MENA) region. During his employment at Algebra Capital, Mr. Shamma was involved in the establishment of the firm's flagship equity funds and was a member of the Equity Investment Committee. Currrently, Mr. Shammais responsible for the investment process, research and performance of FTIME MENA equity team. He is the co-fund manager of the Franklin MENA Fund and Franklin Middle East and North Africa Fund. He is also a member of FTIME's Equity Investment Committee.

Prior to that, Mr. Shamma was with SHUAA Capital's Debt Asset Management department as co-fund manager of the first Arab bond fund (TAIF).

Mr. Shamma holds a B.A. in business with an emphasis on finance from the American University of Beirut.

Franklin MENA Fund

Management Profile


54

KARIM ABBAS, CFASenior Research AnalystMENA EquitiesFranklin Templeton Emerging Markets EquityFranklin Templeton Investments (ME) LimitedDubai, United Arab Emirates

Karim Abbas is a senior research analyst at Franklin Templeton Investments (ME) Limited and has over seven years of relevant investment experience in the region. Mr. Abbas is a member of FTIME's Equity Investment Committee and is currently focused on analyzing investment opportunities in Kuwait and Jordan.

Mr. Abbas joined Algebra Capital as an analyst in May 2008 and was a member of the Equity Investment Committee. The firm is now known as Franklin Templeton Investments (ME) Limited, in the Middle East-North Africa (MENA) region. His work has involved preparing strategy presentations, macro-economicmodels and performance attribution reports.

Mr. Abbas holds a B.A., with honors, in business administration with an emphasis in finance from the American University of Beirut. He is also a Chartered Financial Analyst (CFA) Charterholder.

Franklin MENA Fund

Management Profile


55

KARIM ABBAS, CFASenior Research AnalystMENA EquitiesFranklin Templeton Emerging Markets EquityFranklin Templeton Investments (ME) LimitedDubai, United Arab Emirates

Karim Abbas is a senior research analyst at Franklin Templeton Investments (ME) Limited and has over seven years of relevant investment experience in the region. Mr. Abbas is a member of FTIME's Equity Investment Committee and is currently focused on analyzing investment opportunities in Kuwait and Jordan.

Mr. Abbas joined Algebra Capital as an analyst in May 2008 and was a member of the Equity Investment Committee. The firm is now known as Franklin Templeton Investments (ME) Limited, in the Middle East-North Africa (MENA) region. His work has involved preparing strategy presentations, macro-economicmodels and performance attribution reports.

Mr. Abbas holds a B.A., with honors, in business administration with an emphasis in finance from the American University of Beirut. He is also a Chartered Financial Analyst (CFA) Charterholder.

Franklin MENA Fund

Management Profile


56

Glossary

Franklin MENA Fund

57


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%.

Estimated 3-5 Yr EPS Growth: An estimated measure of the growth of earnings per share over a forward-looking period. For a portfolio, the value represents a weighted average of

the stocks it holds.

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 Capitalisation: A determination of a company's value, calculated by multiplying the total number of company stock shares outstanding by the price per share.

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.

Price to Book: 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 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.

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 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.

Important Disclosures

Franklin MENA Fund


58

This document is intended to be of general interest only and does not constitute legal or tax advice nor is it an offer for shares or invitation to apply for shares of the Luxembourg-domiciled

SICAV Franklin Templeton Investment Funds (the “Fund”). Nothing in this document should be construed as investment advice.

Subscriptions to shares of the Fund can only be made on the basis of the current prospectus of the Fund, accompanied by the latest available audited annual report and the latest semi-annual

report if published thereafter. An investment in the Fund entails risks which are described in the Fund's prospectus.

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. Past performance is not an indicator or a

guarantee of future performance. 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 and are more

fully described in the Fund’s prospectus. If the fund invests in a specific sector or geographical area, the returns may be more volatile than a more diversified fund.

No shares of the Fund may be directly or indirectly offered or sold to residents of the United States of America. Shares of the Fund are not available for distribution in all jurisdictions and

prospective investors should confirm availability with their local Franklin Templeton Investments representative before making any plans to invest.

Opinions expressed are the author’s at publication date and they are subject to change without prior notice. Any research and analysis contained in this document has been procured by Franklin

Templeton Investments for its own purposes and is provided to you only incidentally.

A copy of the latest prospectus, the annual report and semi-annual report, if published thereafter can be found, on our website: www.franklintempletongem.com or can be obtained, free of

charge, from the address below.

Issued by Franklin Templeton Investments (ME) Limited, authorized and regulated by the Dubai Financial Services Authority.

Dubai office: Franklin Templeton Investments, The Gate, East Wing, Level 2, Dubai International Financial Centre, P.O. Box 506613, Dubai, U.A.E., Tel.: +9714-4284100 Fax:+9714-4284140.

References to indices are made for comparative purposes only and are provided to represent the investment environment existing during the time periods shown. 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.

© 2019 Franklin Templeton Investments. All rights reserved.

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges.

Important Disclosures (continued)

Franklin MENA Fund


59

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.

Documents

Franklin MENA Fund