PORTFOLIO SUMMARY WHERE ACTIVE MANAGEMENT AIMS TO DRIVE ... · Where Active Management Aims to Drive Alpha ... transformation from the plain-vanilla ... is offset by strong export

WHERE ACTIVE

MANAGEMENT

AIMS TO DRIVE

ALPHA GENERATION Templeton Emerging Markets Small

Cap Fund – Advisor Class (TEMZX)

As of June 30, 2017

PORTFOLIO SUMMARY

For Financial Professional Use Only / Not for Distribution to the Public

Franklin Retirement Payout Funds March 31, 2016

In contrast to the slow growth in developed markets,

investing in emerging markets may offer a passport to

abundant opportunities in a high-growth market. But, we

think finding the right opportunities and understanding the

associated risks takes more effort and know-how than

traditional developed markets.

Tap into a Vast, Under-Researched

Investment Universe

The emerging market small cap asset class includes over 20,000

companies, an aggregate marketing capitalization of $5.2 trillion1 and is

largely overlooked by research analysts.2

Navigate the Terrain with a Proven

Emerging Markets Pioneer

Templeton Emerging Markets Group opened its first research office in

Hong Kong in 1987, and our global network of research offices now

spans 20 countries. Today, we are located in countries representing

87% of the world's GDP.3

A Distinct Approach,

Our Active Share Score:4 96

The on-the-ground investment in understanding the local markets

at both a macro and micro level distinguishes Templeton’s approach

from others.

Today, the Templeton Emerging Markets Small Cap Fund—Advisor

Class (TEMZX) seeks to provide long-term capital appreciation by

uncovering opportunities with a value tilt through deep, on-the-ground

emerging market small cap research.

TEMPLETON EMERGING MARKETS SMALL CAP FUND

Where Active Management Aims to Drive Alpha Generation

Our Investment Approach

Outcome of Our

Research Expertise

Strategy In Action

Active Investment Selection

Risk And Reward

Portfolio Fit

Allocating to Emerging

Markets Small Cap

Templeton Emerging

Markets Group

Not FDIC Insured | May Lose Value | No Bank Guarantee

Where Active Management Aims to Drive Alpha Generation 1

Topics Covered

1. Source: Bloomberg, as of June 30, 2017. Listed companies under $2 billion market cap size.

2. Source: Bloomberg, as of June 30, 2017. EM small caps represented by the MSCI EM Small Cap Index. Emerging markets represented by the MSCI Emerging Markets Index. For illustrative and discussion purposes only. Negligible research coverage is defined as stocks having one or no research recommendations.

3. Based on information from the International Monetary Fund, World Economic Outlook Database, April 2017. Dates indicate date of establishing presence via an office opening or acquisition of a stake in a joint venture.

4. Source: © 2017 Morningstar as of June 30, 2017. The Active Share Score represents the portion of stock holdings in an actively managed fund that differs from its benchmark index. Active share scores range from 0 to 100. An active share score of 0 indicates a portfolio that is identical to its primary benchmark index, while an active share score of 100 represents a portfolio composition that holds no overlapping positions. Different position allocation amounts contribute to active share score and are subject to change. A high active share score does not guarantee positive fund performance, or that a fund will outperform its benchmark index.



OUR INVESTMENT APPROACH

Gain a thorough understanding of macro and

micro drivers in emerging markets

Templeton Emerging Markets Group is known for its disciplined,

yet flexible, long-term approach to finding undervalued stocks

derived from 30 years of experience. We seek to determine the

underlying value of a business, estimate what that company’s

assets can generate in earnings and cash flow and have the

patience to follow our convictions based on fundamentals, not

market noise. Stock selection drives our portfolio investment

process, reflecting the most compelling opportunities we see.

Starting with an investment universe of more than 23,000 small

cap stocks, we filter out companies that don't meet our basic

criteria for valuation, profitability and organic growth. Given the

varying drivers of stock performance in each country, our analysts

scrutinize the integrity and quality of a country by conducting a

“Country Entry Study” focused on the following:

• Regulatory, accounting standards and taxes

• Banking, monetary, fiscal transparency and foreign

exchange controls

• Compliance to legal framework

• Custodial establishments: registration, trade,

and settlement procedures

• Foreign investment limitations

• Conformity with environmental, social and governmental

(ESG) norms

Our team conducts rigorous analysis to determine whether a stock

is trading at a substantial discount to what our research indicates

the company is worth over a normalized five-year investment

horizon, specifically with regards to price-to-earnings (P/E),

price-to-cash-flow (P/CF), price-to-book-value (P/BV), debt/equity,

and dividend yield. The result is a diversified portfolio of 100–150

securities that is continuously monitored to ensure the fund

reflects our strongest convictions. General characteristics of the

fund include:

• 5-Year Investment Horizon

• 1–6% average stock weighting, with a flexible maximum of 10%

• Average 5%–10% sector allocation, with a typical minimum and

maximum range of 0% to 35%

• Single country allocation typically ranging from 0% to 25%

• Sector and geographic diversification

• Unhedged currency exposure


Templeton Emerging Markets Global Presence

Our local presence

enables analysts to

conduct 2,000–2,500

in-person company

visits per year.

WARSAW

SAN MATEO

MEXICO CITY

RIO DE JANEIROHONG KONG

FRANKFURT

MUMBAI

KUALA LUMPUR

SEOUL

DUBAI

LONDON

HO CHI MINH CITY5

BUENOS AIRES

SINGAPORE

VIENNA

BUCHAREST

MOSCOW

BANGKOK

CAPE TOWN

ISTANBUL

SHANGHAI5

5. Joint venture partners with Franklin Templeton Investments.

This is a general depiction of Templeton’s methodology and may not reflect the exact methodology for selecting eligible investments for this particular portfolio.



0

5

10

15

20

25

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD

TEMZX

MSCI Emerging Markets Small Cap Index

Return on Equity Consistently Outperformed

the Fund’s Benchmark

As of June 30, 2017


TEMZX Index

Data Data

# of Securities 134 1,842

Market Capitalization (Millions USD) 1,966 1,277

Active Share Score 96.2 –

Price/Earnings (12-mo. Trailing) 13.4x 20.7x

P/E using FY1 Estimate 13.5x 13.3x

P/E using FY2 Estimate 12.1x 11.6x

Estimated 3-5 Yr. EPS Growth 16.8x 16.2x

Price/Cash Flow 10.4x 8.0x

Price/Book 1.8x 1.5x

Price/Sales 1.3x 0.8x

ROE 16.6 11.9

Emphasis on attractive valuation, strong

cash flow, and low financial leverage

Evaluating the fund and benchmark characteristics, TEMZX has

a lower 12-month trailing P/E ratio, and stronger estimated 3–5 year

earnings per share (EPS) growth and return on equity (ROE).

We prefer companies with low leverage and strong cash flow, which

may provide a relative margin of safety during periods of credit

shortage. Compared to the benchmark, the fund’s lower long-term

debt to total capital ratio indicates our portfolio companies are less

reliant on long-term debt for permanent financing.

OUTCOME OF OUR RESEARCH EXPERTISE

Portfolio Characterisitcs

TEMZX vs MSCI EM Small Cap Index

Period Ended June 30, 2017

TEMZX posted lower long-term debt to

capital ratios over the majority of the past

10 years than the emerging markets and

emerging markets small cap indexes.

0x

5x

10x

15x

20x

25x

30x

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD

TEMZX

MSCI Emerging Markets Small Cap Index

MSCI Emerging Markets Index

Focus on Quality Companies: Lower Debt

Long-Term Debt/Capital Ratio

As of June 30, 2017

Source: FactSet and MSCI.



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 that 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. Price to Earnings (12-mo. Trailing) measures the current price to earnings ratio (P/E) relative to the trailing 12 tmonths of reported earnings. Price to Earnings, Price to Cash Flow, Price to Book Value and Price to Sales calculations for the weighted average use harmonic means. Values less than 0.01 (i.e., negative values) are excluded and values in excess of 200x are capped at 200x. Yields above 100% are also excluded. For the benchmark (if applicable), no limits are applied to these ratios in keeping with the benchmark’s calculation methodology. Market capitalization statistics are indicated in the base currency for the portfolio presented. 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.

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



STRATEGY IN ACTION

The business landscape of emerging markets has undergone a

transformation from the plain-vanilla business models of the past in

infrastructure and commodities to a new generation of innovative

companies moving into technology and higher value-added goods

and services. The investments below illustrate our investment

process, our local market knowledge and deep due diligence.

MEDY-TOX

Korean Botox Producer

Sector: Health Care

BAJAJ HOLDINGS & INVESTMENTS

Indian Autos and Finance

Sector: Financials

Opportunity: Re-rating and rising turnover

Despite the holding company being a dominant local brand,

Medy-Tox was off-benchmark and under researched in 2009.

Templeton’s team of analysts uncovered its intrinsic value and

invested in the company.

Medy-Tox is one of few companies globally to produce Botox

products, for both medical and cosmetic purposes. Its sales have

grown to over 30% of Korean market share, but only 3% globally.

In order to enter the international market, Medy-Tox has a

licensing agreement with the largest Botox product maker, U.S

company Allergan, which holds 75% of the global market share.

Allergan plans to distribute the next generation of Medy-Tox

products in developed countries once commercialized, with a

projected timeframe of 2017/2018. The company is expanding

capacity with their third factory to be completed in 2019.

Opportunity: Diversified exposure

Bajaj Holdings offers exposure to India's growing consumerism,

covering the auto, insurance, and financial services sectors. The

holding company has primary interests in Bajaj Auto and Bajaj

Finserv, which finances purchase of its own autos and other

consumer goods.

Templeton Emerging Markets Group purchased the security in 2012

when it was trading at nearly a 50% discount to net asset value

(NAV). Our research indicated the weakness in domestic auto sales

is offset by strong export growth in two and three wheelers, primarily

to Africa.

Along with its growth into consumer goods, Bajaj Finserv is

increasing margins through its microlending in rural India. It has

a conservative loan book with nonperforming assets of 0.55%.

However, a slowdown in Nigeria and Egypt has impacted the

exports of Bajaj Auto.


The portfolio held 3.42% of total net assets in Bajaj Holdings and Investments and 1.65% of Medy-Tox, respectively, as of June 30, 2017.

This is not a complete analysis of every material fact regarding an industry or security. The actions taken with respect to this stock, and its

performance, may not represent other advice or investments of the Templeton Emerging Markets Group. It should not be assumed that any

securities transactions were or will be profitable. The analysis and opinions of the security discussed herein may change at any time. There is

no assurance that any security purchased will remain in the fund’s portfolio, or that any security sold will not be repurchased. Factual

statements are from sources deemed reliable, but have not been independently verified for completeness or accuracy. These opinions may

not be relied upon as investment advice or recommendations or an offer for a particular security or as an indication of trading intent for any

Franklin Templeton fund.



Distinctly Different than the Benchmark

The top 10 contributors to performance underscore our commitment

to active management. For the five-year period, several top

contributors were not included in the benchmark index and

all contributors were overweight. Our deep, on-the-ground research

allows us to identify potential opportunities a rules-based algorithm

may not be able to recognize. The majority of our top 10 detractors

represented less than 1% of the portfolio.


0.00%

1.00%

2.00%

3.00%

Federal Bank Bajaj Holdings & Investment

Limited

J.K. Cement Ltd. AmorePacific Group, Inc.

Hartalega Holdings Bhd.

Balkrishna Industries Limited

ING Vysya Bank Limited

Vieworks Co., Ltd. Travelsky Technology

Beauty Community PCL

Fu

nd

/Ind

ex W

eig

ht

Average Fund Weight Average Index Weight

ACTIVE INVESTMENT SELECTION

Top 10 Performance Contributors By Average Fund Weight


5-Year Period Ended June 30, 2017

0.00%

1.00%

2.00%

3.00%

4.00%

Pinar Sut Mamulleri Sanayii

Reysas Gayrimenkul

Yatirim Ortakligi

DSG International Thailand

Work Service Bizim Toptan Satis Magazalari

Nostrum Oil & Gas Cia Hering Dixy Group Express Transindo Utama

O'Key Group

Fu

nd

/Ind

ex W

eig

ht

Average Fund Weight Average Index Weight

Top 10 Performance Detractors By Average Fund Weight


5-Year Period Ended June 30, 2017

Total Return 135.36% 127.30% 439.05% 390.00% 206.82% 487.54% 140.28% 562.93% 242.00% 464.91%

Total Return -28.67% -17.06% -60.52% -42.71% -78.65% -71.21% -63.54% -73.32% -93.60% -79.89%

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 investors may have a gain or a loss when

they sell their shares. Please call Franklin Templeton Investments at (800) DIAL BEN/(800) 342-5236 or visit franklintempleton.com for the

most recent month-end performance.

Holdings of the same issuer have been combined. 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. The information provided is not a recommendation to purchase, sell, or hold any particular security. The securities identified do not represent the fund’s entire holdings and in the aggregate may represent only a small percentage of such holdings. There is no assurance that securities purchased will remain in the fund or that securities sold will not be purchased. In addition, it should not be assumed that any securities transactions discussed were or will prove to be profitable. The portfolio manager for the fund reserves the right to withhold release of information with respect to holdings that would otherwise be included.



RISK AND REWARD

Risk management aims to provide consistency

and compliance

Investors may be concerned about the risks associated with investing

in a lesser-known asset class. We define risk in three ways and aim to

address each of those risks through our investment selection process:

• Stock-specific risk, reflecting those risks that are connected to

individual stocks such as market risk and non-market risk. We

seek to manage stock-specific risk through detailed, in-depth

analysis and in-person meetings with company management.

• Portfolio risk, or the risks associated with inadequate

diversification and lack of adherence to a disciplined portfolio

construction process. Our portfolio management process

includes several forms of risk controls. To seek consistency and

broad diversification, we monitor geographic and sector

exposures as well as individual position sizes.

• Operational risk, or the possibility of loss resulting from failed

internal processes. Franklin Templeton has a large portfolio

compliance team, dedicated performance analysis and

investment risk group, and sophisticated risk management

systems to monitor the risk level of all trades and prevent

prohibited transactions.

Track record of superior returns with

competitive risk

Looking at the average annualized total returns as of June 30,

2017, the fund outperformed its benchmark while maintaining a

competitive standard deviation and higher Sharpe ratio.

The relatively strong downside capture ratios indicate the fund

captured a lower proportion of the losses during periods of negative

returns of the benchmark.

5-Year Risk and Return

June 30, 2012–June 30, 2017


Source: Morningstar and MSCI.

Source: Morningstar and MSCI.

Effective 10/2/06, the fund began offering Advisor Class shares. For periods prior to the fund's Advisor Class inception date, a restated figure is used based on the fund's oldest share class, Class A performance, excluding the effect of Class A's maximum initial sales charge but reflecting the effect of the Class A Rule 12b-1 fees; and for periods after the fund's Advisor Class inception date, actual Advisor Class performance is used, reflecting all charges and fees applicable to that class.

As of June 30, 2017 Average Annual

Total Returns (%)

Standard

Deviation

Sharpe

Ratio

Downside

Capture (%)

Upside

Capture (%)

1-Year 3-Year 5-Year 10-Year 1-Year 3-Year 5-Year 10-Year 1-Year 3-Year 5-Year 10-Year 1-Year 3-Year 5-Year 10-Year 1-Year 3-Year 5-Year 10-Year

TEMZX 21.02 3.87 8.45 2.88 3.07 12.01 11.68 23.98 0.50 0.35 0.73 0.22 122.95 67.49 66.54 89.04 120.73 82.82 88.84 90.72

MSCI Emerging Markets

Small Cap Index17.34 1.10 5.46 2.46 2.65 14.50 13.34 24.86 0.48 0.13 0.45 0.21 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

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 investors may have a gain or a loss when

they sell their shares. Please call Franklin Templeton Investments at

(800) DIAL BEN/(800) 342-5236 or visit franklintempleton.com for the

most recent month-end performance.

Advisor Class shares are only offered to certain eligible investors as stated in the prospectus. They are offered without sales charges or Rule 12b-1 fees. The fund offers multiple share classes subject to different fees and expenses that will affect their performance. Please see the prospectus for details.

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 July 31, 2018. Fund investment results reflect the fee waiver; without this waiver, the results would have been lower.

Total Annual Operating Expenses

With Waiver 1.73% Without Waiver 1.74%TEMZX

0

4

8

12

0 4 8 12 16 20

An

nu

aliz

ed R

etu

rn (

%)

Standard Deviation (%)


Small Cap Index

MSCI Emerging

Markets Index



PORTFOLIO FIT

EM small cap may complement existing

emerging markets exposure

Reflecting on the general long-term success of emerging markets,

as global economies and as an equity asset class, most of these

countries have become ever more integrated into the world

economy. Consequently, their largest and most successful

companies have often expanded beyond domestic markets to

export and invest globally.

By contrast, EM small caps offer the very exposures that enticed

many investors to emerging markets in the first place, with domestic

demand, favorable demographics, local reform initiatives and

innovative niche products often being the primary determinants of

growth. The sectors to which EM small caps investors are exposed

differ notably from those of larger-capitalization stocks, as shown below.

EM small cap exposures are concentrated in higher-growth sectors,

such as consumer discretionary and health care. Such companies

are typically more locally focused and many are relatively dominant

players in smaller industries. The most successful EM small caps will

leverage such local strength to expand internationally, supporting

their transition into mid-or even large-cap companies over time.


Broad Geographic Exposure

As of June 30, 2017

Country TEMZX


Small Cap (%)

India 18.27 13.96

China 10.25 20.42

South Korea 10.01 16.38

Taiwan 8.98 17.91

Turkey 4.88 1.16

Vietnam 3.50 0.00

Hong Kong 3.40 0.00

Russia 3.24 0.64

Poland 2.86 1.25

Brazil 2.85 4.46

Egypt 2.63 0.38

Thailand 2.51 3.67

Malaysia 2.00 3.32

Mexico 1.85 3.06

Sri Lanka 1.82 0.00

Czech Republic 1.61 0.12

Indonesia 1.42 2.45

United States 1.42 0.00

United Arab Emirates 1.34 0.59

Philippines 1.22 1.07

Saudi Arabia 1.17 0.00

Switzerland 1.14 0.00

Pakistan 1.06 1.01

Georgia 1.03 0.00

Hungary 0.99 0.11

Fund Benchmark 10 morecountries are covered

by our fund than the

benchmark

Additional Templeton Emerging Market Small Cap holdings as of June 30, 2017: United Kingdom 0.81%, Peru 0.78%, Austria 0.75%, Chile 0.55%, Japan 0.43%, Botswana 0.23%, Nigeria 0.17%, Kuwait 0.04% and Cash & Cash Equivalents 4.79%. 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.

0 5 10 15 20 25

Utilities

Telecom Services

Energy

Real Estate

Materials

Industrials

Consumer Staples

InformationTechnology

Health Care

Financials

ConsumerDiscretionary

TEMZX MSCI Emerging Markets Index

Fund holds

11.5% more than

benchmark

Fund holds

11.3% more than

benchmark

Small Cap Exposure Targets High-Growth Sectors…

As of June 30, 2017

…And Offers Access to More Markets.

Source: FactSet and MSCI.Source: FactSet and MSCI.



ALLOCATING TO EMERGING MARKETS SMALL CAP

Rethinking the impact of volatility when investing

in EM small cap

It may be intuitive to think that investing in EM small caps would

generally produce higher volatility when compared to their mid- and

large-cap counterparts. In fact, we observed that generally the

opposite was true—allocating EM small cap to a balanced portfolio

resulted in comparable or less volatility relative to the same portfolio

with only broad EM exposure (see figures 1 and 2).

While individual EM small cap companies can indeed be very

volatile, the pairwise correlations of different EM small cap

companies can potentially be lower, in part due to the previously

discussed expansiveness and diversity of businesses within this

investment space—a Korean cosmetics stock is not impacted by

the same factors as an Indian automaker (refer to Strategy in Action

on page 4). This may potentially help to reduce risk at the asset-

class level.

To illustrate how our fund (TEMZX) may benefit your clients’

portfolios, we created a 60% equity/40% fixed income hypothetical

portfolio, where the initial portfolio had a 10% EM allocation,

represented by the MSCI Emerging Markets Index. In portfolio 2, we

replace 5% of the EM allocation with a 5% allocation to EM small cap,

represented by the MSCI Emerging Markets Small Cap Index. We

then substituted TEMZX in place of the 5% MSCI Emerging Markets

Small Cap Index allocation in portfolio 3.

Figure 1: Hypothetical 3-Year Allocation

As of June 30, 2017

Portfolios with TEMZX showed improved returns and lower volatilityin both three- and five-year periods.

Asset Class Portfolio 1 Portfolio 2 Portfolio 3

Fixed Income

High Yield Corporate Bonds 5.0% 5.0% 5.0%

US 30.0% 30.0% 30.0%

US TIPS 5.0% 5.0% 5.0%

Equity

US 35.0% 35.0% 35.0%

US Small Cap 5.0% 5.0% 5.0%

International 10.0% 10.0% 10.0%

Emerging Markets 10.0% 5.0% 5.0%

Emerging Markets Small Cap 0.0% 5.0% 0.0%

TEMZX 0.0% 0.0% 5.0%

Figure 2: Hypothetical 5-Year Allocation

As of June 30, 2017

Performance data represents past performance, which does not guarantee future results. Source: FactSet. All data as June 30, 2017. Fund data is based on Templeton Emerging Markets Small Cap Fund Advisor share class (TEMZX). 1. For the fixed income allocations, high yield corporate bonds are represented by the Bloomberg Barclays High Yield Corporate Index, US fixed income is represented by the Bloomberg Barclays US Aggregate Index, and US TIPS are represented by the Bloomberg Barclays US Treasury TIPS 0-5 Year Index. For the equity allocations, emerging markets equity is represented by the MSCI Emerging Markets Index, emerging markets small cap equity is represented by the MSCI Emerging Markets Small Cap Index, international equity is represented by the MSCI ACWI ex-US, U.S. equity is represented by the S&P 500 Index and U.S. small cap equity is represented by the Russell 2000 Index. All hypothetical portfolios are rebalanced monthly with the reinvestment of all dividends and capital gains.Each asset class is represented by an index with the longest performance history within that asset class. If these hypothetical portfolios included other indexes and/or asset classes not shown here, they may have provided outcomes more or less favorable than those shown within these illustrations.This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. Any investment products or services named herein are for illustrative purposes only and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. As a financial professional, only you can provide your customers with personalized advice and investment recommendations tailored to their specific goals, individual situation, and risk tolerance.Franklin Templeton does not provide legal or tax advice. Federal and state laws and regulations are complex and subject to change, which can materially impact results. FTDI cannot guarantee that such information is accurate, complete or timely; and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.

Hypothetical Portfolios (60% Equity/40% Fixed Income)1

5.00%

5.25%

5.50%

6.00% 6.25% 6.50% 6.75% 7.00%

Portfolio 3

with 5% TEMZX

Portfolio 1

Portfolio 2

with 5% EM Small Cap

Standard Deviation

An

nu

aliz

ed R

etu

rnA

nn

ual

ized

Ret

urn

Standard Deviation


8.00%

8.25%

8.50%

5.50% 5.75% 6.00% 6.25% 6.50%

Portfolio 3

with 5% TEMZX

Portfolio 1

Portfolio 2

with 5% EM Small Cap



TEMPLETON EMERGING MARKETS GROUP

Local Knowledge, Global Reach

In a sea of overlooked and under-researched companies, there’s no

substitute for local market knowledge. Our on-the-ground investment

team of over 50 portfolio managers and analysts across 20 countries

distinguishes Templeton Emerging Markets Group from the crowd.

Investors benefit from our networks of local business contacts,

access to in-person company visits and real time response to local

market events.

Our global reach through Franklin Templeton Investments provides

access to sophisticated risk management and trading resources.

Portfolio management collaborates closely with the Performance

Analysis and Investment Risk Group, which regularly examines risk

analytics to help identify and address areas of excessive risk

exposure within our portfolios. Franklin Templeton’s worldwide

trading desks allow uninterrupted trading of stocks that trade in

multiple time zones.

Chetan Sehgal, CFA

Portfolio Manager

S IN G A P O R E

Erman Kalkandelen

Senior Research Lead

T U R K E Y

Vikas Chiranewal, CFA

Senior Research Lead

IN D IA


50+Portfolio

Managers

& Research

Analysts

15Years on

average of

industry

experience

12Years on

average

with

Templeton

6. As of 31 December, 2016. Based on findings from PwC’s 2017 Benchmark Your Global Fund Distribution Report, which ranks asset managers on the number of countries in which their cross-border funds are distributed. A cross-border fund is one that’s distributed in more than three countries, including its domicile.

7. Joint venture partners with Franklin Templeton Investments.

8.Majority ownership interest.

A truly global organization, Franklin Templeton Investments is the world’s

top cross-border fund management group.6

45RESEARCH

OFFICES

13GLOBAL

TRADING

OFFICES

Americas

Bogota7

Boston

Buenos Aires

Calgary

Coral Gables

Ft. Lauderdale

Los Angeles

Mexico City

Nassau

New York City

Rio de Janeiro

Rancho Cordova

Ridgefield Park

Short Hills

San Mateo

São Paulo

Stamford8

Toronto

Washington, D.C.

Istanbul

Leeds

London

Moscow

Vienna

Warsaw

Europe, Middle East, Africa

Bucharest

Budapest

Cape Town

Dubai

Edinburgh

Frankfurt

Geneva

Asia Pacific

Bangkok

Chennai

Ho Chi Minh City7

Hong Kong

Hyderabad

Kuala Lumpur

Melbourne

Mumbai

Seoul

Shanghai7

Singapore

Sydney

Tokyo

Franklin Templeton’s global

footprint offers local market

knowledge and around-the-

clock trading

TEMSC FL 06/17

Franklin Templeton Distributors, Inc.

One Franklin Parkway

San Mateo, CA 94403-1906

(800) DIAL BEN® / 342-5236

franklintempleton.com

For Financial Professional Use Only / Not For Distribution to the Public.© 2017 Franklin Templeton Investments. All rights reserved.

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. Smaller 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.

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

Your clients should carefully consider a fund's investment goals, risks, charges and expenses before investing. They should read the

summary prospectus and/or prospectus carefully before they invest or send money. To obtain a prospectus, which contains this and other

information, please call Franklin Templeton Investments at (800) DIAL BEN/(800) 342-5236.

Documents

PORTFOLIO SUMMARY WHERE ACTIVE MANAGEMENT AIMS TO DRIVE ... · Where Active Management Aims to Drive Alpha ... transformation from the plain-vanilla ... is offset by strong export