Templeton Emerging Markets Bond Fund

Franklin Templeton Investment Funds

Templeton Emerging Markets Bond Fund - A (acc) USD

Templeton Global Macro

Data as of 30 June 2019

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

Templeton Emerging Markets Bond Fund

2


Table of Contents

Investment Capabilities Overview............................................................................................4

Franklin Templeton—A Trusted, Long-Term Partner in Investment Management.......................5

Templeton Global Macro—Assets Under Management............................................................ 6

Fund Overview....................................................................................................................... 7

The Case for Emerging Market Debt....................................................................................... 8

Credit Quality of Emerging Market Sovereign Bonds Has Steadily Improved.............................9

Relatively Low Correlations Historically to Other Asset Classes.............................................10

Discrete Performance........................................................................................................... 11

Prolonged Advances Versus Moderate Declines....................................................................12

Volatility—Fundamental vs. Market Risks..............................................................................13

Active Currency Management—A Flexible and Opportunistic Approach..................................14

Emerging Market Currencies Have Been Trading Below Crisis Levels.................................... 15

Relatively High Yields Available within Emerging Markets Local Currency Bonds....................16

On-the-Ground Research......................................................................................................17

Insight and Information Sharing Around the Globe................................................................. 18

Templeton Global Macro—A Team of Global Fixed Income Experts........................................19

Investment Philosophy..........................................................................................................20

ESG—Going Beyond Traditional Macroeconomic Indicators...................................................21

A Proprietary ESG Index—TGM-ESGI...................................................................................22

TGM—ESGI Centers Around 13 Indicators............................................................................23

Investment Process.............................................................................................................. 24

Portfolio Construction............................................................................................................25

Portfolio Positioning.............................................................................................................. 26

Summary of Advantages.......................................................................................................27

Summary..............................................................................................................................28

What are the Key Risks?......................................................................................................29

Portfolio Characteristics........................................................................................................30

Geographic Allocation...........................................................................................................31

Currency Exposure...............................................................................................................32

Sector Allocation...................................................................................................................33

Credit Quality Allocation........................................................................................................34

Maturity Allocation................................................................................................................35

Historical Performance..........................................................................................................36

Calendar Year Returns......................................................................................................... 37

Performance Risk Statistics.................................................................................................. 38

Appendix............................................................................................................39

Management Profiles.......................................................................................40


3

Table of Contents (continued)


Templeton Global Macro Management Profiles......................................................................41

Module: Additional Resources........................................................................46

Franklin Templeton Fixed Income..........................................................................................47

A Specialised Local Asset Management (LAM) Team............................................................ 48

Module: Performance Attribution...................................................................49

Three Sources of Potential Alpha Over Time..........................................................................50

Module: Process Implementation Examples.................................................51

Navigating Global Divergence............................................................................................... 52

Sector and Duration Strategy................................................................................................53

Active Duration Management................................................................................................ 54

Environmental, Social & Governance............................................................55

TGM-ESG Index—Scoring Methodology................................................................................56

Developed Countries Usually Exhibit Higher ESG Scores.......................................................57

Strong Relationship between GDP per Capita and ESG Score...............................................58

TGM-ESGI—Favouring Flat or Improving ESG Scores Rather Than Current Levels................59

Franklin Templeton—ESG and Corporate Sustainability.........................................................60

Franklin Templeton—Environmental, Social and Governance (ESG) Investment

Integration

....................61

Glossary...............................................................................................................................62

Important Disclosures...........................................................................................................63

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.


4


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)

Franklin Templeton—A Trusted, Long-Term Partner in Investment Management

Investment excellence• Diverse investment solutions across multiple asset classes• Time-tested investment disciplines plus exceptional research enables strong long-term performance

potential• Integrated, comprehensive and proven approach to investment risk management• Committed to environmental, social and governance (ESG) investment integration

Global perspective, local expertise• Pioneer in global investing, with track record of innovation • Unmatched breadth and depth of global presence• Deep experience and long-term commitment to the markets we enter

Strength and experience• Over 70 years of navigating well through all market cycles• Global business diversified by investment objective, geography and client type• Values-driven culture guides how we work

5889


5


Franklin Templeton—A Trusted, Long-Term Partner in Investment Management

6317

Source: Franklin Templeton Investments (FTI), as of 30 June 2019 unless otherwise noted, based on latest available data. Total combined Templeton Global Macro Assets Under Management (Total Templeton Global Macro AUM) combines the 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 organisation operating as FTI. AUM includes discretionary and advisory accounts, including pooled investment vehicles, separate accounts and other vehicles, as well as some accounts that may not be eligible for inclusion in composites as defined by the firm’s policies. 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.

Templeton Global Macro—Assets Under Management

Assets Under ManagementBillions (USD) as of 30 June 2019

Templeton Global Macro has managed unconstrained strategies since 1986

Global Multi-Sector$37.3

Global Sovereign$60.6

Emerging Markets Debt$16.5

Other$0.8

Templeton Global Macro Total Assets: $115 billion

1


6


Templeton Global Macro—Assets Under Management

Investment Goal• To seek total investment return, consisting of a combination of interest income, capital appreciation and currency gains

Investment Focus• Focus on developing or emerging market government, government-related and corporate debt securities, currencies and related

derivatives.

Potential Sources of Value Added• Yield curve

• Currencies

• Credit

Fund Overview

For investors who seek to:• Diversify overall portfolio with an emerging markets bond allocation

• Capitalise on the growth potential and economic fundamentals in many emerging markets

• Capture income opportunities in emerging markets fixed income

• Pursue attractive, risk-adjusted returns over the long term

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Fund Overview

Generally Strong Economic Fundamentals and Attractive Yields• Emerging markets have increased their share of the global economy and capital markets

• Economic fundamentals in many emerging markets appear healthier than in many developed countries, even though yields on many emerging market debt issues have generally been higher

Improved Credit Quality• Credit quality and liquidity in emerging market debt have generally improved over the last

15 years

Complement to Other Asset Classes• Diversification to an overall portfolio due to historically low correlations to most major asset

classes

The Case for Emerging Market Debt

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8


The Case for Emerging Market Debt

2002 2004 2006 2009 2011 2014 2016 2019

Source: Intercontinental Exchange (“ICE”). Data from third party sources may have been used in the preparation of this material and Franklin Templeton has not independently verified, validated or audited such data. Franklin Templeton and its third party sources accept no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user. Important data provider notices and terms available at www.franklintempletondatasources.com.1. The average credit ratings are represented by the ICE BofAML Emerging Markets External Sovereign Index. This market capitalisation weighted index tracks the performance of U.S. dollar- and euro-denominated emerging markets sovereign debt publically issued in the major domestic and eurobond markets. The composite rating is calculated by assigning a numeric equivalent to the ratings. The average of the numeric equivalents for each agency that rates a bond is rounded to the nearest integer and then converted back to an equivalent composite rating. The scale is from 1–22 with 1=AAA, 2=AA1/Aa1/AA+/AA high, 3=AA2/Aa2/AA, etc.

YTD

Average Credit Ratings—EM Sovereign Debt1

As of 30 June 2019

Credit Quality of Emerging Market Sovereign Bonds Has Steadily Improved

4025Bo

nd C

redi

t Rat

ing

B+

BB-

BB

BB+

B

BB-

BBB


9


Credit Quality of Emerging Market Sovereign Bonds Has Steadily Improved

Templeton Emerging Markets Bond Fund – A (Qdis) USD5-Year Rolling CorrelationsPeriod Ending 31 March 2019

Relatively Low Correlations Historically to Other Asset Classes

Correlation: 1 = perfect positive correlation 0 = no correlation -1 = perfect negative correlation

5 Years Ending 31/03/2019

U.S. Bonds 0.00

High Yield Bonds 0.48

Commodities 0.31

World Stocks 0.38

Hedge Funds 0.32

U.S. Stocks 0.27

FX Carry 0.32

Global Government Bonds 0.19

-0.25

0.00

0.25

0.50

0.75

1.00

Jun-

08

Mar-0

9

Dec-0

9

Aug-

10

May-1

1

Jan-

12

Oct-1

2

Jun-

13

Mar-1

4

Nov-1

4

Aug-

15

Apr-1

6

Jan-

17

Oct-1

7

Jun-

18

Mar-1

9

U.S. Bonds High Yield Bonds Commodities World StocksHedge Funds U.S. Stocks FX Carry Global Government Bonds

The above chart is for illustrative and discussion purposes only. U.S. Bonds are represented by the Bloomberg Barclays U.S. Aggregate Index; U.S. Stocks are represented by the S&P 500 Index; Hedge Funds are represented by the HFRI Fund Weighted Composite Index; High Yield Bonds are represented by the FTSE High Yield Market Local Currency Index; World Stocks are represented by the MSCI World Index; Commodities are represented by the Bloomberg Commodities Index; Global Government Bonds are represented by the JP Morgan Global Government Bond Index; FX Carry are represented by the Deutsche Bank G10 Currency Future Harvest Index. Important data provider notices and terms available at www.franklintempletondatasources.com. The information is historical over the indicated time period and may vary significantly over other past time periods.Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. Past performance is not an indicator or a guarantee of future performance.

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Relatively Low Correlations Historically to Other Asset Classes


11

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

Templeton Emerging Markets Bond Fund - A (acc) USD—Net of Fees 29.1.2010 4.94 -4.50 14.41 1.08 -10.24

JP Morgan EMBI Global Index 11.32 -2.45 5.52 10.32 -1.57

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).

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

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

The chart below illustrates the performance of Templeton Emerging Markets Bond Fund - A (Qdis) USD—Net of Fees. An “advance” is any period of a month or longer when cumulative daily returns exceeded twice the standard deviation of rolling monthly returns of the entire sample period. A “decline” is any period of a month or longer when cumulative daily returns fell more than twice the standard deviation of rolling monthly returns. The chart below is supplemental information to be considered in addition to, and not in lieu of, the Templeton Emerging Markets Bond Fund - A (Qdis) USD—Net of Fees historical performance information.

Performance for the Templeton Emerging Markets Bond Fund - A (Qdis) USD—Net of Fees is historical and may not reflect current or future performance. The performance information above is net of management fees and other expenses, assumesreinvestment of any dividends and is in the Templeton Emerging Markets Bond Fund currency stated. Sales charges and other commissions, taxes and other relevant costs paid by the investor are not included in the calculations. If they were included, the returns would have been lower.The performance shown relates to the Class A (Qdis) shares and the performance of other share classes may vary depending on their respective commissions and fees. Results may differ over other historical time periods.Past performance is not an indicator or a guarantee of future performance.

Prolonged Advances Versus Moderate Declines

Cumulative Daily Returns for Each PeriodAs of 31 March 2019

Average Advance: 22.73%; 11.46 months

Average Decline: -10.48%; 3.65 months

An “advance” (“decline”) is any period of a month or longer when cumulative daily returns exceed (fall more than) twice the standard deviation of rolling monthly returns of the entire sample period.

-40%

-20%

0%

20%

40%

60%

80%

Nov-01 Oct-03 Sep-05 Aug-07 Jul-09 Jun-11 May-13 Apr-15 Mar-17 Feb-19

3896

Mar-19


12


Prolonged Advances Versus Moderate Declines

Annualised Rolling 3-Month VolatilityAs of 31 March 2019

Source: Franklin Templeton Investments, Bloomberg, as of 31 March 2019. 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.Charts are for illustrative and discussion purposes only.

Volatility—Fundamental vs. Market Risks

0%

10%

20%

30%

40%

50%

60%

70%

Sep-

03

Jan-

05

Apr-0

6

Aug-

07

Nov-0

8

Mar-1

0

Jun-

11

Oct-1

2

Jan-

14

Apr-1

5

Aug-

16

Nov-1

7

Mar-1

9

Templeton Emerging Markets Bond Fund - A (Qdis)—Net of Fees (USD) 3-Month LIBOR (USD) MSCI ACWI (USD)

3897


13


Volatility—Fundamental vs. Market Risks

History of Active Currency Management—Templeton Emerging Markets Bond Fund30 June 2006–30 June 2019

Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.Notional exposure figures are intended to estimate the portfolio’s exposure, including any hedged or increased exposure through certain derivatives held in the portfolio (or their underlying reference assets). Portfolio breakdown percentages may not total 100% and may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

Active Currency Management—A Flexible and Opportunistic Approach

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jun-

06Se

p-06

Dec-0

6Ma

r-07

Jun-

07Se

p-07

Dec-0

7Ma

r-08

Jun-

08Se

p-08

Dec-0

8Ma

r-09

Jun-

09Se

p-09

Dec-0

9Ma

r-10

Jun-

10Se

p-10

Dec-1

0Ma

r-11

Jun-

11Se

p-11

Dec-1

1Ma

r-12

Jun-

12Se

p-12

Dec-1

2Ma

r-13

Apr-1

3Se

p-13

Dec-1

3Ma

r-14

Jun-

14Se

p-14

Dec-1

4Ma

r-15

Jun-

15Se

p-15

Dec-1

5Ma

r-16

Jun-

16Se

p-16

Dec-1

6Ma

r-17

Jun-

17Se

p-17

Dec-1

7Ma

r-18

Jun-

18Se

p-18

Dec-1

8Ma

r-19

Jun-

19

Curre

ncyW

eight

ing

(Not

iona

l Exp

osur

e %)

BRL CLP

COP CRC

MXN PEN

UYU USD

CNY AUD

IDR INR

KRW LKR

MYR PHP

THB JPY

GHS NGN

XOF ZMK

EUR CHF

EGP HUF

KZT PLN

RON RSD

RUB SKK

UAH ARS

ZAR Others

4524


14


Active Currency Management—A Flexible and Opportunistic Approach

JP Morgan Emerging Markets Currency Index31 December 2000–30 June 2019

Source: J.P. Morgan Chase & Co. Important data provider notices and terms available at www.franklintempletondatasources.com. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. The above chart is for illustrative and discussion purposes only.Past performance is not an indicator or a guarantee of future performance.

Emerging Market Currencies Have Been Trading Below Crisis Levels

60

70

80

90

100

110

120

Dec-00 Jan-03 Feb-05 Feb-07 Mar-09 Apr-11 Apr-13 May-15 Jun-17 Jun-19

Inde

x Lev

el (U

SD)

-21% below 2002 levels

-26% below 2009 levels

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15


Emerging Market Currencies Have Been Trading Below Crisis Levels

Government Bond Yields: 2-Year and 10-Year YieldsAs of 30 June 2019

Source: Bloomberg. For illustrative and discussion purposes only. Yield figures quoted should not be used as an indication of the income that has or will be received.Past performance is not an indicator or a guarantee of future performance.

Relatively High Yields Available within Emerging Markets Local Currency Bond

7.80%6.74% 6.30% 6.08%

3.27%2.52%

1.61% 1.49% 1.15% 0.98%1.75% 1.47%

0.62%

-0.22%-0.75%

7.59% 7.37%6.88%

7.45%

3.64%3.12%

2.39%

1.60% 1.57% 1.32%

2.01%1.47%

0.83%

-0.16% -0.33%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Mexico Indonesia India Brazil Malaysia Chile Poland South Korea New Zealand Australia United States Canada UnitedKingdom

Japan Germany

2-Year Yields 10-Year Yields

Major Developed Economies

4513


16


Relatively High Yields Available within Emerging Markets Local Currency Bonds

On-the-Ground Research

One of the World’s Largest Global Fixed Income and Equity Platforms

170 Global Fixed Income Professionals:■ Global Fixed Income Offices

♦ Fixed Income Local AssetManagement (LAM) Offices2

126 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

♦ Hyderabad

Chennai

Frankfurt

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17

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 Franklin Templeton Emerging Markets Equity.

As of 30 June 2019.


On-the-Ground Research

Over 170 global fixed income and over 120 global equity investment professionals.

1. This unit is comprised of investment professionals located in affiliates of and joint venture partners with Franklin Templeton Investments. Reference to Local Asset Management is in relation to fixed income teams (excluding equity). Investment professionals include portfolio managers, analysts and traders. *Represents number of years of industry experience.As of 30 June 2019.

Insight and Information Sharing Around the Globe

Local Asset Management1

Average Experience: 15 Years*

Franklin TempletonFixed Income


Templeton Global EquityResearch Team


Franklin Templeton Emerging Markets Equity Research Team

Average Experience: 16 Years*WEEKLY MONTHLYTempleton

Global Macro San Mateo, Singapore

20 Investment Professionals


WEEKLY MONTHLY

0539


18


Insight and Information Sharing Around the Globe

Templeton Global Macro—A Team of Global Fixed Income Experts

1808

As of 30 June 2019.CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

Research Portfolio Construction & Quantitative Analysis Trading Institutional Portfolio

ManagementCalvin Ho, Ph.D.SVP, Director of Research & Portfolio Manager14 Years of Experience

Christine Yuhui ZhuVP, Director of Portfolio Construction16 Years of Experience

Michael MessmerVP, Senior Trader18 Years of Experience

Elsa GoldbergVP, Institutional Portfolio Manager23 Years of Experience

Hyung C. Shin, Ph.D.VP, Senior Global Macro & Research Analyst27 Years of ExperienceDiego Valderrama, Ph.D.Senior Global Macro & Research Analyst16 Years of ExperienceAttila Korpos, Ph.D.Senior Global Macro & Research Analyst18 Years of ExperienceShlomi Kramer, Ph.D.Senior Global Macro & Research Analyst8 Years of Experience

Vivek AhujaPortfolio Manager, Research Analyst23 Years of ExperienceOwen SolisResearch Associate1 Year of ExperienceKeertana AnandrajResearch Associate<1 Year of Experience

Ryan Ferster, CFAQuantitative Research Analyst14 Years of ExperienceJaap WillemsQuantitative Research Analyst, ESG Specialist10 Years of Experience

Matthew HenrySenior Trader12 Years of ExperienceAndrew MesicSenior Trader12 Years of ExperienceMichael SheehanSenior Trader, Derivatives14 Years of ExperienceChristopher MyersTrader15 Years of ExperienceKevin NestTrader12 Years of Experience

Richard Herbert, CFAInstitutional Portfolio Manager8 Years of Experience

Additional ResourcesGerett Blouin, CFASenior Investment Risk Manager16 Years of ExperienceKai Teng, CFA, FRMSenior Investment Risk Analyst8 Years of Experience

Adam Drutel, CFASenior Investment Risk Analyst11 Years of ExperienceJin-Wen Low, CFA, FRMSenior Investment Risk Analyst7 Years of Experience

Junyi Wang, FRMInvestment Risk Analyst6 Years of Experience

Katie KlingensmithVP, Director, Product Management18 Years of ExperienceJason LaRocco, CFA, CAIAVP, Senior Product Manager16 Years of Experience

Jens Waechter, Ph.D.VP, Product Manager20 Years of Experience

Christopher KennedyVP, Product Manager20 Years of Experience g Emily LammersVP, Product Manager13 Years of Experience

Michael Hasenstab, Ph.D.Executive VP & Chief Investment Officer24 Years of Experience

Diverse Global Team• 20 investment professionals including 6 Ph.D. economists• 13 different nationalities represented across 5 continents: Australia, China, Costa Rica, France, Hong Kong,

India, Israel, Netherlands, Peru, Romania, South Korea, Turkey, U.S.• 15 different languages spoken

1


19


Templeton Global Macro—A Team of Global Fixed Income Experts

Beliefs and Guiding Principles• An unconstrained approach to global fixed income investing can lead to long-term value

potential

• Integrating global macroeconomic analysis and ESG indicators with in-depth country research can help identify long-term economic imbalances

• Actively allocating risk across three independent potential sources of alpha can deliver diversification benefits and the potential for more consistent returns in diverse markets

Investment Philosophy

1810


20


Investment Philosophy

6320

ESG—Going Beyond Traditional Macroeconomic Indicators

Key Beliefs

• ESG issues can affect sovereign bond spreads and can be material to a country’s long-term economic sustainability

• We believe in-depth macroeconomic research and ESG considerations provide a better understanding of a country’s risk and creditworthiness

– Soft factors capture the “willingness” vs. the “ability” of a country to service its obligations and deal with the challengesof the future

• ESG integration seeks to improve investment decision making and long-term risk-adjusted returns

– Allows us to identify potential upside opportunities and early transformation stories

– Deepens sovereign risk assessment

• ESG considerations align with our medium- to long-term investment horizon


21


ESG—Going Beyond Traditional Macroeconomic Indicators

6323

A Proprietary ESG Index—TGM-ESGI

Integral to our Country Macroeconomic Research Process

Templeton Global Macro ESG Index (TGM-ESGI) is an aggregate metric comparable to macroeconomic indicators

• Transparency—uses of a wide range of qualitative indicators produced by international institutions and non-governmental organisations (e.g. World Bank, United Nations, Yale)

• Comprehensive—enables comparison across a broad investment universe of developed and emerging countries

• Measurable—a systematic measurement of ESG factors score is attributable to each country and monitored by our analyst team

• Forward-looking—ESG risk projections are calculated by our team of country macro-economists

• Embedded—In-depth macroeconomic research and ESG considerations are an inseparable part of our country risk assessment


22


A Proprietary ESG Index—TGM-ESGI

6326

TGM—ESGI Centres Around 13 Indicators

Summary of index components

Environment20%

Social

40%

Governance 40%

Unsustainable Practices

Extreme Weather Risk

Resource Scarcity

EffectivenessPolicy MixCorruptionInstitutional StrengthBusiness Climate

Social Cohesion and StabilityInfrastructureHuman CapitalLabour

Demographics

13 indicators that we believe would have the most economic and valuation impact


23


TGM—ESGI Centers Around 13 Indicators

Multiple Research Lenses Can Lead to High-Conviction Opportunities

Investment Process

1812

Three Potential Sources of Alpha

Global Research Lenses

Risk Modelling• VaR Analysis• Correlation

Analysis• Scenario/Stress

Testing

Trading• Trade Structuring• Market Flows• Local Execution/

Settlement• Liquidity Analysis

PORTFOLIO

Portfolio Construction and Implementation

Identification of High-

ConvictionOpportunities

Management Team• Potential Return

vs. Expected Risk• Global Allocations

Review/Performance AttributionReview

Yield Curve

Currency Ideas

Credit Ideas

• Growth Drivers

• Monetary Policy

• Fiscal Policy

• Inflation Dynamic

• Debt Sustainability

• Balance of Payment

• Political Situation

Macroeconomic Analysis

Macro-Models Analysis

Local Asset Management Perspectives¹

Country Visits

ES

G


24

1. This unit is comprised of investment professionals located in affiliates of and joint venture partners with Franklin Templeton Investments. Reference to Local Asset Management is in relation to fixed income teams (excluding equity).

The above chart is for illustrative and discussion purposes only.


Investment Process

*The fund may use other derivatives to generate similar exposures, such as futures.The portfolio composition, characteristics and the number of exposures held by the fund will vary due to a variety of factors, such as, but not limited to, market conditions, asset size, interest rates, currency fluctuations, economic instability and political developments.

Portfolio Construction—Position Sizing

5402

Portfolio Positioning Position Sizing

• The portfolio invests across developed and emerging countries in areas where we see potential value

• There are typically a few overarching macro views that are expressed using a variety of instruments

• Individual views are expressed using currency, interest rate, or credit positions

• Position size is based on our view of attractiveness, valuation, conviction level and risk, as well as size and liquidity of the market

• Long country exposures typically range from approximately 4–8%, expressed using some combination of currency, rates and credit; extremely high conviction positions may constitute around 20%

Implementation Barbell Approach

• Views are implemented primarily via hard currency bonds (government and/or corporate), local currency bonds, currency forwards, interest rate swaps, or a combination thereof

• The makeup of a position depends on the exposure, valuation, liquidity, and correlation to the remainder of the portfolio

• The various investment positions in the portfolio seek to balance downside risk, expected return and liquidity

RatesCredit

Hard Currency Gov/Corp

Bonds

Local Currency

Bonds

FX Forwards*

Interest Rate

Swaps*

Currency


25


Portfolio Construction

The foregoing information reflects our analysis, opinions and portfolio information as of 31 March 2019, and may change without notice. The views expressed are those of the individual portfolio managers only and may vary from the views expressed by portfolio managers representing other investment platforms or strategies within Franklin Templeton Investments. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or portfolio. Statements of fact are from sources considered to be reliable, but no representation or warranty is made as to their completeness or accuracy. Because market and economic conditions are subject to rapid change, opinions provided are valid only as of the date indicated. References to particular securities are only for the limited purpose of illustrating general market or economic conditions, and are not recommendations to buy or sell a security or an indication of any actual portfolio’s holdings.

Portfolio Positioning

As of 31 March 2019

3898

Potential Alpha Sources Current Positioning

Defensive Stance Due to Concerns about Rising Interest Rates

• We remained positioned for rising US Treasury yields by maintaining low overall portfolio duration and holding negative duration exposure to US Treasuries

• Held duration exposures in a select number of countries that we believe have attractive risk/return profiles, relatively higher yields and favourable conditions for yields to remain relatively stable or shift lower

YIELD CURVE

Favourable Opportunities in Select Currencies

• We favour currencies in countries that we believe have strong growth fundamentals and compelling interest-rate differentials that should be better positioned to absorb external shocks, such as rising rates in the US

CURRENCIES

Selectively Finding Credit Opportunities

• A select number of credit exposures remain attractive to us on a risk-adjusted basis• Continued to selectively invest in credit opportunities across emerging markets, with a particular focus on credit

exposures in economies with compelling growth indicatorsCREDIT


26


Portfolio Positioning

The Foundation of Our Long-Term Track Record• An Unconstrained Worldview

• A Truly Global Research Platform

• A High-Conviction Process

Summary of Advantages

1828


27


Summary of Advantages


28

Fund Identifiers

ISIN Code LU0478345209

SEDOL Code B3M1YW1

Bloomberg Code TEMEMAU LX


As of 30 June 2019

Summary

Portfolio Manager(s)

Michael Hasenstab, PhD United States

Calvin Ho, PhD United States

Fund Ratings (30 June 2019)

Overall Morningstar Rating™

««

Summary of Investment Objective

The Fund aims to maximize total investment return, consisting of a combination of

interest income, capital appreciation and currency gains by investing principally in a

portfolio of fixed and floating rate debt securities and debt obligations issued by

government and government- related issuers or corporate entities located in

developing or emerging market countries.

Morningstar Category™ Global Emerging Markets Bond

Investment Style Fixed Income - Emerging Markets

Fund Inception Date 5 July 1991

Share Class Inception Date 29 January 2010

Benchmark JP Morgan EMBI Global Index

Base Currency for Fund USD

Base Currency for Share Class USD

Total Net Assets (USD) 11,206,328,042.49

Asset Allocation (Market Value) Fixed Income: 80.34%

Cash & Cash Equivalents: 19.65%

Number of Holdings 249

Total Expense Ratio 1.89%

© 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.

Market value figures reflect the trading value of the investments. Portfolio breakdown percentages may not total 100% and may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

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


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



29

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 debt securities of any quality issued by entities located in developing and emerging markets. Such securities have historically been subject

to price movements, generally due to interest rates, market factors or movements in the bond market. As a result, the performance of the Fund can fluctuate over time.

The Fund may distribute income gross of expenses. Whilst this might allow more income to be distributed, it may also have the effect of reducing capital.

Other significant risks include: credit risk, derivatives risk, emerging markets risk, liquidity 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?



30

Portfolio Characteristics


vs. JP Morgan EMBI Global Index

As of 30 June 2019

Portfolio Index

Average Credit Quality BBB- BBB-

Average Duration 0.93 Yrs 7.36 Yrs

Average Weighted Maturity 2.85 Yrs 11.98 Yrs

Yield to Maturity 11.28% 5.62%

Yield to Worst 11.28% 5.61%

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

Average Duration, Average Weighted Maturity, Yield to Maturity and Yield to Worst figures reflect certain derivatives held in the portfolio (or their underlying reference assets).

The average credit quality (ACQ) rating may change over time. The portfolio itself has not been rated by an independent rating agency. The letter rating, which may be based on bond ratings from different agencies (or internal ratings for unrated bonds,

cash and equivalents), is provided to indicate the average credit rating of the portfolio's underlying investments and generally ranges from AAA (highest) to D (lowest). For unrated bonds, cash and equivalents, ratings may be assigned based on the

ratings of the issuer, the ratings of the underlying holdings of a pooled investment vehicle, or other relevant factors. The ACQ is determined by assigning a sequential integer to all credit ratings AAA to D, taking a simple, asset-weighted average of

investments by market value and rounding to the nearest rating. The risk of default increases as a bond's rating decreases, so the ACQ provided is not a statistical measurement of the portfolio’s default risk because a simple, weighted average does not

measure the increasing level of risk from lower-rated bonds. The ACQ may be lower if cash and equivalents are excluded from the calculation. The ACQ is provided for informational purposes only. Derivative positions are not reflected in the ACQ.

Yield figures quoted should not be used as an indication of the income that has or will be received. Yield figures are based on the portfolio's underlying holdings and do not represent a payout of the portfolio.


Geographic Allocation


31



As of 30 June 2019 — Market Value

CASH & CASH EQUIVALENTS

OTHER

SUPRANATIONAL

EMU EUROPE

Other

NON-EMU EUROPE

EUROPE

Other

South Africa

Kenya

Senegal

Egypt

Ghana

MIDDLE EAST / AFRICA

Thailand

Indonesia

India

ASIA EX-JAPAN

ASIA

USA

Other

Colombia

Mexico

Argentina

Brazil

NON-US AMERICAS

AMERICAS

-1% 9% 19% 29% 39% 49%

19.65

0.05

0.14

0.00

0.01

0.01

0.01

0.77

0.01

0.56

0.69

3.03

5.12

10.19

4.43

8.91

9.45

22.79

22.79

-0.68

0.07

5.12

10.19

12.00

20.47

47.86

47.17


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


Regions Sub-Regions Countries

Portfolio %

Index % Over/Under %

AMERICAS 47.17 34.77 12.40

NON-US AMERICAS 47.86 34.77 13.09

Brazil 20.47 3.69 16.79

Argentina 12.00 3.57 8.43

Mexico 10.19 10.64 -0.45

Colombia 5.12 2.73 2.40

Chile 0.00 2.00 -2.00

Ecuador 0.00 1.73 -1.73

Panama 0.00 1.72 -1.72

Peru 0.00 1.60 -1.60

Dominican Republic 0.00 1.54 -1.54

Uruguay 0.00 1.46 -1.46

Venezuela 0.00 1.00 -1.00

Other 0.07 3.10 -3.03

USA -0.68 0.00 -0.68

ASIA 22.79 25.48 -2.69

ASIA EX-JAPAN 22.79 25.48 -2.69

India 9.45 0.52 8.93

Indonesia 8.91 8.58 0.33

Thailand 4.43 0.00 4.43

China 0.00 8.00 -8.00

Philippines 0.00 2.98 -2.98

Kazakhstan 0.00 1.79 -1.79

Malaysia 0.00 1.29 -1.29

Sri Lanka 0.00 1.27 -1.27

Other 0.00 1.05 -1.05

MIDDLE EAST /

AFRICA

10.19 22.44 -12.26

Ghana 5.12 0.68 4.44

Egypt 3.03 1.74 1.29

Senegal 0.69 0.25 0.44

Kenya 0.56 0.62 -0.06

South Africa 0.01 2.19 -2.18

Saudi Arabia 0.00 4.45 -4.45

Qatar 0.00 2.57 -2.57

Portfolio %

Index % Over/Under %

Oman 0.00 1.92 -1.92

United Arab Emirates 0.00 1.78 -1.78

Lebanon 0.00 1.22 -1.22

Nigeria 0.00 1.11 -1.11

Other 0.77 3.91 -3.14

EUROPE 0.01 17.18 -17.17

NON-EMU EUROPE 0.01 16.71 -16.70

Turkey 0.00 5.67 -5.67

Russia 0.00 4.28 -4.28

Ukraine 0.00 1.77 -1.77

Hungary 0.00 1.19 -1.19

Poland 0.00 1.11 -1.11

Other 0.01 2.70 -2.68

EMU EUROPE 0.00 0.47 -0.47

Lithuania 0.00 0.32 -0.32

Slovak Republic 0.00 0.15 -0.15

SUPRANATIONAL 0.14 0.00 0.14

OTHER 0.05 0.12 -0.08

Other 0.05 0.00 0.05

Other 0.00 0.12 -0.12

CASH & CASH

EQUIVALENTS

19.65 0.00 19.65


32

Currency Exposure

Notional exposure figures are intended to estimate the portfolio’s exposure, including any hedged or increased exposure through certain derivatives held in the portfolio (or their underlying reference assets). Portfolio breakdown percentages may not total

100% and may be negative due to rounding, use of any derivatives, unsettled trades or other factors.





As of 30 June 2019 — Notional Exposure

EURO

EUROPE

Egyptian Pound

Ghanaian Cedi

MIDEAST/AFRICA

Australian Dollar

Indian Rupee

Thailand Baht

Indonesian Rupiah

ASIA EX-JAPAN

JAPANESE YEN

ASIA

U.S. DOLLAR

Colombian Peso

Mexican Peso

Argentine Peso

Brazilian Real

NON-US DOLLAR

AMERICAS

-15% 4% 23% 42% 61% 80%

-14.25

-14.25

3.03

5.12

8.15

-9.74

3.25

4.43

8.91

6.86

19.94

26.80

35.49

5.12

6.53

11.30

20.85

43.81

79.30

Regions Sub-Regions Currencies

Portfolio % Index % Over/Under %

AMERICAS 79.30 100.00 -20.70

NON-US DOLLAR 43.81 0.00 43.81

Brazilian Real 20.85 0.00 20.85

Argentine Peso 11.30 0.00 11.30

Mexican Peso 6.53 0.00 6.53

Colombian Peso 5.12 0.00 5.12

U.S. DOLLAR 35.49 100.00 -64.51

ASIA 26.80 0.00 26.80

JAPANESE YEN 19.94 0.00 19.94

ASIA EX-JAPAN 6.86 0.00 6.86

Indonesian Rupiah 8.91 0.00 8.91

Thailand Baht 4.43 0.00 4.43

Indian Rupee 3.25 0.00 3.25

Australian Dollar -9.74 0.00 -9.74

MIDEAST/AFRICA 8.15 0.00 8.15

Ghanaian Cedi 5.12 0.00 5.12

Egyptian Pound 3.03 0.00 3.03

EUROPE -14.25 0.00 -14.25

EURO -14.25 0.00 -14.25

Cash & Cash Equivalents

Supranational

Derivatives

Non-Investment Grade

Corporate Bonds


Non-Local Curr. Sovereign Bonds

Investment Grade


Local Curr. Govt/Agency Bonds

-1% 15% 31% 47% 63% 79%

19.65

0.14

-0.64

0.06

0.06

2.76

2.76

38.11

39.92

78.03


33

Sector Allocation








Local Curr. Govt/Agency Bonds 78.03 0.00 78.03

Non-Investment Grade 39.92 0.00 39.92

Investment Grade 38.11 0.00 38.11

Non-Local Curr. Sovereign Bonds 2.76 100.00 -97.24

Non-Investment Grade 2.76 39.02 -36.26

Investment Grade 0.00 60.99 -60.99

Corporate Bonds 0.06 0.00 0.06

Non-Investment Grade 0.06 0.00 0.06

Derivatives -0.64 0.00 -0.64

Supranational 0.14 0.00 0.14

Cash & Cash Equivalents 19.65 0.00 19.65

Cash

N/A

NR

D

CC

CCC+

B-

B

B+

BB-

BB

BB+

BBB-

BBB

BBB+

A-

A

A+

AA-

AA

AAA

-1% 7% 15% 23% 31%


JP Morgan EMBI Global Index


34




Credit Quality Allocation


AAA 0.14 0.00 0.14

AA 0.00 1.63 -1.63

AA- 0.00 5.16 -5.16

A+ 0.00 6.95 -6.95

A 0.00 0.70 -0.70

A- 10.19 9.01 1.18

BBB+ 4.43 23.41 -18.98

BBB 14.03 5.31 8.73

BBB- 9.45 3.84 5.61

BB+ 0.00 8.02 -8.02

BB 0.00 4.98 -4.98

BB- 20.47 5.69 14.79

B+ 1.26 3.74 -2.48

B 20.76 9.84 10.92

B- 0.03 6.89 -6.86

CCC+ 0.00 0.58 -0.58

CC 0.05 0.00 0.05

D 0.00 0.68 -0.68

NR 0.16 3.54 -3.38

N/A -0.63 0.03 -0.67

Cash 19.65 0.00 19.65

Investment Grade

38.24 56.01 -17.77


42.74 43.95 -1.21

N/A

-0.63

0.03 -0.67

Cash

19.65 0.00 19.65



Ratings shown are assigned by one or more Nationally Recognised Statistical Rating Organisations (‘NRSRO’), such as Standard & Poor’s, Moody’s and Fitch. The ratings are an indication of an issuer’s creditworthiness and typically range from AAA or

Aaa (highest) to D (lowest). When ratings from all three agencies are available, the middle rating is used; when two are available, the lowest rating is used; and when only one is available, that rating is used. Foreign government bonds without a specific

rating are assigned the country rating provided by an NRSRO, if available. The NR category consists of rateable securities that have not been rated by an NRSRO. The N/A category consists of nonrateable securities (e.g., equities). Cash includes

equivalents, which may be rated.


35


Maturity Allocation

30+ Years

20 to 30 Years

15 to 20 Years

10 to 15 Years

7 to 10 Years

5 to 7 Years

3 to 5 Years

2 to 3 Years

1 to 2 Years

0 to 1 Year

-1% 14% 29% 44% 59%


JP Morgan EMBI Global Index





0 to 1 Year 39.72 0.12 39.60

1 to 2 Years 5.72 5.62 0.11

2 to 3 Years 14.76 7.44 7.32

3 to 5 Years 15.31 17.35 -2.03

5 to 7 Years 5.31 13.32 -8.01

7 to 10 Years 17.36 21.40 -4.04

10 to 15 Years 2.36 5.20 -2.84

15 to 20 Years 0.02 4.38 -4.36

20 to 30 Years -0.58 23.18 -23.76

30+ Years 0.00 2.00 -2.00




Annualised Total Returns (%)

Inception

Date 1 Yr 3 Yrs 5 Yrs

Since

Incept

Templeton Emerging Markets Bond Fund - A (acc) USD—Net of Fees 29.1.2010 4.94 4.67 0.79 3.65

JP Morgan EMBI Global Index 11.32 4.65 4.47 6.57


Historical Performance


As of 30 June 2019









36

Cumulative Performance (%)

Inception

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

Since

Incept

Templeton Emerging Markets Bond Fund - A (acc) USD—Net of Fees 29.1.2010 4.09 3.78 4.24 4.94 14.65 4.02 40.12

JP Morgan EMBI Global Index 3.04 3.76 10.60 11.32 14.60 24.44 82.02


37









Calendar Year Returns


As of 30 June 2019

YTD 2019 2018 2017 2016 2015 2014 2013 2012 2011

-8%

-1%

6%

13%

20%

4.24

10.60

-5.42 -4.61

9.90

9.32

9.86

10.19

-5.54

1.23

-4.45

5.53

-0.61 -6.58

18.31

18.54

-1.68

8.46

JP Morgan EMBI Global IndexTempleton Emerging Markets Bond Fund - A (acc) USD—Net of Fees


38

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 JP Morgan EMBI Global Index.

*Annualised.

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


As of 30 June 2019

Performance Risk Statistics

1 Yr 3 Yrs* 5 Yrs*

Standard Deviation (%):

Templeton Emerging Markets Bond Fund - A (acc) USD 10.57 8.39 8.78

JP Morgan EMBI Global Index 6.32 5.60 5.75

Tracking Error (%)^^ 9.02 7.11 6.85

Information Ratio^^ -0.71 0.00 -0.54

Sharpe Ratio 0.25 0.39 -0.01


Performance Risk Statistics

39

Appendix



40

Management Profiles



Templeton Global Macro Management Profiles

3899

MICHAEL HASENSTAB, Ph.D.Executive Vice President, Portfolio Manager, Chief Investment OfficerTempleton Global Macro

San Mateo, California, United States

Dr. Hasenstab is a member of the Fixed Income Policy Committee and is a portfolio manager for a number of FranklinTempleton fixed income and hybrid funds and strategies.

Dr. Hasenstab holds a Ph.D. in economics from the Asia Pacific School of Economics and Management at Australian National University, a master’s degree in economics of development from the Australian National University and a B.A. in internationalrelations/political economy from Carleton College in the United States.

CALVIN HO, Ph.D.Senior Vice President, Director of ResearchTempleton Global Macro


Dr. Ho is responsible for shaping the research agenda of Templeton Global Macro and specialises in macroeconomic analysis and exchange rate modelling. Dr. Ho is a portfolio manager for a number of Franklin Templeton fixed income funds and acts as a key resource for the firm’s Fixed Income Policy Committee.

Dr. Ho earned both a B.A. and a Ph.D. in economics from the University of California, Berkeley. His prior research analysed international monetary arrangements. He is also fluent in Mandarin and Cantonese.

HYUNG C. SHIN, Ph.D.Vice President, Senior Global Macro& Research AnalystTempleton Global Macro


Dr. Shin joined Franklin Templeton in 2005 as a research analyst and moved to senior global macro & research analyst forTempleton Global Macro. In this position, he analyses global macroeconomic trends and up-to-date developments in emergingmarket economies. Dr. Shin is an expert of Asian economies, with a focus on Southeast Asia and Japan. He also specialises in monetary and global macroeconomic analysis with a focus on world real-interest-rate modelling.

Dr. Shin holds a Ph.D. in economics from the University of California, Davis and a B.A. in business administration from SeoulNational University in South Korea. Dr. Shin’s prior research analysed optimal choice of monetary policy regimes. He is also fluent in Korean.

DIEGO VALDERRAMA, Ph.D.Senior Global Macro & Research AnalystTempleton Global Macro


Dr. Valderrama joined Franklin Templeton in 2009 as research analyst and moved to senior global macro& research analyst in Templeton Global Macro. In this position, Dr. Valderrama specialises in global macroeconomics. In addition, he has a regional focus on Latin America and Africa.

Dr. Valderrama holds a Ph.D. and an M.A. in economics from Duke University and a B.A. in economics from Cornell University. He is also fluent in Spanish.


41


Templeton Global Macro Management Profiles

Templeton Global Macro Management Profiles (continued)

3899

SHLOMI KRAMER, Ph.D.Senior Global Macro & Research AnalystTempleton Global Macro


Shlomi Kramer joined Franklin Templeton in 2016 and is a senior analyst for the Templeton Global Macro team. In this position, he analyses global macroeconomic trends and covers economic developments in China and several developed economies.

Prior to joining Franklin Templeton, Dr. Kramer was a senior economist at GE Corporate, where he ran the economics team’s forecasting model, which forms the basis for GE’s planning and strategy, and served as the team’s lead economist on emerging markets.

Dr. Kramer received his Ph.D. in economics from Princeton University in May 2011 and holds a B.S. in mathematics and economics from Tel Aviv University.

ATTILA KORPOS, Ph.D.Senior Global Macro & Research AnalystTempleton Global Macro


Dr. Korpos joined Franklin Templeton in 2011 as a research analyst in Templeton Global Macro. He is an international fixed income research analyst with a regional focus on Central and Eastern European countries.

Dr. Korpos received a Ph.D. in economics from Tilburg University in the Netherlands, where he investigated monetary regimes in open economies. He holds a B.A. in finance and banking from Babes-Bolyai University in Romania, and an M.A. in economics from the Central European University in Hungary.

VIVEK AHUJAPortfolio Manager, Research Analyst Templeton Global Macro

Singapore, Singapore

Vivek Ahuja is a portfolio manager and research analyst for Templeton Global Macro. He is responsible for the analysis of macroeconomic trends and developments in Asian emerging market economies and financial systems. Prior to joining Franklin Templeton, Mr. Ahuja worked in various financial institutions in India in the areas of fixed income investments and macro research.

Mr. Ahuja earned his bachelor of commerce and master’s degree in finance from Mumbai University.

CHRISTINE YUHUI ZHUVP, Director of Portfolio Construction and Quantitative AnalysisTempleton Global Macro


Christine Yuhui Zhu is a vice president, portfolio manager and director of portfolio construction and quantitative analysis for Templeton Global Macro. She focuses on portfolio construction, derivatives/quantitative strategies in global market, performanceattribution and risk management. Ms. Zhu joined Franklin Templeton in 2007.

Ms. Zhu received an M.B.A. with investment focus from the University of California, Berkeley, and earned her M.S. in computerscience and engineering from the University of Notre Dame. She is fluent in Mandarin.


42



3899

RYAN FERSTER, CFAQuantitative Research AnalystTempleton Global Macro


Ryan Ferster is a quantitative research analyst for Templeton Global Macro. Mr. Ferster manages the internal portfolio administration systems, performs quantitative research including portfolio construction, fixed income security pricing, and portfolio risk management and performance attribution, and researches performance dispersion. He also supports the portfolio managers and traders’ day to day workflow.

Mr. Ferster holds a B.S. in computer engineering, and an M.S. in computer science, from Columbia University. He is a Chartered Financial Analyst (CFA) charterholder.

JAAP WILLEMSQuantitative Research AnalystTempleton Global Macro

Singapore, Singapore

Jaap Willems is a quantitative research analyst for Templeton Global Macro. In his role he supports the rebalancing efforts of separate accounts and provides quantitative analytic support around performance and risk attributes of funds as well as separate accounts to portfolio managers, traders and research analysts.

Jaap joined Franklin Templeton in 2015 after working for 7 years in various investment risk, actuarial/asset liability management companies, most recently at ING Group and Schroders.

Jaap holds a B.S. in international economics and an M.S. in business administration (risk and portfolio management) from the University of Groningen in the Netherlands.

MICHAEL MESSMERVice President, Senior TraderTempleton Global Macro


Michael Messmer is the lead trader for Templeton Global Macro. Mr. Messmer is responsible for trading investment grade and sub-investment grade global government treasuries, currencies and sovereign bonds. Mr. Messmer also provides relative value, yield curve and technical analysis. He joined Franklin Templeton in 2001 and participated in the Futures Associate Program.

Mr. Messmer earned his B.S. in economics with an emphasis in finance from Southern Methodist University.

MATTHEW HENRYSenior TraderTempleton Global Macro


Matthew Henry is a senior trader for Templeton Global Macro. Mr. Henry trades investment grade and sub-investment grade global bonds and currencies. Mr. Henry joined Franklin Templeton in 2006 and participated in the Futures Associate Program.

Mr. Henry holds a B.S. in management science and engineering from Stanford University.


43



3899

ANDREW MESICSenior TraderTempleton Global Macro


Andrew Mesic is a senior trader for Templeton Global Macro, supporting foreign exchange and investment grade global bond traders. Mr. Mesic joined Franklin Templeton in 2007 and participated in the Futures Associate Program.

Mr. Mesic holds a B.A. in economics and international relations from the University of California, San Diego.

MICHAEL SHEEHANSenior Trader—DerivativesTempleton Global Macro


Michael Sheehan is a senior trader for Templeton Global Macro, responsible for derivatives trading and strategy across globalasset markets.

Mr. Sheehan joined Franklin Templeton in 2018, previously having traded at BlackRock and Bank of America/Merrill Lynch.

He holds a B.S. in computer science from the University of Notre Dame.

CHRIS MYERSTraderTempleton Global Macro


Chris Myers is a trader for Templeton Global Macro. Mr. Myers joined Franklin Templeton in 2011 and previously worked for Bank of New York Mellon.

Mr. Myers holds a B.S. in economics from the University of Central Florida.

KEVIN NESTTraderTempleton Global Macro


Kevin Nest is a trader for Templeton Global Macro. Mr. Nest joined Franklin Templeton in 2014 and previously worked for Standard Chartered Bank.

Mr. Nest holds a B.S. in finance and economics from Fordham University.


44



3899

The Templeton Global Macro Group also includes 2 experienced research associates.

ELSA GOLDBERGVice President, Institutional Portfolio ManagerTempleton Global Macro


Elsa Goldberg is a vice president and institutional portfolio manager for Templeton Global Macro. As an integrated member of the Templeton Global Macro team, Ms. Goldberg is the principal conduit to provide perspective and understanding regarding theteam’s investment strategies to a broad range of clients globally. Previously, she was director of the Global Fixed Income Product Management team at Franklin Templeton.

Ms. Goldberg holds a bachelor’s degree in econometrics from the University of Paris Pantheon-Sorbonne and a master’s degree in money, banks and finance from the University of Paris Pantheon-Assas. Ms. Goldberg is a certified European Financial Analyst.

RICHARD HERBERTInstitutional Portfolio ManagerTempleton Global Macro


Richard Herbert is an institutional portfolio manager responsible for the Templeton Global Macro strategies at Franklin Templeton.

As an integrated member of the investment team, Mr. Herbert represents the Global Macro strategies by communicating the team's investment philosophy, process, positioning and macro outlook to domestic and international clients, as well as to external gatekeepers and decision makers. Previously, Mr. Herbert was a senior product manager with the Global Fixed Income Product Management team at Franklin Templeton.

Mr. Herbert joined Franklin Templeton in 2011 and earned a bachelor's degree in business finance, economics and statistics from California Polytechnic State University. He is also a Chartered Financial Analyst (CFA) charterholder.


45


46

Module: Additional Resources



Franklin Templeton Fixed Income

1. This unit is comprised of investment professionals located in affiliates of and joint venture partners with Franklin Templeton Investments. Reference to Local Asset Management is in relation to fixed income teams (excluding equity).2. 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 anintegral component of our overall fixed income research efforts.3. Investment professionals include portfolio managers, analysts and traders.CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.As of 30 June 2019.

Quantitative: David Yuen, CFA, FRM, 6 Professionals

Corporate Credit

Global Sovereign/ Emerging Markets

Mortgages Bank Loans Municipals Local Asset Management1

Glenn Voyles, CFAMatt Fey, CFA

John BeckWilliam Ledward, Ph.D.

Roger Bayston, CFA Reema Agarwal, CFA Sheila Amoroso Argentina, Australia, Brazil, Canada, China,2India, Malaysia, Mexico, Poland, South Korea and UAE







Global Macro

Global Sovereign Local Emerging Market Debt


Fixed Income Policy Committee | Co-Chairs: Sonal Desai and Michael Materasso

Michael Hasenstab, Ph.D.Chief Investment Officer

Sonal Desai, Ph.D.Chief Investment Officer

170+ Dedicated Fixed Income Investment Professionals3

62CFA Charterholders

13 Ph.D.s

57 M.B.A.s

0301


47


Franklin Templeton Fixed Income

On the Ground Worldwide

Local Asset Management is comprised of investment professionals located in affiliates of and joint venture partners with Franklin Templeton Investments. Reference to Local Asset Management is in relation to fixed income teams (excluding equity).1. Individual is not an employee of Franklin Resources, Inc. (FRI). However, this individual is part of our joint venture acquisitions worldwide and is an integral component of our overall fixed income research efforts.CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.As of 30 June 2019.

A Specialised Local Asset Management (LAM) Team

Name TitleYears Experience

Sonal Desai, Ph.D. Chief Investment Officer, Fixed Income 25

Renato S. Pascon Portfolio Manager, Brazil 16

Mohieddine Kronfol Portfolio Manager, Middle East/North Africa 23

Sharif Eid Portfolio Manager, Middle East/North Africa 12

Franck Nowak Research Analyst, Middle East/North Africa 14

Santosh Kamath Portfolio Manager, India 26

Sachin Desai Portfolio Manager, India 19

Umesh Sharma, CFA Portfolio Manager, India 19

Kunal Agrawal Portfolio Manager, India 13

Pallab Roy Research Analyst, India 18

Amit Jain Research Analyst, India 11

Sang Hoon Matthew Baek Portfolio Manager, Research Analyst, South Korea

19

Min Geun Joo, CFA, FRM Research Analyst, South Korea 13

Chee Young Jeon Jr Trader, South Korea 2

Tracy Liu, CFA1 Portfolio Manager, China 16

Hanifah Hashim Portfolio Manager, Malaysia 25

Name TitleYears Experience

Ivy Choo Research Analyst, Malaysia 14

Daniel Koh Research Analyst, Malaysia 11

Andrew Canobi, CFA Portfolio Manager, Australia 25

Chris Siniakov Portfolio Manager, Australia 25

Jennifer Wee, CFA Research Analyst, Australia 13

Joshua Rout Research Analyst/Trader, Australia 8

Timothy Heyman, CBE CIO LAM Mexico, Mexico 41

Ramse Gutierrez, CFA Head of Investment Operations, Mexico 17

Luis Gonzali Saucedo, CFA Portfolio Manager, Mexico 13

Jorge Marmolejo Hernandez, CFA Portfolio Manager, Mexico 12

Nadia Montes de Oca Vargas Investment Analyst, Mexico 7

Michal Oleszkiewicz, CFA Portfolio Manager, Poland 19

Thomas O’Gorman, CFA Portfolio Manager, Canada 29

Darcy Briggs, CFA, FRM Portfolio Manager, Canada 25

Adrienne Marvi Young, CFA VP, Director of Research, Canada 24

Brian Calder Trader, Canada 20

Sevrika Galipeau, CFA Trader, Canada 12

1785


48


A Specialised Local Asset Management (LAM) Team

49

Module: Performance Attribution



Diverse Return Sources in Diverse MarketsPerformance Attribution Summary (Calendar Year)Templeton Emerging Markets Bond Fund (USD) vs. Cash (2009–2018)1

Performance attribution for the Templeton Emerging Markets Bond Fund (USD)—Gross of Fees is historical and may not reflect current or future portfolio characteristics1. Performance attribution may change depending on factors such as market and economic conditions.2. Currencies can be overstated because they can be used to hedge out certain market risks, such as interest rate risk, due to the negative correlation between the exchange rate and the factor that the team is attempting to hedge.A particular factor might also affect positions that are attributed to one or both of the other categories. Therefore, decomposing the attribution into these three categories, without regard to hedging, could lead currencies to be overstated.Past performance is not an indicator or a guarantee of future performance.

Three Sources of Potential Alpha Over Time

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Interest Rates (Duration) 3 2 1 2 1 1 1 1 1 1

Currencies2 2 3 3 3 3 3 3 3 3 3

Credit 1 1 2 1 2 2 2 2 2 2

Greatest Contribution to Performance Ranked by Contribution to Alpha Second Greatest Contribution to Performance Least Contribution to Performance

3900


50


Three Sources of Potential Alpha Over Time

51

Module: Process Implementation Examples



Potential Alpha Sources Can Vary from Country to Country with the Economic Cycle

Navigating Global Divergence

Hypothetical

Exposure

Duration

Currency

Credit

REDUCE

UNHEDGED

EXTEND

Hypothetical

Exposure

Duration

Currency

Credit

EXTEND

HEDGED

REDUCE

Strong Growth Environment

Yield Curve

Currencies

Credit Quality

Weak Growth Environment

Yield Curve

Currencies

Credit Quality

Yield Curve Seeking to position the portfolio to benefit from declining interest rates or to help mitigate the potential impact to the portfolio during periods of rising rates.

Currencies Seeking to position the portfolio in currencies we view as the most attractive and hedge currency risks.

Credit Seeking to capture opportunities for strong growth and improving credit quality in select countries, which may occur during periods of rising inflation and growth.

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52

This is a hypothetical example intended solely to illustrate our investment process. It is for illustrative purposes only and is not intended to reflect any actual positioning of the portfolio and does not constitute investment advice.


Navigating Global Divergence

1. Sector and duration strategies may change depending on factors such as market and economic conditions.Market value figures reflect the trading value of the investments. Portfolio breakdown percentages may not total 100% and may be negative due to rounding, use of any derivatives, unsettled trades or other factors.Average duration figures reflect certain derivatives held in the portfolio (or their underlying reference assets.)Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.

Sector and Duration Strategy

0

1

2

3

4

5

6

7

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec-0

6

Jun-

07

Dec-0

7

Jun-

08

Dec-0

8

Jun-

09

Dec-0

9

Jun-

10

Dec-1

0

Jun-

11

Dec-1

1

Jun-

12

Dec-1

2

Jun-

13

Dec-1

3

Jun-

14

Dec-1

4

Jun-

15

Dec-1

5

Jun-

16

Dec-1

6

Jun-

17

Oct-1

7

Dec-1

7

Feb-

18

Apr-1

8

Jun-

18

Aug-

18

Oct-1

8

Dec-1

8

Feb-

19

Aver

age D

urat

ion

(Yea

rs)

Sect

or A

lloca

tion—

Mark

et V

alue (

%)

Local Currency Govt/Agency BondsInvestment Grade

Local Currency Govt/Agency BondsNon-Investment Grade

Non-Local Currency SovereignInvestment Grade

Non-Local Currency SovereignNon-Investment Grade

Corporate Investment Grade

Corporate Non-Investment Grade

Supranational

Other

Cash & Cash Equivalents

Duration

3901

Templeton Emerging Markets Bond Fund1

As of 31 March 2019

Mar-1

9


53


Sector and Duration Strategy

Managing Duration While Still Seeking Attractive YieldsTempleton Emerging Markets Bond FundDecember 2006–March 2019

All portfolio holdings are subject to change. Yield to Maturity and Average Duration figures reflect certain derivatives held in the portfolio (or their underlying reference assets).The information is historical and may not reflect current or future portfolio characteristics.

Active Duration Management

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

Dec-0

6Ma

r-07

Jun-

07Se

p-07

Dec-0

7Ma

r-08

Jun-

08Se

p-08

Dec-0

8Ma

r-09

Jun-

09Se

p-09

Dec-0

9Ma

r-10

Jun-

10Se

p-10

Dec-1

0Ma

r-11

Jun-

11Se

p-11

Dec-1

1Ma

r-12

Jun-

12Se

p-12

Dec-1

2Ma

r-13

Jun-

13Se

p-13

Dec-1

3Ma

r-14

Jun-

14Se

p-14

Dec-1

4Ma

r-15

Jun-

15Se

p-15

Dec-1

5Ma

r-16

Jun-

16Se

p-16

Dec-1

6Ma

r-17

Jun-

17Se

p-17

Oct-1

7No

v-17

Dec-1

7Ja

n-18

Feb-

18Ma

r-18

Apr-1

8Ma

y-18

Jun-

18Ju

l-18

Aug-

18Se

p-18

Oct-1

8No

v-18

Dec-1

8Ja

n-19

Feb-

19Ma

r-19

Aver

age D

urat

ion

(Yea

rs)

Yield

to M

atur

ity (%

)

Templeton Emerging Markets Bond Fund—Yield to Maturity Templeton Emerging Markets Bond Fund—Average Duration

3902


54


Active Duration Management

55

Environmental, Social & Governance



6329

TGM-ESG Index—Scoring Methodology

TGM-ESGI Proprietary Methodology• Select 13 indicators that we believe would have the most significant economic and valuation impact

• Assign each country a current and projected score on the 13 indicators classified into one of the three dimensions: Environmental, Social and Governance

• Rate countries on a scale from 0 to 10, with 10 being the highest

• Calculate an average score on each of the three dimensions: Environmental, Social and Governance

• A final composite ESG score is calculated for each country with a weighting of 40% for governance, 40% for social and 20% for environment

– Environmental receives a lower weighting as impact on the economy often occurs over significantly longer time horizons than governance and social factors

Benefits to our approach• TGM-ESG Index ranks not only levels but also trends

– Favours countries with flat or improving scores rather than current level

– Prevents disproportionate allocation to wealthier countries


56


TGM-ESG Index—Scoring Methodology

6332

Source: Franklin Templeton Investments (FTI), as of March 31, 2018, 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 organization 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 Source: TGM-ESGI.For illustrative and discussion purposes only.

Developed Countries Usually Exhibit Higher ESG Scores

TGM-ESGI Scores by CountryCurrent Level As of 31 December 2018

0

10

20

30

40

50

60

70

80

90

100

Vene

zuela

Nige

riaTa

nzan

iaEc

uado

rKe

nya

Egyp

tZa

mbia

Ukra

inePh

ilippin

esInd

ones

iaSr

i Lan

kaUg

anda

India

Ghan

aBr

azil

Russ

iaTu

rkey

Vietn

amCo

lombia

Gree

cePe

ruMe

xico

South

Afric

aAr

genti

naCh

inaSe

rbia

Thail

and

Urug

uay

Croa

tiaCh

ile Italy

Malay

siaHu

ngar

yPo

land

Slov

akia

Lithu

ania

Spain

Portu

gal

Kore

aIsr

ael

Fran

ceJa

pan

Czec

h Rep

ublic UK

Nethe

rland

sIre

land

Germ

any

Austr

alia

New

Zeala

nd USSw

eden

Norw

aySi

ngap

ore

Switz

erlan

dCa

nada

Denm

ark

TGM-

ESG

Curre

nt S

core

High

er is

Bet

ter


57


Developed Countries Usually Exhibit Higher ESG Scores

6335

Source: TGM-ESGI; IMF World Economic Outlook.For illustrative and discussion purposes only. TGM-ESGI scores as of 31 December 2018. GDP per Capita values as of 31 December 2018.

Strong Relationship between GDP per Capita and ESG Score

Wealthier countries have greater potential to divert financial resources toward education, health, infrastructure and an improved standard of livingTGM-ESGI Scores vs. GDP per Capita

Developed Markets Emerging Markets

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

0 1 2 3 4 5 6 7 8 9 10

GDP

Per C

apita

(USD

)

TGM-ESGI Score


58


Strong Relationship between GDP per Capita and ESG Score

Source: TGM-ESGI; IMF World Economic OutlookFor illustrative and discussion purposes only. Medium–term projections are for the next 3 years.Source: TGM-ESGI; IMF World Economic Outlook.For illustrative and discussion purposes only. Medium-term projections are for the next 3 years.Source: TGM-ESGI; IMF World Economic OutlookFor illustrative and discussion purposes only. Medium–term projections are for the next 3 years.Source: TGM-ESGI; IMF World Economic Outlook.For illustrative and discussion purposes only. Medium-term projections are for the next 3 years.Source: TGM-ESGI; IMF World Economic OutlookFor illustrative and discussion purposes only. Medium–term projections are for the next 3 years.Source: TGM-ESGI; IMF World Economic Outlook.For illustrative and discussion purposes only. Medium-term projections are for the next 3 years.

6338

TGM-ESGI—Favouring Flat or Improving ESG Scores Rather Than Current Levels

TGM-ESGI Scores Main Changes by CountryCurrent vs. Projected As of 31 December 2018

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

8

9

Polan

dIta

ly USVe

nezu

elaTu

rkey

Hung

ary

Czec

h Rep

ublic

Sing

apor

eGe

rman

ySp

ainSo

uth A

frica

China UK

Nethe

rland

sJa

pan

Sri L

anka

Ugan

daTa

nzan

iaRu

ssia

Israe

lSw

eden

Nige

riaFr

ance

Kore

aUk

raine

Portu

gal

Irelan

dPh

ilippin

esCa

nada

Austr

alia

New

Zeala

ndMe

xico

Urug

uay

Norw

ayDe

nmar

kSw

itzer

land

Slov

akia

Lithu

ania

Croa

tiaZa

mbia

Malay

siaEc

uado

rKe

nya

Gree

ceVi

etnam

Thail

and

Colom

biaCh

ileEg

ypt

Ghan

aPe

ruSe

rbia

Indon

esia

India

Braz

ilAr

genti

na

TGM-

ESGI

Sco

re C

hang

es (C

urre

nt vs

. Pro

jecte

d)

Score Improvement

Score Deterioration


59


TGM-ESGI—Favouring Flat or Improving ESG Scores Rather Than Current Levels

Guides How We Work• Our primary objective is to deliver exceptional investment management through an active fundamental

approach…while always acting in the best interests of our clients and shareholders • As a fiduciary, we recognise that ESG considerations are a driver of long-term investment performance and

thus affect our business and the companies we invest in• Our approach to ESG is one of the many strengths of our organisation

ESG considerations at the corporate level that impact our business:

Environmental ImpactEnergy usage

Greenhouse gases

Waste/recycling

Water consumption

Social FactorsDiversity and inclusion

Talent management(attracting, retaining top talent)

Charitable giving

Customer privacy and data security

Employee volunteering

GovernanceAnti-money laundering

Code of ethics/conduct

Compliance

Executive compensation

Enterprise risk management

ESG investment integration

5888


60


Franklin Templeton—ESG and Corporate Sustainability

ESG considerations are a driver of long-term investment performance • We embed ESG best practices and analytics in our investment processes, enhancing our traditional financial analysis to open new

investment opportunities, help mitigate risk and seek to enhance long-term returns

Our dedicated specialist ESG team collaborates with the investment teams to:

Franklin Templeton—Environmental, Social and Governance (ESG) Investment Integration

Independent Risk ManagementIntegrate ESG analytics into fund reviews and risk reports

Dedicated ESG TeamTrack trends and share

industry best practices with investment teams Portfolio Construction &

Management

Investment Portfolios

Investment Research & Analysis

ESG considerations embedded in security evaluation processes

Educate and engage to understand the impact and scope of ESG considerations and consult on

emerging ESG issues

Evaluate ESG-related research practices and identify opportunities

to refine and deepen insights

Enhance analysis by incorporating independent, unbiased ESG

research and analytics

6312


61


Franklin Templeton—Environmental, Social and Governance (ESG) Investment

Integration

Glossary


62


Average Credit Quality: The average credit quality reflects the holdings of the underlying issues, based on the size of each holding and ratings assigned to each based on rating

agency assessments of its creditworthiness.

Average Duration: A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. Duration is expressed as a number of

years. The weighted average duration of a fund reflects the effective duration of the underlying issues, based on the size of each holding.

Average Weighted Maturity: An estimate of the number of years to maturity, taking the possibility of early payments into account, for the underlying holdings.

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.

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.

Yield to Maturity: Yield to Maturity ('YTM') also known as the 'Gross Redemption Yield' or 'Redemption Yield'. The rate of return anticipated on a bond if it is held until the maturity date.

YTM is considered a long-term bond yield expressed as an annual rate. The calculation of YTM takes into account the current market price, par value, coupon interest rate and time to

maturity. It is also assumed that all coupons are reinvested at the same rate.

Yield to Worst: The yield to maturity if the worst possible bond repayment takes place. If market yields are higher than the coupon, the yield to worst would assume no prepayment. If

market yields are below the coupon, the yield to worst would assume prepayment. In other words, yield to worst assumes that market yields are unchanged. Normally this value is not

aggregated since it varies but if a weighted average value is used for a Fund then the figure will reflect the values of the underlying issues, based on the size of each holding.

Important Disclosures



63

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.

Documents

Templeton Emerging Markets Bond Fund