TempletonGlobalMacro FranklinTempletonInvestmentFunds TempletonGlobalBondFund · PDF file · 2017-11-03JP Morgan Global Government Bond Index 6 TempletonGlobalBondFund-A(acc)USD vs.JPMorganGlobalGovernmentBondIndex

Franklin Templeton Investment Funds

Templeton Global Bond Fund - A (acc) USD

Templeton Global Macro

Data as of 31 March 2018

Templeton Global Bond Fund

2

Table of Contents

Investment Capabilities Overview............................................................................................3

Strategy Overview.................................................................................................................. 4

A Record of Strong Performance.............................................................................................5

Relatively Moderate to Low Correlations Historically to Other Asset Classes............................6

Discrete Performance............................................................................................................. 7

Prolonged Advances Versus Moderate Declines......................................................................8

A Solid Risk/Reward Profile.....................................................................................................9

Expanding Opportunity Set....................................................................................................10

A Benchmark Worldview.......................................................................................................11

The Global Bond Fund Worldview......................................................................................... 12

Navigating Global Divergence............................................................................................... 13

On-the-Ground Research......................................................................................................14

Insight and Information Sharing Around the Globe................................................................. 15

Investment Philosophy..........................................................................................................16

Investment Process.............................................................................................................. 17

Global Research—Multiple Perspective/Lenses.....................................................................18

Country Research Can Help to Identify Potential Alpha Sources............................................ 19

Portfolio Construction............................................................................................................20

Portfolio Positioning.............................................................................................................. 21

Summary of Advantages.......................................................................................................22

Summary..............................................................................................................................23

What are the Key Risks?......................................................................................................24

Portfolio Characteristics........................................................................................................25

Geographic Allocation...........................................................................................................26

Currency Allocation...............................................................................................................27

Sector Allocation...................................................................................................................28

Quality Allocation..................................................................................................................29

Maturity Allocation................................................................................................................30

Historical Performance..........................................................................................................31

Calendar Year Returns......................................................................................................... 32

Performance Risk Statistics.................................................................................................. 33

Appendix............................................................................................................34

Management Profiles.......................................................................................35

Templeton Global Macro Management Profiles......................................................................36

Module: Additional Resources........................................................................40

A Specialised Local Asset Management (LAM) Team............................................................ 41

Module: Performance Attribution...................................................................42

Three Sources of Potential Alpha Over Time..........................................................................43

Module: Process Implementation Examples.................................................44

Active Duration Management................................................................................................ 45

Important Disclosures...........................................................................................................46

Source: Franklin Templeton Investments (FTI), as of 31 March 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 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.

3


Investment Capabilities Overview

FRANKLIN TEMPLETON INVESTMENTS

Total Combined Assets Under Management : US$737.5 Billion

2

Equity

5

Fixed Income

8

Multi-Asset Solutions

11

Alternatives

AUM

US$315.0 Billion US$290.0 Billion US$124.0 Billion US$16.2 Billion

CAPABILITIES

•

Value

•

Government

•

Income

•

Commodities

•

Deep Value

•

Municipals

•

Real Return

•

Infrastructure

•

Core Value

•

Corporate Credit

•

Balanced/Hybrid

•

Real Estate

•

Blend

•

Bank Loans

•

Total Return

•

Hedge Funds

•

GARP

•

Securitised

•

Target Date/Risk

•

Private Equity

•

Growth

•

Multi-Sector

•

Absolute Return

•

Convertibles

•

Currencies

•

Tactical Asset Allocation

•

Sector

•

Sukuk

•

Managed Volatility

•

Shariah

•

Smart Beta

INVESTMENT

•

Templeton Global Equity Group (1940)

•

Franklin Templeton Fixed Income Group (1970)

•

Franklin Templeton Multi-Asset Solutions (1996)

•

Franklin Real Asset Advisors (1984)

TEAMS

•

Franklin Equity Group (1947)

•

Templeton Global Macro (1986)

•

Franklin SystematiQ (2011)

•

Darby Overseas Investments (1994)

•

Franklin Mutual Series (1949)

•

Franklin LAM-Fixed Income (1993)

•

K2 Advisors (1994)

•

Franklin Templeton Emerging Markets Equity

(1987)

•

Pelagos Capital Management (2005)

Strategy Summary1

• Seek to maximise total investment return consisting of a combination of interest income, currency gains and capital appreciation

• Utilise a benchmark agnostic approach to take advantage of an unconstrained worldview

• Seeks to maintain a longer term volatility profile that is commensurate with that of a traditional global governmentbond index

Investment Focus• Focus on global government and government-related debt securities, global currencies and related derivatives

• Limit below-investment grade country exposure typically to no more than 25%

• May include allocations to both developed and emerging markets

Potential Sources of Value Added• May utilise three independent sources of alpha potential:

– Yield Curve

– Currencies

– Sovereign Credit

Strategy Overview

1794

For investors who seek to:• Diversify a fixed income allocation or an overall portfolio via an unconstrained global bond strategy that has historically had

low to moderate correlations to other asset classes

• Achieve solid, long-term, risk adjusted returns in diverse market conditions by capturing potential alpha opportunities in global fixed income and currencies


4

1. There is no assurance that the strategy will achieve its investment objectives. The strategy is managed in a benchmark unconstrained manner.

Strategy Overview

-4% 1% 6% 11% 16%

-4%

1%

6%

11%

16%

JP Morgan Global Government Bond Index

5


vs. JP Morgan Global Government Bond Index

Monthly Rolling 3-Year Annualised Returns

30 April 2009 to 31 March 2018

A Record of Strong Performance

Tem

pleto

nG

lo

balB

on

dF

un

d-

A(acc)

US

D—

Net

of

Fees

Templeton Global Bond Fund - A (acc) USD outperformed the JP Morgan

Global Government Bond Index 87 out of the 108 monthly rolling 3-year

periods shown

UNDERPERFORMED

OUTPERFORMED


Annualised Total Returns (%)

As of 31 March 2018

Inception

Date 3 Yrs 5 Yrs 10 Yrs

Templeton Global Bond Fund - A (acc) USD—Net

of Fees

28.4.2006 0.63 0.61 4.61

JP Morgan Global Government Bond Index 3.21 1.32 2.26

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.

Annualized rolling periods are plotted on a monthly or quarterly basis as indicated. The leading diagonal line links points of return for the index (lower axis). For every point of return along this line there is a corresponding return for the fund represented by

the blue square (left axis). Any point above the line represents outperformance relative to the index for that period. Any point below the line represents underperformance relative to the index for that period.

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 franklintempleton.lu for current performance.

Discrete Annual Performance (%)

As of 31 March 2018

03/17

03/18

03/16

03/17

03/15

03/16

03/14

03/15

03/13

03/14

Templeton Global Bond Fund - A (acc) USD—Net

of Fees

-0.87 10.06 -6.60 0.63 0.52

JP Morgan Global Government Bond Index 7.61 -3.48 5.85 -3.73 0.90

Templeton Global Bond Fund - A (Mdis) USD5-Year Rolling CorrelationsPeriod Ending 31 March 2018

Relatively Moderate to Low Correlations Historically to Other Asset Classes

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

5 Years Ending 31/03/2018

U.S. Bonds 0.07

High Yield Bonds 0.53

Emerging Markets Sovereign Debt 0.52

U.S. Stocks 0.55

World Stocks1 0.59

FX Carry 0.52

Hedge Funds 0.53

Commodities 0.24

-0.25

0.00

0.25

0.50

0.75

1.00

Dec-0

5

Jul-0

6

Feb-

07

Sep-

07

Apr-0

8

Nov-0

8

Jun-

09

Jan-

10

Aug-

10

Mar-1

1

Oct-1

1

May-1

2

Dec-1

2

Jul-1

3

Feb-

14

Sep-

14

Apr-1

5

Nov-1

5

Jun-

16

Jan-

17

Aug-

17

Mar-1

8

U.S. Bonds High Yield Bonds Emerging Markets Sovereign DebtU.S. Stocks World Stocks¹ FX CarryHedge Funds Commodities

1937


6

1. Source: Morgan Stanley Capital International (MSCI). All MSCI data is provided “as is.” In no event shall MSCI, its affiliates or any MSCI data provider have any liability of any kind in connection with the MSCI data or the information described herein.

Copying or redistributing the MSCI data is strictly prohibited.

Sources: Bloomberg, Citigroup, JP Morgan, Standard & Poor’s, Deutsche Bank, Hedge Fund Research, Inc. STANDARD & POOR’S®, S&P® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC. Standard & Poor’s

does not sponsor, endorse, sell or promote any S&P index-based product. 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 Citigroup High Yield Market Local Currency Index; World Stocks are represented by the MSCI World Index;

Commodities are represented by the S&P GSCI Official Close Index; Emerging Markets Sovereign Debt are represented by the JP Morgan Emerging Markets Bonds Index EMBI Global Composite; FX Carry are represented by the Deutsche Bank G10

Currency Future Harvest Index. 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.

Relatively Moderate to Low Correlations Historically to Other Asset Classes


7

Discrete Performance

Discrete Annual Performance (%)

Inception

Date

03/17

03/18

03/16

03/17

03/15

03/16

03/14

03/15

03/13

03/14

Templeton Global Bond Fund - A (acc) USD—Net of Fees 28.4.2006 -0.87 10.06 -6.60 0.63 0.52

JP Morgan Global Government Bond Index 7.61 -3.48 5.85 -3.73 0.90








As of 31 March 2018

The fund has been able to provide investors with competitive performance results in various market conditions over the time period below. The chart below highlights how the fund’s track record has been through various alternating periods of moderate declines,where short-term performance has lagged, and prolonged advances, where long-term gains have more than offset the short-term declines. The fund’s contrarian strategy is designed to tolerate short-term periods of lagging performance as the management team builds positions in investments that may be out of favour, but may be poised for a rebound. Periods of at least twice the standard deviation of monthly returns were chosen to isolate long-term gains, which the team seeks, and short-term periods of lagging performance from daily and weekly market volatility.

Prolonged Advances Versus Moderate Declines

Cumulative Daily Returns for Each Period—Templeton Global Bond Fund - A (Mdis) USD—Net of FeesAs of 31 December 2017

Average Advance: 21.17%; 11.1 months

Average Decline: -8.60%; 6.5 months

-20%

-10%

0%

10%

20%

30%

40%

Dec-01 Jul-03 Feb-05 Sep-06 Apr-08 Dec-09 Jul-11 Feb-13 Sep-14 May-16 Dec-17

Performance for the Templeton Global Bond Fund - A (Mdis) USD is historical and may not reflect current or future performance. The performance information above is net of management fees and other expenses, assumes reinvestment of any dividends and is in the 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 (Mdis) 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. Charts are for illustrative and discussion purposes only.Past performance is not an indicator or a guarantee of future performance.

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. On average, periods defined as “declines” have been shorter and smaller than periods defined as “advances.”

1892


8

Prolonged Advances Versus Moderate Declines

• Templeton Global Bond Fund - A (Mdis) USD—Net of Fees has provided relatively strong returns with relatively lower volatility compared to many asset classes over the long term

10-Year PeriodAs of 31 December 2017

Performance data represents past performance, which does not guarantee future results. Current performance may differ from figures shown. Investment return and principal value will fluctuate with market conditions, and you may have a gain or a loss when you sell your shares. Please call your Franklin Templeton representative for the most recent month-end performance.

A Solid Risk/Reward Profile

Templeton Global Bond Fund –A (Mdis) USD—Net of Fees

Global Government Bonds

US BondsUS TIPS

Emerging Market BondsHigh Yield Bonds

Hedge Funds

Commodities

Domestic Stocks

World Stocks

Cash

-8

-4

0

4

8

12

-5 0 5 10 15 20

Retu

rn (%

)

Standard Deviation (%)

1891


9

Source: © 2018 Morningstar, as of 31 December 2017. Global Government Bonds are represented by the JP Morgan Global Government Bond Index; U.S. Bonds are represented by the Bloomberg Barclays U.S. Aggregate Bond Index; U.S. TIPS are

represented by the Bloomberg Barclays U.S. Treasury TIPS Index; Emerging Market Bonds are represented by the JP Morgan Emerging Markets Bond Index Global; High Yield Bonds are represented by the Credit Suisse High Yield Index;

Commodities are represented by the Bloomberg Commodity Index; REITs are represented by the FTSE NAREIT All REITs Index; World Stocks are represented by the MSCI World Index; U.S. Stocks are represented by the S&P 500 Index; Hedge

Funds are represented by the Credit Suisse Tremont Hedge Fund Index; Cash is represented by the Citigroup (3M) Treasury Bill Index. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales

charges.

All MSCI data is provided “as is.” The portfolio described herein is not sponsored or endorsed by MSCI. In no event shall MSCI, its affiliates or any MSCI data provider have any liability of any kind in connection with the MSCI data or the portfolio

described herein. Copying or redistributing the MSCI data is strictly prohibited.

STANDARD & POOR’S®, S&P® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC. Standard & Poor’s does not sponsor, endorse, sell or promote any S&P index-based product.

Volatility as measured by annualised standard deviation.


A Solid Risk/Reward Profile

Total Government Debt Outstanding: US$55.0 trillionAs of 30 September 2017

Source: FactSet. Important data provider notices and terms available at www.franklintempletondatasources.com. G3 includes U.S., Japan and Eurozone. Developed and developing countries are based on IMF lists. All nations may not be included due to data availability. Data from January 1996 through December 1999 is reported annually.Charts are for illustrative and discussion purposes only.

Expanding Opportunity Set

US$31.8 tn

US$4.7 tnUS$3.9 tn

0524

0

10

20

30

40

50

60

0

10

20

30

40

50

60

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Num

ber o

f Cou

ntrie

s Ava

ilabl

e for

Inve

stm

ent

Debt

Out

stan

ding

(tril

lions

of U

.S. d

ollar

s)

Developing Developed ex-G3 G3 Number of Countries

US$41.7 tn

US$5.4 tn

US$7.8 tn


10

Expanding Opportunity Set

Historic Country Allocation of JP Morgan Global Government Bond Index30 June 2005–31 December 2017

A Benchmark Worldview

13Country ExposuresThe eurozone, Japan and the USA represented 89% of the benchmark

1804


11

For illustrative purposes only. The Fund is managed in a benchmark unconstrained manner. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges.

The countries depicted on this slide represent those that the index had exposure to at any time during the stated time period, and are not necessarily the countries that the index had exposure to on 31 December 2017.

A Benchmark Worldview

• Since 30 June 2005, the Templeton Global Bond Fund has invested in 50 countriescompared to 13 countries for the JP Morgan Global Government Bond Index (the benchmark)

Historic Country Allocation of the Templeton Global Bond Fund30 June 2005–31 December 2017

The Global Bond Fund Worldview (DA) vs The Global Bond Plus Worldview

51Country Exposures

1895


12

Country allocations may change without notice and are not a complete analysis of every material fact regarding any country. The chart should not be viewed as investment recommendations, but is intended to provide insight into the portfolio’s country

holdings. Holdings are subject to change.

The Global Bond Fund Worldview

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

Navigating Global Divergence

Hypothetical

Exposure

Duration

Currency

Sovereign Credit

REDUCE

UNHEDGED

EXTEND

Hypothetical

Exposure

Duration

Currency

Sovereign 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.

Sovereign 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.

1844


13

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

On-the-Ground Research

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

181 Global Fixed Income Professionals:■ Global Fixed Income Offices

♦ Fixed Income Local AssetManagement (LAM) Offices2

123 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

0540


14

1. Includes individuals that are not employees of Franklin Resources, Inc. (FRI) or wholly owned subsidiaries of FRI. However, these individuals are part of our joint venture or strategic partnership relationships worldwide and are an integral component

of our overall fixed income research efforts.

2. This unit is comprised of investment professionals located in affiliates of and joint venture partners with Franklin Templeton Investments.

3. Includes the Templeton Global Equity Group and the Templeton Emerging Markets Equity Group.

As of 31 March 2018.

On-the-Ground Research

Over 180 global fixed income and over 120 global equity investment professionals.

Insight and Information Sharing Around the Globe

Local Asset Management1

Average Experience: 14 Years*

Franklin TempletonFixed Income


Templeton Global EquityResearch Team


Templeton Emerging Markets Equity Research Team

Average Experience: 15 Years*WEEKLY MONTHLYTempleton

Global Macro San Mateo, Singapore

20 Investment Professionals


WEEKLY MONTHLY

0539


15

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.


Insight and Information Sharing Around the Globe

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

potential

• Integrating global macroeconomic analysis 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


16

Investment Philosophy

Multiple Research Lenses Can Lead to High-Conviction Opportunities

Investment Process

Yield CurveIdeas

Currency Ideas

Sovereign Credit Ideas

Risk Modelling• VaR Analysis• Correlation Analysis• Scenario/Stress

Testing

Trading• Trade Structuring• Market Flows• Local Execution/

Settlement• Liquidity Analysis

PORTFOLIO

Global Research Lenses

Three Potential Sources of Alpha

Portfolio Construction and Implementation

Identification of High-Conviction

Opportunities

Macro Models/Analysis

In-DepthCountry Analysis

Local AssetManagement1Perspective

Management Team• Potential Return vs.

Expected Risk• Global Allocations

Review/Performance AttributionReview Review

1812


17


The above chart is for illustrative and discussion purposes only.

Investment Process

Global Research—Multiple Perspectives/Lenses

COUNTRY ANALYSIS• Fundamentals• Monetary and fiscal policy• Macroeconomic disequilibria• Capacity for change and

policy implementation• Country visits• Meetings with policymakers

MACRO MODELLING• Currency and interest rate valuation• Currency models

– Purchasing Power Parity (PPP), equilibrium exchange rates, interest rate differentials

• Interest rate models– Econometric analysis, Taylor

Rule, yield curve analysis• Trading

– Short-term technicals and flows• Ad hoc thematic research

– Scenario, shock and theme/trend analysis

LOCAL PERSPECTIVE1

• Local/regional perspectives– Australia– Brazil– Canada– China2

– India– Malaysia– Mexico– Poland– South Korea– United Arab Emirates

0537


18


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 an integral component

of our overall fixed income research efforts.

Global Research—Multiple Perspective/Lenses

Goal of Isolating Desired Risks

Hypothetical Examples

Country Research Can Help to Identify Potential Alpha Sources

MEXICO SOUTH KOREA AUSTRALIA

Hypothetical Situation and Country AnalysisEconomic activity in Mexico is slowing down,which we believe will eventually force the centralbank to cut interest rates and the Mexican peso to depreciate.

Hypothetical Situation and Country AnalysisKorean sovereign credit appears to be priced at distressed levels caused by liquidity issues. However, our analysis does not reveal a solvency problem.

Hypothetical Situation and Country AnalysisAustralia is among the first countries to tighten their monetary policy. As a result, we expect the Australian economy to recover at a faster pace and the currency to strengthen.

Proposed Course of ActionTake advantage of attractive interest rates in Mexico but without exposure to the Mexican peso.

Proposed Course of ActionTake advantage of attractive yield and spread compression opportunities in Korean sovereign credits.

Proposed Course of ActionTake advantage of the appreciation of the Australian dollar.

YIELD CURVE SOVEREIGN CREDIT CURRENCY

Hypothetical Portfolio Decision• Purchase peso-denominated 20-year Mexican bond• Hedge out peso risk by purchasing forex forward

Hypothetical Portfolio Decision• Purchase Korean sovereign credit

Hypothetical Portfolio Decision• Purchase short-term government bonds

denominated in Australian dollars

1818


19

These hypothetical examples are for illustrative purposes only to demonstrate our investment process. They are not intended to reflect any past, current or future holdings of the portfolio and should not be considered as

investment advice or an investment recommendation.

Country Research Can Help to Identify Potential Alpha Sources

*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

5397

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 local currency bonds, currency forwards, interest rate swaps, hard currency bonds, 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

Bonds

Local Currency

Bonds

FX Forwards*

Interest Rate

Swaps*

Currency


20

Portfolio Construction

As of 31 March 2018

Portfolio Positioning

Potential Alpha Sources Current Positioning

Defensive Stance Due to Concerns about Rising Interest Rates• We remained positioned for rising yields by maintaining low overall portfolio duration and holding negative duration

exposure to US Treasuries • Outside of the developed markets, we held select duration exposures in specific countries that we believe have

attractive risk/return profiles, relatively higher yields and favourable macro conditions for yields to remain even or shift lower

YIELD CURVE

Favourable Opportunities in Select Currencies • A resilient US economy and rising US Treasury yields should increasingly magnify the fundamental differences

between healthy and vulnerable economies, potentially leading to respective appreciations or depreciations against the US dollar

• We maintained net-negative positions in the Japanese yen and the euro as we continue to expect highly accommodative monetary policies from the Bank of Japan and the European Central Bank

• We favour currencies in countries that we believe have strong growth fundamentals and compelling interest-rate differentials CURRENCIES

Selectively Finding Sovereign Credit Opportunities• Continued to selectively invest in credit opportunities across emerging markets, with a particular focus on credit

exposures in economies with strong growth indicators

SOVEREIGN CREDIT

1822


21

The foregoing information reflects our analysis, opinions and portfolio information as of 31 March 2018. 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.

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


22

Summary of Advantages


23

Fund Identifiers

ISIN Code LU0252652382

SEDOL Code B13QQC5

Bloomberg Code FTGBFAC LX


As of 31 March 2018

Summary

Portfolio Manager(s)

Michael Hasenstab, PhD United States

Sonal Desai, PhD United States

Fund Ratings (31 March 2018)

Overall Morningstar Rating™

««««

Summary of Investment Objective

The Fund aims to maximise total investment return consisting of a combination of

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

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

government or government-related issuers worldwide.

Morningstar Category™ Global Bond

Investment Style Fixed Income - Governments

Fund Inception Date 28 February 1991

Share Class Inception Date 28 April 2006

Benchmark JP Morgan Global Government Bond Index

Base Currency for Fund USD

Base Currency for Share Class USD

Total Net Assets (USD) 16,783,468,708.65

Asset Allocation Fixed Income: 83.70%

Cash & Cash Equivalents: 16.30%

Number of Holdings 173

Total Expense Ratio 1.41%

© Morningstar, Inc. 2018. 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.

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

Asset Allocation figures reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.




24

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 issued by government or government-related entities in any country and in derivatives. Such securities and derivatives have

historically been subject to price movements, generally due to interest rates, foreign exchange rates 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, currency risk, derivatives risk, liquidity risk, emerging markets 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?


25

Portfolio Characteristics



As of 31 March 2018


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

Source: Franklin Templeton Investments. 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.

Portfolio Index

Average Credit Quality BBB+ AA

Average Duration -0.84 Yrs 8.00 Yrs

Average Weighted Maturity 2.91 Yrs 9.96 Yrs

Yield to Maturity 8.00% 1.36%

Yield to Worst 7.99% 1.36%

Geographic Allocation


26



As of 31 March 2018

ST CASH AND CASH EQUIVALENTS

OTHER

SUPRANATIONAL

EMU EUROPE

Ukraine

NON-EMU EUROPE

EUROPE

Ghana

MIDDLE EAST / AFRICA

JAPAN

Philippines

India

Indonesia

South Korea

ASIA EX-JAPAN

ASIA

USA

Peru

Argentina

Colombia

Brazil

Mexico

NON-US AMERICAS

AMERICAS

-1% 10% 21% 32% 43% 54%

10.66

-0.92

0.60

0.00

1.10

1.10

1.10

2.11

2.11

0.00

0.36

9.04

10.99

16.63

37.02

37.02

5.33

0.57

4.69

4.83

14.08

19.92

44.09

49.42


Figures reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

Regions Sub-Regions Countries

Portfolio %

Index % Over/Under %

AMERICAS 49.42 40.23 9.18

NON-US AMERICAS 44.09 1.35 42.74

Mexico 19.92 0.00 19.92

Brazil 14.08 0.00 14.08

Colombia 4.83 0.00 4.83

Argentina 4.69 0.00 4.69

Peru 0.57 0.00 0.57

Canada 0.00 1.35 -1.35

USA 5.33 38.89 -33.55

ASIA 37.02 21.87 15.15

ASIA EX-JAPAN 37.02 1.64 35.38

South Korea 16.63 0.00 16.63

Indonesia 10.99 0.00 10.99

India 9.04 0.00 9.04

Philippines 0.36 0.00 0.36

Australia 0.00 1.64 -1.64

JAPAN 0.00 20.23 -20.23

MIDDLE EAST /

AFRICA

2.11 0.00 2.11

Ghana 2.11 0.00 2.11

EUROPE 1.10 37.89 -36.79

NON-EMU EUROPE 1.10 8.26 -7.16

Ukraine 1.10 0.00 1.10

United Kingdom 0.00 7.47 -7.47

Denmark 0.00 0.48 -0.48

Sweden 0.00 0.32 -0.32

EMU EUROPE 0.00 29.63 -29.63

France 0.00 8.09 -8.09

Italy 0.00 7.61 -7.61

Germany 0.00 5.50 -5.50

Spain 0.00 4.73 -4.73

Belgium 0.00 2.01 -2.01

Netherlands 0.00 1.70 -1.70

SUPRANATIONAL 0.60 0.00 0.60

Portfolio %

Index % Over/Under %

OTHER -0.92 0.00 -0.92

ST CASH AND CASH

EQUIVALENTS

10.66 0.00 10.66


27

Currency Allocation





As of 31 March 2018

Euro

NON-EURO

EUROPE

JAPANESE YEN

Australian Dollar

South Korean Won

Philippine Peso

Indonesian Rupiah

Indian Rupee

ASIA EX-JAPAN

ASIA

Ghanaian Cedi

MIDEAST/AFRICA

Peru Nuevo Sol

Argentine Peso

Colombian Peso

Brazilian Real

Mexican Peso

NON-US DOLLAR

U.S. DOLLAR

AMERICAS

-45% -2% 41% 84% 127% 170%

-44.52

0.00

-44.52

-41.29

-10.67

0.09

0.36

10.99

13.28

14.05

-27.24

2.11

2.11

0.57

4.69

4.83

14.08

20.53

44.69

124.96

169.64

Regions Sub-Regions Currencies

Portfolio % Index % Over/Under %

AMERICAS 169.64 40.23 129.41

U.S. DOLLAR 124.96 38.89 86.07

NON-US DOLLAR 44.69 1.35 43.34

Mexican Peso 20.53 0.00 20.53

Brazilian Real 14.08 0.00 14.08

Colombian Peso 4.83 0.00 4.83

Argentine Peso 4.69 0.00 4.69

Peru Nuevo Sol 0.57 0.00 0.57

Canadian Dollar 0.00 1.35 -1.35

MIDEAST/AFRICA 2.11 0.00 2.11

Ghanaian Cedi 2.11 0.00 2.11

ASIA -27.24 21.87 -49.12

ASIA EX-JAPAN 14.05 1.64 12.41

Indian Rupee 13.28 0.00 13.28

Indonesian Rupiah 10.99 0.00 10.99

Philippine Peso 0.36 0.00 0.36

South Korean Won 0.09 0.00 0.09

Australian Dollar -10.67 1.64 -12.31

JAPANESE YEN -41.29 20.23 -61.53

EUROPE -44.52 37.89 -82.41

NON-EURO 0.00 8.26 -8.26

British Pound 0.00 7.47 -7.47

Danish Krone 0.00 0.48 -0.48

Swedish Krona 0.00 0.32 -0.32

Euro -44.52 29.63 -74.15

Cash & Cash Equivalents

Supranational

Derivatives

Non-Investment Grade

Non-Local Curr. Sovereign Bonds


Investment Grade

Local Curr. Govt/Agency Bonds

-2% 16% 34% 52% 70% 88%

16.30

0.60

-1.23

1.10

1.10

20.88

62.34

83.22


28

Sector Allocation



As of 31 March 2018




Local Curr. Govt/Agency Bonds 83.22 61.11 22.11

Investment Grade 62.34 61.11 1.23

Non-Investment Grade 20.88 0.00 20.88

Non-Local Curr. Sovereign Bonds 1.10 0.00 1.10

Non-Investment Grade 1.10 0.00 1.10

US Treasuries/Agencies 0.00 38.89 -38.89

Derivatives -1.23 0.00 -1.23

Supranational 0.60 0.00 0.60

Cash & Cash Equivalents 16.30 0.00 16.30

Cash

NR

B-

B

BB-

BBB-

BBB

A-

A+

AA-

AA

AA+

AAA

0% 20% 40% 60% 80%




29

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

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

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

rating are assigned the country rating provided by an NRSRO, if available. The NR category consists of rateable securities that have not been rated by an NRSRO. Cash includes equivalents, which may be rated. Derivatives are excluded from this

breakdown.



As of 31 March 2018

Quality Allocation


AAA 0.55 65.20 -64.65

AA+ 6.01 2.01 4.00

AA 15.21 0.00 15.21

AA- 0.00 20.23 -20.23

A+ 0.00 7.61 -7.61

A- 18.75 0.31 18.43

BBB 4.75 0.00 4.75

BBB- 18.32 0.00 18.32

BB- 12.88 0.00 12.88

B 4.26 0.00 4.26

B- 2.94 0.00 2.94

NR 0.03 4.64 -4.61

Cash 16.30 0.00 16.30

Investment Grade

63.58 95.36 -31.78


20.11 4.64 15.47

Cash

16.30 0.00 16.30

30


Maturity Allocation



As of 31 March 2018

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%






0 to 1 Year 38.33 0.00 38.33

1 to 2 Years 10.17 12.10 -1.92

2 to 3 Years 10.95 11.20 -0.25

3 to 5 Years 17.60 19.54 -1.94

5 to 7 Years 11.56 12.37 -0.81

7 to 10 Years 7.57 12.81 -5.24

10 to 15 Years 3.80 8.01 -4.21

15 to 20 Years 0.50 6.01 -5.51

20 to 30 Years -0.48 15.27 -15.75

30+ Years 0.00 2.71 -2.71

Annualised Total Returns (%)

Inception

Date 1 Yr 3 Yrs 5 Yrs 10 Yrs

Since

Incept

Templeton Global Bond Fund - A (acc) USD—Net of Fees 28.4.2006 -0.87 0.63 0.61 4.61 5.82

JP Morgan Global Government Bond Index 7.60 3.21 1.32 2.26 3.91


Historical Performance


As of 31 March 2018







31

Cumulative Performance (%)

Inception

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

Since

Incept

Templeton Global Bond Fund - A (acc) USD—Net of Fees 28.4.2006 0.78 1.13 1.13 -0.87 1.89 3.07 57.00 96.23

JP Morgan Global Government Bond Index 1.54 2.17 2.17 7.60 9.93 6.78 24.99 57.95


32







Calendar Year Returns


As of 31 March 2018

YTD 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

-7%

0%

7%

14%

21%

1.13

2.17

2.20

6.83

4.33

1.57

-5.40 -2.61

1.15

0.67

1.24

-4.50

16.33

1.30

-3.14

7.22

11.67

6.42

18.83

1.90

7.30

12.00

Templeton Global Bond Fund - A (acc) USD—Net of Fees JP Morgan Global Government Bond Index


33

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 Global Government Bond Index.

*Annualised.


As of 31 March 2018

Performance Risk Statistics

1 Yr 3 Yrs* 5 Yrs* 10 Yrs*

Standard Deviation (%):

Templeton Global Bond Fund - A (acc) USD 3.32 6.75 6.14 8.28

JP Morgan Global Government Bond Index 3.36 5.46 5.12 6.25

Tracking Error (%)^^ 5.09 10.00 8.44 9.06

Information Ratio^^ -1.66 -0.26 -0.08 0.26

Sharpe Ratio -0.60 0.02 0.05 0.52


Performance Risk Statistics

34

Appendix


35

Management Profiles


Templeton Global Macro Management Profiles

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

Franklin Advisers, Inc.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.

SONAL DESAI, Ph.D.Senior Vice President, Portfolio Manager,Director of ResearchTempleton Global Macro


Dr. Desai is responsible for shaping the research agenda of Templeton Global Macro, and providing macroeconomic analysis to the fixed income team. Dr. Desai acts as a key resource for the firm’s Fixed Income Policy Committee, which provides policy views on sectors, markets and currencies.

Dr. Desai holds a Ph.D. in economics from Northwestern University and earned a B.A. with honors from Delhi University inNew Delhi.

CALVIN HO, Ph.D.Vice President, Senior Global Macro& Research AnalystTempleton Global Macro

Franklin Advisers, Inc. San Mateo, California, United States

Dr. Ho joined Franklin Templeton Investments in 2005. Currently, he is a vice president and senior global macro & research analyst for Templeton Global Macro. In this position, he specialises in global macroeconomic analysis and global exchange rate modelling.

Dr. Ho earned both a B.A. and a Ph.D. in economics from the University of California, Berkeley. His prior research analysedinternational 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 for Templeton 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.

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36

Templeton Global Macro Management Profiles

Templeton Global Macro Management Profiles (continued)

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


Dr. Valderrama joined Franklin Templeton Investments 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 the United States, Canada, Latin America, Australia, New Zealand and the United Kingdom.

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.

LAURA BURAKREISPortfolio Manager, Research Analyst Templeton Global Macro


Laura Burakreis joined Franklin Templeton Investments in August 2006. She is a portfolio manager and research analyst and has a focus on emerging market corporate debt. She worked in various parts of the World Bank in Washington, D.C. At the World Bank, she assisted governments in the Middle East and North Africa in designing and implementing financial sector reforms. Ms. Burakreis also negotiated the terms of debt issued by the International Bank of Reconstruction and Development in emerging and developed markets.

Ms. Burakreis holds an M.B.A. in finance from the University of Chicago, Graduate School of Business (1987) and an M.A. from the University of Chicago, Center for Middle Eastern Studies (1990). She earned her B.A. in economics from The College at theUniversity of Chicago (1984).

VIVEK AHUJAPortfolio Manager, Research Analyst Templeton Global Macro

Templeton Asset Management Ltd. Singapore, Singapore

Mr. Ahuja joined Franklin Templeton Investments in 2006 and has over 17 years of investment and research experience in fixed income markets. He 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.

ATTILA KORPOS, Ph.D.Research AnalystTempleton Global Macro


Dr. Korpos joined Franklin Templeton Investments 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.

1834


37


SHLOMI KRAMER, Ph.D.Research AnalystTempleton Global Macro


Shlomi Kramer joined Franklin Templeton Investments in 2016 as a global fixed income research analyst. 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.

CHRISTINE ZHUPortfolio Manager,Quantitative Research AnalystTempleton Global Macro


Ms. Zhu is a portfolio manager and quantitative research analyst in Templeton Global Macro. She focuses on portfolio construction, derivatives/quantitative strategies in global market, performance attribution 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.

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

Templeton Asset Management Ltd. 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.

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38

The Templeton Global Macro Group also includes 3 experienced research associates and 1 assistant trader.


MICHAEL MESSMERVice President, Senior TraderTempleton Global Macro


Mr. 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 HENRYTraderTempleton Global Macro


Mr. Henry is a 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.

ANDREW MESICTraderTempleton Global Macro


Mr. Mesic is a 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.

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. Ms. Goldberg has over 19 years of experience in the investment industry. 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. She holds NASD Series 7 and 66 licences.

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39

40

Module: Additional Resources


A Specialised Local Asset Management (LAM) Team

Name TitleYears Experience

Christopher Molumphy, CFA Chief Investment Officer, Fixed Income 31

Rodrigo da Rosa Borges VP, CIO Fixed Income, Brazil 21

Renato S. Pascon Portfolio Manager, Brazil 15

Mohieddine Kronfol Portfolio Manager, Middle East/North Africa 22

Sharif Eid Portfolio Manager, Middle East/North Africa 11

Franck Nowak Research Analyst, Middle East/North Africa 13

Santosh Kamath Portfolio Manager, India 25

Sachin Desai Portfolio Manager, India 18

Umesh Sharma, CFA Portfolio Manager, India 18

Kunal Agrawal Portfolio Manager, India 12

Pallab Roy Research Analyst, India 17

Sumit Gupta Research Analyst, India 13

Amit Jain Research Analyst, India 10

Jeong Suk Kim Portfolio Manager, South Korea 23

Sang Hoon Matthew Baek Portfolio Manager, Research Analyst, South Korea 18

Min Geun Joo, CFA, FRM Research Analyst, South Korea 12

Kangho Kim Research Analyst, South Korea 8

Chee Young Jeon Jr Trader, South Korea 1

Tracy Liu, CFA1 Portfolio Manager, China 14

Name TitleYears Experience

Hanifah Hashim Portfolio Manager, Malaysia 24

Ivy Choo Research Analyst, Malaysia 13

Daniel Koh Research Analyst, Malaysia 10

Andrew Canobi, CFA Portfolio Manager, Australia 24

Chris Siniakov Portfolio Manager, Australia 24

Jennifer Wee, CFA Research Analyst, Australia 12

Joshua Rout Research Analyst/Trader, Australia 7

Timothy Heyman, CBE CIO LAM Mexico, Mexico 40

Ramse Gutierrez, CFA Head of Investment Operations, Mexico 16

Luis Gonzali Saucedo, CFA Portfolio Manager, Mexico 12

Jorge Marmolejo Hernandez, CFA Portfolio Manager, Mexico 11

Nadia Montes de Oca Vargas Investment Analyst, Mexico 6

Michal Oleszkiewicz, CFA Portfolio Manager, Poland 18

Thomas O’Gorman, CFA Portfolio Manager, Canada 28

Darcy Briggs, CFA, FRM Portfolio Manager, Canada 24

Adrienne Marvi Young, CFA VP, Director of Research, Canada 23

Jeffrey Johnson, CFA Portfolio Manager, Canada 22

Brian Calder Trader, Canada 19

Sevrika Galipeau, CFA Trader, Canada 10

On the Ground Worldwide

1785


41

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.


A Specialised Local Asset Management (LAM) Team

42

Module: Performance Attribution


Diverse Return Sources in Diverse MarketsPerformance Attribution Summary (Calendar Year)Templeton Global Bond Fund vs. Cash (2009–2017)1

The information is historical and may not reflect current or future portfolio characteristics.1. 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

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

Currencies2 1 2 3 1 3 3 3 1 3

Sovereign Credit 2 3 2 3 2 2 1 3 2

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

1907


43

Three Sources of Potential Alpha Over Time

44

Module: Process Implementation Examples


Managing Duration While Still Seeking Attractive YieldsTempleton Global Bond FundSeptember 2007–March 2018

Active Duration Management

-1

0

1

2

3

4

5

6

7

0

1

2

3

4

5

6

7

8

Sep-

07De

c-07

Mar-0

8Ju

n-08

Sep-

08De

c-08

Mar-0

9Ju

n-09

Sep-

09De

c-09

Mar-1

0Ju

n-10

Sep-

10De

c-10

Mar-1

1Ju

n-11

Sep-

11De

c-11

Mar-1

2Ju

n-12

Sep-

12De

c-12

Mar-1

3Ju

n-13

Sep-

13De

c-13

Mar-1

4Ju

n-14

Sep-

14De

c-14

Mar-1

5Ju

n-15

Sep-

15De

c-15

Mar-1

6Ju

n-16

Sep-

16De

c-16

Mar-1

7Ju

n-17

Sep-

17De

c-17

Jan-

18Fe

b-18

Mar-1

8

Aver

age D

urat

ion

(Yea

rs)

Yield

to M

atur

ity (%

)

Templeton Global Bond Fund—Yield to Maturity Templeton Global Bond Fund—Average Duration

This text has to be here and be this long in order for the chart to stay in the landscape position, otherwise it rotates to vertical.

1906


45

The information is historical and may not reflect current or future portfolio characteristics.

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).

Active Duration Management

Important Disclosures


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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.

© 2018 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

TempletonGlobalMacro FranklinTempletonInvestmentFunds TempletonGlobalBondFund · PDF file · 2017-11-03JP Morgan Global Government Bond Index 6 TempletonGlobalBondFund-A(acc)USD vs.JPMorganGlobalGovernmentBondIndex