Franklin Templeton Investment Funds
Templeton Global 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 Global Bond Fund
2
For professional investor use only. Not for distribution to retail investors.
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
Strategy Overview.................................................................................................................. 7
A Record of Strong Performance.............................................................................................8
Relatively Moderate to Low Correlations Historically to Other Asset Classes............................9
Discrete Performance........................................................................................................... 10
Prolonged Advances Versus Moderate Declines....................................................................11
A Solid Risk/Reward Profile...................................................................................................12
Expanding Opportunity Set....................................................................................................13
A Benchmark Worldview.......................................................................................................14
The Global Bond Fund Worldview......................................................................................... 15
Navigating Global Divergence............................................................................................... 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
Country Research Can Help to Identify Potential Alpha Sources............................................ 25
Portfolio Construction............................................................................................................26
Portfolio Positioning.............................................................................................................. 27
Summary of Advantages.......................................................................................................28
Summary..............................................................................................................................29
What are the Key Risks?......................................................................................................30
Portfolio Characteristics........................................................................................................31
Geographic Allocation...........................................................................................................32
Currency Exposure...............................................................................................................33
Sector Allocation...................................................................................................................34
Credit Quality Allocation........................................................................................................35
Maturity Allocation................................................................................................................36
Historical Performance..........................................................................................................37
Calendar Year Returns......................................................................................................... 38
Performance Risk Statistics.................................................................................................. 39
Appendix............................................................................................................40
Templeton Global Bond Fund
3
Table of Contents (continued)
For professional investor use only. Not for distribution to retail investors.
Management Profiles.......................................................................................41
Templeton Global Macro Management Profiles......................................................................42
Module: Additional Resources........................................................................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
Active Duration Management................................................................................................ 52
Environmental, Social & Governance............................................................53
TGM-ESG Index—Scoring Methodology................................................................................54
Developed Countries Usually Exhibit Higher ESG Scores.......................................................55
Strong Relationship between GDP per Capita and ESG Score...............................................56
TGM-ESGI—Favouring Flat or Improving ESG Scores Rather Than Current Levels................57
Franklin Templeton—ESG and Corporate Sustainability.........................................................58
Franklin Templeton—Environmental, Social and Governance (ESG) Investment
Integration
....................59
Important Disclosures...........................................................................................................60
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.
For professional investor use only. Not for distribution to retail investors.
4
Templeton Global Bond Fund
Investment Capabilities Overview
FRANKLIN TEMPLETON
Total Combined Assets Under Management: US$715.2 Billion
2
Equity
5
Fixed Income
8
Multi-Asset Solutions
11
Alternatives
AUM
US$289.2 Billion US$269.8 Billion US$116.0 Billion US$42.2 Billion
CAPABILITIES
•
Value
•
Government
•
Multi-Asset Income
•
Commodities
•
Deep Value
•
Municipals
•
Diversified Outcome-Oriented
•
Infrastructure
•
Core Value
•
Corporate Credit
•
Risk Premia
•
Real Estate
•
Blend
•
Bank Loans
•
Smart Beta
•
Hedge Funds
•
GARP
•
Securitised
•
Balanced Allocation
•
Private Equity
•
Growth
•
Multi-Sector
•
Target Date/Risk
•
Private Debt
•
Convertibles
•
Currencies
•
Model Portfolios
•
Sector
•
Sukuk
•
Inflation Protection
•
Shariah
•
Managed Volatility
•
Smart Beta
INVESTMENT
•
Templeton Global Equity Group (1940)
•
Franklin Templeton Fixed Income Group (1970)
•
Franklin Templeton Multi-Asset Solutions (1948)
•
Franklin Real Asset Advisors (1984)
TEAMS
•
Franklin Equity Group (1947)
•
Templeton Global Macro (1986)
•
Franklin Systematic (2011)
•
Darby Overseas Investments (1994)
•
Franklin Mutual Series (1949)
•
Franklin LAM-Fixed Income (1993)
•
K2 Advisors (1994)
• Franklin Templeton Emerging Markets Equity (1987) •
Pelagos (2005)
•
Franklin LAM-Developed Markets Equity (1993)
•
Benefit Street Partners (2008)
•
Edinburgh Partners (2003)
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
Templeton Global Bond Fund
5
For professional investor use only. Not for distribution to retail investors.
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
Templeton Global Bond Fund
6
For professional investor use only. Not for distribution to retail investors.
Templeton Global Macro—Assets Under Management
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
Templeton Global Bond Fund
7
1. There is no assurance that the strategy will achieve its investment objectives. The strategy is managed in a benchmark unconstrained manner.
For professional investor use only. Not for distribution to retail investors.
Strategy Overview
8
Templeton Global Bond Fund - A (acc) USD
vs. JP Morgan Global Government Bond Index
Monthly Rolling 3-Year Annualised Returns
30 April 2009 to 30 June 2019
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 96 out of the 123 monthly rolling 3-year
periods shown
Templeton Global Bond Fund
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.
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 www.franklinresources.com/countries for current performance.
For professional investor use only. Not for distribution to retail investors.
Discrete Annual Performance (%)
As of 30 June 2019
06/18
06/19
06/17
06/18
06/16
06/17
06/15
06/16
06/14
06/15
Templeton Global Bond Fund - A (acc) USD—Net
of Fees
6.16 -2.17 10.03 -7.26 -2.20
JP Morgan Global Government Bond Index 5.66 1.70 -4.41 11.52 -7.46
Annualised Total Returns (%)
As of 30 June 2019
Inception
Date 3 Yrs 5 Yrs 10 Yrs
Templeton Global Bond Fund - A (acc) USD—Net
of Fees
28.4.2006 4.55 0.72 4.13
JP Morgan Global Government Bond Index 0.90 1.17 2.48
-4% 1% 6% 11% 16%
-4%
1%
6%
11%
16%
JP Morgan Global Government Bond Index
UNDERPERFORMED
OUTPERFORMED
Templeton Global Bond Fund - A (Mdis) USD5-Year Rolling CorrelationsPeriod Ending 30 June 2019
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 30/06/2019
U.S. Bonds -0.21
High Yield Bonds 0.44
Emerging Markets Sovereign Debt 0.35
U.S. Stocks 0.41
World Stocks1 0.45
FX Carry 0.41
Hedge Funds 0.37
Commodities 0.25
-0.50
-0.25
0.00
0.25
0.50
0.75
1.00
Dec-0
5
Oct-0
6
Aug-
07
May-0
8
Mar-0
9
Dec-0
9
Sep-
10
Jul-1
1
Apr-1
2
Feb-
13
Nov-1
3
Sep-
14
Jun-
15
Apr-1
6
Jan-
17
Nov-1
7
Aug-
18
Jun-
19
U.S. Bonds High Yield Bonds Emerging Markets Sovereign DebtU.S. Stocks World Stocks¹ FX CarryHedge Funds Commodities
1937
1
Templeton Global Bond Fund
9
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, FTSE, 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 FTSE 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.
For professional investor use only. Not for distribution to retail investors.
Relatively Moderate to Low Correlations Historically to Other Asset Classes
Templeton Global Bond Fund
10
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 Global Bond Fund - A (acc) USD—Net of Fees 28.4.2006 6.16 -2.17 10.03 -7.26 -2.20
JP Morgan Global Government Bond Index 5.66 1.70 -4.41 11.52 -7.46
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.
For professional investor use only. Not for distribution to retail investors.
Templeton Global Bond Fund - A (acc) USD
As of 30 June 2019
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 March 2019
Average Advance: 20.99%; 13.7 months
Average Decline: -8.66%; 3.9 months
-20%
-10%
0%
10%
20%
30%
40%
50%
Dec-01 Jun-03 Jan-05 Aug-06 Mar-08 Oct-09 May-11 Nov-12 Jun-14 Jan-16 Aug-17 Mar-19
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
1
Templeton Global Bond Fund
11
For professional investor use only. Not for distribution to retail investors.
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 March 2019
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
Source: © 2019 Morningstar, as of 31 March 2019. 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; Domestic Stocks are represented by the IA SBBI U.S. Large Stock Index; Hedge Funds are represented by the Credit Suisse Tremont Hedge Fund Index; Cash is represented by the FTSE (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.Volatility as measured by annualised standard deviation.
1891
Templeton Global Bond Fund –A (Mdis) USD—Net of Fees
Global Government Bonds
U.S. Bonds U.S. TIPS
Emerging Market BondsHigh Yield Bonds
Hedge Funds
Commodities
REITsDomestic Stocks
World Stocks
Cash
-10
-6
-2
2
6
10
14
18
22
-1 2 5 8 11 14 17 20
Retu
rn (%
)
Standard Deviation (%)
1
Templeton Global Bond Fund
12
For professional investor use only. Not for distribution to retail investors.
A Solid Risk/Reward Profile
Total Government Debt Outstanding: US$57.0 trillionAs of 31 December 2018
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
-5
5
15
25
35
45
55
65
0
10
20
30
40
50
60
'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
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$43.3 tn
US$5.5 tn
US$8.1 tn
1
Templeton Global Bond Fund
13
For professional investor use only. Not for distribution to retail investors.
Expanding Opportunity Set
Historic Country Allocation of JP Morgan Global Government Bond Index30 June 2005–31 December 2018
A Benchmark Worldview
13Country ExposuresThe eurozone, Japan and the USA represented 89% of the benchmark
1804
Templeton Global Bond Fund
14
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 2018.
For professional investor use only. Not for distribution to retail investors.
A Benchmark Worldview
• Since 30 June 2005, the Templeton Global Bond Fund has invested in 51 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 2018
The Global Bond Fund Worldview (DA) vs The Global Bond Plus Worldview
51Country Exposures
1895
1
Templeton Global Bond Fund
15
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.
For professional investor use only. Not for distribution to retail investors.
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
Templeton Global Bond Fund
16
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.
For professional investor use only. Not for distribution to retail investors.
Navigating Global Divergence
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
0540
Templeton Global Bond Fund
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.
For professional investor use only. Not for distribution to retail investors.
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
Average Experience: 19 Years*
Templeton Global EquityResearch Team
Average Experience: 21 Years*
Franklin Templeton Emerging Markets Equity Research Team
Average Experience: 16 Years*WEEKLY MONTHLYTempleton
Global Macro San Mateo, Singapore
20 Investment Professionals
Average Experience: 14 Years*
WEEKLY MONTHLY
0539
Templeton Global Bond Fund
18
For professional investor use only. Not for distribution to retail investors.
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
Templeton Global Bond Fund
19
For professional investor use only. Not for distribution to retail investors.
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
Templeton Global Bond Fund
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For professional investor use only. Not for distribution to retail investors.
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
Templeton Global Bond Fund
21
For professional investor use only. Not for distribution to retail investors.
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
Templeton Global Bond Fund
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For professional investor use only. Not for distribution to retail investors.
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
Templeton Global Bond Fund
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For professional investor use only. Not for distribution to retail investors.
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
Templeton Global Bond Fund
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.
For professional investor use only. Not for distribution to retail investors.
Investment Process
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
Templeton Global Bond Fund
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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.
For professional investor use only. Not for distribution to retail investors.
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
Templeton Global Bond Fund
26
For professional investor use only. Not for distribution to retail investors.
Portfolio Construction
As of 30 June 2019
Portfolio Positioning
1822
1
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 • Outside of the developed markets, we held select duration exposures in specific countries that we believe have
attractive risk/return profiles, relatively higher yields, resiliencies to external shocks and favorable macro 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• We maintained net-negative positions in the euro and the Australian dollar as we continue to expect monetary
accommodation from the European Central Bank and Reserve Bank of AustraliaCURRENCIES
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 compelling growth indicators
SOVEREIGN CREDIT
Templeton Global Bond Fund
27
The foregoing information reflects our analysis, opinions and portfolio information as of 30 June 2019. 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.
For professional investor use only. Not for distribution to retail investors.
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
Templeton Global Bond Fund
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For professional investor use only. Not for distribution to retail investors.
Summary of Advantages
Templeton Global Bond Fund
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Fund Identifiers
ISIN Code LU0252652382
SEDOL Code B13QQC5
Bloomberg Code FTGBFAC LX
Templeton Global Bond Fund - A (acc) USD
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 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) 15,245,568,825.71
Asset Allocation (Market Value) Fixed Income: 72.12%
Cash & Cash Equivalents: 27.88%
Number of Holdings 236
Total Expense Ratio 1.40%
© 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.
The fund offers other share classes subject to different fees and expenses, which will affect their performance. Please see the prospectus for details.
Past performance is not an indicator or a guarantee of future performance.
For professional investor use only. Not for distribution to retail investors.
Templeton Global Bond Fund
30
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?
For professional investor use only. Not for distribution to retail investors.
Templeton Global Bond Fund
31
Portfolio Characteristics
Templeton Global Bond Fund
vs. JP Morgan Global Government Bond Index
As of 30 June 2019
Portfolio Index
Average Credit Quality A AA
Average Duration -2.13 Yrs 8.30 Yrs
Average Weighted Maturity 1.18 Yrs 10.19 Yrs
Yield to Maturity 6.72% 0.98%
Yield to Worst 6.72% 0.99%
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.
For professional investor use only. Not for distribution to retail investors.
Geographic Allocation
Templeton Global Bond Fund
32
Templeton Global Bond Fund
vs. JP Morgan Global Government Bond Index
As of 30 June 2019 — Market Value
CASH & CASH EQUIVALENTS
SUPRANATIONAL
NON-EMU EUROPE
EMU EUROPE
EUROPE
Ghana
MIDDLE EAST / AFRICA
JAPAN
Indonesia
India
South Korea
ASIA EX-JAPAN
ASIA
USA
Colombia
Argentina
Brazil
Mexico
NON-US AMERICAS
AMERICAS
-2% 6% 14% 22% 30% 38%
27.88
0.64
0.00
0.00
0.00
1.58
1.58
0.00
7.80
8.78
16.98
33.58
33.58
-1.64
1.53
3.82
14.87
17.70
37.91
36.27
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.
Weightings as percent of total. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.
For professional investor use only. Not for distribution to retail investors.
Regions Sub-Regions Countries
Portfolio %
Index % Over/Under %
AMERICAS 36.27 43.11 -6.84
NON-US AMERICAS 37.91 1.33 36.58
Mexico 17.70 0.00 17.70
Brazil 14.87 0.00 14.87
Argentina 3.82 0.00 3.82
Colombia 1.53 0.00 1.53
Canada 0.00 1.33 -1.33
USA -1.64 41.78 -43.42
ASIA 33.58 21.88 11.70
ASIA EX-JAPAN 33.58 1.57 32.01
South Korea 16.98 0.00 16.98
India 8.78 0.00 8.78
Indonesia 7.80 0.00 7.80
Philippines 0.01 0.00 0.01
Australia 0.00 1.57 -1.57
JAPAN 0.00 20.30 -20.30
MIDDLE EAST /
AFRICA
1.58 0.00 1.58
Ghana 1.58 0.00 1.58
EUROPE 0.00 35.01 -35.01
EMU EUROPE 0.00 27.78 -27.78
France 0.00 7.83 -7.83
Italy 0.00 6.86 -6.86
Germany 0.00 5.09 -5.09
Spain 0.00 4.52 -4.52
Belgium 0.00 1.98 -1.98
Netherlands 0.00 1.49 -1.49
NON-EMU EUROPE 0.00 7.24 -7.24
United Kingdom 0.00 6.52 -6.52
Denmark 0.00 0.43 -0.43
Sweden 0.00 0.29 -0.29
SUPRANATIONAL 0.64 0.00 0.64
OTHER 0.05 0.00 0.05
Portfolio %
Index % Over/Under %
CASH & CASH
EQUIVALENTS
27.88 0.00 27.88
Templeton Global Bond Fund
33
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.
Weightings as percent of total. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.
For professional investor use only. Not for distribution to retail investors.
Templeton Global Bond Fund
vs. JP Morgan Global Government Bond Index
As of 30 June 2019 — Notional Exposure
EURO
NON-EURO
EUROPE
Ghanaian Cedi
MIDEAST/AFRICA
Australian Dollar
Philippine Peso
Indian Rupee
South Korean Won
Indonesian Rupiah
ASIA EX-JAPAN
JAPANESE YEN
ASIA
Colombian Peso
Argentine Peso
Mexican Peso
Brazilian Real
NON-US DOLLAR
U.S. DOLLAR
AMERICAS
-41% -7% 27% 61% 95% 129%
-40.19
0.00
-40.19
1.58
1.58
-14.95
0.01
0.24
0.26
7.80
-6.63
20.26
13.63
1.53
3.62
14.47
14.87
34.48
90.50
124.98
Regions Sub-Regions Currencies
Portfolio % Index % Over/Under %
AMERICAS 124.98 43.11 81.87
U.S. DOLLAR 90.50 41.78 48.72
NON-US DOLLAR 34.48 1.33 33.15
Brazilian Real 14.87 0.00 14.87
Mexican Peso 14.47 0.00 14.47
Argentine Peso 3.62 0.00 3.62
Colombian Peso 1.53 0.00 1.53
Canadian Dollar 0.00 1.33 -1.33
ASIA 13.63 21.88 -8.25
JAPANESE YEN 20.26 20.30 -0.04
ASIA EX-JAPAN -6.63 1.57 -8.21
Indonesian Rupiah 7.80 0.00 7.80
South Korean Won 0.26 0.00 0.26
Indian Rupee 0.24 0.00 0.24
Philippine Peso 0.01 0.00 0.01
Australian Dollar -14.95 1.57 -16.53
MIDEAST/AFRICA 1.58 0.00 1.58
Ghanaian Cedi 1.58 0.00 1.58
EUROPE -40.19 35.01 -75.20
NON-EURO 0.00 7.24 -7.24
British Pound 0.00 6.52 -6.52
Danish Krone 0.00 0.43 -0.43
Swedish Krona 0.00 0.29 -0.29
EURO -40.19 27.78 -67.97
Cash & Cash Equivalents
Supranational
Derivatives
Non-Investment Grade
Non-Local Curr. Sovereign Bonds
US Treasuries/Agencies
Non-Investment Grade
Investment Grade
Local Curr. Govt/Agency Bonds
-4% 12% 28% 44% 60% 76%
27.88
0.64
-3.79
0.20
0.20
2.20
20.07
52.81
72.87
Templeton Global Bond Fund
34
Sector Allocation
Templeton Global Bond Fund
vs. JP Morgan Global Government Bond Index
As of 30 June 2019 — Market Value
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.
Weightings as percent of total. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.
For professional investor use only. Not for distribution to retail investors.
Portfolio % Index % Over/Under %
Local Curr. Govt/Agency Bonds 72.87 58.22 14.65
Investment Grade 52.81 58.22 -5.41
Non-Investment Grade 20.07 0.00 20.07
US Treasuries/Agencies 2.20 41.78 -39.58
Non-Local Curr. Sovereign Bonds 0.20 0.00 0.20
Non-Investment Grade 0.20 0.00 0.20
Derivatives -3.79 0.00 -3.79
Supranational 0.64 0.00 0.64
Cash & Cash Equivalents 27.88 0.00 27.88
Cash
N/A
NR
B
BB-
BBB-
BBB
A-
A+
AA-
AA
AA+
AAA
-4% 16% 36% 56% 76%
Templeton Global Bond Fund
JP Morgan Global Government Bond Index
Templeton Global Bond Fund
35
Templeton Global Bond Fund
vs. JP Morgan Global Government Bond Index
As of 30 June 2019 — Market Value
Credit Quality Allocation
Portfolio % Index % Over/Under %
AAA 2.84 65.74 -62.90
AA+ 0.00 1.98 -1.98
AA 16.98 0.00 16.98
AA- 0.00 20.30 -20.30
A+ 0.00 6.86 -6.86
A- 17.70 0.87 16.83
BBB 9.34 0.00 9.34
BBB- 8.78 0.00 8.78
BB- 14.87 0.00 14.87
B 5.40 0.00 5.40
NR 0.00 4.24 -4.24
N/A -3.79 0.00 -3.79
Cash 27.88 0.00 27.88
Investment Grade
55.64 95.76 -40.11
Non-Investment Grade
20.26 4.24 16.02
N/A
-3.79
0.00 -3.79
Cash
27.88 0.00 27.88
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.
Weightings as percent of total. 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 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.
For professional investor use only. Not for distribution to retail investors.
36
Templeton Global Bond Fund
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
-4% 12% 28% 44% 60%
Templeton Global Bond Fund
JP Morgan Global Government Bond Index
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.
Weightings as percent of total. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.
For professional investor use only. Not for distribution to retail investors.
Portfolio % Index % Over/Under %
0 to 1 Year 53.35 0.00 53.35
1 to 2 Years 12.65 12.41 0.24
2 to 3 Years 12.60 11.45 1.15
3 to 5 Years 11.44 18.48 -7.04
5 to 7 Years 4.76 11.72 -6.96
7 to 10 Years 8.18 13.21 -5.03
10 to 15 Years 0.73 6.81 -6.07
15 to 20 Years 0.00 6.81 -6.81
20 to 30 Years -3.72 16.34 -20.06
30+ Years 0.00 2.77 -2.77
Templeton Global Bond Fund
vs. JP Morgan Global Government Bond Index
As of 30 June 2019 — Market Value
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 6.16 4.55 0.72 4.13 5.52
JP Morgan Global Government Bond Index 5.66 0.90 1.17 2.48 3.72
Templeton Global Bond Fund
Historical Performance
Templeton Global Bond Fund - A (acc) USD
As of 30 June 2019
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.
For professional investor use only. Not for distribution to retail investors.
37
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 1.32 1.25 3.06 6.16 14.28 3.66 49.90 103.06
JP Morgan Global Government Bond Index 2.14 3.49 5.37 5.66 2.71 6.00 27.74 61.82
Templeton Global Bond Fund
38
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.
For professional investor use only. Not for distribution to retail investors.
Calendar Year Returns
Templeton Global Bond Fund - A (acc) USD
As of 30 June 2019
YTD 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
-7%
0%
7%
14%
21%
3.06
5.37
1.53
-0.66
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
JP Morgan Global Government Bond IndexTempleton Global Bond Fund - A (acc) USD—Net of Fees
Templeton Global Bond Fund
39
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.
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.
^^Measured against the JP Morgan Global Government Bond Index.
*Annualised.
Past performance is not an indicator or a guarantee of future performance.
For professional investor use only. Not for distribution to retail investors.
As of 30 June 2019
Performance Risk Statistics
1 Yr 3 Yrs* 5 Yrs* 10 Yrs*
Standard Deviation (%):
Templeton Global Bond Fund - A (acc) USD 6.66 5.88 6.32 7.51
JP Morgan Global Government Bond Index 4.36 5.02 5.11 5.40
Tracking Error (%)^^ 9.22 8.97 9.08 8.87
Information Ratio^^ 0.06 0.41 -0.05 0.19
Sharpe Ratio 0.59 0.54 -0.02 0.49
Templeton Global Bond Fund - A (acc) USD
Performance Risk Statistics
40
Appendix
Templeton Global Bond Fund
For professional investor use only. Not for distribution to retail investors.
41
Management Profiles
Templeton Global Bond Fund
For professional investor use only. Not for distribution to retail investors.
Templeton Global Macro Management Profiles
1834
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
San Mateo, California, United States
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 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
San Mateo, California, United States
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
San Mateo, California, United States
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.
1
Templeton Global Bond Fund
42
For professional investor use only. Not for distribution to retail investors.
Templeton Global Macro Management Profiles
Templeton Global Macro Management Profiles (continued)
1834
2
SHLOMI KRAMER, Ph.D.Senior Global Macro & Research AnalystTempleton Global Macro
San Mateo, California, United States
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
San Mateo, California, United States
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
San Mateo, California, United States
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.
Templeton Global Bond Fund
43
For professional investor use only. Not for distribution to retail investors.
Templeton Global Macro Management Profiles (continued)
1834
3
RYAN FERSTER, CFAQuantitative Research AnalystTempleton Global Macro
San Mateo, California, United States
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
San Mateo, California, United States
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
San Mateo, California, United States
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.
Templeton Global Bond Fund
44
For professional investor use only. Not for distribution to retail investors.
Templeton Global Macro Management Profiles (continued)
1834
4
ANDREW MESICSenior TraderTempleton Global Macro
San Mateo, California, United States
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
San Mateo, California, United States
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
San Mateo, California, United States
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
San Mateo, California, United States
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.
Templeton Global Bond Fund
45
For professional investor use only. Not for distribution to retail investors.
Templeton Global Macro Management Profiles (continued)
1834
The Templeton Global Macro Group also includes 2 experienced research associates.
5
ELSA GOLDBERGVice President, Institutional Portfolio ManagerTempleton Global Macro
San Mateo, California, United States
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
San Mateo, California, United States
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 Templeton Global Macro 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.
Templeton Global Bond Fund
46
For professional investor use only. Not for distribution to retail investors.
47
Module: Additional Resources
Templeton Global Bond Fund
For professional investor use only. Not for distribution to retail investors.
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
Templeton Global Bond Fund
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For professional investor use only. Not for distribution to retail investors.
A Specialised Local Asset Management (LAM) Team
49
Module: Performance Attribution
Templeton Global Bond Fund
For professional investor use only. Not for distribution to retail investors.
Diverse Return Sources in Diverse MarketsPerformance Attribution Summary (Calendar Year)Templeton Global Bond Fund vs. Cash (2009–2018)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 2018
Interest Rates (Duration) 3 1 1 2 1 1 2 2 1 3
Currencies2 1 2 3 1 3 3 3 1 3 1
Sovereign Credit 2 3 2 3 2 2 1 3 2 2
Greatest Contribution to Performance Ranked by Contribution to Alpha Second Greatest Contribution to Performance Least Contribution to Performance
1907
Templeton Global Bond Fund
50
For professional investor use only. Not for distribution to retail investors.
Three Sources of Potential Alpha Over Time
51
Module: Process Implementation Examples
Templeton Global Bond Fund
For professional investor use only. Not for distribution to retail investors.
Managing Duration While Still Seeking Attractive YieldsTempleton Global Bond FundSeptember 2007–June 2019
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
-4
-2
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4
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n-09
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09De
c-09
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0Ju
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Sep-
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c-10
Mar-1
1Ju
n-11
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11De
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c-12
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3Ju
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13De
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Sep-
14De
c-14
Mar-1
5Ju
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Sep-
15De
c-15
Mar-1
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Sep-
16De
c-16
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n-17
Sep-
17De
c-17
Mar-1
8Ju
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Sep-
18De
c-18
Mar-1
9Ju
n-19
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
1
Templeton Global Bond Fund
52
For professional investor use only. Not for distribution to retail investors.
Active Duration Management
53
Environmental, Social & Governance
Templeton Global Bond Fund
For professional investor use only. Not for distribution to retail investors.
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
Templeton Global Bond Fund
54
For professional investor use only. Not for distribution to retail investors.
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
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inaSe
rbia
Thail
and
Urug
uay
Croa
tiaCh
ile Italy
Malay
siaHu
ngar
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land
Slov
akia
Lithu
ania
Spain
Portu
gal
Kore
aIsr
ael
Fran
ceJa
pan
Czec
h Rep
ublic UK
Nethe
rland
sIre
land
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any
Austr
alia
New
Zeala
nd USSw
eden
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aySi
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ore
Switz
erlan
dCa
nada
Denm
ark
TGM-
ESG
Curre
nt S
core
High
er is
Bet
ter
Templeton Global Bond Fund
55
For professional investor use only. Not for distribution to retail investors.
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
Templeton Global Bond Fund
56
For professional investor use only. Not for distribution to retail investors.
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
Templeton Global Bond Fund
57
For professional investor use only. Not for distribution to retail investors.
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
Templeton Global Bond Fund
58
For professional investor use only. Not for distribution to retail investors.
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
Templeton Global Bond Fund
59
For professional investor use only. Not for distribution to retail investors.
Franklin Templeton—Environmental, Social and Governance (ESG) Investment
Integration
Important Disclosures
Templeton Global Bond Fund
For professional investor use only. Not for distribution to retail investors.
60
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.