franklin global sukuk fund

Franklin Templeton Shariah Funds

Franklin Global Sukuk Fund - A (acc) USD

Franklin Templeton Fixed Income Group

Data as of 30 June 2019

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

Franklin Global Sukuk Fund

2


Table of Contents

Franklin Templeton............................................................................................4

Investment Capabilities Overview............................................................................................5

Franklin Templeton—A Trusted, Long-Term Partner in Investment Management.......................6

Franklin Templeton Fixed Income Management.......................................................................7

Who Is Franklin Templeton?...................................................................................................8

Financial Strength That Our Clients and Partners Can Trust.................................................... 9

Local Insights from a Global Leader...................................................................................... 10

Extensive Shariah-Compliant Resources............................................................................... 11

Global Sukuk.....................................................................................................12

Basic Building Block of a Shariah-Compliant Asset Allocation................................................ 13

Global Sukuk Bonds Have Low Correlation to Oil and Other Major Asset Classes.................. 14

Strong Outperformance of Global Sukuk with Less Volatility than Conventional Bonds............15

Global Sukuk Index Returns Have a Strong Risk/Return Profile Compared to

Emerging Markets Bonds and Global Bonds

........................16

Global Sukuk Have Provided Downside Protection.................................................................17

Exponential Growth in Annual Global Sukuk Issuance............................................................18

The Global Sukuk Market Has Grown in Size and Diversity....................................................19

Global Sukuk Issues Are Increasingly Larger, Listed and Liquid.............................................20

Portfolio Themes: Global Sukuk Q2 2019...............................................................................21

Trailing Allocations................................................................................................................22

Strategy Overview.................................................................................................................24

Sukuk Investing with a Global Asset Management Leader......................................................25

Access to a Well-Established, Integrated Platform.................................................................26

Global Sukuk Specialists on the Ground................................................................................27

An Experienced, Tenured Team............................................................................................ 28

Amanie International Shariah Supervisory Board....................................................................29

Fatwa...................................................................................................................................30

Investment Philosophy..........................................................................................................31

Sukuk Investment Process....................................................................................................32

Broad Exposure to Global Sukuk Market Opportunities..........................................................33

Integrated Risk Management Has Three Different Layers.......................................................34

Global Sukuk | Risk Framework.............................................................................................35

Fund Characteristics........................................................................................36

Summary..............................................................................................................................37

What are the Key Risks?......................................................................................................38

Portfolio Characteristics........................................................................................................39

Geographic Allocation...........................................................................................................40

Currency Allocation...............................................................................................................41


3

Table of Contents (continued)


Sector Allocation...................................................................................................................42

Credit Quality Allocation........................................................................................................43

Maturity Allocation................................................................................................................44

Top Ten Holdings..................................................................................................................45

Discrete Performance........................................................................................................... 46

Historical Performance..........................................................................................................47

Calendar Year Returns......................................................................................................... 48

Performance Risk Statistics.................................................................................................. 49

Supplemental Information......................................................................................................50

Appendix............................................................................................................52

Most Common Sukuk Instruments.........................................................................................53

Growing Global Sukuk Market Increasingly Diversified...........................................................54

Franklin Templeton—ESG and Corporate Sustainability.........................................................55

Franklin Templeton—ESG Investment Philosophy..................................................................56

Franklin Templeton Is Committed to ESG..............................................................................57

Glossary...............................................................................................................................58

Important Disclosures...........................................................................................................59

Additional Disclosures...........................................................................................................60

GIPS Performance Presentation............................................................................................61

4

Franklin Templeton



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.


5


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


6


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

Franklin Templeton Fixed Income

1. This unit is comprised of investment professionals located in affiliates of and joint venture partners with Franklin Templeton Investments. Reference to Local Asset Management is in relation to fixed income teams (excluding equity).2. Includes individuals that are not employees of Franklin Resources, Inc. (FRI) or wholly owned subsidiaries of FRI. However, these individuals are part of our joint venture or strategic partnership relationships worldwide and are anintegral component of our overall fixed income research efforts.3. Investment professionals include portfolio managers, analysts and traders.CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.As of 30 June 2019.

Quantitative: David Yuen, CFA, FRM, 6 Professionals

Corporate Credit

Global Sovereign/ Emerging Markets

Mortgages Bank Loans Municipals Local Asset Management1

Glenn Voyles, CFAMatt Fey, CFA

John BeckWilliam Ledward, Ph.D.

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

32 Investment Professionals






Global Macro

Global Sovereign Local Emerging Market Debt


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

Michael Hasenstab, Ph.D.Chief Investment Officer

Sonal Desai, Ph.D.Chief Investment Officer

170+ Dedicated Fixed Income Investment Professionals3

62CFA Charterholders

13 Ph.D.s

57 M.B.A.s

0301


7


Franklin Templeton Fixed Income Management

Investment professionals include portfolio managers, analysts and traders.1. As of 30 June 2019.

Who Is Franklin Templeton?

An Investment Management Organisation• Focusing on research and investment management with over 620

investment professionals covering all major asset classes

• Serving the needs of investors worldwide with a dedicated team of investment professionals

• Providing the resources, expertise, experience and commitment to ensure outstanding service to our clients

• Offering a broad range of investment strategies and vehicles

Shariah-Compliant Investment Solutions Provider• Managing over US$2.24 billion in Shariah-compliant assets1

• Offering Shariah-compliant strategies across a wide range of asset classes, including global, regional and local equities, and fixed income (sukuk)

• Applying our management expertise in combination with the knowledge and advice of Shariah scholars

Franklin Templeton total firm assetsUS$715.2 billion as of 30 June 20192019

Bissett Investment Management joins Franklin Templeton2000

Franklin Resources, Inc. (BEN), stock is added to S&P 500 Index1998

Mutual Series joins Franklin Templeton1996

Templeton joins Franklin Templeton1992

Franklin Resources, Inc., stock listed and begins trading on New York Stock Exchange1986

Franklin Resources, Inc., moves offices from New York to California1973

Franklin Resources, Inc., formed as a holding company going public as BEN1971

Franklin Distributors, Inc., introduces its first mutual funds1947

Fiduciary Trust Company International joinsFranklin Templeton2001

1648


8


Who Is Franklin Templeton?

Diversified Business• Franklin Templeton manages over US$712.3 billion assets in total

• Continue to benefit from the global diversification of our assets under management by investment objective, client type and geographic region

• A significant portion of our business is generated from outside the United States

Strong Balance Sheet • Franklin Resources, Inc. is well capitalised with over US$6.7 billion in total cash and investments*

Excellent Credit Ratings• Standard & Poor’s long-term and short-term ratings are AA- and A-1+, respectively

• Moody’s long-term and short-term ratings are A2 and P-1, respectively

*Cash and investments, net of debt and the tax liability related to the Tax Act, was US$6.7 billion.Source: Franklin Resources, Inc. as of 31 March 2019.

Financial Strength That Our Clients and Partners Can Trust

1650


9


Financial Strength That Our Clients and Partners Can Trust

What Sets Us Apart

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

Local Insights from a Global Leader

Access to Locally Sourced Ideas & Insights

Broad Research Capabilities Worldwide

Strength of a GlobalAsset Management Leader

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

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

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

• Real-time response to local market events

• Networks of local business contacts

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

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

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

• Franklin Templeton was establishedin 1947

• Manages US$715 billion of assets1

• Credit ratings among the highest of any asset management company

• Large research platform that operates seamlessly across the globe

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

3016


10


Local Insights from a Global Leader

Independent Endorsement from Esteemed Board of Scholars• Our portfolios are independently reviewed and endorsed by the Amanie International Shariah Supervisory Board

• The Amanie scholars provide initial approval on investment objectives and strategy, as well as ongoing supervisory and monitoring services to ensure continuous adherence and validation to internationally accepted Shariah principles and standards

• A fatwa was issued for Franklin Global Sukuk Fund on 30 September 2011

Comprehensive, Integrated Risk Management• Each portfolio team employs a highly disciplined investment philosophy and process designed to comprehensively measure and

manage risk

• The teams also leverage analysis and insight from a worldwide network of locally based risk management specialists

Extensive Shariah-Compliant Resources

1651


11


Extensive Shariah-Compliant Resources

12

Global Sukuk



Global Sukuk Can Provide Diversification Benefits• A 40% allocation to global sukuk would have reduced risk by 52%, while still achieving 78% of the return

of the all-equity Shariah portfolio

Basic Building Block of a Shariah-Compliant Asset Allocation

100% Global Sukuk

80%/20%

60%/40%40%/60%

20%/80%100% Shariah Equity

1%

2%

3%

4%

5%

6%

2% 4% 6% 8% 10% 12%

Annu

alise

dRe

turn

Risk (Annualised Standard Deviation)

5-Year Period Ended 30 June 2019

1653


13

FactSet. Important data provider notices and terms available at www.franklintempletondatasources.com. (Global Sukuk is represented by the S&P Dow Jones Sukuk (USD) Index; Shariah Equities are represented by the MSCI AC World Islamic Index).

See Important Disclosures slide for additional information.

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


Basic Building Block of a Shariah-Compliant Asset Allocation

Emerging Markets Government Bond 0.35

Index Weight in Oil Sensitive Sectors as of 31 March 20191 3-Year Correlation of Daily Returns in US$ as of 31 March 20192

1. Source: FactSet. Indices are represented as follows: Global IG Corporates (Bloomberg Global IG Corporate Bond Index), Global HY Corporates (Bloomberg Global HY Corporate Bond Index), Emerging Market Corporates (Bloomberg USD EM Corporate Bond Index), GCC Bonds (FTSE MENA Broad Bond GCC Issuers Index), Sukuk Bonds (Dow Jones Sukuk Index).2. Source: FactSet. Indices are represented as follows: Crude Oil (Bloomberg Composite Crude Oil Index), Developed Markets Equity (MSCI The World Index), Global Government Bond (JP Morgan GBI Global Index), Emerging Markets Equity (MSCI Emerging Markets Index), Global Bonds (Bloomberg Barclays Global Aggregate Index), Emerging Markets Government Bond (JP Morgan GBI-EM Global Composite Index) and Emerging Markets Bond (JP Morgan EMBI Global Index). MSCI makes no warranties and shall have no liability with respect to any MSCI data reproduced herein. No further redistribution or use is permitted. This report is not prepared or endorsed by MSCI. Important data provider notices and terms available at www.franklintempletondatasources.com. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges.

Global Sukuk Bonds Have Low Correlation to Oil and Other Major Asset Classes

0% 7% 14% 21% 28% 35%

Sukuk Bonds

GCC Bonds

Emerging Market Corporates

Global HY Corporates

Global IG Corporates

Energy Exposure Materials Exposure

Crude Oil 0.04

Emerging Markets Equity 0.26

Global Government Bond 0.50

Emerging Markets Bond 0.61

Developed Markets Equity 0.06

Global Bonds 0.51

4267


14


Global Sukuk Bonds Have Low Correlation to Oil and Other Major Asset Classes

3-Year Period Ended 30 June 2019

Strong Outperformance of Global Sukuk with Less Volatility than Conventional Bonds

8,000

9,000

10,000

11,000

12,000

Jun-16 Oct-16 Feb-17 May-17 Sep-17 Dec-17 Apr-18 Jul-18 Nov-18 Feb-19 Jun-19

US$

Global Sukuk Global Bonds

Global Sukuk vs. Global Bonds

1655


15

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

Source: S&P and J.P. Morgan as of 30 June 2019. Global Sukuk are represented by the Dow Jones Sukuk Index. Global Bonds are represented by the J.P. Morgan GBI Broad Index. Returns are in USD. See Important Disclosures slide for additional

information.



Strong Outperformance of Global Sukuk with Less Volatility than Conventional

Bonds

Global Sukuk Index vs. Emerging Markets Bond and Global Bond Indexes, Risk vs. Return3-Year Period Ended 31 March 2019

Source: © 2019 Morningstar. 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. NeitherMorningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Sukuk Bonds are represented by the Dow Jones Sukuk Index; Emerging Markets Bonds are represented by the JP Morgan EMBI Plus Index; Global Bonds are represented by the JP Morgan Global Government Bond Index. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. Important data provider notices and terms available at www.franklintempletondatasources.com.Past performance is not an indicator or a guarantee of future performance.

Global Sukuk Index Returns Have a Strong Risk/Return Profile Compared to Emerging Markets Bonds and Global Bonds

-2%

0%

2%

4%

6%

8%

1% 2% 3% 4% 5% 6% 7% 8% 9%

Aver

age A

nnua

l Tot

al Re

turn

Annualised Standard Deviation (Risk)

Emerging MarketsBond Index

Global Sukuk Index

Global Bond Index

4266


16


Global Sukuk Index Returns Have a Strong Risk/Return Profile Compared to

Emerging Markets Bonds and Global Bonds

-20.0

-18.0

-16.0

-14.0

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

Apr-0

9

Nov-0

9

Jun-

10

Jan-

11

Aug-

11

Mar-1

2

Oct-1

2

May-1

3

Dec-1

3

Jul-1

4

Feb-

15

Sep-

15

Apr-1

6

Nov-1

6

Jun-

17

Jan-

18

Aug-

18

Mar-1

9

Bloomberg Barclays Global Aggregate Bloomberg Barclays US Aggregate Bloomberg Barclays Euro Aggregate JP Morgan EMBI + Dow Jones Sukuk

Apart from the Global Financial Crisis, Global Sukuk Have Experienced Less Downside Risk Compared to Major Global Fixed Income Benchmarks Over the Past 10 Years

Drawdown4/2009 to 3/2019

Global Sukuk Have Provided Downside Protection

5990


17


Global Sukuk Have Provided Downside Protection

Annual Global Sukuk IssuanceAs of 31 December 2018

Exponential Growth in Annual Global Sukuk Issuance

Over US$477 Billion to Date

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

US$ M

illion

GCC Asia Other

1656


18

Source: Bloomberg LP as of 31 December 2018. Data excludes short-term issuance.


Exponential Growth in Annual Global Sukuk Issuance

US$1.5 billionNew Issuances: 107

2018

The Global Sukuk Market Has Grown in Size and Diversity




2000 20102005

2913

Sovereign 24.37% Diversified Financial Services 16.34% Banks 12.50% Electric 8.46% Multi-National 7.97% Real Estate 6.46% Commercial Services 3.52% Transportation 3.19% Holding Companies-Divers 2.94% Investment Companies 2.59% Chemicals 1.93% Airlines 1.24% REITS 1.15% Water 1.09% Engineering & Construction 1.07% Telecommunications 0.95% Oil & Gas 0.94% Healthcare-Services 0.93% Auto Manufacturers 0.89% Energy-Alternate Sources 0.59% Forest Products&Paper 0.35% Retail 0.20% Oil & Gas Services 0.13% Computers 0.12% Iron/Steel 0.06% Agriculture 0.02% Environmental Control 0.01%

Electric 14.46% Diversified Financial Services 11.66% Commercial Services 11.36% Multi-National 9.71% Sovereign 8.32% Leisure Time 7.63% Engineering & Construction 6.79% Water 3.79% Banks 3.67% Private Equity 2.92% Commodity Fund 2.77% Auto Manufacturers 2.52% Real Estate 1.95% Telecommunication Services 1.92% Iron/Steel 1.84% Holding Companies—Diversified 1.84% Oil & Gas 1.64% Agriculture 1.56% Computers 1.18% Oil & Gas Services 0.92% Auto Parts & Equipment 0.47% Apparel 0.36% Miscellaneous Manufacturers 0.26% Lodging 0.18% Electrical Compo & Equipment 0.11% Pharmaceuticals 0.09% Retail 0.07%

Environmental Control 45.62% Commercial Services 13.85% Water 12.00% Electric 11.33% Transportation 10.67% Real Estate 4.41% Engineering & Construction 2.12%

Sovereign 24.16% Banks 13.00% Diversified Financial Services 12.84% Engineering & Construction 12.33% Electric 11.83% Telecommunication Services 8.12% Multi-National 6.05% Real Estate 3.49% Commercial Services 3.17% Transportation 2.28% Gas 1.18% Agriculture 0.96% Auto Manufacturers 0.23% Oil & Gas Services 0.14% Chemicals 0.13% REITs 0.06% Software 0.02%


19

Source: Bloomberg LP as of 31 December 2018.


The Global Sukuk Market Has Grown in Size and Diversity

Annual Global Sukuk IssuanceNumber of Issues over US$500 MillionAs of 31 December 2018

Number of Issues over US$1 BillionAs of 31 December 2018

Global Sukuk Issues Are Increasingly Larger, Listed and Liquid

Annual Global Sukuk Issuance

0

5

10

15

20

25

30

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

GCC Asia Other

0

2

4

6

8

10

12

14

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

GCC Asia Other

1657


20

Source: Bloomberg LP as of 31 December 2018. Data excludes short-term issuance.


Global Sukuk Issues Are Increasingly Larger, Listed and Liquid

Portfolio Themes: Global Sukuk Q2 2019

5096

Opinions expressed are as of 30 April 2019, and are subject to change without prior notice. This is not investment advice, and is not a complete analysis of every material fact regarding any security, sector, portfolio, strategy or market.Source: Franklin Templeton Investments.

Credit Oil Price

Valuations Less Attractive• Geopolitical risks remain elevated in the Gulf Cooperation Council (GCC), with a

more pronounced downside to country risk.• Sukuk valuations less attractive after recent rally.• GCC and Asian corporates have maintained solid credit quality, highlighted by a

continued trend in stable or upgraded ratings.• We anticipate banks to benefit from improving liquidity conditions into 2019, with

solid profitability and capitalisation to remain key strengths. Turkey the exception.

• Portfolio risk on a declining trend. Shift to higher yielding corporate issuers in the GCC and emerging market sovereigns subject to relative value discipline.

OPEC Under Increasing Pressure• Technical backdrop deteriorating with shorts being built and inventories

increasing. Tactical outlook more cautious. • Prices should be supported by OPEC cuts, geopolitical risks and rising cost

structure in tight oil.• We see the OPEC deal between members and non-members persisting with

compliance remaining robust, even if deteriorating from 135% compliance in March 2019.

• Fiscal consolidation and reform-oriented agendas may be at risk with higher oil prices and pressure to stimulate growth.

Benchmark Rates Currencies

Neutral, Long Non-Dollar Duration • Relative positioning more neutral after Fed pivot and yield curve shift lower.• Expectations remain for broadly stable rates with risks tilted slightly to the

downside if inflation and structural reform in the US disappoint. Consumer spending is expected to remain robust.

• The US and developed markets still have to contend with structural issues including massive debt stock, low labour productivity, aging populations and modest growth.

• We are still constructive on emerging market local rates, including Malaysia,Indonesia and Nigeria, with high real rates and accommodative policy frameworks.

The US Dollar Looks Expensive• Dollar strength in Q1 2019 is somewhat perplexing given the strength of risk

assets generally.• Disconnect between rates and foreign currency markets. The former has priced

in the end of the US Fed’s rate hike cycle while the latter seems to be more focused on risk aversion.

• We continue to find value in some EM currencies. We also expect the euro to benefit from recoveries in China and global trade. Fund maintains approximately 10% in non-USD currencies.


21


Portfolio Themes: Global Sukuk Q2 2019


Geographic AllocationsAs of 31 March 2019

Sector Allocations As of 31 March 2019

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

Trailing Allocations

5101

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2014 2015 2016 2017 2019

Perc

ent o

f Por

tfolio

Cash & Cash Equivalents Corporate Bonds

Government-Related Agencies Government-Related Sovereign and Others

YTD0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014 2015 2016 2017 2018 2019

Perc

ent o

f Por

tfolio

Hong Kong Indonesia Malaysia PakistanTurkey United Kingdom Cayman Islands BahrainKuwait Oman Qatar Saudi ArabiaUnited Arab Emirates United States Others

YTD


22


Trailing Allocations


Currency AllocationsAs of 31 March 2019

Portfolio Duration vs. Benchmark As of 31 March 2019

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

Trailing Allocations (continued)

5101

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2014 2015 2016 2017 2019

Perc

ent o

f Por

tfolio

Chinese Yuan Indonesian Rupiah Malaysian Ringgit Singapore Dollar EuroBritish Pound Nigerian Naira Emirati Dirham US Dollar

3.00

3.50

4.00

4.50

5.00

5.50

6.00

2012 2014 2015 2016 2017 2019

Fund Benchmark

YTD YTD


23


Investment Objectives1

• To maximise total investment return, consisting of a combination of profit income and capital appreciation, consistent with prudent investment management

Investment Universe• Focuses on fixed- and floating-rate Shariah-compliant securities issued by government, government-related and corporate entities

• May include non-investment grade securities and allocations to both developed and emerging markets

• Can invest up to 40% of its net assets in short-term instruments including Murabaha placements

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

– Profit rates

– Currencies

– Sovereign and corporate credit

Strategy Overview

1658


24

1. The expected risk and return profile is provided solely to illustrate the manager’s expectations with respect to fund characteristics, based on the fund’s historical experience during normal market conditions. Thus, the characteristics do not take into

account future market risks or changing economic conditions and are not a prediction or guarantee of future performance. An investor in the fund may experience significantly different risk and return characteristics, including greater volatility

and lower returns than expected with the potential for loss of principal amounts invested.

There is no assurance that the fund will achieve its investment objectives. As stated above, the fund is managed in a benchmark unconstrained manner. Past

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


Strategy Overview

Recognised Expertise in Managing Global Sukuk• Manages over US$2.24 billion in Shariah-compliant strategies• Named “Best Global Sukuk Fund Manager” – 2018 Award by Employees Provident Fund

(EPF Malaysia)• Named “Best Islamic Asset Management House (Institutional) in Malaysia” by the Asset Triple

A Islamic Finance Awards in 2017, 2018 and 2019• Won “The Most Outstanding Islamic Fund Manager,” 14th KLIFF Islamic Finance Awards 2017

Access to a Well-Established, Integrated Platform• Global Sukuk Team is supported by the analysis and insight of a worldwide network of over

200 investment, trading and risk professionals

Extensive Shariah-Compliant Resources• Independent endorsement and regular monitoring by the Amanie International Shariah

Supervisory Board

Broad Exposure to Global Sukuk Market Opportunities• Strong research coverage across global sukuk issuing markets conducted by sukuk specialists

on the ground

Sukuk Investing with a Global Asset Management Leader

1659


25

As of 30 June 2019.


Sukuk Investing with a Global Asset Management Leader

A Worldwide Network of over 200 Fixed Income, Trading and Risk Professionals

Access to a Well-Established, Integrated Platform

Fort LauderdaleNew YorkShort HillsStamford

CalgaryDublinRancho CordovaSan Mateo

EdinburghFrankfurt

London LuxembourgPoznan

ChennaiHong KongHyderabadKuala LumpurMumbaiSeoulSingapore

Dubai

Melbourne

São Paulo

Fixed Income Research Offices Trading Platforms Risk Management Specialists

Mexico City

1661


26

As of 31 March 2019.


Access to a Well-Established, Integrated Platform

Global Sukuk Specialists on the Ground

1662

Franklin Templeton Fixed Income ResourcesOver 160 Fixed Income Professionals

Global SukukTeam

Access to global insights and expertise of investment professionals in different fixed income sector teams and supported by a well-established, integrated global platform.

BOTTOM-UP RESEARCH

Franklin Templeton Investments

well-established, integrated global platform

Global Trading

Risk Management

Product Management

Compliance

Technology

Franklin Templeton Fixed Income Policy Committee17 Investment Professionals – Average Experience: 29 Years

TOP-DOWN RESEARCH

Global Sovereign Local Emerging Market Debt18 Professionals

Local AssetManagement39 Professionals

Corporate Credit32 Professionals

Global Sovereign/ Emerging Markets14 Professionals

Bank Loans14 Professionals

Municipals30 Professionals

Quantitative Analysis Team6 Professionals

Global Sukuk Team(Dubai, Kuala Lumpur, San Mateo, Hyderabad)

8 Investment Professionals – Average Experience: 14 Years

Franklin Templeton Fixed Income Group Templeton Global Macro


27

As of 30 June 2019.

Please note that investment professionals mentioned on this page may participate in different functions.


Global Sukuk Specialists on the Ground

Dino KronfolChief Investment Officer, Global Sukuk and MENA Fixed Income, Portfolio ManagerYears with Firm: 12Years of Experience: 23

Sharif EidPortfolio Manager—Fixed IncomeYears with Firm: 10Years of Experience: 12

An Experienced, Tenured Team

1. Local Asset Management is comprised of investment professionals located in affiliates of and joint venture partners with Franklin Templeton Investments. The Local Asset Management group is not part of, but does share research with, Franklin Templeton Fixed Income Group. As of 30 June 2019.

Franck NowakVice PresidentResearch Analyst—Fixed IncomeYears with Firm: 6Years of Experience: 14

Hanifah HashimExecutive Director, Head Malaysian Fixed Income & Sukuk Portfolio ManagerYears with Firm: 7Years of Experience: 25

Ivy ChooResearch Analyst—Fixed IncomeYears with Firm: 8Years of Experience: 14

Daniel KohResearch Analyst—Fixed IncomeYears with Firm: 4Years of Experience: 11

Amit JainResearch Analyst—Fixed IncomeYears with Firm: 5Years of Experience: 11

Rakesh TripathiResearch Analyst—Fixed IncomeYears with Firm: 2Years of Experience: 2

Franklin Templeton Global Sukuk Fund Team

ADDITIONAL RESOURCES

Bank LoansMembers: 14

Corporates—High YieldMembers: 19

Corporates—Investment GradeMembers: 14

Global Fixed IncomeMembers: 32

Local Asset Management1

Members: 39MBS

Members: 9Municipals

Members: 30QuantitativeMembers: 6

PRODUCT MANAGERS

Stuart LingardYears of Experience: 21

Alberto LandiYears of Experience: 11

1663


28


An Experienced, Tenured Team

Amanie International Shariah Supervisory Board

1643

DR. OSAMA AL DEREAI

Qatar

DR. MOHD DAUD BAKAR

Malaysia

SHEIKH DR. MOHAMED ALI ELGARICHAIRMAN

Kingdom of Saudi Arabia

Dr. Mohamed Ali Elgari is a Professor of Islamic Economics and the former Director of the Centre for Research in Islamic Economics at King Abdul Aziz University in Saudi Arabia. He is an advisor to many Islamic financial institutions throughout the world and is also on the Shariah board of the Dow Jones Islamic index. He is also a member of the Islamic Fiqh Academy as well as the Islamic Accounting and Auditing Organisation for Islamic Financial Institution (AAOIFI). Dr. Elgari has written several books on Islamic banking. He graduated from the University of California with a Ph.D. in Economics.

DR. MUHAMMAD AMIN ALI QATTAN

Kuwait

Dr. Muhammad Amin Ali Qattan has a Ph.D. in Islamic Banking from Birmingham University and is himself a lecturer as well as a prolific author of texts and articles on Islamic economics and finance. He currently is the Director of Islamic Economics Unit, Centre of Excellence in Management at Kuwait University. Dr. Qattan also serves as the Shariah adviser to many reputable institutions such as Ratings Intelligence, Standard & Poor’s Shariah indices, Al Fajer Retakaful, amongst others. He is a highly regarded Shariah scholar and is based in Kuwait.

Dr. Mohd Daud Bakar is the founder and group chairman of Amanie Advisors, a global boutique Shariah advisory firm with offices located in Kuala Lumpur, Dubai, Luxembourg, Cairo, Kazakhstan, Oman, Australia, South Korea and Dublin. He is also the founder and chairman of Amanie Nexus Sdn Bhd (Kuala Lumpur). Prior to this, he was the deputy vice-chancellor at the International Islamic University Malaysia. He received his first degree in Shariah from University of Kuwait in 1988 and obtained his Ph.D. from University of St. Andrews, United Kingdom in 1993. In 2002, he went on to complete his external Bachelor of Jurisprudence at University of Malaya. He has published a number of articles in various academic journals and has made many presentations in various conferences both local and overseas. Dr. Mohd Daud is currently the chairman of the ShariahAdvisory Council of the Central Bank of Malaysia, the SACSC and the Shariah Supervisory Council of Labuan Financial Services Authority. He is also a member of the Shariah Board of Dow Jones Islamic Market Index (New York), Oasis Asset Management (Cape Town, South Africa), The National Bank of Oman, Financial Guidance (USA), BNP Paribas (Bahrain), Morgan Stanley (Dubai), Jadwa-Russell Islamic Fund (Kingdom of Saudi Arabia), Bank of London and Middle East (London), Noor Islamic Bank (Dubai), Islamic Bank of Asia (Singapore), and in other financial institutions both local and abroad. Apart from that, Dr. Mohd Daud is also actively advising, locally and overseas, on capital markets product structuring such as sukuk.

Dr. Osama Al Dereai is a Shariah scholar from Qatar. He has extensive experience in teaching, consulting and research in the field of Islamic finance. He received his bachelor’s degree specialising in the Science of Hadeth Al Sharef from the prestigious Islamic University of Madinah(Saudi Arabia). He obtained his master’s degree from the International Islamic University Malaysiaand was later conferred his Doctorate in Islamic Transactions from the University of Malaya. Dr. Al Dereai is a Shariah board member of various financial institutions which include the First Leasing Company, Barwa Bank, First Investment Company and Ghanim Al Saad Group of Companies amongst others.


29


Amanie International Shariah Supervisory Board

Issued on the Franklin Global Sukuk Fund on 30 September 2011 and issued quarterly thereafter

Fatwa

1664


30


Fatwa

We believe: • The Global Sukuk team uses a fundamental research-driven investment approach.

• That while various factors can cause markets and securities to trade independently of their underlying fundamentals for periods of time, markets are efficient in the longer-term. We assign significant resources to identify and exploit these inefficiencies.

• An actively managed portfolio of lowly-correlated positions, selected on the basis of intensive bottom-up research, and guided by top-down macroeconomic analysis, has the potential to deliver above-benchmark returns over a full market cycle. We aim to manage volatility and downside risk by ensuring that no single position or risk factor dominates the portfolio.

• Our approach benefits from Franklin Templeton’s global asset management platform, with institutional-quality capabilities supporting portfolio management, trading, and risk management.

Investment Philosophy

1665


31


Investment Philosophy

Multiple Research Perspectives Can Lead to High-Conviction Sukuk Opportunities

Sukuk Investment Process

Identification of High-Conviction

Sukuk Opportunities

Profit RatesIdeas

Currency Ideas

Credit Ideas

Three Research Perspectives

Portfolio Construction & Implementation

Three Potential Alpha Sources

• Currency and Profit Rate Models• Identifies Market Inefficiencies

Macroeconomic Country Analysis

• Fundamental Credit Research• Proprietary Credit Models

Bottom-Up Credit Analysis

• Risk Mapping of Sukuk Universe• Quantitative Risk Analyses

Quantitative Analysis

Risk Management

Portfolio Management

Portfolio Optimisation

Trading

Full Integration of Amanie Int’l Shariah Supervisory BoardOngoing Portfolio Monitoring by Risk Management and Compliance

GLOBAL SUKUKPORTFOLIO

1666


32


Sukuk Investment Process

Broad Research Coverage across Sukuk Issuing Markets• Regular analysis of 130 credits with the ability to expand the research along with the rapid market growth

• Extensive resources of a global asset management leader allow research of rated and unrated securities within the sukuk universe worldwide with the goal to identify alpha-generating sukuk opportunities

• The result is a diversified portfolio with over 52 sukuk securities from 12 countries and supranational entities

Strong Relationships with Sukuk Issuers• Only global asset manager with Islamic investment specialists on the ground in major sukuk issuing markets, such as Dubai and

Kuala Lumpur, with great insight into issuances

• First and only global asset manager with a dedicated MENA trading desk in Dubai

First Global Sukuk Fund Available for European Retail Investors

Broad Exposure to Global Sukuk Market Opportunities

Non-Financials Corporates/ Industrial/Holdings/Real Estate 56

Financials 48 Sovereigns 26

1668


33

As of 31 March 2019.


Broad Exposure to Global Sukuk Market Opportunities

Multiple Teams Review the Portfolio Seeking to Ensure Consistencyand Compliance with Prospectus and Objectives

As of 30 June 2019.1. Investment Risk Management Group—an independent team of risk specialists reporting directly to the CEO—performs a risk oversight function and can consult with the portfolio manager to provide unbiased risk insights.

Integrated Risk Management Has Three Different Layers

In-Depth Research andQuantitative Risk Analysis Investment Risk Management Group1 Portfolio Compliance

• Provides risk data related to country, currency, sector, industry, yield curve and issuer positions

• Generates potential trade ideas for portfolio

• Generates monthly security-specific and performance attributions

• Creates historical return summaries for all asset classes

• Examines and assesses portfolio risk relative to a benchmark

• Estimates risk and correlation impact on portfolio when positions are added or removed

• Generates risk reports used by portfolio managers and analysts across the fixed income platform

• Oversees the maintenance and reliability of firm-wide fixed income investment risk reporting tools

• Maps Sukuk to appropriate risk factors to generate reports

• Develops and monitors strategy specific risk framework

• Performs pre-trade compliance for all trades entered into the Charles River IMS ona daily basis

• Utilises ex-post trading tools to ensure the portfolio compliance with stated Prospectus, objectives and restrictions on a daily and monthly basis

• Utilises Shariah compliance protocol for existing and new issues with Amanie advisors

• Employs Sukuk screening technology from Ideal Ratings for customised Sukuk structure governance and compliance


16 Average Years of Experience

1 Location

47 Risk Consultants and Analysts


12 Locations



12 Locations

5098


34


Integrated Risk Management Has Three Different Layers

Global Sukuk | Risk Framework

5467

Risk Framework Philosophy:As the market developed, we have adopted a set of specific risk guidelines for the strategy which were designed collaboratively to enhance oversight and information sharing. The risk guidelines include risk measurements across three dimensions:1. Absolute and relative volatility limits.

2. Risk budget limits for five risk factors.

3. Expected exposure ranges to various asset types.

Customised Set of Internal Risk Guidelines:• Not hard limits or constraints• May be breached during abnormal market conditions• Common metrics for the portfolio management and risk

management teams to monitor exposures• Used as a discussion tool to ensure that the strategy’s

risk exposures align with our conviction• Used as a management reporting tool

These are only a partial sample of the risk exposures tracked on a daily basis.For illustrative and discussion purposes only. This screenshot is not representative of the fund.

• TEV is the strategy’s risk budget for the year• Value at Risk is used to approximate downside risk• Estimated shortfall is used to measure tail risk

(in excess of VaR)

We budget risk among the different risk factors. Thestrategy is geared towards credit risk with constraintsfor FX and duration risk.

DTS, or duration times spread, is a more accuratemeasure of risk that takes into account the maturity aswell as the credit spread of each issue or issuer.

Risk guideline levels are not hard limits, but are usedinternally to ensure that risks are recognized andintentional.

Risk Estimates: Min Sample Max Warning Bar CheckTEV in bps/year 140 201 300 38%

VaR 99% in bps/month 0 160 300 53%

ES 99% in bps/month 0 207 350 59%

Risk Budget by Factor:Spread Credit 14% 60% 14%

Curve 5% 40% 13%

Foreign Exchange 19% 40% 48%

Idiosyncratic & Credit Default 61% 50% 122%

Exposures/Sensitivities:DTS ratio (Portfolio/Benchmark) 0.75 1.22 1.75 47%

Non-USD unhedged exposure per currency (MV%) 5% 5% 94%

Non-USD unhedged exposure cumulative (MV%) 8% 20% 41%

Portfolio overall DTS % contribution from sector (unit is %) 39% 35% 113%

Portfolio overall DTS % contribution from High Yield Sukuk (unit is %) 13% 40% 33%

Market Value % of High Yield Sukuk 13% 25% 52%

Net Option Adjusted Duration (with respect to BM in years) -2 0% 2% 54%

Market Value of illiquid positions 2% 4% 50%

Contribution to Total Volatility Range

Exposure Range


35


Global Sukuk | Risk Framework

36

Fund Characteristics




37

Fund Identifiers

ISIN Code LU0792756115

SEDOL Code B7PXZP2

Bloomberg Code FTGSAAU LX


As of 30 June 2019

Summary

Portfolio Manager(s)

Mohieddine (Dino) Kronfol U. Arab Emir.

Sharif Eid U. Arab Emir.

Fund Ratings (30 June 2019)

Overall Morningstar Rating™

««

Summary of Investment Objective

To maximise, consistent with prudent investment management, total investment

return, consisting of a combination of profit income and capital appreciation. The

Fund seeks to achieve this objective by investing principally in a portfolio of fixed- and

floating-rate Shariah-compliant securities (including non-investment grade securities),

including Sukuk, Murabaha and Wakala placements and other short-term instruments

issued by government, government-related and corporate entities located in

developed and developing countries.

Morningstar Category™ Islamic Global Bond

Investment Style Fixed Income

Fund Inception Date 10 September 2012

Share Class Inception Date 10 September 2012

Benchmark Dow Jones Sukuk Index

Base Currency for Fund USD

Base Currency for Share Class USD

Total Net Assets (USD) 136,133,181.22

Asset Allocation Fixed Income: 98.40%

Cash & Cash Equivalents: 1.60%

Number of Holdings 50

Total Expense Ratio 1.50%

© Morningstar, Inc. 2019. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither

Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Percentage may not total 100% due to rounding.

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

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




38

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 Shariah-compliant debt securities, including Sukuk and short-term instruments of any quality issued by entities located in developed and

emerging markets. Such securities have historically been subject to price movements, generally due to the supply and demand for financing, other market factors or

movements in the Sukuk market. As a result, the performance of the Fund can fluctuate moderately over time.

Other significant risks include: emerging markets risk, derivatives risk, counterparty risk, liquidity risk, Sukuk risk, Shariah compliance 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?



39

Portfolio Characteristics


vs. Dow Jones Sukuk Index

As of 30 June 2019

Portfolio Index

Average Credit Quality BBB+ A

Average Duration 5.53 Yrs 4.95 Yrs

Average Weighted Maturity 7.16 Yrs 5.99 Yrs

Yield to Maturity 4.64% 3.15%

Yield to Worst 4.64% 3.14%


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.


Weightings as percent of total. Percentage may not total 100% due to rounding.



Cash & Cash Equivalents

Supranational

Non-EMU Europe

Asia ex-Japan

Middle East / Africa

0% 35% 70%


Dow Jones Sukuk Index


40

Geographic Allocation



As of 30 June 2019

Portfolio % Index % Over/Under %

MIDDLE EAST / AFRICA 67.18 57.61 9.57

United Arab Emirates 33.80 24.82 8.99

Saudi Arabia 14.43 26.22 -11.78

Qatar 8.21 5.95 2.26

Kuwait 4.11 0.63 3.48

Nigeria 3.51 0.00 3.51

Bahrain 1.78 0.00 1.78

Oman 1.34 0.00 1.34

ASIA 26.33 28.73 -2.40

ASIA EX-JAPAN 26.33 28.73 -2.40

Indonesia 17.74 19.31 -1.57

Malaysia 4.14 8.14 -4.00

Hong Kong 2.65 1.27 1.38

Pakistan 1.79 0.00 1.79

EUROPE 1.11 0.00 1.11

NON-EMU EUROPE 1.11 0.00 1.11

Turkey 0.71 0.00 0.71

United Kingdom 0.40 0.00 0.40

SUPRANATIONAL 3.78 13.66 -9.88

CASH & CASH EQUIVALENTS 1.60 0.00 1.60


41

Currency Allocation



As of 30 June 2019

Indonesian Rupiah

Euro

Nigerian Naira

U.S. Dollar

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


NORTH AMERICA 91.78 100.00 -8.22

U.S. DOLLAR 91.78 100.00 -8.22

MIDEAST/AFRICA 3.51 0.00 3.51

Nigerian Naira 3.51 0.00 3.51

EUROPE 2.57 0.00 2.57

EURO 2.57 0.00 2.57

ASIA 2.14 0.00 2.14

ASIA EX-JAPAN 2.14 0.00 2.14

Indonesian Rupiah 2.14 0.00 2.14






42



As of 30 June 2019

Sector Allocation


Government-Related Sovereign 33.93 47.36 -13.43

Government-Related Agencies 22.66 22.05 0.61

Corporate Industrials 17.57 3.81 13.76

Corporate Financial Institutions 14.81 13.13 1.68

Treasury 5.65 0.00 5.65

Government-Related Supranational 3.78 13.66 -9.88

Cash & Cash Equivalents 1.60 0.00 1.60


Cash & Cash Equivalents

Government-Related Supranational

Treasury

Corporate Financial Institutions

Corporate Industrials

Government-Related Agencies

Government-Related Sovereign

0% 10% 20% 30% 40% 50%






Cash

NR

D

B

BB

BBB

A

AA

AAA

0% 15% 30% 45% 60%




43



As of 30 June 2019

Credit Quality Allocation


AAA 2.57 12.07 -9.50

AA 3.05 7.50 -4.44

A 31.07 50.33 -19.25

BBB 34.95 30.11 4.84

BB 4.12 0.00 4.12

B 11.24 0.00 11.24

D 0.71 0.00 0.71

NR 10.69 0.00 10.69

Cash 1.60 0.00 1.60

Investment Grade

71.65 100.00 -28.35

Non-Investment Grade

26.75 0.00 26.75

Cash

1.60 0.00 1.60



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. Cash includes equivalents, which may be rated.


44


Maturity Allocation

20 to 30 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

0% 8% 16% 24% 32%







0 to 1 Year 5.31 0.00 5.31

1 to 2 Years 9.04 7.49 1.54

2 to 3 Years 5.70 17.72 -12.02

3 to 5 Years 19.29 27.34 -8.05

5 to 7 Years 24.21 17.60 6.61

7 to 10 Years 27.98 25.78 2.21

20 to 30 Years 8.47 4.07 4.41



As of 30 June 2019

45

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

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

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


Top Ten Holdings


As of 30 June 2019


Security Name % of Total

Perusahaan Penerbit SBSN Indonesia III, senior note, Reg S, 4.40%, 3/01/28 6.79

Perusahaan Penerbit SBSN Indonesia III, Reg S, 4.55%, 3/29/26 4.03

KSA Sukuk Ltd., senior bond, Reg S, 3.628%, 4/20/27 3.68

Nile Delta Sukuk Ltd., secured note, Reg S, 4.00%, 10/31/20 3.55

FGN Roads Sukuk Co. 1 PLC, senior note, 16.47%, 9/26/24 3.51

Perusahaan Penerbit SBSN Indonesia III, senior note, Reg S, 4.325%, 5/28/25 3.43

Equate Sukuk SPC Ltd., senior note, Reg S, 3.944%, 2/21/24 3.41

Aldar Sukuk Ltd., senior note, Reg S, 4.75%, 9/29/25 3.14

Malaysia Sukuk Global Bhd., Reg S, 4.08%, 4/27/46 2.97

Saudi Electricity Global Sukuk Co. 3, senior bond, Reg S, 5.50%, 4/08/44 2.79

Total 37.28


46

Discrete Performance

Discrete Annual Performance (%)

Inception

Date

06/18

06/19

06/17

06/18

06/16

06/17

06/15

06/16

06/14

06/15

Franklin Global Sukuk Fund - A (acc) USD—Net of Fees 10.9.2012 7.82 -1.24 1.17 1.64 0.36

Dow Jones Sukuk Index 8.77 -0.17 2.91 4.36 3.35

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

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


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

The value of shares in the Fund and income received from it can go down as well as up, and investors may not get back the full amount invested. Past performance is not an indicator

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

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



As of 30 June 2019

Annualised Total Returns (%)

Inception

Date 1 Yr 3 Yrs 5 Yrs

Since

Incept

Franklin Global Sukuk Fund - A (acc) USD—Net of Fees 10.9.2012 7.82 2.51 1.91 2.70

Dow Jones Sukuk Index 8.77 3.77 3.80 3.70


Historical Performance


As of 30 June 2019









47

Cumulative Performance (%)

Inception

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

Since

Incept

Franklin Global Sukuk Fund - A (acc) USD—Net of Fees 10.9.2012 1.70 3.10 7.44 7.82 7.73 9.90 19.90

Dow Jones Sukuk Index 1.54 3.17 7.03 8.77 11.74 20.52 28.05


48









Calendar Year Returns


As of 30 June 2019

YTD 2019 2018 2017 2016 2015 2014 2013

-4%

-1%

2%

5%

8%

7.44

7.03

-2.53

0.12

7.72

4.47

-1.12

4.35

-0.19

1.24

3.76

6.37

1.37

0.22

Dow Jones Sukuk IndexFranklin Global Sukuk Fund - A (acc) USD—Net of Fees


49

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

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


^^Measured against the Dow Jones Sukuk Index.

*Annualised.



As of 30 June 2019

Performance Risk Statistics

1 Yr 3 Yrs* 5 Yrs*

Standard Deviation (%):

Franklin Global Sukuk Fund - A (acc) USD 3.01 3.41 3.16

Dow Jones Sukuk Index 2.20 2.38 2.38

Tracking Error (%)^^ 1.19 2.04 1.97

Information Ratio^^ -0.79 -0.62 -0.96

Beta^^ 1.30 1.16 1.03

Sharpe Ratio 1.85 0.33 0.33


Performance Risk Statistics

Franklin Global Sukuk Fund (the “Fund”) is a relatively new fund that has a short performance history.The following section reflects the historical performance of the Franklin Global Sukuk Composite (the “composite”) and is intended for supplemental information. From the composite inception to the present, the Franklin Global Sukuk Composite may include accounts that are managed by Franklin affiliates and sub-advised by Franklin Templeton Investments Middle East (ME), Limited (FTIME). FTIME provides non-binding, non-discretionary advice in connection with the Fund to Franklin Advisers, Inc., the investment manager of the Fund. FTIME is a separate firm which does not claim GIPS® compliance. Although the composite reflects a similarly managedstrategy as the Fund, it reflects the performance of discretionary constituent separate account(s) and pooled investment vehicle(s) with daily, as well as, less frequent cash flows. Separate accounts and pooled investment vehicles are managed in accordance with an account’s specific guidelines and due to the regulatory and fee/expense structure differences between private accounts and funds, composite returns and fund returns will differ, sometimes significantly.

For additional information regarding the Fund or composite, please see the Important Disclosures and Composite Disclosures page.

Supplemental Information

1669


50


Supplemental Information

Quarter 1 Year 3 Years 5 YearsSince Inception

(30.09.2008)

Franklin Global Sukuk Composite—Gross of Fees (USD) 4.49 4.97 3.26 3.12 5.02

Franklin Global Sukuk Composite—Net of Fees (USD) 4.40 4.61 2.91 2.66 3.63

Dow Jones Sukuk Index (USD) 3.74 5.09 3.41 3.51 4.88

Franklin Global Sukuk CompositeAs of 31 March 2019Annualised Total Returns (%)

From the composite inception to the present, the Franklin Global Sukuk Composite may include accounts that are managed by Franklin affiliates and sub-advised by Franklin Templeton Investments Middle East (ME), Limited (FTIME). FTIME provides non-binding, non-discretionary advice in connection with Franklin Global Sukuk Fund (the “Fund”) to Franklin Advisers Inc., the investment manager of the Fund. FTIME is a separate firm which does not claim GIPS® compliance.Performance data is shown rounded to the nearest hundredth. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges.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.Past performance is not an indicator or a guarantee of future performance.

Supplemental Information Historical Performance

1669


51


52

Appendix



Most Common Sukuk Instruments

1672

Source: Latham & Watkins | The Sukuk Handbook: A Guide To Structuring Sukuk June 2015

Sukuk Type Nature of Product Uses IssuesSukuk al-ijara Sale and leaseback Seen as “gold standard” Requires availability of fixed assets to the

required value available for the life of the Sukuk

Sukuk al-wakala Agency basis, investor share fixed Used when portfolio of assets is used to support the Sukuk

Few objections, becoming more popular where ijara not practical

Sukuk al-mudaraba Agency basis with profit share on agreed ratio

Used where originator does not own an actual tangible asset

Some issues where purchase undertakings exist caused decline in popularity

Sukuk al-musharaka Partnership agreement Buy back arrangements without which capital return cannot be guaranteed are problematic, leading to decline in popularity for this product

Sukuk al-istithmar Investment agency using a package of products, at least 30% being asset backed

Elements of the package must not be debt instruments

Sukuk al-manafa’a Can be used where underlying assets are intangible

Airtime for telecoms companies or passenger revenues of airlines

Sukuk al-istisna’a Contractual agreement for the sale of goods to be produced in the future

Good for infrastructure projects Underlying assets must be capable of transformation by manufacture, with price and features agreed in advance

Sukuk al-murabaha Deferred payment agreement Used if originator lacks tangible underlying assets. Quite often used as element in hybrid Sukuk

Cannot be traded at a premium

Ijara, hybrid wakala-mudaraba and murabaha are the most common Sukuk forms at present, with murabaha used mainly by banks as abuy-and-hold product


53


Most Common Sukuk Instruments

As of 31 December 2018

76881001201511712222502682775001,0001,8642,1662,1973,6944,7175,7396,146

12,27714,374

19,61322,294

57,21563,012

184,9450 30,000 60,000 90,000 120,000 150,000 180,000

KazakhstanGuernsey

JapanJordanIrelandChina

FranceCôte d'IvoireLuxembourg

NigeriaSouth Africa

United States of AmericaKuwait

SingaporeUnited Kingdom

Hong KongPakistan

OmanBahrain

QatarTurkey

IndonesiaSupranational

United Arab EmiratesSaudi Arabia

Malaysia

…by Country (USD Millions)

Growing Global Sukuk Market Increasingly Diversified…

Source: Bloomberg as of 31 December 2018.

646,0716,741

10,37211,306

17,50825,532

40,17046,918

109,475129,319

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000

TechnologyDiversified

Basic MaterialsEnergy

CommunicationsConsumer, Cyclical

Consumer, Non-cyclicalIndustrial

UtilitiesGovernment

Financial

…by Sector (USD Millions)

2,484

29,098

52,092

55,181

76,807

85,288

102,528

0 20,000 40,000 60,000 80,000 100,000 120,000

Sukuk Al Istisna'a

Sukuk Al Mudarabah

Sukuk Al Musharakah

Other

Sukuk Al-Wakala Bel-Istithma

Sukuk Al Ijara

Sukuk Al Murabaha

…by Structure (USD Millions)

1618521202362502775401,0511,7172,6512,6792,7133,0585,691

40,071170,192172,145

0 40,000 80,000 120,000 160,000 200,000

Australian DollarJapanese Yen

Hong Kong DollarJordanian Dinar

Chinese Yuan RenminbiWest African CFA

Nigerian NaraBritish Pound

Oman RialPakistani Rupee

Indonesian RupiahSingaporean Dollar

Turkey LiraEuro

UAE DirhamSaudi RiyalU.S. Dollar

Malaysian Ringgit

…by Currency (USD Millions)

1905


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Growing Global Sukuk Market Increasingly Diversified

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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 returns over the long term • Led by investment research teams to understand the long-term economic impact on securities

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Franklin Templeton—ESG Investment Philosophy

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Franklin Templeton Is Committed to ESG

Average Credit Quality: The credit rating of an Islamic bond is an assessment of the credit worthiness of individuals and corporations. It is based upon the history of borrowing and repayment, as well as the availability of assets and extent of liabilities. The average credit quality of a fund reflects the holdings of the underlying issues, based on the size of each holding. Usually we quote the average credit quality as per Standard & Poor’s or Moody’s credit rating agencies.

Average Duration: Also known as “effective” or “McCauley” duration, it is a measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in income. Duration is expressed as a number of years. It’s an indication of an issue’s coupon relative to its maturity. Rising income means falling Islamic bond prices; declining income means rising Islamic bond prices. The bigger the duration number, the greater the income risk (or reward for Islamic bond prices). The weighted average duration of a fund reflects the effective duration of the underlying issues, based on the size of each holding. This value differs with “Modified Duration” which is modified for the market (dirty) price of an issue.

Average Weighted Maturity: An estimate of the number of terms to maturity, taking the possibility of early payments into account, for the underlying holdings. Average life is calculated using the weighted average time to the receipt of all future cash flows for all holdings. Sometimes also known as “average maturity” for fixed-term products. The weighted average life of a fund reflects the maturity of the underlying issues, based on the size of each holding.

Current Yield: In general, yield is the annual rate of return for any investment and is expressed as a percentage. With Islamic bonds, yield is the effective rate of income paid on an Islamic bond, calculated by the coupon rate divided by the Islamic bond’s market price. Islamic bonds are typically issued with fixed coupon payments (regular cash payments of a fixed amount). Islamic bonds are typically valued in terms of the their yield—what dollar amount as coupon payments is received as compared to the Islamic bond’s current market price. For an Islamic bond fund, the current yield may be the disclosed yield paid out to investors.

Yield to Maturity: Yield to Maturity (“YTM”) also known as the “Gross Redemption Yield” or “Redemption Yield.” The rate of return anticipated on an Islamic bond if it is held until the maturity date. YTM is considered a long-term Islamic bond yield expressed as an annual rate. The calculation of YTM takes into account the current market price, par value, coupon income and time to maturity. It is also assumed that all coupons are reinvested at the same rate.

Yield to Worst: The yield to maturity if the worst possible Islamic bond repayment takes place. If market yields are higher than the coupon, the yield to worst would assume no prepayment. If market yields are below the coupon, the yield to worst would assume prepayment. In other words, yield to worst assumes that market yields are unchanged. Normally this value is not aggregated since it varies but if a weighted average value is used for a fund, then the figure will reflect the values of the underlying issues, based on the size of each holding.

Glossary

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Glossary

Important Disclosures



59

© 2019 Franklin Templeton Investments. All rights reserved. This document/marketing material is directed at Professional Clients. Franklin Templeton Shariah Funds (the “Fund”) is a

Luxembourg registered SICAV. Source for data and information provided by Franklin Templeton Investments, is as of the date of this document, unless otherwise noted. Benchmark related data

provided by FactSet, is as of the date of this document, unless otherwise noted. This document does not constitute a legal or tax advice nor an investment advice or an offer for shares of the

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

on our website at www.franklintempletongem.com or which can be obtained, free of charge, from Franklin Templeton Investments, Gate Building, East Wing, 2nd Floor, Dubai International

Financial Centre, P.O. Box 506613, Dubai, U.A.E. 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.

An investment in the Fund entails risks, which are described in the Fund’s prospectus. Special risks may be associated with a Fund’s investment in certain types of securities, asset classes,

sectors, markets, currencies or countries and in the Fund’s possible use of derivatives. In emerging markets, the risks can be greater than developed markets. These risks are more fully

described in the Fund’s prospectus and should be read closely before investing. 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. When investing in a fund denominated in a foreign currency, the performance

may also be affected by currency fluctuations. All investments involve risk and there can be no guarantee against loss resulting from an investment in the Fund, nor can there be any assurance

that the Fund’s investment objective(s) will be attained.

The investment activities will be undertaken in accordance with the Shariah Guidelines. As a consequence, the performance of a Fund may possibly be lower than other investment funds that do

not seek to strictly adhere to the Islamic investment criteria. The requirement to “purify” cash holdings or dividend income will likely result in payments being made to charities. The return to

investors will be reduced by the amount of such payments. The International Shariah Supervisory Board of Amanie Advisors Sdn Bhd has certified that the Fund is in compliance with the

requirements of the Shariah principles. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.

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

© 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.

“Dow Jones®” and “Dow Jones Sukuk Index” are trademarks of Dow Jones Trademark Holdings LLC (“Dow Jones”) or its affiliates and have been licensed for use for certain purposes by S&P

Dow Jones Indices LLC and its affiliates (“S&P Dow Jones Indices”) and sublicensed to Franklin Templeton Companies, LLC for use with the Franklin Global Sukuk Fund. Franklin Global Sukuk

Fund, which is benchmarkcd to the Dow Jones Sukuk Index, is not sponsored, endorsed, sold or promoted by Dow Jones, S&P Dow Jones Indices or their respective affiliates, and none of S&P

Dow Jones Indices, Dow Jones or any of their respective affiliates makes any representation regarding the advisability of trading in such product(s).

Reproduction of the S&P Dow Jones Indices in any form is prohibited except with the prior written permission of Standard and Poor’s (“S&P”). S&P does not guarantee the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions, regardless of the cause or for the results obtained from the use of such information. S&P DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall S&P be liable for any direct, indirect, special or consequential damages, costs, expenses, legal fees, or losses (including lost income or lost profit and opportunity costs) in connection with subscriber’s or others’ use of the S&P Dow Jones Indices.

Source: J.P. Morgan. Copyright 2019. JPMorgan Chase & Co. All rights reserved. J.P. Morgan is the marketing name for JPMorgan Chase & Co., and its subsidiaries and affiliates worldwide. The Franklin Global Sukuk Fund is not sponsored, endorsed, sold or promoted by J.P. Morgan. THE J.P. MORGAN GBI BROAD INDEX is created based on stated, established rules. The creation or use of THE J.P. MORGAN GBI BROAD INDEX does not constitute a recommendation by J.P. Morgan of the Franklin Global SukukFund or a trade recommendation by J.P. Morgan. J.P. Morgan makes no representation or warranty, express or implied, with respect to the Franklin Global Sukuk Fund, or the advisability of investing in securities generally, or in the Franklin Global Sukuk Fund particularly, or the ability of THE J.P. MORGAN GBI BROAD INDEX to track bond market performance. J.P. Morgan has no obligation to take the needs of the prospective purchasers or owners of the Franklin Global Sukuk Fund into consideration in determining, composing or calculating THE J.P. MORGAN GBI BROAD INDEX. J.P. Morgan is not responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Franklin Global Sukuk Fund. J.P. Morgan has no obligation or liability in connection with the administration, marketing or trading of the Franklin Global Sukuk Fund. THE J.P. MORGAN GBI BROAD INDEX IS PROVIDED “AS IS” WITH ANY AND ALL FAULTS. J.P. MORGAN DOES NOT GUARANTEE THE AVAILABILITY, SEQUENCE, TIMELINESS, QUALITY, ACCURACY AND/OR THE COMPLETENESS OF THE J.P. MORGAN GBI BROAD INDEX AND/OR ANY DATA INCLUDED THEREIN, OR FROM ANY USE OF THE J.P. MORGAN GBI BROAD INDEX. J.P. MORGAN MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OF FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE J.P. MORGAN GBI BROAD INDEX OR ANY DATA INCLUDED THEREIN, OR FROM ANY USE OF THE J.P. MORGAN GBI BROAD INDEX. THERE ARE NO REPRESENTATIONS OR WARRANTIES WHICH EXTEND BEYOND THE DESCRIPTION ON THE FACE OF THIS DOCUMENT, IF ANY. ALL WARRANTIES AND REPRESENTATIONS OF ANY KIND WITH REGARD TO THE J.P. MORGAN GBI BROAD INDEX, ARE DISCLAIMED INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, QUALITY, ACCURACY, FITNESS FOR A PARTICULAR PURPOSE AND/OR AGAINST INFRINGEMENT THE J.P. MORGAN GBI BROAD INDEX AND/OR WARRANTIES AS TO ANY RESULTS TO BE OBTAINED BY AND/OR FROM THE USE OF THE J.P. MORGAN GBI BROAD INDEX WITHOUT LIMITING ANY OF THE FOREGOING, TO THE FULLEST EXTENT PERMITTED BY LAW, IN NO EVENT SHALL J.P. MORGAN HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, DIRECT, INDIRECT, OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PRINCIPAL AND/OR LOST PROFITS, IN CONNECTION WITH THE J.P. MORGAN GBI BROAD INDEX. THE J.P. MORGAN GBI BROAD INDEX AND/OR THE FRANKLIN GLOBAL SUKUK FUND EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

Additional Disclosures

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Additional Disclosures

Total Firm Assets

(Millions)

No of Portfolios (End of Period)

Equal-Wtd Dispersion

Calendar Year

Composite Total Return

Gross

Primary Benchmark

Return

Composite Gross

Annualized 3-Yr St Dev

Primary Benchmark Annualized 3-Yr St Dev

Composite Assets

(Millions)

All Returns and Asset Figures in USD

Composite Total Return

Net

Franklin Global Sukuk Composite

4.49% 4.39% 3,051.76 ≤5 ≤53.74% 3.25% 2.35% 484.96YTD*

-0.66% -0.99% 2,931.25 ≤5 ≤50.12% 3.13% 2.23% 468.432018

8.60% 8.25% 1,886.37 ≤5 ≤54.47% 3.11% 2.31% 495.102017

0.23% -0.14% 1,258.76 ≤5 ≤54.35% 3.27% 2.58% 249.902016

1.52% 1.06% 1,146.08 ≤5 ≤51.24% 3.88% 2.83% 215.862015

5.42% 4.54% 1,121.75 ≤5 ≤56.37% 3.89% 2.65% 84.332014

2.96% 1.94% 588.77 ≤5 ≤50.22% 4.11% 2.86% 49.092013

12.76% 10.56% 508.83 ≤5 ≤58.00% 3.61% 2.33% 29.922012

8.93% 5.95% 365.78 ≤5 ≤55.46% 8.77% 9.76% 9.972011

10.81% 6.99% 180.94 ≤5 ≤59.40% < 3 Years < 3 Years 7.922010

13.27% 11.09% 61.39 ≤5 ≤527.13% < 3 Years < 3 Years 27.022009

1 See important notes to this performance presentation beginning on the next page.

2 Past performance does not guarantee future results and results may differ over future time periods.

N/A = Not Available

* Year to Date reflects performance through 3/31/2019 and composite composition as of 3/31/2019

Primary Benchmark: Dow Jones Sukuk TR Index.

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GIPS Performance Presentation

Disclosures:

a Firm Description - Franklin Templeton Investments (ME) Limited is a wholly-owned subsidiary of Franklin Resources, Inc. managing equity, fixed income and global Sukuk-Shariah compliant fixed income securities serving retail and institutional clients. The equity process applies a bottom-up fundamental research approach to invest in equity securities located in the Middle East and North Africa (MENA), as well as a top-down process to country allocation selection. The fixed income process applies a mix of bottom up, top down and quantitative approaches to invest in fixed income securities located in the Middle East, North Africa, Emerging Asia and Sukuk markets.

b Composite Description - The Franklin Global Sukuk Composite consists of all portfolios managed on a fully discretionary basis with an investment objective that seeks to maximize total return by investing in fixed and floating-rate Shariah-compliant securities (including non-investment grade securities), including Sukuk Wakala and Murabaha placements and other short-term instruments issued by government, government-related and corporate entities located in developed and developing countries. The portfolios may utilize investments in securities, financial derivative instruments or structured products in which the underlying security is linked to or derives its value from a distinct security, asset, commodity or currency of any nation. Composite constituents may invest in Islamic derivatives, specifically Islamic FX and Islamic profit-rate swaps; Shariah-compliant asset-backed and exchangeable securities. Use of financial derivatives instruments may result in negative exposures in a specific yield curve/duration, currency or credit. Derivative instruments have the risk of counterparty default. Foreign investing, especially in developing countries, has additional risks such as currency and market volatility and political or social instability. The base currency of the composite is USD. The inception date of the composite is 30 September 2008. The composite creation date is December 2012. Eligible new accounts and eligible accounts that have changed to this mandate are added to the composite after one full month of performance, excluding any first partial month following inception or notification of mandate change. Accounts are removed the month prior to notification of termination or notification of client directed restrictions that result in the account becoming non-discretionary.

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c Basis of Presentation and Calculation Methodology -Total returns are both gross and net of investment advisory fees, are inclusive of commissions and transaction costs, and assume reinvestment of any dividends, profit rate, capital gains or other earnings. Dividends, profit rate , and capital gains are net of any applicable withholding taxes. Both gross and net performance results are time-weighted rates of return, including realized and unrealized gains and losses. Gross of fee returns for pooled investment vehicles are calculated by adding back 1/12 of the pooled investment vehicle’s total annual expense ratio to the monthly returns which are based on the net asset values for the primary share class. The total expense ratio reflects the investment management fees, administrative fees and all other pooled vehicle-related expenses for the primary share class but do not include any sales charges. Monthly composite returns are calculated by weighting each account’s monthly return by its beginning market value as a percent of the total composite beginning market value. Quarterly and annual returns are calculated by linking the monthly returns through compounded multiplication. Returns for periods of less than one year are not annualized. For separate accounts, net performance reflects actual investment management fees charged, assessed quarterly in arrears, and actual performance fees as applicable. For all pooled investment vehicles (including commingled trust accounts), third party administered accounts, including accounts that use custodian market values where actual fees are not available, or accounts which are otherwise not charged a fee or benefit from fee waivers, net performance is reduced by performance fees if applicable and investment management fees by applying the highest breakpoint from the standard institutional fee schedule to the gross monthly returns regardless of asset size. Portfolios are valued on the last business day of the month or the last business day within the region. The last business day within the region may be a non-calendar month end. Portfolios may be valued at fair market value on a trade date basis and market values include accrued income for fixed income securities and accrued dividends for equity securities based on ex-dividend date. In addition, some portfolios may be valued at fair market value with adjustment for cash flows based on the regional business day which may be monthly, weekly or daily. Where market quotations are readily available, securities are valued thereon (using closing quotations when available), provided such quotations adequately reflect, in the judgment of the firm, the fair value of the securities. Positions for which no quotation is readily available are valued at fair market value using quotations from brokers, Bloomberg or using Franklin ‘s own assessment of fair market value based on fundamental analysis (earnings multiples, price to cash flow analysis), discounts from market prices of similar securities, or matrix pricing, among other methods. Securities not in the base currency of the portfolio are generally valued using foreign exchange rates obtained through Reuters, using 4:00 PM (New York time) foreign exchange (FX) rates. Some composite constituents, due to requests from clients or approval by respective mutual fund boards, may utilize London Close FX rates. Franklin uses London Close FX rates for converting non-base currency accounts to the base currency of the composite. Past performance does not guarantee future results and may differ for future time periods.

d Description of Index - The primary benchmark is Dow Jones Sukuk TR Index. This index is a market cap weighted index comprised of issues from global U.S. dollar-denominated investment-grade bonds that are Shariah-compliant based on an explicit or implicit rating of at least BBB-/Baa3 by S&P, Moody’s or a leading rating agency. Total return components for the benchmark include price change, coupon payments excluding reinvestment and accrued profit rate not adjusted for foreign withholding taxes and are based on foreign exchange rates established at the London close (or mid-day New York time). As of 12/31/12 Dow Jones Sukuk TR Index with coupon reinvested was discontinued. FX rates used by index vendors are obtained from their respective FX vendors and may differ slightly from the FX rates used by Franklin. The benchmark, which is not managed, is used for comparative purposes only and is provided to represent the investment environment existing during the time periods shown. Additionally, the benchmark does not reflect any fees, expenses or sales charges.

e Minimum Account Size - There is no minimum account size required to be included in this composite.

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f Standard Fee Schedule - The standard investment management fee schedule has breakpoints depending on asset size, with the result that accounts with higher assets levels will pay a lower fee. Investment management fees are negotiable, so some clients may be able to negotiate a fee that is less than the standard fee schedule at a given breakpoint. For pooled investment vehicles such as mutual funds that may be in the composite, the total expense ratio may be higher than the standard fee schedule for separate accounts, depending on the total expenses for that vehicle which includes management fees, administrative fees, and the other expenses. The fee schedule is presented in USD.

Breakpoints Separate AccountsFirst $100,000,000 0.425%Next $150,000,000 0.350%Over $250,000,000 0.300%

g Measure of Dispersion - Dispersion represents the consistency of the Franklin’s results with respect to individual portfolio returns within the composite. The dispersion of annual returns is measured by the standard deviation of equal-weighted returns for those accounts that were in the composite for each full calendar year, or partial year for the most recent year-to-date. Dispersion is not meaningful when there are five or fewer accounts in a given year or time period, so is not presented for periods when this is applicable.

h 3 Year Standard Deviation - The annualized three year standard deviation measures the variability of the composite and benchmark returns over the preceding 36 month period as of each period end.

i Additional Information - For additional information, please contact Franklin Templeton International Services S.A. - Professional of the Financial Sector under the supervision of the Commission de Surveillance du Secteur Financier - 8A rue Albert Borschette L - 1246 Luxembourg - Tel: +352-46 66 67-1.

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