Franklin Templeton Investment Funds
Templeton Global Total Return 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 Total Return 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
Fund Description....................................................................................................................7
Fund Overview....................................................................................................................... 8
A Record of Strong Performance.............................................................................................9
Relatively Low to Moderate Correlations Historically to Other Asset Classes..........................10
Discrete Performance........................................................................................................... 11
Prolonged Advances vs. Moderate Declines..........................................................................12
Historically Attractive Risk/Return Profile Compared to Other Asset Classes..........................13
On-the-Ground Research......................................................................................................14
Franklin Templeton Fixed Income..........................................................................................15
Insight and Information Sharing Around the Globe................................................................. 16
Templeton Global Macro—A Team of Global Fixed Income Experts........................................17
Investment Philosophy..........................................................................................................18
ESG—Going Beyond Traditional Macroeconomic Indicators...................................................19
A Proprietary ESG Index—TGM-ESGI...................................................................................20
TGM—ESGI Centers Around 13 Indicators............................................................................21
Investment Process.............................................................................................................. 22
Country Research Can Help to Identify Potential Alpha Sources............................................ 23
Portfolio Construction............................................................................................................24
Portfolio Positioning.............................................................................................................. 25
Case Study: Ireland..............................................................................................................26
Summary of Advantages.......................................................................................................27
Summary..............................................................................................................................28
What are the Key Risks?......................................................................................................29
Portfolio Characteristics........................................................................................................30
Geographic Allocation...........................................................................................................31
Currency Exposure...............................................................................................................32
Sector Allocation...................................................................................................................33
Credit Quality Allocation........................................................................................................34
Maturity Allocation................................................................................................................35
Historical Performance..........................................................................................................36
Calendar Year Returns......................................................................................................... 37
Performance Risk Statistics.................................................................................................. 38
Appendix............................................................................................................39
Management Profiles.......................................................................................40
Templeton Global Total Return Fund
3
Table of Contents (continued)
For professional investor use only. Not for distribution to retail investors.
Templeton Global Macro Management Profiles......................................................................41
Module: Additional Resources........................................................................46
Global Aggregate/EMD Team (New York, London).................................................................47
A Specialised Local Asset Management (LAM) Team............................................................ 48
Fixed Income Policy Committee (FIPC)..................................................................................49
Module: Performance Attribution...................................................................50
Three Sources of Potential Alpha Over Time..........................................................................51
Module: Process Implementation Examples.................................................52
Navigating Global Divergence............................................................................................... 53
Active Duration Management................................................................................................ 54
Sector and Duration Strategy................................................................................................55
Environmental, Social & Governance............................................................56
TGM-ESG Index—Scoring Methodology................................................................................57
Developed Countries Usually Exhibit Higher ESG Scores.......................................................58
Strong Relationship between GDP per Capita and ESG Score...............................................59
TGM-ESGI—Favouring Flat or Improving ESG Scores Rather Than Current Levels................60
Franklin Templeton—ESG and Corporate Sustainability.........................................................61
Franklin Templeton—Environmental, Social and Governance (ESG) Investment
Integration
....................62
Glossary...............................................................................................................................63
Important Disclosures...........................................................................................................64
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 Total Return 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 Total Return 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 Total Return Fund
6
For professional investor use only. Not for distribution to retail investors.
Templeton Global Macro—Assets Under Management
Seeks to:• Maximise, consistent with prudent investment management, total investment return consisting
of a combination of interest income, capital appreciation and currency gains
• Capitalise on the large, expanding opportunity set in global bonds
• Capture potential alpha opportunities in global fixed income and currencies
• Achieve solid, long-term, risk-adjusted returns in diverse market conditions
Fund Description
2947
Templeton Global Total Return Fund
7
For professional investor use only. Not for distribution to retail investors.
Fund Description
Investment Objectives1
• Seek to maximise, consistent with prudent investment management, total investment return consisting of a combination of interest income, capital appreciation and currency gains
• Take advantage of an unconstrained worldview independent from its benchmark—the Bloomberg Barclays Multiverse Index
• Seek to maintain a portfolio risk profile commensurate with the volatility of the benchmark
Investment Focus• Invest in global debt securities and global currencies across all sectors and utilises active currency management
• Limit below-investment grade securities exposure
• 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
– Credit
Fund Overview
2948
Templeton Global Total Return Fund
8
1. There is no assurance that the strategy will achieve its investment objectives. As stated above, the strategy is managed in a benchmark unconstrained manner.
For professional investor use only. Not for distribution to retail investors.
Fund Overview
9
Templeton Global Total Return Fund - A (acc) USD
vs. Bloomberg Barclays Multiverse Index
Monthly Rolling 3-Year Annualised Returns
31 August 2006 to 30 June 2019
A Record of Strong Performance
Tem
pleto
nG
lo
balT
otalR
etu
rn
Fu
nd
-A
(acc)
US
D—
Net
of
Fees
Templeton Global Total Return Fund - A (acc) USD outperformed the
Bloomberg Barclays Multiverse Index 126 out of the 155 monthly rolling 3-year
periods shown
Templeton Global Total Return 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 Total Return Fund - A (acc)
USD—Net of Fees
5.73 -3.59 12.54 -6.92 -3.33
Bloomberg Barclays Multiverse Index 6.01 1.34 -1.38 8.62 -7.10
Annualised Total Returns (%)
As of 30 June 2019
Inception
Date 3 Yrs 5 Yrs 10 Yrs
Templeton Global Total Return Fund - A (acc)
USD—Net of Fees
29.8.2003 4.68 0.63 5.70
Bloomberg Barclays Multiverse Index 1.95 1.35 3.13
-5% 2% 9% 16% 23%
-5%
2%
9%
16%
23%
Bloomberg Barclays Multiverse Index
UNDERPERFORMED
OUTPERFORMED
Templeton Global Total Return Fund – A (Mdis) USD5-Year Rolling CorrelationsPeriod Ending 30 June 2019
-0.25
0.00
0.25
0.50
0.75
1.00
Dec-0
8Ma
r-09
Jun-
09Se
p-09
Dec-0
9Ma
r-10
Jun-
10Se
p-10
Dec-1
0Ma
r-11
Jun-
11Se
p-11
Dec-1
1Ma
r-12
Jun-
12Se
p-12
Dec-1
2Ma
r-13
Jun-
13Se
p-13
Dec-1
3Ma
r-14
Jun-
14Se
p-14
Dec-1
4Ma
r-15
Jun-
15Se
p-15
Dec-1
5Ma
r-16
Jun-
16Se
p-16
Dec-1
6Ma
r-17
Jun-
17Se
p-17
Dec-1
7Ma
r-18
Jun-
18Se
p-18
Dec-1
8Ma
r-19
Jun-
19
U.S. Bonds High Yield Bonds Emerging Markets Sovereign DebtU.S. Stocks World Stocks¹ FX CarryHedge Funds Commodities
5 Years Ending 30/06/2019
U.S. Bonds -0.22
High Yield Bonds 0.46
Emerging Markets Sovereign Debt 0.38
U.S. Stocks 0.39
World Stocks1 0.45
FX Carry 0.40
Hedge Funds 0.37
Commodities 0.25
Correlation: 1 = perfect positive correlation 0 = no correlation -1 = perfect negative correlation
2949
Templeton Global Total Return Fund
10
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 Bond 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 Low to Moderate Correlations Historically to Other Asset Classes
Templeton Global Total Return Fund
11
Discrete Performance
Discrete Annual Performance (%)
Inception
Date
06/18
06/19
06/17
06/18
06/16
06/17
06/15
06/16
06/14
06/15
Templeton Global Total Return Fund - A (acc) USD—Net of Fees 29.8.2003 5.73 -3.59 12.54 -6.92 -3.33
Bloomberg Barclays Multiverse Index 6.01 1.34 -1.38 8.62 -7.10
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 Total Return 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.
Cumulative Daily Returns for Each Period—Templeton Global Total Return Fund - A (Mdis) USD—Net of FeesAs of 31 March 2019
Average Advance: 21.27%; 8.8 months
Average Decline: -8.06%; 8.2 months
An “advance” (“decline”) is any period of a month or longer when cumulative daily returns exceed (fall more than) twice the standard deviation of rolling monthly returns of the entire sample period. On average, periods defined as “declines” have been shorter and smaller than periods defined as “advances.”
2950
-20%
0%
20%
40%
60%
80%
Dec-03 Oct-04 Aug-05 Jun-06 Apr-07 Feb-08 Jan-09 Nov-09 Sep-10 Jul-11 May-12 Apr-13 Feb-14 Dec-14 Oct-15 Aug-16 Jun-17 May-18 Mar-19
Templeton Global Total Return Fund
12
For professional investor use only. Not for distribution to retail investors.
Prolonged Advances vs. Moderate Declines
• Templeton Global Total Return Fund - A (Mdis) USD has provided a relatively strong risk/return profilecompared to other asset classes over the long term
10-Year PeriodAs of 31 March 2019
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.
Historically Attractive Risk/Return Profile Compared to Other Asset Classes
Global Government BondsU.S. Bonds U.S. TIPS
Emerging Market Bonds
High Yield Bonds
Hedge Funds
Commodities
REITs
Domestic Stocks
World Stocks
Cash
-4
0
4
8
12
16
20
0 3 6 9 12 15 18
Retu
rn (%
)
Standard Deviation (%)
Templeton Global Total Return Fund - A (Mdis) USD—Net of Fees
2952
Templeton Global Total Return Fund
13
For professional investor use only. Not for distribution to retail investors.
Historically Attractive Risk/Return Profile Compared to Other Asset Classes
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 Total Return Fund
14
1. Includes individuals that are not employees of Franklin Resources, Inc. (FRI) or wholly owned subsidiaries of FRI. However, these individuals are part of our joint venture or strategic partnership relationships worldwide and are an integral component
of our overall fixed income research efforts.
2. This unit is comprised of investment professionals located in affiliates of and joint venture partners with Franklin Templeton Investments.
3. Includes the Templeton Global Equity Group and 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
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
14 Investment Professionals
9 Investment Professionals
13 Investment Professionals
30 Investment Professionals
39 Investment Professionals
Global Macro
Global Sovereign Local Emerging Market Debt
20 Investment Professionals
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
Templeton Global Total Return Fund
15
For professional investor use only. Not for distribution to retail investors.
Franklin Templeton Fixed Income
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 Total Return Fund
16
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 Total Return Fund
17
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 Total Return Fund
18
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 Total Return Fund
19
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 Total Return Fund
20
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 Total Return Fund
21
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 Total Return Fund
22
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 AnalysisIf economic activity in Mexico slowed down, that could eventually force the central bank to cut interest rates and the Mexican peso to depreciate.
Hypothetical Situation and Country AnalysisWe would see a potential opportunity if Korean sovereign credit appeared to be priced at distressed levels while our analysis did not reveal any solvency issues.
Hypothetical Situation and Country AnalysisIf Australia were to tighten their monetary policy, we could 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 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
2583
Templeton Global Total Return Fund
23
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
5402
Portfolio Positioning Position Sizing
• The portfolio invests across developed and emerging countries in areas where we see potential value
• There are typically a few overarching macro views that are expressed using a variety of instruments
• Individual views are expressed using currency, interest rate, or credit positions
• Position size is based on our view of attractiveness, valuation, conviction level and risk, as well as size and liquidity of the market
• Long country exposures typically range from approximately 4–8%, expressed using some combination of currency, rates and credit; extremely high conviction positions may constitute around 20%
Implementation Barbell Approach
• Views are implemented primarily via hard currency bonds (government and/or corporate), local currency bonds, currency forwards, interest rate swaps, or a combination thereof
• The makeup of a position depends on the exposure, valuation, liquidity, and correlation to the remainder of the portfolio
• The various investment positions in the portfolio seek to balance downside risk, expected return and liquidity
RatesCredit
Hard Currency Gov/Corp
Bonds
Local Currency
Bonds
FX Forwards*
Interest Rate
Swaps*
Currency
Templeton Global Total Return Fund
24
For professional investor use only. Not for distribution to retail investors.
Portfolio Construction
As of 30 June 2019
2679
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 lowerYIELD 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 Australia
CURRENCIES
Selectively Finding 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
CREDIT
Templeton Global Total Return Fund
25
For professional investor use only. Not for distribution to retail investors.
Portfolio Positioning
Irish Government Bond Index Yield to MaturityAs of 31 March 2016
Investing in Ireland when others feared the worst was a contrarian strategy that required us to have a steady hand.
Note: this chart shows the yield to maturity of the JP Morgan Government Bond Index (GBI) Broad Ireland sub-index starting 31 March 2010. Templeton Global Total Return - A (Mdis) Fund entered the initial position of Irish government bonds during July 2011. As of 30 June 2019, Templeton Global Total Return Fund had 0.00% of its total net assets invested in Irish sovereign debt. Holdings are subject to change. This information is for general information only as it is based solely on Templeton Global Total Return Fund. The information is historical and may vary depending on a variety of factors such as portfolio size, market conditions and currency fluctuations just to name a few.Source: JP Morgan Chase & Co., as of 31 March 2016. Franklin Templeton Investments, as of 30 June 2019.Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges.The chart above is intended solely to show the yield to maturity of the JP Morgan Government Bond Index (GBI) Broad Ireland sub-index and general market conditions and does not represent the performance of any holdings of Templeton Global Total Return Fund.Templeton Global Total Return Fund is a sub-fund of the Luxembourg-domiciled SICAV, Franklin Templeton Investment Funds. Charts are for illustrative and discussion purposes only.Past performance is not an indicator or a guarantee of future performance.
Case Study: Ireland
CONTRARIAN STRATEGY
IRELANDThird Quarter 2011
Country Analysis
• In the second half of 2011, markets around the world began to panic in response to
fears of an Armageddon scenario in Europe.
• We believed Irish government bonds were being sold indiscriminately and felt Ireland
did not face the crisis level of risk implied by its borrowing costs at the time.
Proposed Course of Action
• Based on our fundamental research approach and contrarian views, look to take
advantage of indiscriminate selling of Irish government bonds.
Portfolio DecisionPosition in Irish Government Debt
0
2
4
6
8
10
12
14
16
Mar-10 Dec-10 Sep-11 Jun-12 Mar-13 Dec-13 Sep-14 Jun-15 Mar-16Yi
eld to
Mat
urity
(%)
EntryOpportunity
Irish Government Bond Index YTM
2954
1
Templeton Global Total Return Fund
26
For professional investor use only. Not for distribution to retail investors.
Case Study: Ireland
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 Total Return Fund
27
For professional investor use only. Not for distribution to retail investors.
Summary of Advantages
Templeton Global Total Return Fund
28
Fund Identifiers
ISIN Code LU0170475312
SEDOL Code 7660300
Bloomberg Code TGTRFAA LX
Templeton Global Total Return 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 and/or floating rate debt securities and debt obligations issued by
government and government-related issuers or corporate entities worldwide. The
Fund may invest in investment grade and non-investment grade debt securities. The
Fund may also use various currency-related and other transactions involving
derivative instruments.
Morningstar Category™ Global Bond
Investment Style Fixed Income - Total Return
Fund Inception Date 29 August 2003
Share Class Inception Date 29 August 2003
Benchmark Bloomberg Barclays Multiverse Index
Base Currency for Fund USD
Base Currency for Share Class USD
Total Net Assets (USD) 17,194,336,645.51
Asset Allocation (Market Value) Fixed Income: 75.67%
Cash & Cash Equivalents: 24.33%
Number of Holdings 261
Total Expense Ratio 1.41%
© 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 Total Return Fund
29
The value of shares in the Fund and income received from it can go down as well as up and investors may not get back the full amount invested.
Performance may also be affected by currency fluctuations. Currency fluctuations may affect the value of overseas investments.
The Fund invests mainly in debt securities issued by government, government-related or corporate entities worldwide 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 Total Return Fund
30
Portfolio Characteristics
Templeton Global Total Return Fund
vs. Bloomberg Barclays Multiverse Index
As of 30 June 2019
Portfolio Index
Average Credit Quality BBB+ AA-
Average Duration -2.08 Yrs 6.92 Yrs
Average Weighted Maturity 1.51 Yrs 8.63 Yrs
Yield to Maturity 8.61% 1.71%
Yield to Worst 8.61% 1.69%
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 Total Return Fund
31
Templeton Global Total Return Fund
vs. Bloomberg Barclays Multiverse Index
As of 30 June 2019 — Market Value
CASH & CASH EQUIVALENTS
SUPRANATIONAL
NON-EMU EUROPE
EMU EUROPE
EUROPE
Other
Kenya
Ghana
MIDDLE EAST / AFRICA
JAPAN
Philippines
Indonesia
South Korea
India
ASIA EX-JAPAN
ASIA
USA
Colombia
Argentina
Brazil
Mexico
NON-US AMERICAS
AMERICAS
-3% 7% 17% 27% 37% 47%
24.33
0.15
0.00
0.00
0.00
0.01
0.48
2.86
3.35
0.00
0.01
9.00
10.69
12.12
31.82
31.82
-2.93
2.09
7.22
15.77
18.15
43.23
40.30
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 40.30 44.64 -4.34
NON-US AMERICAS 43.23 5.37 37.86
Mexico 18.15 0.64 17.50
Brazil 15.77 0.63 15.14
Argentina 7.22 0.14 7.08
Colombia 2.09 0.21 1.88
Canada 0.00 3.24 -3.24
Chile 0.00 0.17 -0.17
Other 0.00 0.33 -0.33
USA -2.93 39.27 -42.20
ASIA 31.82 22.48 9.34
ASIA EX-JAPAN 31.82 6.73 25.08
India 12.12 0.10 12.02
South Korea 10.69 1.30 9.39
Indonesia 9.00 0.49 8.51
Philippines 0.01 0.18 -0.17
China 0.00 1.96 -1.96
Australia 0.00 1.44 -1.44
Thailand 0.00 0.34 -0.34
Malaysia 0.00 0.32 -0.32
Singapore 0.00 0.25 -0.25
Other 0.00 0.36 -0.36
JAPAN 0.00 15.75 -15.75
MIDDLE EAST /
AFRICA
3.35 0.99 2.36
Ghana 2.86 0.02 2.84
Kenya 0.48 0.01 0.47
Israel 0.00 0.19 -0.19
United Arab Emirates 0.00 0.16 -0.16
Other 0.01 0.60 -0.60
EUROPE 0.00 29.86 -29.86
EMU EUROPE 0.00 21.44 -21.44
France 0.00 5.64 -5.64
Germany 0.00 4.88 -4.88
Portfolio %
Index % Over/Under %
Italy 0.00 3.51 -3.51
Spain 0.00 2.57 -2.57
Netherlands 0.00 1.58 -1.58
Belgium 0.00 1.06 -1.06
Austria 0.00 0.68 -0.68
Finland 0.00 0.39 -0.39
Ireland 0.00 0.37 -0.37
Portugal 0.00 0.35 -0.35
Other 0.00 0.41 -0.41
NON-EMU EUROPE 0.00 8.41 -8.41
United Kingdom 0.00 4.95 -4.95
Switzerland 0.00 0.79 -0.79
Sweden 0.00 0.71 -0.71
Denmark 0.00 0.35 -0.35
Russia 0.00 0.35 -0.35
Norway 0.00 0.33 -0.33
Poland 0.00 0.31 -0.31
Turkey 0.00 0.16 -0.16
Other 0.00 0.45 -0.45
SUPRANATIONAL 0.15 2.03 -1.87
OTHER 0.05 0.00 0.05
CASH & CASH
EQUIVALENTS
24.33 0.00 24.33
Templeton Global Total Return Fund
32
Currency Exposure
Notional exposure figures are intended to estimate the portfolio’s exposure, including any hedged or increased exposure through certain derivatives held in the portfolio (or their underlying reference assets). Portfolio breakdown percentages may not total
100% and may be negative due to rounding, use of any derivatives, unsettled trades or other factors.
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 Total Return Fund
vs. Bloomberg Barclays Multiverse Index
As of 30 June 2019 — Notional Exposure
Regions Sub-Regions Currencies
EURO
NON-EURO
EUROPE
Ghanaian Cedi
MIDEAST/AFRICA
Australian Dollar
Philippine Peso
South Korean Won
Indian Rupee
Indonesian Rupiah
ASIA EX-JAPAN
JAPANESE YEN
ASIA
Colombian Peso
Argentine Peso
Mexican Peso
Brazilian Real
NON-US DOLLAR
U.S. DOLLAR
AMERICAS
-40% -7% 26% 59% 92% 125%
-39.87
0.00
-39.87
2.86
2.86
-15.18
0.01
0.18
0.25
9.00
-5.74
20.34
14.60
2.09
6.69
14.34
15.77
38.89
83.51
122.41
Portfolio % Index % Over/Under %
AMERICAS 122.41 49.61 72.80
U.S. DOLLAR 83.51 46.25 37.26
NON-US DOLLAR 38.89 3.36 35.53
Brazilian Real 15.77 0.37 15.40
Mexican Peso 14.34 0.25 14.09
Argentine Peso 6.69 0.00 6.69
Colombian Peso 2.09 0.12 1.97
Canadian Dollar 0.00 2.49 -2.49
Peru Nuevo Sol 0.00 0.07 -0.07
Chilean Peso 0.00 0.06 -0.06
ASIA 14.60 20.10 -5.50
JAPANESE YEN 20.34 15.33 5.01
ASIA EX-JAPAN -5.74 4.77 -10.51
Indonesian Rupiah 9.00 0.29 8.71
Indian Rupee 0.25 0.00 0.25
South Korean Won 0.18 1.13 -0.95
Philippine Peso 0.01 0.11 -0.10
Chinese Yuan 0.00 1.16 -1.16
Thailand Baht 0.00 0.31 -0.31
Malaysian Ringgit 0.00 0.28 -0.28
Singapore Dollar 0.00 0.19 -0.19
New Zealand Dollar 0.00 0.10 -0.10
Hong Kong Dollar 0.00 0.02 -0.02
Australian Dollar -15.18 1.18 -16.35
MIDEAST/AFRICA 2.86 0.11 2.76
Ghanaian Cedi 2.86 0.00 2.86
Israeli Shekel 0.00 0.11 -0.11
EUROPE -39.87 30.18 -70.05
NON-EURO 0.00 6.31 -6.31
British Pound 0.00 4.47 -4.47
Swiss Franc 0.00 0.54 -0.54
Swedish Krona 0.00 0.40 -0.40
Danish Krone 0.00 0.22 -0.22
Polish Zloty 0.00 0.20 -0.20
Russian Ruble 0.00 0.15 -0.15
Portfolio % Index % Over/Under %
Norwegian Krone 0.00 0.10 -0.10
Czech Koruna 0.00 0.09 -0.09
Hungarian Forint 0.00 0.07 -0.07
Romania Leu 0.00 0.05 -0.05
EURO -39.87 23.88 -63.75
Cash & Cash Equivalents
Others
Supranational
Derivatives
Non-Investment Grade
Non-Local Curr. Sovereign Bonds
Non-Investment Grade
Investment Grade
Local Curr. Govt/Agency Bonds
-3% 14% 31% 48% 65% 82%
24.33
0.01
0.15
-2.88
1.02
1.02
25.32
52.05
77.37
Templeton Global Total Return Fund
33
Sector Allocation
Templeton Global Total Return Fund
vs. Bloomberg Barclays Multiverse 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 77.37 42.36 35.01
Investment Grade 52.05 41.91 10.14
Non-Investment Grade 25.32 0.45 24.87
Non-Local Curr. Sovereign Bonds 1.02 4.25 -3.24
Non-Investment Grade 1.02 0.92 0.09
Investment Grade 0.00 3.33 -3.33
Corporate Bonds 0.00 21.43 -21.43
Investment Grade 0.00 18.20 -18.20
Non-Investment Grade 0.00 3.23 -3.23
Securitised 0.00 14.08 -14.08
CMBS / ABS 0.00 0.95 -0.95
MBS 0.00 10.58 -10.58
N/A 0.00 2.55 -2.55
US Treasuries/Agencies 0.00 15.85 -15.85
Derivatives -2.88 0.00 -2.88
Supranational 0.15 2.02 -1.87
Others 0.01 0.00 0.01
Cash & Cash Equivalents 24.33 0.00 24.33
Cash
N/A
NR
CC+
CCC-
CCC
CCC+
B-
B
B+
BB-
BB
BB+
BBB-
BBB
BBB+
A-
A
A+
AA-
AA
AA+
AAA
-3% 12% 27% 42% 57%
Templeton Global Total Return Fund
Bloomberg Barclays Multiverse Index
Templeton Global Total Return Fund
34
Templeton Global Total Return Fund
vs. Bloomberg Barclays Multiverse Index
As of 30 June 2019 — Market Value
Credit Quality Allocation
Portfolio % Index % Over/Under %
AAA 0.15 37.52 -37.36
AA+ 0.00 2.28 -2.28
AA 10.69 9.19 1.50
AA- 0.00 3.38 -3.38
A+ 0.00 18.95 -18.95
A 0.00 3.18 -3.18
A- 18.15 5.86 12.29
BBB+ 0.00 4.33 -4.33
BBB 11.10 7.51 3.58
BBB- 12.12 3.15 8.98
BB+ 0.00 0.69 -0.69
BB 0.00 0.52 -0.52
BB- 15.77 1.13 14.64
B+ 0.48 0.64 -0.16
B 10.08 0.75 9.33
B- 0.00 0.50 -0.50
CCC+ 0.00 0.19 -0.19
CCC 0.00 0.13 -0.13
CCC- 0.00 0.02 -0.02
CC+ 0.00 0.02 -0.02
NR 0.00 0.06 -0.06
N/A -2.88 0.01 -2.89
Cash 24.33 0.00 24.33
Investment Grade
52.21 95.34 -43.13
Non-Investment Grade
26.34 4.65 21.69
N/A
-2.88
0.01 -2.89
Cash
24.33 0.00 24.33
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.
35
Templeton Global Total Return 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
-3% 12% 27% 42% 57%
Templeton Global Total Return Fund
Bloomberg Barclays Multiverse 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 49.87 0.50 49.36
1 to 2 Years 12.05 11.71 0.34
2 to 3 Years 11.81 10.99 0.82
3 to 5 Years 14.65 21.87 -7.22
5 to 7 Years 3.74 18.11 -14.37
7 to 10 Years 10.00 13.20 -3.21
10 to 15 Years 0.61 5.68 -5.06
15 to 20 Years 0.00 5.28 -5.28
20 to 30 Years -2.73 10.81 -13.54
30+ Years 0.00 1.85 -1.85
Templeton Global Total Return Fund
vs. Bloomberg Barclays Multiverse 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 Total Return Fund - A (acc) USD—Net of Fees 29.8.2003 5.73 4.68 0.63 5.70 7.41
Bloomberg Barclays Multiverse Index 6.01 1.95 1.35 3.13 4.21
Templeton Global Total Return Fund
Historical Performance
Templeton Global Total Return 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.
36
Cumulative Performance (%)
Inception
Date 1 Mth 3 Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs
Since
Incept
Templeton Global Total Return Fund - A (acc) USD—Net of Fees 29.8.2003 1.87 1.47 2.96 5.73 14.71 3.21 73.99 210.08
Bloomberg Barclays Multiverse Index 2.28 3.31 5.78 6.01 5.96 6.93 36.06 92.19
Templeton Global Total Return Fund
37
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 Total Return Fund - A (acc) USD
As of 30 June 2019
YTD 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
-7%
4%
15%
26%
37%
2.96
5.78
-0.60 -1.36
3.58
7.69
5.98
2.84
-5.77 -3.29 -0.28
0.47
3.56
-2.19
19.76
4.84
-1.08
5.55
15.43
5.84
33.46
8.04
Bloomberg Barclays Multiverse IndexTempleton Global Total Return Fund - A (acc) USD—Net of Fees
Templeton Global Total Return Fund
38
The base currency of a fund determines the risk-free rate index used in calculating certain risk statistics on this page. A fund that is based in USD uses the US T-Bill Index as the risk free rate return, a EUR-based fund uses the Euro 3-Month T-Bill
Index, a GBP-based fund uses the UK Treasury Bills 3 Month Index, a JPY-based fund uses the Japan Financing Bill 3 Month Index, and an AUD-based fund uses the Australia T-Note 3 Month Index.
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 Bloomberg Barclays Multiverse 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* 15 Yrs*
Standard Deviation (%):
Templeton Global Total Return Fund - A (acc) USD 8.43 6.86 6.97 8.34 8.97
Bloomberg Barclays Multiverse Index 3.72 4.36 4.52 4.85 5.34
Tracking Error (%)^^ 9.77 8.84 8.59 8.17 8.11
Information Ratio^^ -0.03 0.31 -0.08 0.31 0.41
Sharpe Ratio 0.41 0.48 -0.03 0.63 0.66
Templeton Global Total Return Fund - A (acc) USD
Performance Risk Statistics
39
Appendix
Templeton Global Total Return Fund
For professional investor use only. Not for distribution to retail investors.
40
Management Profiles
Templeton Global Total Return 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 Total Return Fund
41
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 Total Return Fund
42
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 Total Return Fund
43
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 Total Return Fund
44
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 Total Return Fund
45
For professional investor use only. Not for distribution to retail investors.
46
Module: Additional Resources
Templeton Global Total Return Fund
For professional investor use only. Not for distribution to retail investors.
Insight and Information Sharing
Global Aggregate/EMD Team (New York, London)
Name TitleYears Experience
John Beck Director of Fixed Income, London 32
David Zahn, CFA, FRM Portfolio Manager 25
Michael Materasso Portfolio Manager 47
Warren Keyser Portfolio Manager 34
Vi-Minh Tran, CFA Portfolio Manager, Research Analyst 24
William Ledward, Ph.D. Portfolio Manager, Emerging Market Debt 34
Nicholas Hardingham, CFA Portfolio Manager, Research Analyst, Emerging Market Debt
19
Stephanie Ouwendijk, CFA Portfolio Manager, Research Analyst, Emerging Market Debt
11
Robert Nelson, CFA Portfolio Manager, Research Analyst, Emerging Market Debt
18
Fatma Charlwood Research Analyst, Emerging Market Debt 16
Philip Spires Senior Trader 24
Roderick MacPhee, CFA Portfolio Manager, Research Analyst 12
Carlos Ortiz Research Analyst 8
Gail Counihan ESG Analyst 14
1782
Templeton Global Total Return Fund
47
CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
As of 30 June 2019.
For professional investor use only. Not for distribution to retail investors.
Global Aggregate/EMD Team (New York, London)
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 Total Return Fund
48
For professional investor use only. Not for distribution to retail investors.
A Specialised Local Asset Management (LAM) Team
Fixed Income Policy Committee (FIPC)
FIPC Contains Both Strategy Leaders and Sector Specialists
Name ResponsibilityYears of Investment Experience
Years with Firm Education
Sonal Desai, Ph.D. Chief Investment Officer, Co-Chair of FIPC
25 9 Ph.D., Northwestern University
Michael J. Materasso Co-Chair of FIPC, U.S. Multisector 47 30 B.B.A., Baruch College
Reema Agarwal, CFA Floating Rate Bank Loans 22 14 B.A., Delhi University; M.B.A., Indian Institute of Management
Sheila Amoroso Municipals 33 33 M.B.A., College of Notre Dame
Roger Bayston, CFA Mortgages & U.S. Multisector 33 27 B.S., University of Virginia; M.B.A., University of California, Los Angeles
John W. Beck Global & European 32 29 M.A., Oxford University
Matt Fey, CFA High Yield Corporate Bonds 24 20 B.S., University of Pennsylvania; M.B.A., University of Chicago
Michael Hasenstab, Ph.D. Global Macro 24 20 Ph.D., Asia-Pacific School of Economics and Management at Australian National University
Richard Hsu, CFA High Yield 23 22 M.A., Stanford University
Warren A. Keyser U.S. Multisector & U.S. Low Duration 34 32 B.S., Philadelphia University
Marc Kremer, CFA IG Credit 31 15 A.B., Vassar College; M.B.A., Duke University
William F. Ledward, Ph.D. Emerging Markets 34 22 M.A., D.Phil., Oxford University
Shawn Lyons, CFA Money Markets & IG Credit 23 22 B.A., University of California, Berkeley
Jeffrey S. MacDonald, CFA U.S. Multisector 26 6 B.S., Trinity College; M.B.A., Boston University
Glenn Voyles, CFA High Yield & IG Credit 26 25 B.A., Stanford University
David Yuen, CFA, FRM Quantitative 31 23 B.S., California Institute of Technology; M.B.A., University of California, Los Angeles
David Zahn, CFA, FRM Global & European 25 13 B.S., University of Maine; M.B.A., University of Connecticut
Average Years 29 21
0312
Templeton Global Total Return Fund
49
CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
As of 30 June 2019.
For professional investor use only. Not for distribution to retail investors.
Fixed Income Policy Committee (FIPC)
50
Module: Performance Attribution
Templeton Global Total Return Fund
For professional investor use only. Not for distribution to retail investors.
Diverse Return Sources in Diverse MarketsPerformance Attribution Summary (Calendar Year)Templeton Global Total Return Fund vs. Cash (2010–2018)¹
Greatest Contribution to Performance Second Greatest Contribution to Performance Least Contribution to Performance
Ranked by Contribution to Alpha
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Interest Rates (Duration) 3 1 1 1 1 1 1 1 1 3
Currencies2 2 2 3 2 3 3 3 2 3 2
Credit 1 3 2 3 2 2 2 3 2 1
2955
Templeton Global Total Return Fund
51
The information is historical and may not reflect current or future portfolio characteristics. Charts are for illustrative and discussion purposes only.
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.
For professional investor use only. Not for distribution to retail investors.
Three Sources of Potential Alpha Over Time
52
Module: Process Implementation Examples
Templeton Global Total Return Fund
For professional investor use only. Not for distribution to retail investors.
Potential Alpha Sources Can Vary from Country to Country with the Economic Cycle
Navigating Global Divergence
Hypothetical
Exposure
Duration
Currency
Credit
REDUCE
UNHEDGED
EXTEND
Hypothetical
Exposure
Duration
Currency
Credit
EXTEND
HEDGED
REDUCE
Strong Growth Environment
Yield Curve
Currencies
Credit Quality
Weak Growth Environment
Yield Curve
Currencies
Credit Quality
Yield Curve Seeking to position the portfolio to benefit from declining interest rates or to help mitigate the potential impact to the portfolio during periods of rising rates.
Currencies Seeking to position the portfolio in currencies we view as the most attractive and hedge currency risks.
Credit Seeking to capture opportunities for strong growth and improving credit quality in select countries, which may occur during periods of rising inflation and growth.
2956
Templeton Global Total Return Fund
53
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
Managing Duration While Still Seeking Attractive YieldsTempleton Global Total Return FundDecember 2007–March 2019
Prin……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….t test
2957
-2
-1
0
1
2
3
4
5
6
7
8
9
10
0
1
2
3
4
5
6
7
8
9
10
11
12
Dec-0
7Ma
r-08
Jun-
08Se
p-08
Dec-0
8Ma
r-09
Jun-
09Se
p-09
Dec-0
9Ma
r-10
Jun-
10Se
p-10
Dec-1
0Ma
r-11
Jun-
11Se
p-11
Dec-1
1Ma
r-12
Jun-
12Se
p-12
Dec-1
2Ma
r-13
Jun-
13Se
p-13
Dec-1
3Ma
r-14
Jun-
14Se
p-14
Dec-1
4Ma
r-15
Jun-
15Se
p-15
Dec-1
5Ma
r-16
Jun-
16Se
p-16
Dec-1
6Ma
r-17
Jun-
17Se
p-17
Dec-1
7Ma
r-18
Jun-
18Se
p-18
Dec-1
8Ma
r-19
Aver
age D
urat
ion
(Yea
rs)
Yield
to M
atur
ity (%
)
Templeton Global Total Return Fund—Yield to Maturity Templeton Global Total Return Fund—Average Duration
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).
Templeton Global Total Return Fund
54
For professional investor use only. Not for distribution to retail investors.
Active Duration Management
1. Sector and duration strategies may change depending on factors such as market and economic conditions. “Other Assets” includes cash and cash equivalents.The information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change. 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. Avarage duration figures reflect certain derivatives held in the portfolio (or their underlying reference assets).
Templeton Global Total Return Fund1
As of 30 June 2019
-3
-2
-1
0
1
2
3
4
5
6
7
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jun-
05Se
p-05
Dec-0
5Ma
r-06
Jun-
06Se
p-06
Dec-0
6Ma
r-07
Jun-
07Se
p-07
Dec-0
7Ma
r-08
Jun-
08Se
p-08
Dec-0
8Ma
r-09
Jun-
09Se
p-09
Dec-0
9Ma
r-10
Jun-
10Se
p-10
Dec-1
0Ma
r-11
Jun-
11Se
p-11
Dec-1
1Ma
r-12
Jun-
12Se
p-12
Dec-1
2Ma
r-13
Jun-
13Se
p-13
Dec-1
3Ma
r-14
Jun-
14Se
p-14
Dec-1
4Ma
r-15
Jun-
15Se
p-15
Dec-1
5Ma
r-16
Jun-
16Se
p-16
Dec-1
6Ma
r-17
Jun-
17Se
p-17
Dec-1
7Ma
r-18
Jun-
18Se
p-18
Dec-1
8Ma
r-19
Jun-
19
Aver
age D
urat
ion
(Yea
rs)
Sect
or A
lloca
tion
(Mar
ket V
alue %
)
Local Currency Govt/Agency Invest Grade
Local Currency Govt/Agency Non-Invest Grade
Non-Local Currency Sovereign Invest Grade
Non-Local Currency Sovereign Non-Invest Grade
Corporate Invest Grade
Corporate Non-Invest Grade
U.S. Treasuries/Agencies
Securitised
Supranationals
Other Assets
Duration
4246
1
Templeton Global Total Return Fund
55
For professional investor use only. Not for distribution to retail investors.
Sector and Duration Strategy
56
Environmental, Social & Governance
Templeton Global Total Return 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 Total Return Fund
57
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
naCh
inaSe
rbia
Thail
and
Urug
uay
Croa
tiaCh
ile Italy
Malay
siaHu
ngar
yPo
land
Slov
akia
Lithu
ania
Spain
Portu
gal
Kore
aIsr
ael
Fran
ceJa
pan
Czec
h Rep
ublic UK
Nethe
rland
sIre
land
Germ
any
Austr
alia
New
Zeala
nd USSw
eden
Norw
aySi
ngap
ore
Switz
erlan
dCa
nada
Denm
ark
TGM-
ESG
Curre
nt S
core
High
er is
Bet
ter
Templeton Global Total Return Fund
58
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 Total Return Fund
59
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 Total Return Fund
60
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 Total Return Fund
61
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 Total Return Fund
62
For professional investor use only. Not for distribution to retail investors.
Franklin Templeton—Environmental, Social and Governance (ESG) Investment
Integration
Glossary
Templeton Global Total Return Fund
63
For professional investor use only. Not for distribution to retail investors.
Average Credit Quality: The average credit quality reflects the holdings of the underlying issues, based on the size of each holding and ratings assigned to each based on rating
agency assessments of its creditworthiness.
Average Duration: A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. Duration is expressed as a number of
years. The weighted average duration of a fund reflects the effective duration of the underlying issues, based on the size of each holding.
Average Weighted Maturity: An estimate of the number of years to maturity, taking the possibility of early payments into account, for the underlying holdings.
Information Ratio: In investing terminology, the ratio of expected return to risk. Usually, this statistical technique is used to measure a manager's performance against a benchmark.
This measure explicitly relates the degree by which an investment has beaten the benchmark to the consistency by which the investment has beaten the benchmark.
Sharpe Ratio: To calculate a Sharpe ratio, an asset's excess returns (its return in excess of the return generated by risk-free assets such as Treasury bills) are divided by the asset's
standard deviation.
Standard Deviation: A measure of the degree to which a fund's return varies from the average of its previous returns. The larger the standard deviation, the greater the likelihood (and
risk) that a fund's performance will fluctuate from the average return.
Tracking Error: Measure of the deviation of the return of a fund compared to the return of a benchmark over a fixed period of time. Expressed as a percentage. The more passively the
investment fund is managed, the smaller the tracking error.
Yield to Maturity: Yield to Maturity ('YTM') also known as the 'Gross Redemption Yield' or 'Redemption Yield'. The rate of return anticipated on a bond if it is held until the maturity date.
YTM is considered a long-term bond yield expressed as an annual rate. The calculation of YTM takes into account the current market price, par value, coupon interest rate and time to
maturity. It is also assumed that all coupons are reinvested at the same rate.
Yield to Worst: The yield to maturity if the worst possible bond repayment takes place. If market yields are higher than the coupon, the yield to worst would assume no prepayment. If
market yields are below the coupon, the yield to worst would assume prepayment. In other words, yield to worst assumes that market yields are unchanged. Normally this value is not
aggregated since it varies but if a weighted average value is used for a Fund then the figure will reflect the values of the underlying issues, based on the size of each holding.
Important Disclosures
Templeton Global Total Return Fund
For professional investor use only. Not for distribution to retail investors.
64
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.