Fund Description

The fund seeks long-term capital growth by investing at least 80% of its net assets in foreign securities, that are predominantly equity securities of companies located outside of the U.S., including developing markets.

Strategy Statement

"Templeton Foreign fund is constructed using the disciplined and time-tested Templeton philosophy of value, patience and bottom-up fundamental analysis. "

Fund Commentary

Quarterly Fund Commentary September 30, 2020

  • Global equities advanced during 2020’s third quarter as economies reopened and government officials continued pledging extraordinary measures to lessen the economic impact of the COVID-19 pandemic. Many investors were encouraged by economic data and corporate earnings reports from several countries, as well as by the ongoing accommodative stances of many central banks. Sentiment late in the period was restrained by worries about rising COVID-19 infections, escalating US-China tensions, and an increasingly hostile domestic political climate in the United States.
  • For the quarter, the fund’s Advisor Class shares returned 2.41%, and its benchmark, the MSCI All Country World ex-US Index, returned 6.36%. Past performance is not an indicator or a guarantee of future performance.

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Important Legal Information

The information provided is not a complete analysis of every material fact regarding any country, market, industry, security or fund. Because market and economic conditions are subject to change, comments, opinions and analyses are rendered as of the date of this material and may change without notice. A portfolio manager’s assessment of a particular security, investment or strategy is not intended as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy; it is intended only to provide insight into the fund’s portfolio selection process. Holdings are subject to change.

Your clients should carefully consider a fund’s investment goals, risks, charges and expenses before investing. They should read the summary prospectus and/or prospectus carefully before they invest or send money. To obtain a prospectus, which contains this and other information, please call Franklin Templeton at (800) DIAL BEN/(800) 342-5236.

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Management

Christopher James Peel, CFA

Christopher James Peel, CFA®

  • Joined Franklin Templeton in 2007
  • Managed Fund Since 2017
Herbert J Arnett Jr.

Herbert J Arnett Jr.

  • Joined Franklin Templeton in 1996
  • Managed Fund Since 2017
Peter Moeschter, CFA

Peter Moeschter, CFA®

  • Joined Franklin Templeton in 1997
  • Managed Fund Since 2019
Warren Pustam, CFA

Warren Pustam, CFA®

  • Joined Franklin Templeton in 2013
  • Managed Fund Since 2019

INVESTMENT PHILOSOPHY, STRATEGY AND APPROACH

Templeton utilizes a disciplined, consistent approach based on three timeless principles of investing:

Value

Our flexible approach is applied within a disciplined framework and seeks to identify companies trading at large discounts to their business value.

Patience

Our long-term focus gives us a framework to take advantage of price volatility to reveal potential long-term investment opportunities. Patience allows for potential long-term value recognition.

Bottom-Up

Our portfolio management process seeks to buy pessimism and sell optimism. We build portfolios spanning regions and sectors made up of securities identified through this process.

Investment Process

  1. Identify Potential Bargains
    • Experienced analysts
    • Focus on global industry sectors
    • Quantitative and qualitative assessment
    • Identify material ESG issues
  2. In-Depth Fundamental Analysis
    • Five-year financial forecasts
    • Management/supplier/competitive evaluation
    • Recommendation of Bargain List candidates
  3. Research Team Evaluation
    • Presentation of investment thesis
    • Investment debate and critique: "Devil's Advocate"
    • ESG "Devil's Advocate"
    • Director of Research approval
  4. Bottom-Up Portfolio Construction
    • Investment parameters
    • Industry and sector framework
    • Build and diversify portfolio
    • Long-term approach: 20% historical turnover4
  5. Portfolio Monitoring and Risk Management
    • Ongoing valuation analysis
    • Ongoing ESG monitoring
    • Disciplined sell methodology
    • Weekly peer review and risk analytics

Rating

Overall Morningstar Rating As of 09/30/2020

Rating Category: Foreign Large Value

Morningstar
The fund's overall Morningstar Rating measures risk-adjusted returns and is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) rating metrics.

Historical Morningstar Rating As of 09/30/2020

Years Ratings Funds
in category
3
2 Stars
313
5
2 Stars
274
10
2 Stars
180

Morningstar Style Box As of06/30/2020

Strategy, Benefits, Results

Strategy

Our strategy is built upon the following Templeton cornerstones, which have been in place for more than 70 years.

  • Search Globally. We believe bargains have no borders when searching for the best investment opportunities.
  • Seek Value. We search worldwide for stocks selling at prices we believe are low relative to their true value.
  • Perform Fundamental, Bottom-Up Research. We conduct in-person visits and perform extensive fundamental research to model a company's potential future earnings, cash flow and asset value relative to its stock price.
  • Practice Patient, Long-Term Investing. We evaluate a company's potential for earnings and growth over a five-year horizon.

Benefits

  • Diversification. By investing primarily in international securities, Templeton Foreign Fund can offer diversification to complement the U.S. portion of your portfolio.
  • Reduced Volatility. Templeton Foreign Fund has historically experienced less volatility than its benchmark, the MSCI All Country World ex-U.S. Index.
  • Low Average Turnover Ratio. Our long-term investing approach has historically resulted in a lower than average portfolio turnover ratio.