Beginning on 10/19/18, Class C shares held for 10 years or more will automatically convert to Class A shares. Thereafter, Class C shares held for 10 years or more will automatically convert to Class A shares on a monthly basis. This conversion allows shareholders to take advantage of the lower expenses offered by Class A shares. Please see the prospectus supplement for more information. If you have any questions, please contact your financial advisor or call Franklin Templeton.
Effective 9/10/18, certain sales charges and commissions paid to dealers on Class A and A1 shares of our mutual funds changed. Please see the prospectus supplement for more information. If you have additional questions, please contact your financial advisor or call Franklin Templeton.
P. Schoenfeld Asset Management (PSAM) was founded by Peter Schoenfeld in 1997 as a spin-out from Schroder & Co. Inc. PSAM pursues an event-driven investment strategy with a focus on global opportunities involving corporate actions. The manager's research process is fundamental in nature and involves analysis across debt and equity instruments in an effort to find a favorable manner in which to express the manager’s event-driven views.
H2O Asset Management was founded in August 2010 by a team that previously managed similar strategies at Amundi Asset Management. Specializing in discretionary global macro, the manager uses both directional and relative value trading strategies across fixed income, equities, and currency markets. Their portfolio is comprised of long-term strategic and short-term overlay trading strategies.
The investment team of Emso Asset Management Limited (Emso) was founded in May 2000 as a business unit of Citigroup. The company became independent in 2013 following an employee buyout. Emso pursues a liquid, long-short fixed income strategy in emerging market countries. The portfolio invests in sovereign, quasi-sovereign and corporate debt, both long and short, as well as local markets interest rate or foreign exchange investments, seeking to exploit idiosyncratic investment opportunities in those markets.
Jeremy Grantham, Richard Mayo and Eyk Van Otterloo founded GMO in 1977 as a private investment firm to serve institutional investors. GMO introduced its Systematic Global Macro Strategy in 2002, and the SGM Major Markets strategy in October 2011. Both strategies utilize models that use a variety of value and sentiment measures, including asset price trends, profit margins, discount rates, business cycles, spending, and investment, to generate trading signals. The Major Markets strategy applies these signals and models to a universe of approximately 30 liquid global futures markets across equity indices, commodities, currencies and fixed income, systematically building portfolios that seek to deliver attractive risk adjusted returns with low correlation to all asset classes.
Graham Capital Management (GCM) is a macro-oriented alternative investment firm founded in 1994 by Kenneth G. Tropin. GCM focuses on macro-oriented investment strategies in the global fixed income, currency, commodity and equity markets. GCM’s Tactical Trend Strategy is a quantitative trading system driven by trend-following models. The program signals buy and sell orders based on a number of factors and employs sophisticated techniques to gradually enter and exit positions over the course of a trend in order to maximise profit opportunities.
Chilton Investment Company was founded in 1992 by Richard L. Chilton, Jr. Chilton pursues a long / short equity strategy diversified across sectors and market capitalisations. The manager is generally U.S. focused but may invest a portion of its assets globally. The manager employs a research-driven, bottom-up stock selection process where investment decisions are based on analysis of the business and financial fundamentals concerning the subject companies and its industry.
Jennison Associates was founded in 1969 and today is owned by Prudential Financial. David Chan is the portfolio manager of Jennison’s Global Healthcare strategy. The manager employs a bottom-up, analyst-driven stock selection process. Jennison seeks to identify both long and short investments across the spectrum of global healthcare companies and markets. The manager places a particular emphasis on sustainability of growth.
Portland Hill was founded by Thierry Lucas in 2011. The manager pursues a deep, fundamental, catalyst-driven strategy with a mid- to long-term investment horizon. In addition to its bottom-up, research-intensive approach, the team focuses on company and industry catalysts that may trigger a re-rating or de-rating of securities. Portland Hill invests globally across the capital structure with an expected bias towards European equities.
Impala Asset Management was founded by Bob Bishop in 2003. Impala is a long / short equity manager that focuses on investing in global cyclical equities. The core of Impala’s strategy is fundamental stock selection, but the manager also formulates a macroeconomic view. The team then combines that view with bottom-up, fundamental, company-specific research.
Wellington Management traces their history to 1928 and today is a private partnership. The firm has long had a significant presence in nearly all sectors of the global securities markets. Wellington seeks to identify both long and short investments across the spectrum of global technology companies with a focus on those sub-sectors and companies that the manager believes are likely to generate attractive returns. The investment approach utilizes a bottom-up security selection process.
Lazard Asset Management was established in 1970 as part of what is now known as Lazard Ltd., a global investment bank. Sean Reynolds is the portfolio manager. Lazard pursues a strategy, primarily expressed through convertible securities, with the objective of current income, long-term capital appreciation and principal protection. The strategy utilizes selective portfolio level and position level hedges to seek to minimize macro risk-off (both equity and credit) and interest rate risk.
Loomis Sayles is a global asset manager founded in 1926. Loomis Sayles invests opportunistically across the global fixed income markets in instruments such as high yield bonds, investment grade bonds, and to a lesser extent, securitized debt, convertibles, foreign exchange and emerging market bonds. The strategy is executed by adjusting the portfolio’s risk weights based on the top-down market environment and the manager’s bottom-up, fundamental investment views.
Chatham Asset Management was founded by Anthony Melchiorre in 2003. Chatham invests primarily in high yield credit and other leveraged credit instruments. The manager runs an actively traded long and short strategy focused on both issuer specific credit fundamentals as well as technical conditions in the capital markets. Credit selection is based on a bottom-up research process focusing on identifying positive and negative credit events. The manager will adjust portfolio exposure depending on both their short and long term market view.
Ellington Management Group was founded in 1994 by Michael Vranos. Robert Kinderman is a portfolio manager responsible for credit related securities at the firm. Ellington’s liquid long/short credit portfolio focuses primarily on structured credit with some exposure to yield enhancing credit index relative value. The portfolio expects to invest in more liquid areas of MBS, ABS, and other mortgage-related and asset-backed related securities, with a focus on credit-sensitive non-agency RMBS, CMBS, CLOs, and credit indices (including options and tranches thereon).
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Important Legal Information
CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
Indexes are unmanaged, and one cannot invest directly in an index. Index returns do not reflect any fees, expenses or sales charges.
Total Returns include change in share price, assume reinvestment of all distributions, and reflect the deduction of fund expenses and applicable fees. Total Returns With Sales Charge: returns reflect the deduction of the stated sales charge. Total returns, distribution rate, and yields reflect any applicable expense reductions, without which the results for those impacted funds would have been lower.
All investments involve risks, including possible loss of principal. The market values of securities owned by the Fund will go up or down, sometimes rapidly or unpredictably. The Fund's performance depends on the manager's skill in selecting, overseeing, and allocating Fund assets to the sub-advisors. The Fund is actively managed and could experience losses if the investment manager's and sub-advisors' judgment about particular investments made for the Fund's portfolio prove to be incorrect. Some sub-advisors may have little or no experience managing the assets of a registered investment company. Foreign investments are subject to greater investment risk such as political, economic, credit and information risks as well as risk of currency fluctuations. Investments in derivatives involve costs and create economic leverage, which may result in significant volatility and cause the Fund to participate in losses (as well as gains) that significantly exceed the Fund's initial investment. Lower-rated or high yield debt securities involve greater credit risk, including the possibility of default or bankruptcy. Currency management strategies could result in losses to the Fund if currencies do not perform as the investment manager or sub-advisor expects. The Fund may make short sales of securities, which involves the risk that losses may exceed the original amount invested. Merger arbitrage investments risk loss if a proposed reorganization in which the fund invests is renegotiated or terminated. Liquidity risk exists when securities have become more difficult to sell, or are unable to be sold, at the price at which they have been valued. Please see the prospectus and summary prospectus for information on these as well as other risk considerations.
Your clients should carefully consider a fund's investment goals, risks, charges and expenses before investing. Download a prospectus, which contains this and other information. Your clients should read the prospectus carefully before they invest or send money.
The index data referenced herein is the property of Intercontinental Exchange ("ICE") and/or its licensors and has been licensed for use by Franklin Templeton. ICE and its licensors accept no liability in connection with this use. See www.franklintempletondatasources.com for a full copy of the Disclaimer.
Class R shares do not have sales charges and are only offered to certain eligible investors as stated in the prospectus.
Performance data represents past performance, which does not guarantee future results. Current performance may differ from figures shown. Investment return and principal value will fluctuate with market conditions, and you may have a gain or loss when you sell your shares.
Advisor Class, Class R, Class R6 and Class Z shares are only offered to certain eligible investors as stated in the prospectus. The fund offers multiple share classes, which are subject to different fees and expenses that will affect their performance. Please see the prospectus for details. Change the share class selection in the dropdown at the top of this page in order to see its performance details.
Footnotes
Portfolio holdings are subject to change.
A statistical measurement of a fund's historical risk-adjusted performance. It is calculated by taking a fund's excess return over that of the three-month Treasury bill divided by its standard deviation. Higher values generally indicate better historical risk-adjusted performance. Based on the 3 years ended as of the date of the calculation.
The annualized percentage difference between a fund's actual returns and its expected performance given its level of market risk, as measured by beta. Based on the 3-year period ended as of the date of the calculation.
A measure of the fund's volatility relative to the market, as represented by the S&P 500 Index. A beta greater than 1.00 indicates volatility greater than the market. Based on the 3-year period ended as of the date of the calculation.
Percentage of the fund's returns explained by movements in the S&P 500 Index. 100 equals perfect correlation to the index. Based on the 3-year period ended as of the date of the calculation.
The Gross Expense Ratio does not include an expense reduction contractually guaranteed through 9/30/19. Fund investment results reflect the expense reduction ("Total Annual Operating Expenses with Waiver"); without this reduction, the results would have been lower. Please see the prospectus for additional information.
Public Offering Price — Purchase price for each share of the fund on a given day. It includes the maximum initial sales charge, if any.
Net Asset Value — The amount per share you would receive if you sold shares that day.
Source: Morningstar®. For each mutual fund and exchange traded fund with at least a 3-year history, Morningstar calculates a Morningstar Rating based on how a fund ranks on a Morningstar Risk-Adjusted Return measure against other funds in the same category. This measure takes into account variations in a fund's monthly performance, and does not take into account the effects of sales charges and loads, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. The weights are: 100% 3-year rating for 36-59 months of total returns, 60% 5-year rating/40% 3-year rating for 60-119 months of total returns, and 50% 10-year rating/30% 5-year rating/20% 3-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent 3-year period actually has the greatest impact because it is included in all three rating periods. Morningstar Rating is for the named share class only; other classes may have different performance characteristics. Past performance is not an indicator or a guarantee of future performance.
Gross Exposure: Gross exposure is the sum of the absolute value of all exposures, directly or through derivatives, as a percentage of total assets. The sum of the percentage of long positions and short (in absolute terms) positions.
Net Exposure: Net exposure is the sum of the total value of all exposures, directly or through derivatives, as a percentage of total assets. The percentage value of the long positions less the percentage value of the short positions.
Long Exposure: Sum of the long exposures, directly or through derivatives, as a percentage of the total assets.
Short Exposure: Sum of the short exposures, directly or through derivatives, as a percentage of total assets.
Manager roster includes managers that have been appointed as sub-advisors or managers of investment funds. K2 may determine in its sole discretion not to allocate to one or more of the managers and or to add new managers. Accordingly, the manager roster is presented for illustrative purposes only, and should not be viewed as predictive of the ongoing composition of the Fund's portfolio, which may change at any time.
Source: Hedgemark. Actual Allocation is a percentage of invested capital into fund managers (sub-advisors or co-managers) as of the end of the period. Percentage may not total 100% due to rounding. Target Allocations reflect end of period target allocations. The Fund may shift allocations among strategies at any time. Further, K2 may determine in its sole discretion not to allocate to one or more of the strategies and or to add new strategies. Accordingly the above target allocations are presented for illustrative purposes only, and should not be viewed as predictive of the ongoing composition of the fund's portfolio (and its managers), which may change at any time.
Source: Hedgemark. Figures shown reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of derivatives, unsettled trades or other factors.
Source: Hedgemark. The Top Ten Long and Short Exposures represent the ten largest long and short equity issuer exposures of Franklin K2 Alternative Strategies Fund as of the date indicated. Issuer exposures include actual security holdings and single security exposures obtained through the use of derivatives. Direct security holdings and derivatives exposures are combined for calculation purposes. The portfolio manager for the fund reserves the right to withhold release of information with respect to holdings that would otherwise be included in the top 10 holdings list. The information provided is not a recommendation to purchase, sell, or hold any particular security. Information is historical and may not reflect current or future portfolio characteristics.
Source: Hedgemark. Weightings as percent of invested capital into fund managers (sub-advisors or co-managers). Percentage may not total 100% due to rounding. Manager allocation includes managers that have been appointed as sub-advisors or managers of investment funds. K2 may determine in its sole discretion not to allocate to one or more of the managers and/or to add new managers. Accordingly, the manager allocation is presented for illustrative purposes only, and should not be viewed as predictive of the ongoing composition of the Fund's portfolio, which may change at any time.
Reference Benchmark: S&P 500 Index. The S&P 500 Index is solely utilized as a reference benchmark to illustrate difference in behavior between U.S. equity markets and the fund. However, the S&P 500 Index is not fully reflective of the risk profile of the fund, which is not limited to investing solely for long U.S. equity market exposures.
Correlation is a statistical measure of how two investments move in relation to each other. Negative correlation indicates a relationship in which one increases as the other decreases. 1 = Positive Correlation; 0 = No Correlation; -1 = Perfect Negative Correlation.
A statistical measurement of the range of a fund's total returns. In general, a higher standard deviation means greater volatility. Based on the fund's monthly returns over the 3-year period ended as of the date of the calculation.
Source: Hedge Fund Research, Inc. www.hedgefundresearch.com. The HFR indices are being used under license from Hedge Fund Research, Inc., which does not endorse or approve of any of the contents of this report. Unlike most asset class indexes, HFR Index returns reflect fees and expenses.
Costs associated with the fund's short positions. The fund's manager and sub-advisors use short positions in an attempt to either protect against losses or provide an additional source of returns versus long-only strategies. There is no guarantee that these positions will perform as the fund's manager or sub-advisors intended, and losses may occur.
Includes distribution and service (12b-1) fees; acquired fund fees and expenses; and other expenses of the fund or the subsidiary.
Costs associated with the fund's short positions. The fund's manager and sub-advisors use short positions in an attempt to either protect against losses or provide an additional source of returns versus long-only strategies. There is no guarantee that these positions will perform as the fund's manager or sub-advisors intended, and losses may occur.
Includes distribution and service (12b-1) fees; acquired fund fees and expenses; and other expenses of the fund or the subsidiary.
Indices are unmanaged and one cannot invest directly in them. Index returns do not reflect any fees, expenses or sales charges.
For performance reporting purposes, the inception date for Classes A/A1, R, R6, Z, and Advisor Class shares of all Franklin Templeton Funds is the date of effectiveness of the fund's registration statement or the first day the fund commenced operations. For Class C shares, generally the inception date is the first day the fund commenced offering such shares. Exceptions: Templeton Global Balanced Fund Classes A and C use the inception date of the old Class A and C shares, renamed Class A1 and Class C1. For Franklin Mutual Series Funds, Franklin International Small Cap Growth Fund and Franklin Pelagos Commodities Strategy Fund, the inception date for Classes A, C, R and R6 shares is the funds' oldest class', Z or Advisor, inception date. Franklin U.S. Government Money Fund Class R6 inception date is the first day it commenced offering such shares. For Franklin California Ultra-Short Tax-Free Income Fund Classes A1 and Advisor Class use the inception date of its predecessor, Franklin California Tax-Exempt Money Fund.
Important Legal Information
Distributions are made to those who are registered shareholders of the fund on the record date. Distributions are paid on the pay date. Estimates can change prior to the record date depending on market conditions and number of shares outstanding. All dates and distributions are subject to board approval. Net investment income distribution estimates do not include short- or long-term capital gain distributions the funds may be making. The actual amounts of net investment income shareholders will receive will be reported, along with any short-term capital gain distributions, as Ordinary Dividends on Form 1099-DIV.