k2 hedge fund strategy outlook - franklin templeton

K2 HEDGE FUNDSTRATEGY OUTLOOK

Q4 2020

Hedge Fund Strategy Outlook—Q4 2020

For Institutional/Professional Investor and Consultant Use Only—Not for Use with Retail Investors.2

Q4 2020 Outlook: Summary

Discretionary Macro

The opportunity set remains attractive with major elections, geopolitical negotiations, and policy decisions likely to play an important role in absolute and relative market moves over the medium term.

Long/Short Equity Generalist

Dispersion and volatility created by COVID-19 disruptions and US election uncertainty should be advantageous to long/short equity managers who have the ability to capitalize on both improving and weakening trends.

Long/Short Credit

Managers often target a change in credit rating as a catalyst to realize an investment thesis. While the high absolute number of changes this year is a positive in general, the spike in downgrades favors managers that can generate alpha on the short side in particular.

Given elements of uncertainty tied to COVID-19, geopolitics and policy decisions to come in the United States and across the globe, we believe it is prudent to remain conservative in our positioning, but maintain a positive outlook for alternative investments that exhibit a low correlation to the general direction of broader risk assets. We believe the theme of lingering uncertainty around the health crisis and policy responses may favor nimble, shorter-term strategies.

Strategy Highlights

Strategy Outlook

Long/Short Equity While the trajectory of the overall markets remains uncertain, we believe that a strong alpha environment will persist, which can be attributed to higher dispersion. In addition, elevated market volatility has historically benefited long/short equity managers as they have more opportunities to realize dispersion.

Relative Value Persistent opportunities exist for relative value trading in convertible bonds and equity volatility due to continued market inefficiencies and limited competition. We are less focused on fixed income relative value trading as the essentially unlimited central bank support has depressed volatility for the foreseeable future.

Event Driven Merger arbitrage spreads remain wide, reflecting increased uncertainty. Deal volumes are still low but have been recovering recently. Special situations investing remains underweight because of susceptibility to a potential increase in market volatility.

Credit Long/short credit managers may be able to generate alpha on the short side as the market transitions from financing rescue deals to thinking more critically about go-forward business models. Extreme uncertainty in structured credit may lead to high levels of dispersion at the manager level.

Global Macro Macro factors are likely to remain a leading driver of market fluctuations over the medium term. Managers may find attractive trading opportunities around political events as well as significant policy changes being made by monetary and fiscal authorities.

Commodities The fourth quarter is seasonally a stronger period for commodity market volatility with the Northern Hemisphere fall harvest and transition in seasonal fuel demand. This tailwind is tempered by geopolitical risks around the US elections and China-US trade.

Insurance-Linked Securities (ILS)

We are constructive on property catastrophe reinsurance as the trend of higher pricing is expected to continue into 2021 along with higher catastrophe bond issuance. Pricing in the life securitization market is less attractive to us.

This presentation is provided to you for informational purposes and is not intended for redistribution. It shall not constitute an offer to sell or a solicitation of an offer to buy an interest in any investment product or fund. This presentation discusses strategies that are available through a variety of structures such as separate accounts, mutual funds and private funds. Not all structures are available for all strategies shown. Interests or shares of an investment fund are offered only through the fund’s offering documents, such as a Prospectus or Confidential Private Offering Memorandum.

3Hedge Fund Strategy Outlook—Q4 2020

For Institutional/Professional Investor and Consultant Use Only—Not for Use with Retail Investors.

Might inflation expectations continue to rise given recent fiscal and monetary stimulus?Recent comments from the US Federal Reserve (Fed) and other central banks refer to the potential for inflation targets to be shifted to an average level instead of being capped at a specific target. This implies that policymakers may allow inflation to overshoot past inflation levels for a period of time. This policy shift comes at a time when interest rates are down to historically low levels, money supply growth has been strong, and indications are that rates will remain lower for years. Additionally, governments are talking about increasing fiscal spending, progress is being made on a vaccine to stem the risk of a COVID-19 resurgence, and economies are trying to re-open.

These and other factors may lead to market participants to ratchet up expectations for future inflation. As a result, yield curves may steepen, the US dollar may weaken, non-US equities may outperform, and sector dispersion may increase. Hedged strategies able to pivot to this new regime should see increased long versus short alpha-driven opportunities. Specifically, the discretionary macro, long/short equity generalist, and long/short credit managers may see improved return-to-risk characteristics.

Will global growth continue to recover, or will a COVID-19 resurgence cap economic gains?While we and the world wait for a safe COVID-19 vaccine, we are discussing which areas of economies and markets will continue to benefit from (or be hurt by) the shift in working and consumer behavior driven by the health crisis. A portion of the remote-work population may never return to an office environment on a permanent basis. Will air travel and other mass transit services return to prior volumes? How will the hospitality and onsite entertainment industries adapt to this new culture? Clearly this theme has been somewhat priced in, but we believe the effects on growth outlooks for various sectors and balance-sheet quality will linger for some time.

As many have noted, the beneficiaries in this environment include software and hardware producers, non-contact delivery and payment services, and online retailing and educational services. Areas that may need to further cut costs and adapt to the new normal might include mass transit, commercial real estate, and those operating onsite entertainment, educational and retail

facilities. While hedged strategies looking for long/short trades in the equity and fixed income markets should better capture relative value trades in this environment, other areas less impacted by the pandemic might also perform well. These strategies include insurance-linked securities, volatility arbitrage, and commodities programs.

How might the upcoming US election and other geopolitical events affect markets?Global geopolitics will likely drive market action during the fourth quarter of 2020 (and probably early in 2021), particularly the direction and timeliness of the results from the November 3 US elections. As of late September, the polls are indicating a tight race for president. Will we have a clear winner on November 4, or will the United States repeat the contested election scenario seen in the November 2000 election that led to investor uncertainty? Recent headlines have also centered on various scenarios as to which party might control Congress. The appointment of an open seat on the Supreme Court is also a hot topic, as the new potential justice may lead to more conservative court decisions that would impact business, consumer and governmental policies for decades.

Adding to these new elements of uncertainty are the ongoing trade tensions between China and the United States, limited progress in the Brexit negotiations and continuing civil protests in various regions of the world. Typically, uncertainty creates above-average market volatility and a heightened shift to safe-haven investments (and portfolio hedges) until more clarity is evident.

We have heard from our hedge-fund managers and strategists that hedge positions have recently ticked up. This is prudent as the policy positions being discussed by both US presidential candidates are far apart. President Donald Trump’s policies tend to be pro-business and beneficial to the energy, consumer, and US domestic supplier and production areas. Joe Biden’s policies might lead to higher corporate and individual taxes, enhanced regulations on fossil fuel exploration and production, and tighter regulations on technology and health care.

As a result, we believe it is prudent to remain conservative in our portfolio positioning, with a positive outlook for those hedged alternative investments that exhibit a low correlation to the general direction of broader risk assets.

The above reflects the opinions of the K2 Investment & Research Management (IRM) group as of September 24, 2020 and may not reflect the views of other groups within K2 or Franklin Templeton. 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.

Macro Themes We Are Discussing



Source: US Bureau of Economic Analysis, FRED database. Important data provide notices and terms available at www.franklintempletondatasources.com.

Discretionary MacroThe Fed concluded its policy framework review in August, announcing an awaited shift towards Average Inflation Targeting (AIT). Under the new policy, the Fed will tolerate inflation overshooting the 2% target (see Exhibit 1 below). While questions remain over the Fed’s ability to generate inflation following several years of undershooting the target, their seemingly structural commitment to accommodative policy may send a clear dovish message to market participants. Against a somewhat conflicted backdrop of lingering economic uncertainty and growing calls for fiscal support, managers focused on macro factors may find attractive trading opportunities over the medium term.

Q4 2020 Outlook: Strategy Highlights

Long/Short Equity GeneralistIn months of higher volatility levels, long/short equity funds have generally outperformed the S&P 500 Index. The last several years were characterized by relatively low volatility, which challenged long/short equity managers. However, since early 2020, the CBOE Volatility Index (VIX), a measure of the stock market’s expectation of volatility based on S&P 500 Index options (see Exhibit 2 below), has remained elevated, which could lead to improved returns and alpha against broader benchmarks as managers can take advantage of stock price swings.

Exhibit 1: Inflation Has Remained Persistently Below the Fed's Long-Term Inflation Target

Exhibit 2: Comparison of the S&P 500 TR and HFRI Equity Hedge Index Monthly Returns at Various VIX Levels December 31, 1994–August 31, 2020

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%

Jan-90 Oct-92 Jul-95 Apr-98 Jan-01 Oct-03 Jul-06 Apr-09 Jan-12 Oct-14 Jul-17 Apr-20

PCE ex-Food and Energy Fed's 2% Inflation Target

Year-over-year change (%)

75%

60%

47%

39%

25%

40%

53%

61%

93 months

89 months

64 months

62 months

10–15 (Low)

15–20

20–25

>25 (High)

VIX Level HFRI Equity Hedge > S&P 500 TR Number of MonthsHFRI Equity Hedge < S&P 500 TR

Source: Bloomberg. Important data provide notices and terms available at www.franklintempletondatasources.com. Indexes are unmanaged and one cannot directly invest in them. They do not include fees, expenses or sales charges. Past performance is not an indicator or a guarantee of future results.



Long/Short CreditThe COVID-19 crisis has created both significant challenges for many businesses and, to a lesser degree, new opportunities for others. One way in which these changing conditions manifest is in the outlook for debt issuers and the ability to meet their obligations. The chart below (Exhibit 3) demonstrates the count of ratings changes in the high yield bond universe made by S&P on a quarterly basis. Credit managers often target ratings changes as a catalyst to realize a thesis on a particular issuer.

Q4 2020 Outlook: Strategy Highlights

An upgrade, for example, can attract a new ratings-sensitive buyer base, allow a company to issue debt at a lower cost of capital, or satisfy criteria for inclusion in an index. Downgrades, of course, can mean the opposite. Given these implications, the absolute number of ratings changes represents a positive for active credit managers, but this particular setup in which downgrades are far more prevalent than upgrades favors those that can also benefit on the short side. In our experience, that ability to generate alpha from a short credit portfolio is a rare skill and therefore requires careful manager selection.

Exhibit 3: High Yield Ratings Changes by QuarterJanuary 1, 2010–September 21, 2020US$ billion

Source: J.P. Morgan. Important data provide notices and terms available at www.franklintempletondatasources.com.

0

100

200

300

400

500

600

700

Q1 2

010

Q2 2

010

Q3 2

010

Q4 2

010

Q1 2

011

Q2 2

011

Q3 2

011

Q4 2

011

Q1 2

012

Q2 2

012

Q3 2

012

Q4 2

012

Q1 2

013

Q2 2

013

Q3 2

013

Q4 2

013

Q1 2

014

Q2 2

014

Q3 2

014

Q4 2

014

Q1 2

015

Q2 2

015

Q3 2

015

Q4 2

015

Q1 2

016

Q2 2

016

Q3 2

016

Q4 2

016

Q1 2

017

Q2 2

017

Q3 2

017

Q4 2

017

Q1 2

018

Q2 2

018

Q3 2

018

Q4 2

018

Q1 2

019

Q2 2

019

Q3 2

019

Q4 2

019

Q1 2

020

Q2 2

020

Q3 2

020

Upgrades Downgrades

Source: S&P, Bloomberg. Important data provide notices and terms available at www.franklintempletondatasources.com.



Q4 2020 Outlook by Strategy

Long/Short Equity

In addition to the ongoing COVID-19 pandemic, the macro environment continues to show incremental uncertainty as a result of renewed geopolitical tensions and, more importantly, the US 2020 presidential election. While a beta call is tough to predict amid this backdrop, we believe that the alpha opportunity for managers will endure for longer, which should result in enhanced performance more broadly. Dispersion in various sectors remains elevated as companies have been demonstrating how well or how poorly they are positioned to navigate their businesses during and after the pandemic. Moreover, long/short equity managers have historically benefited from higher volatility as volatility allows for more opportunities to capture greater dispersion.

Relative Value While equity market volatility has subsided from recent historic peaks, it remains elevated, reflecting the continued uncertainty associated with COVID-19 and the upcoming US elections. Volatility markets are exhibiting significant inefficiencies across many traditional relationships such as skew, term structure, and correlation. This is attributable to the combination of greater demand for options from retail and large institutional investors, combined with lower supply as many traditional suppliers of liquidity have stepped back from these markets. We believe the resulting opportunity set remains attractive for the few relative value volatility managers left in the strategy. Similar inefficiencies persist in convertible arbitrage where the recent record levels of new issuance have helped to significantly diversify and grow the market even as the universe of managers competing in the space has shrunk to a handful of experienced participants. We remain underweight fixed income relative value trading based on expectations for continued low bond market volatility given the unlimited backstop from the central banks for the foreseeable future.

Event Driven We are hopeful that the recent pick-up in M&A activity will persist, resulting in a more robust opportunity set for our managers. The need for both offensive and defensive M&A persists, and potential acquirer balance sheets are well capitalized due to the recent wave of new issuance. For now, however, the supply of deals remains muted relative to near-peak equity market valuations. Deal spreads are attractive compared to historically low yields, reflecting increased uncertainty around the global economic and political climate as well as elevated valuations in some sectors. Certain subsets of event-driven investing remain susceptible to an increase in equity market volatility, most notably in special situations investing where we remain underweight.

Understanding the Pendulum Graphic

Arrows represent any change since the last quarter-end.

Neutral

Overweight

StronglyOverweight

Underweight

StronglyUnderweight



Q4 2020 Outlook by Strategy

Credit Credit has rallied alongside most other risk assets with investor sentiment buoyed by improving data on both the public health and economic fronts. Credit managers are now turning toward the US presidential election and the path of the coronavirus as social activities move back indoors for potential sources of volatility. In long/short credit, managers may be able to generate alpha by identifying issuers with impaired business models as the market evolves from financing rescue deals to thinking more critically about the future ability to service debts. Structured credit in general has rebounded, but consumer-centric risk (asset-backed securities), non-agency residential mortgage-backed securities have outperformed commercial real estate given the extreme levels of uncertainty associated with the latter. Of course, uncertainty can also present opportunity, so we expect dispersion at the manager level. The distressed environment can be characterized by the K-shaped model as higher quality companies secure financing at a low cost of capital while more challenged companies default. The “good company, bad balance sheet” playbook does not necessarily apply, and the opportunity set is limited as a result. Direct lending managers are preoccupied with their existing portfolio companies. Asset-management capabilities and workout experience will serve as differentiators in this space.

Global Macro Some large directional and relative value opportunities are behind us, but macro factors remain a strong driver of markets with major political and policy events remaining relatively uncertain heading into year-end. We remain constructive on discretionary macro strategies that tend to focus on these drivers, particularly those that can apply tactical shifts around potential surprises. Regional specialists, including those focused on emerging markets, may also be presented with an attractive dispersion environment as varying policy responses and recoveries continue to develop; strategies focused on emerging market debt opportunities may benefit from a tailwind of yield-seeking investor demand should the economic recovery continue across the globe. While systematic strategies mostly remain dependent on the path and sustainability of market trends (positive or negative), the theme of lingering uncertainty around the health crisis and policy responses may favor nimble, shorter-term strategies.

Commodities We believe the opportunity set is improving for hedged commodity strategies. From a macro perspective, low interest rates, a weaker dollar and higher inflation expectations should support commodities. The fourth quarter can lead to higher price volatility due to seasonal changes in supply and demand, which may be exacerbated by the dislocation in capital markets to finance commodities. Examples include the increase in bankruptcies among US shale producers and banks pulling back from commodity trade finance. Geopolitical events with the upcoming US election and US-China trade negotiations provide a potential headwind to an improving market outlook.

Insurance-LinkedSecurities

While the hurricane and wildfire seasons have been very active year to date, industry-insured losses remain near their historical averages. Even so, the property catastrophe (cat) reinsurance market continues to price attractively to globally high yield in a low-rate environment, and we forecast the trend of higher property cat reinsurance pricing to continue into 2021. We also expect new issuance of catastrophe bonds to be active into the end of the year as the market is expected to grow from both a capital and sponsor perspective. While our outlook is positive on the property side of the insurance-linked securities market, we remain less constructive within life securitizations where we have not seen a similar repricing trend over the past few years.



> +1 Strongly Overweight+0.5 to +1 Overweight-0.5 to +0.5 Neutral-1 to -0.5 Underweight< -1 Strongly Underweight

Outlook Trend for Strategies and Sub-Strategies Sub-Strategies Ranked by Z-Score

Strategies Q3 2020 Q4 2020 Changes

Long/Short Equity —

Long/Short Equity

Equity Market Neutral —

Activist —

Europe

Asia —

Technology —

Healthcare —

Relative Value —

Convertible Arbitrage —

Volatility Arbitrage —

Fixed Income —

Event Driven —

Merger Arbitrage —

Special Situations —

Credit —

Direct Lending —

Distressed

Long/Short Credit —

Structured Credit —

Global Macro

Discretionary —

Systematic —

Emerging Markets —

Commodities —

Oil & Products —

Agriculture

Metals

US Natural Gas —

Insurance-Linked Securities

Catastrophe Bonds

Private Transactions

Life Securitization —

Retrocessional —

Industry Loss Warranties

The K2 Investment Research & Management (IRM) Outlook Scores are the opinions of the K2 IRM group as of the date indicated and may not reflect the views of other groups within K2 or Franklin Templeton. Scores are determined relative to other hedge fund strategies and do not represent an opinion regarding absolute expected future performance or risk of any strategy or substrategy. Scores are determined by the K2 IRM group based on a variety of factors deemed relevant to the analyst(s) covering the strategy or substrategy and may change from time to time in K2’s sole discretion. In certain sections of this presentation, outlook scores are rounded to the nearest whole number. These scores are only one of several factors that K2 uses in making investment recommendations, which may vary based on a client’s specific investment objectives, risk tolerance and other considerations. Therefore, underweightings and overweightings as shown are meant to indicate K2's view of relative attractiveness of hedge strategies and are not meant to indicate that a particular strategy or sub-strategy should be overweighted or underweighted, respectively, in any given portfolio. This information contains a general discussion of certain strategies pursued by underlying hedge strategies, which may be allocated across several K2 strategies. This discussion is not meant to represent a discussion of the overall performance of any K2 strategy. Specific performance information relating to K2 strategies is available from K2.

Rankings (Top Down) Z-Score

Retrocessional 1.5

Emerging Markets 1.5

Discretionary 1.4

Insurance Loss Warranties 1.3

Private Transactions 1.3

Catastrophe Bonds 0.9

Volatility Arbitrage 0.8

Metals 0.7

Europe 0.5

Oil & Products 0.2

Agriculture 0.2

Healthcare 0.2

Activist 0.0

Long/Short Credit 0.0

Structured Credit 0.0

Technology -0.1

US Natural Gas -0.1

Convertible Arbitrage -0.1

Systematic -0.1

Equity Market Neutral -0.3

Asia -0.5

Long/Short Equity -0.6

Merger Arbitrage -0.9

Direct Lending -1.1

Special Situations -1.2

Distressed -1.3

Fixed Income -1.6

Life Securitization -2.6



GlossaryAlphaA mathematical value indicating an investment's excess return relative to a benchmark. Measures a manager's value added relative to a passive strategy, independent of the market movement.

CorrelationThe degree of interaction between an investment’s return and that of the comparison Index. The correlation coefficient, expressed as a value between +1 and –1, indicates the strength and direction of the linear relationship between the investment’s returns and the returns of the index.

RetrocessionalA type of insurance contract that allows a re-insurer to transfer risks it has re-insured to another re-insurer.

Z-scoreA Z-score is a numerical measurement used in statistics of a value’s relationship to the mean (average) of a group of values, measured in terms of standard deviations from the mean. If a Z-score is 0, it indicates that the data point's score is identical to the mean score.



Notes



DISCLOSUREThe K2 Investment Research & Management (IRM) Outlook Scores are the opinions of the K2 IRM group as of the date indicated and may not reflect the views of other groups within K2 or Franklin Templeton. Scores are determined relative to other hedge fundstrategies and do not represent an opinion regarding absolute expected future performance or risk of any strategy or substrategy. Scores are determined by the K2 IRM group based on a variety of factors deemed relevant to the analyst(s) covering the strategy or substrategy and may change from time to time in K2's sole discretion. These scores are only one of several factors that K2 uses in making investment recommendations, which may vary based on a client's specific investment objectives, risk tolerance and other considerations. Therefore, a positive or negative score may not indicate that a particular strategy or substrategy should be overweighted or underweighted, respectively, in any given portfolio.This information contains a general discussion of certain strategies pursued by underlying hedge strategies, which may be allocated across several K2 strategies. 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 any of the funds employing K2 strategies. Nothing in this document should be construed as investment advice. Specific performance information relating to K2 strategies is available from K2. This presentation should not be reproduced without the written consent of K2.Past performance is not an indicator or guarantee of future results.Certain information contained in this document represents or is based upon forward-looking statements or information, including descriptions of anticipated market changes and expectations of future activity. K2 believes that such statements and information are based upon reasonable estimates and assumptions. However, forward-looking statements and information are inherently uncertain and actual events or results may differ from those projected. Therefore, too much reliance should not be placed on such forward-looking statements and information.Professional care and diligence have been exercised in the collection of information in this document. However, data from third party sources may have been used in its preparation and Franklin Templeton/K2 has not independently verified, validated or audited such data.Any research and analysis contained in this document has been procured by Franklin Templeton/K2 Investments for its own purposesand is provided to you only incidentally. Franklin Templeton/K2 shall not be liable to any user of this document or to any other person or entity for the inaccuracy of information or any errors or omissions in its contents, regardless of the cause of such inaccuracy, error or omission.

WHAT ARE THE RISKS?All investments involve risks, including possible loss or principal. Investments in alternative investment strategies and hedge funds (collectively, “Alternative Investments”) are complex and speculative investments, entail significant risk and should not be considered a complete investment program. Financial Derivative instruments are often used in alternative investment strategies and involve costs and can create economic leverage in the fund's portfolio which may result in significant volatility and cause the fund to participate in losses (as well as gains) in an amount that significantly exceeds the fund's initial investment. Depending on the product invested in, an investment in Alternative Investments may provide for only limited liquidity and is suitable only for persons who can afford to lose the entire amount of their investment. There can be no assurance that the investment strategies employed by K2 or the managers of the investment entities selected by K2 will be successful.The identification of attractive investment opportunities is difficult and involves a significant degree of uncertainty. Returns generated from Alternative Investments may not adequately compensate investors for the business and financial risks assumed. An investment in Alternative Investments is subject to those market risks common to entities investing in all types of securities, including market volatility. Also, certain trading techniques employed by Alternative Investments, such as leverage and hedging, may increase the adverse impact to which an investment portfolio may be subject.Depending on the structure of the product invested, Alternative Investments may not be required to provide investors with periodic pricing or valuation and there may be a lack of transparency as to the underlying assets. Investing in Alternative Investments may also involve tax consequences and a prospective investor should consult with a tax advisor before investing. In addition to direct asset-based fees and expenses, certain Alternative Investments such as funds of hedge funds incur additional indirect fees, expenses and asset-based compensation of investment funds in which these Alternative Investments invest.

© 2020 Franklin Templeton Investments. All rights reserved. HFSOA_4Q20_1020


IMPORTANT LEGAL INFORMATION

This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice.The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. All investments involve risks, including possible loss of principal.Data from third party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verified, validated or audited such data. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments opinions and analyses in the material is at the sole discretion of the user. Products, services and information may not be available in all jurisdictions and are offered outside the U.S. by other FT affiliates and/or their distributors as local laws and regulation permits. Please consult your own financial professional or Franklin Templeton institutional contact for further information on availability of products and services in your jurisdiction.Issued in the U.S. by Franklin Templeton Distributors, Inc., One Franklin Parkway, San Mateo, California 94403-1906, (800) DIAL BEN/342-5236, franklintempleton.com—Franklin Templeton Distributors, Inc. is the principal distributor of Franklin Templeton U.S. registered products, which are not FDIC insured; may lose value; and are not bank guaranteed and are available only in jurisdictions where an offer or solicitation of such products is permitted under applicable laws and regulation.

Australia: Issued by Franklin Templeton Investments Australia Limited (ABN 87 006 972 247) (Australian Financial Services License Holder No. 225328), Level 19, 101 Collins Street, Melbourne, Victoria, 3000 / Austria/Germany: Issued by Franklin Templeton Investment Services GmbH, Frankfurt, Mainzer Landstr. 16, 60325 Frankfurt/Main, Tel 08 00/0 73 80 01 (Germany), 08 00/29 59 11 (Austria), Fax +49(0)69/2 72 23-120, [email protected], [email protected] / Canada: Issued by Franklin Templeton Investments Corp., 200 King Street West, Suite 1500 Toronto, ON, M5H3T4, Fax (416) 364-1163, (800) 387-0830, www.franklintempleton.ca / Netherlands: Franklin Templeton International Services S.à r.l., Dutch Branch, World Trade Center Amsterdam, H-Toren, 5e verdieping, Zuidplein 36, 1077 XV Amsterdam, Netherlands. Tel +31 (0) 20 575 2890 / United Arab Emirates: Issued by Franklin Templeton Investments (ME) Limited, authorized and regulated by the Dubai Financial Services Authority. Dubai office: Franklin Templeton, The Gate, East Wing, Level 2, Dubai International Financial Centre, P.O. Box 506613, Dubai, U.A.E., Tel +9714-4284100, Fax +9714-4284140 / France: Issued by Franklin Templeton International Services S.à r.l., French branch. 20 rue de la Paix - 75002 Paris. Tél +33 (0)1 40 73 86 00, Fax: +33 (0)140 73 86 10 / Hong Kong: Issued by Franklin Templeton Investments (Asia) Limited, 17/F, Chater House, 8 Connaught Road Central, Hong Kong / Italy: Issued by Franklin Templeton International Services S.à.r.l.—Italian Branch, Corso Italia, 1, Milan, 20122, Italy / Japan: Issued by Franklin Templeton Investments Japan Limited / Korea: Issued by Franklin Templeton Investment Trust Management Co., Ltd., 3rd fl., CCMM Building, 12 Youido-Dong, Youngdungpo-Gu, Seoul, Korea 150-968 / Luxembourg/Benelux: Issued by Franklin Templeton International Services S.à r.l.—Supervised by the Commission de Surveillance du Secteur Financier–8A, rue Albert Borschette, L-1246 Luxembourg, Tel +352-46 66 67-1, Fax +352-46 66 76 / Malaysia: Issued by Franklin Templeton Asset Management (Malaysia) Sdn. Bhd. & Franklin Templeton GSC Asset Management Sdn. Bhd / Poland: Issued by Templeton Asset Management (Poland) TFI S.A.; Rondo ONZ 1; 00-124 Warsaw / Romania: Issued by Bucharest branch of Franklin Templeton Investment Management Limited (“FTIML”) registered with the Romania Financial Supervisory Authority under no. PJM01SFIM/400005/14.09.2009, and authorized and regulated in the UK by the Financial Conduct Authority / Singapore: Issued by Templeton Asset Management Ltd. Registration No. (UEN) 199205211E. 7 Temasek Boulevard, #38-03 Suntec Tower One, 038987, Singapore / Spain: Issued by Franklin Templeton International Services S.à r.l.—Spanish Branch, Professional of the Financial Sector under the Supervision of CNMV, José Ortega y Gasset 29, Madrid, Spain. Tel +34 91 426 3600, Fax +34 91 577 1857 / South Africa: Issued by Franklin Templeton Investments SA (PTY) Ltd which is an authorised Financial Services Provider. Tel +27 (21) 831 7400, Fax +27 (21) 831 7422 / Switzerland: Issued by Franklin Templeton Switzerland Ltd, Stockerstrasse 38, CH-8002 Zurich / UK: Issued by Franklin Templeton Investment Management Limited (FTIML), registered office: Cannon Place, 78 Cannon Street, London EC4N 6HL, Tel +44 (0)20 7073 8500. Authorized and regulated in the United Kingdom by the Financial Conduct Authority / Nordic regions: Issued by Franklin Templeton International Services S.à r.l., Contact details: Franklin Templeton International Services S.à r.l., Swedish Branch, filial, Nybrokajen 5, SE-111 48, Stockholm, Sweden. Tel +46 (0)8 545 012 30, [email protected], authorised in the Luxembourg by the Commission de Surveillance du Secteur Financier to conduct certain financial activities in Denmark, in Sweden, in Norway, in Iceland and in Finland. Franklin Templeton International Services S.à r.l., Swedish Branch, filial conducts activities under supervision of Finansinspektionen in Sweden / Offshore Americas: In the U.S., this publication is made available only to financial intermediaries by Templeton/Franklin Investment Services, 100 Fountain Parkway, St. Petersburg, Florida 33716. Tel (800) 239-3894 (USA Toll-Free), (877) 389-0076 (Canada Toll-Free), and Fax (727) 299-8736. Investments are not FDIC insured; may lose value; and are not bank guaranteed. Distribution outside the U.S. may be made by Templeton Global Advisors Limited or other sub-distributors, intermediaries, dealers or professional investors that have been engaged by Templeton Global Advisors Limited to distribute shares of Franklin Templeton funds in certain jurisdictions. This is not an offer to sell or a solicitation of an offer to purchase securities in any jurisdiction where it would be illegal to do so.Please visit www.franklinresources.com to be directed to your local Franklin Templeton website.

k2 hedge fund strategy outlook - franklin templeton

Documents