templeton international adr equity sma composite

Data as of December 31, 2018

Templeton International ADR Equity SMA Composite

Templeton Global Equity Group

Templeton Separately Managed Accounts and Templeton are defined as separate firms within Franklin Templeton Investments for the purposes of complying with the Global Investment Performance Standards (GIPS®). Effective July 1,

2014, Templeton Investment Counsel, LLC, assumed responsibility for Templeton Separately Managed Account’s global and international equity SMA accounts. Templeton Investment Counsel, LLC is a sub-adviser to Templeton

Separately Managed Accounts.

For Dealer Use Only. Not for Distribution to the Public.

Non-U.S. Equity


2

Table of Contents

Investment Capabilities Overview............................................................................................3

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

Management

.......................4

Franklin Templeton Investments—ESG and Corporate Sustainability....................................... 5

Templeton Separately Managed Accounts—Assets Under Management..................................6

Templeton Global Equity Group—Value Investors Focused on Seeking Long-Term

Capital Growth for Our Clients

................. 7

The Templeton Investment Philosophy.................................................................................... 8

Templeton Global Equity Group Organizational Structure.........................................................9

Bottom Up Stock Pickers: Global Focus Uncovers the Best Opportunities Across

Sectors and Geographies

..................10

Templeton’s Valuation-Driven Investment Process.....................................11

Templeton’s Valuation-Driven Investment Process.................................................................12

Performance and Characteristics...................................................................17

Summary..............................................................................................................................18

Sector Allocation...................................................................................................................19

Geographic Allocation...........................................................................................................20

Top Ten Holdings..................................................................................................................21

Portfolio Characteristics........................................................................................................22

Performance Statistics..........................................................................................................23

Calendar Year Returns......................................................................................................... 24

Performance Risk Statistics.................................................................................................. 25

Current Perspectives—Sectors............................................................................................. 26

Current Perspectives—Regions.............................................................................................27

Management Profiles.......................................................................................28

Management Profile..............................................................................................................29

Templeton Global Equity Group Senior Management Profiles.................................................31

Appendix............................................................................................................32

Collaboration with Financial Experts Across Franklin Templeton.............................................33

Risk Management—Templeton Global Equity Group..............................................................34

An Integrated Global Trading Platform...................................................................................35

Important Information............................................................................................................36

Important Disclosures...........................................................................................................38

GIPS Performance Presentation............................................................................................39

Non-U.S. Equity

Source: Franklin Templeton Investments (FTI), as of December 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 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 utilized 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.

Franklin Local Asset Management (LAM) includes Franklin Bissett Investment Management, which is part of Franklin Templeton Investments Corp. In Canada, the advisor to the Franklin Templeton Multi-Asset Solutions mandates is

Fiduciary Trust Company of Canada, a wholly owned subsidiary of Franklin Templeton Investments Corp. Franklin Templeton Multi-Asset Solutions is a business name used by Fiduciary Trust Company of Canada.


3

Investment Capabilities Overview

FRANKLIN TEMPLETON INVESTMENTS

Total Combined Assets Under Management : US$649.9 Billion

Institutional AUM : US$157.7 Billion

Single Business Development, Relationship Management, and Consultant Relations Platform

2

Equity

5

Fixed Income

8

Multi-Asset Solutions

11

Alternatives

AUM

US$269.0 Billion US$261.2 Billion US$107.8 Billion US$15.6 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

•

Growth At a Reasonable Price (GARP)

•

Securitized

•

Balanced Allocation

•

Private Equity

•

Growth

•

Multi-Sector

•

Target Date/Risk

•

ActiveQuant

•

Currencies

•

Model Portfolios

•

Convertibles

•

Sukuk

•

Inflation Protection

•

Sector

•

Managed Volatility

•

Shariah

•

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)

•

Franklin Bissett Investment Mgmt (1982)

•

Pelagos Capital Management (2005)

•

Franklin Bissett Investment Mgmt (1982)

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• 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

5848

Non-U.S. Equity

4


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

Management

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 recognize 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 organization

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

5847

Non-U.S. Equity

5


Franklin Templeton Investments—ESG and Corporate Sustainability

Total AUM by MandateAs of December 31, 2018

Templeton Separately Managed Accounts—Assets Under Management

Total AUM by Distribution ChannelAs of December 31, 2018

International ADRUS$448 million

International ORDUS$55 million

Global ADRUS$10 million

Global ORDUS$2 million

World BalancedUS$13 million

Dual ContractUS$210 million

UMAUS$235 million

Sub-AdvisoryUS$83 million

4691

Non-U.S. Equity

6


Templeton Separately Managed Accounts—Assets Under Management

Templeton Global Equity Group—Value Investors Focused on Seeking Long-Term Capital Growth for Our Clients

RIGOROUS BOTTOM-UP STOCK SELECTIONeveryone an analyst in a broadly experienced research team, identifying undervalued stocks across global industries

FORTITUDE TO BE DIFFERENTconviction to purchase out-of-favor securities and patience to wait for value recognition

LONG-TERMPERSPECTIVEfive-year horizon takes advantageof short-term price volatility to reveal long-term investment opportunities

DISCIPLINED, REPEATABLE PROCESSadherence to valuation-driven philosophy and process that have navigated every market cycle over seven decades

TEMPLETON GLOBAL EQUITY GROUP

What Sets Us Apart

2890

Non-U.S. Equity

7


Templeton Global Equity Group—Value Investors Focused on Seeking Long-Term

Capital Growth for Our Clients

We Utilize a Disciplined, Consistent ApproachBased on Three Timeless Principles of Investing

Value• Uncover bargains—seeking companies trading at large discounts to their

business value

• Business value—based on normalized earnings, cash flow or asset value potential

• Flexible approach in a disciplined framework

Patience• Rolling five-year time horizon focused on normalized business value

• Long-term focus takes advantage of short-term price volatility to reveal investment opportunities

• Patience allows time for value recognition and has historically resulted in low turnover

Bottom-up stock picking• Build portfolios with undervalued securities identified through research process

• Portfolio structure reflects where we are finding value across sectors and regions

• Portfolio management process seeks to buy pessimism and sell optimism

The Templeton Investment Philosophy

“The best bargains are those stocks having the lowest prices in relation to possible earning power of future years.”

—Sir John TempletonOctober 1957

2891

Non-U.S. Equity

8


The Templeton Investment Philosophy

Templeton Global Equity Group Organizational Structure

2892

CHAIRMANDr. Sandy Nairn, CFA34 Years Industry ExperienceEDINBURGH, UNITED KINGDOM

CHIEF INVESTMENT OFFICERNorman Boersma, CFA33 Years Industry ExperienceNASSAU, BAHAMAS

DIRECTOR OF RESEARCH

Heather Arnold, CFA35 Years Industry ExperienceNASSAU, BAHAMAS

34 Portfolio Managers & Research Analysts

Average 15 Years with TempletonSpeak 13 Languages

Average 20 Years of Industry Experience

Stable Team/Historically Low Turnover

North America15 PM/Analysts

6 Analysts

Europe1 PM/Analyst

2 AnalystsAsia

4 PM/Analysts3 Analysts

Australia2 PM/Analysts

1 Analyst

DIRECTOR OF PORTFOLIO MANAGEMENT

Antonio T. Docal, CFA39 Years Industry ExperienceFORT LAUDERDALE, UNITED STATES

DIRECTOR OF BUSINESS DEVELOPMENT

C. Reed Hutchens, CFA30 Years Industry ExperienceFORT LAUDERDALE, UNITED STATES

9

Investment team information is as of December 31, 2018.

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.


Non-U.S. Equity

Templeton Global Equity Group Organizational Structure

Bottom-Up Stock Pickers: Global Focus Uncovers the Best OpportunitiesAcross Sectors and Geographies

As of December 31, 2018. Note: Sector team leaders in blue boldface.Templeton Separately Managed Accounts and Templeton are defined as separate firms within Franklin Templeton Investments for the purposes of complying with the Global Investment Performance Standards (GIPS®). Effective July 1, 2014, Templeton Investment Counsel, LLC, assumed responsibility for Templeton Separately Managed Account’s global and international equity SMA accounts. Templeton Investment Counsel, LLC is a sub-adviser to Templeton Separately Managed Accounts.CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

4692

Director of Research: Heather Arnold, CFAGLOBAL SECTOR TEAMS

Japan

India

Katherine Owen Global Consumer Discretionary

Alan Chua Global Autos & Components

Harlan Hodes Small Cap ConsumersWarren Pustam Americas ConsumersJames Windsor European ConsumersJoanne Wong Global Consumer Staples

CONSUMERS

Tian Qiu Global Health CareRoman Aliev Asian Heath CareCraig Cameron Global Health CareShane Smith Small Cap Health Care

HEALTH CARE

FINANCIALSTina Sadler Global MaterialsDylan Ball European MaterialsTony Docal Americas MaterialsClara Lee Asian MaterialsDavid Tuttle Small Cap Materials

MATERIALSINDUSTRIALS

ENERGY

Matthew Nagle European Banks Americas Banks

Dylan Ball European FinancialsPaul de Josselin Asian BanksHsung Khoo Asian FinancialsWarren Pustam Global Insurance

Global Diversified FinancialsAmericas FinancialsSmall Cap Financials

Maggie Wong Global Real Estate

Peter Moeschter Global IndustrialsFerdinand Cheuk Asian AutosAlan Chua Global MachineryTony Docal Americas IndustrialsHeather Waddell Small Cap IndustrialsJames Windsor European Industrials

COMMUNICATION SERVICES INFORMATION TECHNOLOGY

Peter Nori Global Semiconductors & Semiconductor Equipment

Ferdinand Cheuk Asian Information Technology

Peter Wilmshurst Global Software & ServicesGlobal Technology Hardware & Equipment

James Windsor European Information Technology

Katie Ylijoki Small Cap Information Technology

ADDITIONAL RESOURCESResearchTechnology Group

Global Research Library

Junior Research Analysts

Investment Risk Management Group

ESG Resources

GlobalTrading Platform

Product ManagementGroup

Franklin Templeton Emerging Markets Equity & Templeton Global Macro

Herbert Arnett Global Communication Services

Hsung Khoo Asian Communication Services

Heather Waddell Small Cap Communication Services

Chris Peel Global EnergyHsung Khoo Asian EnergyDavid Tuttle Small Cap Energy

Non-U.S. Equity

10


Bottom Up Stock Pickers: Global Focus Uncovers the Best Opportunities Across

Sectors and Geographies

11

Templeton’s Valuation-Driven Investment Process

Non-U.S. Equity



The above chart is for illustrative and discussion purposes only.1. Historical turnover is based on Templeton Global Equity Group’s overall experience, over a five-year period ended September 30, 2018, and is not intended to reflect the historical turnover of the strategy. The turnover is a byproduct of Templeton’s long-term approach to managing portfolios, but various factors, such as a portfolio’s specific investment parameters and market or economic conditions may cause actual portfolio turnover to vary. For more information regarding an individual strategy’s historical turnover ratio please contact your Franklin Templeton representative.

Identify Potential Bargains

In-Depth Fundamental Analysis

Research Team Evaluation

Bottom-Up Portfolio Construction

Portfolio Monitoringand Risk Management

Experienced analysts

Focus on global industry sectors

Quantitative and qualitative assessment

Identify material ESG issues

Five-year financial forecasts

Management/supplier/competitive evaluation

Upside/downside return quantification

Recommendation of Bargain List candidates

Presentation of investment thesis

Investment debateand critique: “Devil’s Advocate”

ESG “Devil’s Advocate”

Director of Research approval

Investment parameters

Industry and sector framework

Build and diversify portfolio

Long-term approach: 20% historical turnover1

Ongoing valuation analysis

Ongoing ESG monitoring

Disciplined sell methodology

Weekly peer review and risk analytics

54321

TEMPLETON’S BOTTOM-UP STOCK SELECTION PROCESS

4712

Non-U.S. Equity

12



A Bottom-Up Research Process Leverages Global Capabilities Across Market Cap Spectrum

The above chart is for illustrative and discussion purposes only.

Bargain List

1. Identify Potential Bargains

• Global focus– Analysts are aligned by

sectors globally– Unconstrained investable

universe

• Fundamental and quantitative assessment– Price/Earnings– Price/Book Value– Price/Cash Flow

• Identify material ESG issues– Environmental– Social– Governance

• Most attractively valued companies based on valuation

2. In-Depth Fundamental Analysis

• Develop research models– Revenue drivers; growth

potential– Assessment of ESG factors

on long-term risk/return– Operating costs– Capital expenditures– Capital allocation– Retained capital– Competitor analysis

• Five-year financial forecasts– Emphasis on future earnings

potential– Cash flow potential

• Upside/downside return quantification

• Recommendation of Bargain List candidates

3. Research Team Evaluation

• Presentation of investment thesis– Valuation history– Business outlook relative to

global industry– Why we believe business is

undervalued– Opportunities and risks– Capital strength appraisal

• Rigorous investment team debate– Team vetting generates best

thinking– “Devil’s Advocate” critique– ESG “Devil’s Advocate”

• Director of Research approval

4712

Non-U.S. Equity

13


Lifecycle of a Templeton Stock

Templeton’s research platform is designed to track securities through their valuation lifecycle. The above chart is intended solely to illustrate the ideal interplay between the Bargain List, Core List and Source of Funds List over an anticipated holding period but there is no guarantee any Templeton stock will follow this lifecycle. The chart is hypothetical and is not intended to represent an actual Templeton portfolio, or any stock purchased or sold by Templeton.

SOURCE OF FUNDS LISTFully valued stocks recommended for sale

CORE LISTAttractively priced stocks with potential

for significant price upside

BARGAIN LISTStocks priced at a significant discount to our estimation of their future business value

VALU

ATI

ON

TIME

4712

Non-U.S. Equity

14


Portfolio Manager Stock Selection Decisions & Oversight

The above chart is for illustrative and discussion purposes only.The turnover is a byproduct of Templeton’s long-term approach to managing portfolios, but various factors, such as a portfolio’s specific investment parameters and market or economic conditions may cause actual portfolio turnoverto vary. For more information regarding an individual strategy’s or fund’s historical turnover ratio please contact your Franklin Templeton representative.Portfolio managers purchase securities from the approved Templeton database of 300–500 securities which was derived from the investable universe of approximately 10,000 equity securities.1. The Templeton Global Equity Group has the capability to utilize ESG Value-Based Constraints, but may choose not to do so.2. Although the typical Templeton Global or Non-U.S. SMA equity portfolio holds approximately 90 securities, individual portfolios may vary, depending on various factors, such as portfolio size or investment strategy.

Bottom-Up Portfolio Construction—Step 4

Analysts’highest-conviction holdings per sector

Source of Funds List

Core List

Bargain List

Mandate parameters

Geographic/sector constraints

Portfoliocash flow

Other Client Guidelines

ESG Value-Based Constraints1

Consumer

Health Care

Financials

Telecom

Utilities

Materials/Energy

Industrials

Info Tech

Historically low turnover, which may result in lower transaction costs

TEMPLETON GLOBAL OR

NON-U.S. PORTFOLIO

Approximately 90 Securities2

SELLDISCIPLINE

300–500Securities

on Proprietary Database

Approved Database

Sector Analyst Portfolios

Framework of Sector Ranges

Portfolio-SpecificFeatures

4712

Non-U.S. Equity

15


Portfolio Monitoring and Risk Management—Step 5

The above chart is for illustrative and discussion purposes only.

Ongoing Valuation Analysis Disciplined Sell Methodology Integrated Risk Approach

Research team closely monitorsinvestment thesis including ESG factorsand updates forecasts and recommendations:• Sector Team Meetings—Meet monthly to

review main holdings, best ideas and sector analyst portfolios, discuss sector drivers and trends, and vet potential new bargains

• Industry Reviews—Industry analysis reports and stock holdings formally reviewed twice a year by each analyst to the full investment team

• Analyst Database Reviews—All stocks under analysts’ coverage also formally reviewed on a rotating weekly schedule

Stocks placed on the Source of Funds List and sold if:• Price meets/exceeds our estimation of

full value, or• Greater value exists in another similar

security, or• Fundamental change in our

investment thesis occurs

• Stock-specific risk is addressed primarily through our research discipline and team vetting process

• Ongoing assessment of material ESG issues provides another way to quantify potential downside risk

• Portfolio risk is managed through sector and geographic diversification and weekly peer review process

• Investment Risk Management Group—an independent team of risk specialists reporting directly to the CEO—performs a risk oversight function and can consult with the portfolio managers to provide unbiased risk insights

TEMPLETON GLOBAL EQUITY GROUP

4712

Non-U.S. Equity

16


17

Performance and Characteristics

Non-U.S. Equity


18

Non-U.S. Equity

Summary


As of December 31, 2018

Investment Mandate Non-U.S. Equity

Investment Style Value

Inception Date November 30, 1999

Benchmarks MSCI All Country World ex U.S. Index

MSCI EAFE Index

Total Net Assets (USD) 27,237,792

This presentation is intended only as a general overview of the Templeton Foreign ADR Only SMA Strategy and is for informational purposes only and should not be construed or relied upon as investment advice. It has been provided to

the recipient for use in a private and confidential meeting to discuss a potential or existing investment advisory relationship and may not be reproduced or used for any other purpose. It is intended only for institutional investment

consultants or institutional investors. It is not meant for the general public. Information provided in this presentation is as of the date of this presentation, unless otherwise indicated.

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


Non-U.S. Equity

Cash & Cash Equivalents

Real Estate

Utilities

Consumer Discretionary

Consumer Staples

Materials

Information Technology

Industrials

Communication Services

Energy

Health Care

Financials

0% 6% 12% 18% 24% 30%

Information is supplemental to the Historical Performance page and the accompanying full performance presentation prepared in accordance with the Global Investment Performance Standards (GIPS®). Please also

see the Important Information page in the Appendix.

Weightings as percent of total. Percentage may not total 100% due to rounding. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.


Sector Allocation


vs. MSCI All Country World ex U.S. Index



MSCI All Country World ex U.S. Index

19

Portfolio % Index % Over/Under %

Financials 21.94 22.16 -0.22

Banks

10.73 13.90 -3.17

Diversified Financials

6.48 3.03 3.46

Insurance

4.73 5.23 -0.50

Health Care 18.64 8.36 10.28

Pharmaceuticals, Biotechnology & Life Sciences

16.90 6.89 10.00

Health Care Equipment & Services

1.74 1.47 0.28

Energy 11.35 7.30 4.05

Communication Services 11.24 7.63 3.61

Telecommunication Services

8.17 4.08 4.09

Media & Entertainment

3.07 3.56 -0.48

Industrials 8.47 11.70 -3.23

Capital Goods

7.14 7.68 -0.54

Transportation

1.33 2.66 -1.34

Commercial & Professional Services

0.00 1.36 -1.36

Information Technology 6.56 8.01 -1.45

Semiconductors & Semiconductor Equipment

4.57 2.24 2.33

Technology Hardware & Equipment

1.99 3.49 -1.50

Software & Services

0.00 2.29 -2.29

Materials 6.48 7.67 -1.19

Consumer Staples 4.41 9.85 -5.44

Food, Beverage & Tobacco

2.39 5.57 -3.19

Food & Staples Retailing

2.02 1.78 0.24

Household & Personal Products

0.00 2.50 -2.50

Consumer Discretionary 4.08 10.56 -6.49

Consumer Durables & Apparel

1.76 2.88 -1.13

Automobiles & Components

1.56 3.77 -2.22

Retailing

0.76 2.51 -1.75

Consumer Services

0.00 1.40 -1.40

Utilities 3.67 3.39 0.28

Real Estate 0.00 3.35 -3.35

Cash & Cash Equivalents 3.16 0.00 3.16

20

Information is supplemental to the Historical Performance page and the accompanying full performance presentation prepared in accordance with the Global Investment Performance Standards (GIPS®).

Please also see the Important Information page in the Appendix.

Percentages may not equal 100% due to rounding.

Weightings as percent of total. Percentage may not total 100% due to rounding. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.

Emerging markets exposure is based on the countries included in the MSCI Emerging Markets Index.


Non-U.S. Equity

Cash & Cash Equivalents

Latin America / Caribbean

Australia / New Zealand

North America

Mid-East / Africa

Asia

Europe

0% 12% 24% 36% 48% 60%


MSCI All Country World ex U.S. Index



Geographic Allocation


Portfolio % Index % Over/Under %

Europe 56.93 43.80 13.13

France 13.94

7.50

6.44

United Kingdom 12.14

11.44

0.70

Germany 10.01

5.96

4.05

Switzerland 6.96

5.84

1.12

Netherlands 4.10

2.32

1.78

Italy 3.47

1.52

1.95

Denmark 2.64

1.18

1.46

Ireland 1.99

0.37

1.63

Spain 0.00

2.09

-2.09

Others 1.67 5.58 -3.91

Asia 36.55 39.23 -2.68

Japan 13.14

16.62

-3.48

China 7.43

7.90

-0.48

South Korea 5.94

3.58

2.35

Singapore 4.48

0.92

3.55

Hong Kong 2.97

2.64

0.33

Taiwan 2.60

2.96

-0.36

India 0.00

2.44

-2.44

Others 0.00 2.16 -2.16

Mid-East / Africa 1.88 2.50 -0.62

Israel 1.88

0.36

1.51

Others 0.00 2.14 -2.14

North America 1.48 6.47 -4.99

Canada 1.48

6.47

-4.99

Australia / New Zealand 0.00 4.83 -4.83

Australia 0.00

4.68

-4.68

New Zealand 0.00

0.16

-0.16

Latin America / Caribbean 0.00 3.17 -3.17

Others 0.00 3.17 -3.17

Cash & Cash Equivalents 3.16 0.00 3.16

Emerging Markets Exposure 15.97 26.00 -10.03

Non-U.S. Equity



Top ten equity holdings information is historical and may not reflect current or future composite characteristics. All holdings are subject to change. Holdings of the same issuers have been combined.

The information provided is not a recommendation to purchase, sell, or hold any particular security. The securities identified do not represent an account’s entire holdings and in the aggregate may represent only a small percentage of such

holdings. There is no assurance that securities purchased will remain in account’s portfolio, or that securities sold will not be repurchased. In addition, it should not be assumed that any securities mentioned were or will prove to be

profitable.

Holdings of the same issuer have been combined, unless otherwise noted. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.

The information provided is not a recommendation to purchase, sell, or hold any particular security. The securities identified do not represent the Fund’s entire holdings and in the aggregate may represent only a small percentage of such

holdings. There is no assurance that securities purchased will remain in the Fund or that securities sold will not be purchased. In addition, it should not be assumed that any securities transactions discussed were or will prove to be

profitable. 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.


21



Top Ten Holdings

Name of Issuer Country Industry % of Total

ISHARES MSCI SOUTH KOREA ETF 4.55

BP PLC United Kingdom Energy 2.77

ENI SPA Italy Energy 2.76

Taiwan Semiconductor Manufacturing Co Ltd Taiwan Semiconductors & Semiconductor Equipment 2.60

Royal Dutch Shell PLC United Kingdom Energy 2.57

Sanofi France Pharmaceuticals, Biotechnology & Life Sciences 2.56

Total SA France Energy 2.54

Novartis AG Switzerland Pharmaceuticals, Biotechnology & Life Sciences 2.52

ROCHE HOLDING AG Switzerland Pharmaceuticals, Biotechnology & Life Sciences 2.50

Singapore Telecommunications Ltd Singapore Telecommunication Services 2.49

Total 27.87




Non-U.S. Equity

Portfolio Characteristics

22

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

The portfolio characteristics listed are based on the composite's underlying holdings, and do not necessarily reflect the composite's characteristics. Due to data limitations all equity holdings are assumed to be the primary equity issue

(usually the ordinary or common shares) of each security’s issuing company. This methodology may cause small differences between the portfolio’s reported characteristics and the portfolio’s actual characteristics. In practice, Franklin

Templeton’s portfolio managers invest in the class or type of security which they believe is most appropriate at the time of purchase. The dividend yield quoted here is the yield on securities within the composite's portfolio and

should not be used as an indication of the income received from this portfolio. The market capitalization figures for both the portfolio and the benchmark are the security level, not aggregated up to the main issuer.

Source: FactSet. Price Ratio calculations for the weighted average use harmonic means. Any exceptions to this are noted. Market capitalization statistics are indicated in the base currency for the portfolio presented.

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


Portfolio Index

Price to Earnings (12-month Trailing) 12.26x 13.01x

Price to Cash Flow 6.80x 7.98x

Price to Book 1.23x 1.49x

Dividend Yield 3.70% 3.46%

Market Capitalization (Millions USD) 64,797 55,315

Market Capitalization Breakdown in USD Portfolio %

2.0-5.0 Billion 7.06

5.0-10.0 Billion 6.71

10.0-25.0 Billion 31.98

25.0-50.0 Billion 15.83

>50.0 Billion 38.41

Performance Statistics



Non-U.S. Equity

Annualized Total Returns (%)

Inception

Date 1 Mth* 3 Mths* YTD* 1 Yr 3 Yrs 5 Yrs 10 Yrs

Since

Incept

Templeton International ADR Equity SMA Composite—Gross of Fees

(USD)

11.30.1999 -6.55 -14.13 -17.25 -17.25 1.21 -1.22 4.93 3.35

Templeton International ADR Equity SMA Composite—Net of Fees

(USD)

-6.65 -14.49 -18.67 -18.67 -0.60 -2.86 3.30 1.90

MSCI All Country World ex U.S. Index (USD) -4.49 -11.41 -13.78 -13.78 4.98 1.14 7.06 3.89

MSCI EAFE Index (USD) -4.83 -12.50 -13.36 -13.36 3.38 1.00 6.81 3.31

23

Annualized Performance: Trailing Period Total Returns

Gross of fees: Pure gross of fees

“Pure” gross does not reflect the deduction of any expenses, including trading costs, and is provided as supplemental information. Templeton Separately Managed Accounts claims compliance with GIPS® for the period January 1, 2000

to the present. Any performance presented prior to that date is not in compliance. Please see accompanying full performance presentation prepared in accordance with the Global Investment Performance Standards (GIPS®)

which includes additional information regarding net of fee calculations. Please also see the Important Information page in the Appendix. Past performance is not an indicator or a guarantee of future performance.

Performance data is shown rounded to the nearest hundreth.

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.

*Cumulative Total Returns


24

Non-U.S. Equity

Calendar Year Returns

Annualized Performance: Trailing Period Total Returns

Gross of fees: Pure gross of fees

“Pure” gross does not reflect the deduction of any expenses, including trading costs, and is provided as supplemental information. Templeton Separately Managed Accounts claims compliance with GIPS® for the period January 1, 2000

to the present. Any performance presented prior to that date is not in compliance. Please see accompanying full performance presentation prepared in accordance with the Global Investment Performance Standards (GIPS®)

which includes additional information regarding net of fee calculations. Please also see the Important Information page in the Appendix. Past performance is not an indicator or a guarantee of future performance.

Performance data is shown rounded to the nearest hundreth.



2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

-19%

-3%

13%

29%

45%

-17.25-18.67-13.78-13.36

22.57

20.07

27.77

25.62

2.22

0.57

5.01

1.51

-2.74 -4.12 -5.25 -0.39 -6.75 -8.14 -3.44 -4.48

21.75

20.02

15.78

23.29

20.77

18.95

17.39

17.90

-11.32-12.64-13.33-11.73

6.04

4.55

11.60

8.21

24.42

22.70

42.14

32.46

Templeton International ADR Equity SMA Composite—Gross of Fees (USD)

MSCI All Country World ex U.S. Index (USD)

Templeton International ADR Equity SMA Composite—Net of Fees (USD)

MSCI EAFE Index (USD)




Non-U.S. Equity

25

Performance Risk Statistics




Risk statistics are calculated using gross of fees performance.


^^Measured against the MSCI All Country World ex-US Index.

*Annualized.

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


Performance Risk Statistics

1 Yr 3 Yrs* 5 Yrs* 10 Yrs* 15 Yrs*

Standard Deviation (%):

Templeton International ADR Equity SMA Composite 13.57 12.09 11.97 16.34 16.06

MSCI All Country World ex-US Index 12.18 11.40 11.83 16.31 16.80

Tracking Error (%)^^ 2.74 3.58 3.44 4.02 4.35

Information Ratio^^ -1.27 -1.05 -0.69 -0.53 -0.28

Beta^^ 1.10 1.01 0.97 0.97 0.92

Sharpe Ratio -1.41 0.02 -0.15 0.28 0.20

Current Perspectives—Sectors

2895

All statements are opinions only and are expressed as of the publication date and are subject to change without prior notice. This is not a complete analysis of any industry, sector or region and should not be construed as an investment recommendation or advice.

Sector Opportunities Comments

Financials MANY

We continued gradually repositioning our financials portfolio in 2018 to rationalize holdings and reduce concentrated political risk. Our thesis on European banks rests largely on valuation and shareholder returns. As of year-end, European lenders traded at the same earnings multiple as they did in the sovereign debt crisis, despite significant progress restructuring and recapitalizing to improve asset quality and returns. Depressed valuations combined with generous shareholder returns have resulted in dividend yields exceeding price/earnings ratios at a number of European banks. In Asia, we believe prospects for improving corporate governance and political stability, combined with rising interest rates and solid economic growth, should benefit banks over time.

Health Care MANY

Unlike other defensive sectors, health care is less of a simple bond proxy, offering defensiveness independent of rate fluctuations. The sector also offers above-average growth through innovation and untapped market potential. At year-end, the industry was generating higher profit margins than the overall global market with lower-than-average leverage ratios. Investors might expect to pay a premium for such attributes, but the industry has been trading at a discount based on price-to-free-cash flow, with some of that cash having been returned to shareholders through an overall dividend yield on par with that of 10-year US Treasuries. Concerns persist about regulation and pricing, but history suggests that companies capable of innovating to provide products that address unmet medical needs can continue to thrive and profit. It is these kinds of companies in which we seek to invest.

Energy SOME

As the price of oil rose above our estimate of the marginal cost of demand in late 2017/early 2018, we began selling into strength the higher beta, price-sensitive oilfield services and exploration and production stocks. This allowed us to shift into more defensive integrated oil producers with still-modest valuations and high dividend yields. The rise of US shale as the industry’s swing producer means that oil market fundamentals are becoming increasingly driven by a highly leveraged, low-intensity production regime functioning in a market-based economy. Compared to the regime led by Saudi Arabia and OPEC (Organization of the Petroleum Exporting Countries), that can mean a more rapid supply response to prevailing imbalances and, ultimately, shorter, more volatile cycles. We remain constructive on our more defensive positioning, but with oil prices falling back to levels on the cost curve historically associated with support, we have also begun using weakness to again search for potential bargains in more cyclical parts of the sector.

Information Technology SOME

Over the past year, leading internet stocks were increasingly driven by multiple expansion, not earnings growth, leaving them vulnerable to the sharp sell-off experienced in the second half of 2018 as sentiment abruptly changed. We have avoided expensive, momentum-driven stocks, finding opportunities instead among mature, cash-generative software firms developing new growth businesses, as well as hardware companies with restructuring potential and semiconductor manufacturers excessively pressured by supply concerns.

Industrials SOMESelect opportunities exist, particularly among companies benefiting from restructuring or exposure to growth-oriented end markets, such as aerospace/defense and industrial automation. We have avoided expensive companies that fail to reflect the maturity of their business cycles or are excessively optimistic about sustainable growth rates and returns. Protectionism is a risk as export-oriented capital goods firms remain at the forefront of trade war rhetoric, though valuations are beginning to reflect such concerns.

Consumer Discretionary SOME Fuller valuations led us to sell some holdings and redirect proceeds toward areas that we believe offer greater long-term value. We remain cautious on consumer names exposed

to steel/aluminum and trade war risks. Opportunities remain in some select retail franchises that can grow in a challenging environment or restructure their operations.

Materials SOMESome renewed opportunities among construction materials firms that have de-rated amid cyclical concerns. Select chemicals stocks offer opportunities to own high-quality businesses. In mining, we used reflationary tailwinds to sell into strength industrial metals producers and rotate into select precious metals firms featuring what we viewed as cheap valuations, strong balance sheets and defensive characteristics. Encouragingly, these holdings began to show signs of life as volatility resurfaced in the fourth quarter.

Communication Services SOME

Among telecoms, we look for lowly valued firms with strong balance sheets, declining capital intensity and attractive dividends operating in markets with stable competitive dynamics and regulatory structures. The sector’s defensiveness and yield profile should help in a low-rate, elevated risk environment. The other part of this new sector grouping—media and entertainment—is home to a number of former tech and consumer stocks we have avoided on valuation grounds.

Consumer Staples FEW After underperforming for the better part of two years amid low volatility and global reflationary tailwinds, defensive consumer stocks rallied strongly as volatility re-emerged at the

end of the year. Valuations had become more interesting in recent years, but re-rated sharply in the second half of 2018 and are once again expensive for a low-growth sector.

Utilities FEW In our view, utilities are broadly expensive considering the potential impacts of weaker economic growth and increasing regulatory interference on power demand and industry pricing. Oversupply concerns persist in developed markets. However, select opportunities evident among renewable power generators.

Real Estate FEW Few opportunities in this late-cycle sector as bond yields rise, given already-expensive valuations and compressed cap rates.


Non-U.S. Equity

26


Current Perspectives—Sectors


Current Perspectives—Regions

2896

Equity weakness in 2018 seemed to be more a function of sentiment than fundamentals. European stocks—especially cyclicals—underperformed to an extent typically associated with contraction and recession. Although growth did slow in 2018, composite manufacturing data remained firmly expansionary and gross domestic product growth was positive. Looking ahead, lead indicators suggest European PMIs (purchasing manufacturer indices) may be bottoming as the inventory cycle improves and euro strength fades. Europe’s economy remains highly exposed to global growth trends, which show signs of troughing on expectations of Chinese stimulus and a potential pause in Federal Reserve Board (“the Fed”) normalization efforts. Politics remain highly uncertain, though 2019 will likely bring clarity on Brexit and possibly the containment of turmoil in Italy and France; keep in mind that modern Europe has a long history of muddling through political crises. In the meantime, we expect quantitative tightening by the European Central Bank to be gradual and overall policy to remain dovish given the bank’s single mandate of price stability. With a solid 4% dividend yield and attractive 8% equity risk premium, European remained excessively cheap as of the end of the quarter and appears poised for recovery following protracted weakness.

Emerging markets are not homogenous; conditions between markets can vary dramatically. On a headline basis, many emerging markets look attractively valued relative to developed-market peers. However, such discounts are sometimes justified given higher risks and economic concentration in lowly valued resource and financials sectors. Recently, emerging markets have been buffeted by a series of headwinds originating in the US, including a stronger dollar and diminished liquidity thanks to quantitative tightening, as well as the uncertainty surrounding trade. Those threats are at least partially reflected in emerging market equity valuations hovering near three-year lows, and we continue to find selective opportunities among cheap emerging market stocks with unique value catalysts in this environment.

We believe the best opportunities in the region are effectively plays on the long-term wealth accumulation and demand potential of Asian consumers. We are finding many such opportunities among providers of the critical services and infrastructure—utilities, telecoms, insurers—required to facilitate the rise of a middle class. In China, the impact of trade wars and economic imbalances are becoming apparent in softer economic data. While officials will continue to pursue a more sustainable economic model by deleveraging, de-risking and closing excess capacity over the long term, short-term pressures will probably necessitate easier policy in 2019. From an investment standpoint, Chinese companies still offer an attractive combination of high organic growth and cheap valuations, though opportunities are selective. To this end, we have largely avoided state-controlled industries plagued by excess leverage and capacity, focusing instead on lowly valued consumer- and service-oriented sectors likely to capture an increasing share of China’s future economic growth.

Japan is one of the few markets in the world that is both under-owned and trading at a discount to its historical valuation levels. Investor caution relates to legacy issues of low growth, expensive valuations, excessive leverage and poor returns. Yet, conditions have improved. Corporate governance reform is gaining traction and earnings have recently risen to multi-decade highs while leverage fell to multi-decade lows. According to the Bank of Japan, the country’s economy has delivered two consecutive years of above-potential growth, the longest streak since before the global financial crisis. Valuations are becoming more attractive, with the market trading at a record discount to the US on both earnings and book value in 2018. Structural headwinds attributable to aging demographics and high government debt persist, but Japan is making progress, and continues to produce select bargains.

Limited value opportunities.

Region Opportunities Comments

Europe MANY

Emerging Markets SOME

Asia ex-Japan SOME

Japan SOME

Australia FEW

Non-U.S. Equity

27

All statements are opinions only and are expressed as of the publication date and are subject to change without prior notice. This is not a complete analysis of any industry, sector or region and should not be construed as an investment

recommendation or advice.


Current Perspectives—Regions

28

Management Profiles

Non-U.S. Equity


HEATHER WADDELL, CFAExecutive Vice PresidentPortfolio Manager, Research AnalystTempleton Global Equity GroupTempleton Investment Counsel, LLCFort Lauderdale, Florida, United States

Heather Waddell, Executive Vice President, joined the Templeton organization in 1996. Ms. Waddell is a research analyst and lead portfolio manager on a number of institutional separate account relationships and sub-advised portfolios.

Ms. Waddell has research responsibility for the global small capitalization industrials and communication services sectors.

Ms. Waddell earned an M.B.A. from the Columbia University Graduate School of Business in New York and a B.A. in economics from the University of California, Santa Cruz. She is a Chartered Financial Analyst (CFA) charterholder and an active member of the Columbia University and the University of California Alumni associations, and the South Florida Society of Financial Analysts.

Non-U.S. Equity

Management Profile


29

MATTHEW R. NAGLE, CFA, CPAExecutive Vice PresidentPortfolio Manager, Research AnalystTempleton Global Equity GroupTempleton Investment Council, LLCFort Lauderdale, Florida, United States

Matthew R. Nagle is an executive vice president, portfolio manager and research analyst in the Templeton Global Equity Group, responsible for managing institutional portfolios. He also has global research responsibilities for the US banks sector, electronic manufacturing services and component manufacturer companies.

Prior to joining Franklin Templeton in 2003, Mr. Nagle was an associate sell-side analyst for Sanford C. Bernstein & Co., a research associate with ABN AMRO, and an auditor for financial services companies at Coopers & Lybrand. He entered the financial services industry in 1998.

Mr. Nagle holds a B.B.A. in accounting from Siena College and an M.B.A. in finance from New York University. He is a Chartered Financial Analyst (CFA) charterholder and a Certified Public Accountant (CPA).

Non-U.S. Equity


30

Management Profile

Templeton Global Equity Group Senior Management Profiles

NORMAN J. BOERSMA, CFAChief Investment Officer, Templeton Global Equity GroupPresident, Templeton Global Advisors LimitedNassau, Bahamas

Norman J. Boersma is the chief investment officer of Templeton Global Equity Group (TGEG) and president of Templeton Global Advisors. He is also lead portfolio manager for the Templeton Growth Fund, Templeton Growth (Euro) Fund and Templeton World Fund and related strategies.

ANTONIO T. DOCAL, CFAPresident, Templeton Investment Counsel, LLCDirector of Portfolio ManagementTempleton Global Equity GroupFort Lauderdale, Florida, United States

Antonio Docal is the President of Templeton Investment Counsel, LLC and the Director of Portfolio Management for the Templeton Global Equity Group (TGEG).Mr. Docal has lead portfolio manager responsibilities for the TIF-International Equity Series and portfolio management responsibility for a number of other institutional commingled funds and separate account relationships. He also oversees the institutional segment of TGEG’s global investment management business. Mr. Docal has research responsibility for the U.S. and previously served as the Deputy Director of Research, and in the past has covered various global sectors.

HEATHER ARNOLD, CFADirector of ResearchPortfolio Manager, Research AnalystTempleton Global Equity GroupNassau, Bahamas

Heather Arnold is the director of research for the Templeton Global Equity Group, as well as a portfolio manager and research analyst. Ms. Arnold is the lead portfolio manager for the Templeton Global Fund as well as the lead portfolio manager on a number of Global, International and European institutional separate accounts. She is also the lead equity portfolio manager of TGIT Templeton Global Balanced Fund, FTIF Templeton Global Income Fund and Templeton Global Balanced Fund in Canada.

C. REED HUTCHENS, CFAExecutive Vice President, Director of Business ManagementTempleton Global Equity GroupFort Lauderdale, Florida, United States

Reed Hutchens is an executive vice president and director of business management for the Templeton Global Equity Group. He works closely with the senior management team, focusing on thoughtfully and strategically managing the Templeton business worldwide.

4748

Non-U.S. Equity

31


Templeton Global Equity Group Senior Management Profiles

32

Appendix

Non-U.S. Equity


Collaboration with Financial Experts Across Franklin Templeton

2894

Analysts and Portfolio Managers in 16 Locations

Analysts and Portfolio Managers in over 20 Locations

TEMPLETON GLOBAL EQUITY34 Analysts, Portfolio Managers

Consultants and Analysts in 19 Locations

Expertise on Macroeconomic and Currency Trends

Generates Accurate, Relevant and Timely Performance and Investment Risk Analytics

Perspective and Insights on Local Business Conditions and Economic and Political Risks

Non-U.S. Equity

33

As of December 31, 2018.

Templeton Global Equity leverages expertise and resources throughout the broader global organization, Franklin Templeton Investments. Templeton Global Equity is part of the Templeton firm definition and Templeton Global Macro,

Franklin Fixed Income and Franklin Templeton Emerging Markets Equity are part of the Franklin firm definition for purposes of compliance with the Global Investment Performance Standards (GIPS®).

Franklin and Templeton claim compliance with GIPS®. LAM firms, Franklin Templeton Investment Trust Management Co., Ltd. (Korea) and Bissett Investment Management (Canada) also claim compliance with GIPS®; all other LAM

firms do not claim compliance with GIPS®. Franklin Europe has been integrated into the Templeton firm definition as of December 1, 2017.


Collaboration with Financial Experts Across Franklin Templeton

Templeton maintains a robust, multi-faceted risk management process throughout its organizational structure.

Levels of Risk Management:

Risk Management—Templeton Global Equity Group

Templeton Philosophy and ProcessTempleton applies a long-term, bottom-up, value investment philosophy• Long-term view allows us to use volatility to our advantage over a secular

investment horizon• Rigorous, bottom-up analysis determines normalized business value• Search for significant valuation discount to help reduce downside risk

Equally important is the process by which Templeton’s philosophy is implemented• Analysts bring their best ideas to our global investment team• Pre-mortem “devil’s advocate” exercise attempts to identify potential flaws in

the thesis• Portfolios are diversified in an effort to help reduce stock-specific risk

• Frequent communication ensures portfolios reflect convictions

Core: Templeton Global Equity Group (GEG)

Dedicated Risk Review Corporate Risk CommitteesInvestment Risk Management Group• A team of specialized risk professionals reporting directly

to Franklin Templeton’s CEO• Generates accurate, relevant and timely performance and

investment risk analytics• Oversees the strategy’s performance against guidelines,

company policies and industry standards

• The Complex Securities Review Committee helps PMs understand the risks associated with more esoteric securities

• The Counterparty Credit Committee (CCC) assesses risks posed by banks and brokers that act as our trading partners

• These two Franklin Templeton committees that assess and manage portfolio risk have been in place since before the most recent Global Financial Crisis

Complementary: Investment Risk Management Group Complementary: Franklin Templeton (FT)

CorporateRisk

Committees (FT)Investment

Risk Management

GroupTempleton

Philosophy & Process (GEG)

2898

Non-U.S. Equity

34


Risk Management—Templeton Global Equity Group

Trade Execution and Implementation• Integrating trading and overlaying informed execution on top of investment decisions may provide opportunities for

increased investment performance by maximizing market insight, relationships, trading strategies and technologies

An Integrated Global Trading Platform

GLOBAL TRADINGPLATFORM

IMPLEMENTATION

AND

EXECUTION

Present trading ideas and strategies

Suggest timing and manage liquidity

Filter and present potentially opportunistic information

Actively seek to reduce trading costs

Seek to decrease impact and opportunity costs of trading

Coordinate and foster collaboration

Manage and seek to optimize commissions

Understand the daily market dynamics

2899

Non-U.S. Equity

35


An Integrated Global Trading Platform

Non-U.S. Equity

36


Important Information

Templeton Separately Managed Accounts and Templeton claim compliance with the Global Investment Performance Standards (GIPS®). Please see accompanying full performance

presentation prepared in accordance with Global Investment Performance Standards (GIPS®) which includes additional information regarding the net of fee calculations.

Templeton Separately Managed Accounts (the “firm”) manages portfolios for high net worth individuals and institutional clients, applying a bottom-up, value oriented, long-term investment style,

focusing on global and non-U.S. markets. Templeton Separately Managed Accounts is a division of Franklin Templeton Portfolio Advisors, Inc. (“FTPA”), a subsidiary of Franklin Resources, Inc.

(“FRI”) and is a unit of the broader Templeton organization. At Templeton Separately Managed Accounts, brokerage, administrative, custodial and investment management fees may be charged

together as a percentage of the portfolios’ assets (comprehensive fee or wrap-fee) or may in some instances be charged separately (unbundled fee). Retail and Institutional separate accounts

managed by affiliated Templeton entities are not included in the firm definition. Templeton Separately Managed Accounts was previously known as Templeton Portfolio Advisors prior to June 30,

2012. Templeton Portfolio Advisors was previously known as the Templeton Private Client Group prior to October 1, 2004. Effective July 1, 2014, Templeton Investment Counsel, LLC, assumed

responsibility for Templeton Separately Managed Accounts' global and international equity SMA accounts. Templeton Investment Counsel, LLC is a sub-adviser to Templeton Separately

Managed Accounts.

Templeton (or the “firm”) as defined encompasses the wholly owned investment management subsidiaries of Templeton Worldwide, Inc. with global, international, single country or regional, and

emerging market equity investment objectives serving both retail and institutional clients. The firm definition for Templeton does not include the foreign-domiciled investment advisory subsidiaries

of Templeton Worldwide, Inc. that primarily offer only locally registered investment mandates or funds and the wrap-fee and non wrap-fee accounts managed by Templeton Separately Managed

Accounts. Each investment advisory subsidiary within Templeton employs the same bottom-up, value-oriented investment style whether managing global equity, non-U.S. equity, single country

or regional equity, or emerging market equity mandates. Portfolio managers pursuing similar investment mandates share research, have equivalent access to Templeton’s bargain and source of

funds lists, and are subject to the same peer review process.

Templeton Separately Managed Accounts and Templeton are defined as separate firms within Franklin Templeton Investments for the purposes of complying with the Global Investment

Performance Standards (GIPS®). Templeton is a sub-adviser to Templeton Separately Managed Accounts.

Templeton International ADR Equity SMA Composite consists of all the fully discretionary wrap-fee portfolios which have a non-U.S. equity investment objective with a restriction that accounts

may invest in foreign securities only through American Depositary Receipts (ADRs) and for which the brokerage (including trading expenses), administrative, custodial, and investment

management fees are charged together as a percentage of the portfolios' assets (known as a comprehensive fee, wrap-fee or bundled fee). As the criterion for inclusion in this composite is that

the portfolios have bundled fees (i.e. where commission costs are not charged separately), 100% of the accounts in the composite have bundled fees for all time periods presented.

All returns are presented in U.S. dollars and have been calculated using time-weighted total rates of return. Net-of-fees returns have been reduced by the total “wrap fee” which includes

brokerage fees (including trading expenses), administrative, custodial and investment management fees. Gross performance returns presented are “pure” gross-of-fees returns, which are before

wrap fees, including brokerage fees related to trading expenses for transactions executed through the sponsor. “Pure” gross-of-fees returns are presented as supplemental information only. Both

net- and “pure” gross-of-fees returns assume the reinvestment of dividends, interest, and realized and unrealized capital gains and losses.

Non-U.S. Equity


37

Important Information (continued)

The primary benchmark for this composite is the MSCI All Country World ex-U.S. Index, which is a free float adjusted market capitalization weighted equity index comprised of securities in

MSCI's developed and emerging market country-specific indexes, excluding the U.S. The MSCI EAFE Index, which is a free float adjusted market capitalization weighted equity index comprised

of securities in MSCI's developed market country-specific indexes, excluding the U.S. and Canada.

Additional information regarding the firm's policies and procedures for calculating and reporting performance results is available upon request. To receive a complete list of composite descriptions

for Templeton Separately Managed Accounts and/or a presentation that adheres to the GIPS® standards for any composite, contact your Franklin Templeton separately managed account sales

team at (800) 822-8464 or visit www.franklintempleton.com. This publication is intended only as a general overview of the Templeton management team and philosophy and is for informational

purposes only. It has been prepared solely for the use of the person to whom it has been delivered and may not be reproduced or used for any other purpose. It is intended only for institutional

investment consultants or institutional investors. It is not meant for the general public. For specific information on available equity products or services, please contact your consulting services

representative.

The information contained in this piece is not a complete analysis of every material fact regarding the market and any industry, sector, security or portfolio. Statements of fact cited by the

manager have been obtained from sources considered reliable but no representation is made as to their completeness or accuracy. Because market and economic conditions are subject to rapid

change, opinions provided are valid only as of the date of the material, and are subject to change without notice. The manager’s opinions are intended solely to provide insight into how the

manager analyzes securities and are not a recommendation or individual investment advice for any particular security, strategy or investment product. Any securities discussed may not

represent an account’s entire portfolio and in the aggregate may represent a small percentage of an account’s portfolio holdings. There is no assurance that any such securities will remain in an

account’s portfolio, or that securities sold have not been repurchased. It should not be assumed that any securities transactions discussed were or will prove to be profitable. The information

provided should not be considered a recommendation to purchase, sell or hold any particular security.

Investors should review their investment objectives, risk tolerance and liquidity needs before choosing a manager. There is no guarantee that investment strategies will work under all market

conditions, and investors should evaluate their ability to invest for the long term, especially during periods of market downturns. Past performance is not an indicator or a guarantee of future

performance.

Foreign investing is subject to certain risks, such as currency fluctuations and social and political changes, which may result in increased stock price volatility. Since no one manager is suitable

for all types of investors, this information is provided for informational purposes only. Please review your investment objectives, risk tolerance and liquidity needs before choosing a manager. The

performance of an individual portfolio may differ from that of a benchmark, representative account or composite included herein for various reasons, including but not limited to, the objectives,

limitations or investment strategies of a particular portfolio. Management fees will reduce the rate of return on any particular account or portfolio.

Non-U.S. Equity

38

Important Disclosures


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 Fund 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 Fund described herein. Copying or redistributing the MSCI data is strictly prohibited.

© 2019 Franklin Templeton Investments Corp. All rights reserved. Franklin Templeton Investments Canada is a business name used by Franklin Templeton Investments Corp.

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

Secondary Benchmark Annualized 3-Yr St Dev

Total Firm Assets

(Millions)

No of Portfolios (End of Period)

Equal-Wtd Dispersion

Calendar Year

Composite Total Return

Gross

Primary Benchmark

Return

Secondary Benchmark

Return

Composite Gross

Annualized 3-Yr St Dev

Primary Benchmark Annualized 3-Yr St Dev

Composite Assets

(Millions)

All Returns and Asset Figures in USD

Composite Total Return

Net


-3.64% -4.90% 342.57 6210.63% 0.14%-2.67% -0.98% 10.81% 10.73% 38.19YTD*

22.57% 20.07% 383.92 3711.85% 0.19%27.77% 25.62% 11.51% 11.88% 19.902017

2.22% 0.57% 350.74 6912.48% 0.27%5.01% 1.51% 12.08% 12.53% 22.192016

-2.74% -4.12% 619.72 37212.47% 0.21%-5.25% -0.39% 12.07% 12.13% 135.122015

-6.75% -8.15% 589.72 42512.99% 0.18%-3.44% -4.48% 13.53% 12.78% 161.122014

21.75% 20.02% 669.23 52316.22% 0.25%15.78% 23.29% 17.05% 16.20% 189.782013

20.77% 18.95% 718.27 70019.32% 0.29%17.39% 17.90% 20.20% 19.22% 196.772012

-11.32% -12.64% 743.25 89322.45% 0.29%-13.33% -11.73% 22.22% 22.74% 210.892011

6.04% 4.55% 916.17 112026.28% 0.26%11.60% 8.21% 24.74% 27.33% 308.802010

24.42% 22.70% 1,403.41 145623.65% 0.50%42.14% 32.46% 21.99% 25.30% 404.422009

-39.07% -39.96% 1,402.84 184719.26% 0.57%-45.24% -43.06% 18.08% 20.90% 373.592008

1 Templeton Separately Managed Accounts claims compliance with the Global Investment Performance Standards (GIPS®) and has prep ared and presented this report in compliance with the GIPS standards. Templeton Separately Managed Accounts has not been independently verified.

2 For wrap fee composites, gross of fee returns are "pure" gross, before wrap fees that include trading expenses. "Pure" gross returns are presented as supplemental information.

3 Past performance is not an indicator or a guarantee of future performance. Please see notes to this performance presentation starting on page 2.

4 Beginning with the third quarter of 2010, accounts in Unified Managed Account (UMA) programs are excluded from firm assets. See footnote a for more information.

N/A = Not Available

* Year to Date reflects performance through 9/30/2018 and composite composition as of 9/30/2018

Primary Benchmark: MSCI All Country World ex-U.S. Index. Secondary Benchmark: MSCI EAFE Index.

CO6300

Non-U.S. Equity

39


GIPS Performance Presentation

Disclosures:

a Firm Definition: Templeton Separately Managed Accounts (the "firm") manages portfolios for high net worth individuals and institutional clients, applying a bottom-up, value oriented, long-term investment style, focusing on global and non-U.S. markets. Templeton Separately Managed Accounts is a division of Franklin Templeton Portfolio Advisors, Inc. ("FTPA"), a subsidiary of Franklin Resources, Inc. ("FRI") and is a unit of the broader Templeton organization. At Templeton Separately Managed Accounts, brokerage, administrative, custodial and investment management fees may be charged together as a percentage of the portfolios’ assets (comprehensive fee or wrap-fee) or may in some instances be charged separately (unbundled fee). Effective July 1, 2014, Templeton Investment Counsel, LLC (TICLLC) assumed responsibility for Templeton Separately Managed Accounts’ global and international equity SMA accounts. TICLLC is a sub-adviser to Templeton Separately Managed Accounts. Retail and Institutional separate accounts managed by affiliated Templetonentities are not included in the firm definition. Templeton Separately Managed Accounts was previously known as Templeton Portfolio Advisors prior to June 30, 2012. Templeton Portfolio Advisors was previously known as the Templeton Private Client Group prior to October 1, 2004.

Beginning with the third quarter of 2010, Templeton Separately Managed Accounts changed its policy with respect to the inclusion of accounts in Unified Managed Account (UMA) programs. UMA accounts are accounts where end investors of the sponsor invest in various strategies or “sleeves”, with the asset allocation determined by the sponsor according to the investment objectives of the end investor. In most cases, Templeton Separately Managed Accounts has either no or only partial trading discretion. Such accounts have historically been included in firm assets for Templeton Separately Managed Accounts on the basis that they are (and continue to be) included in the Form ADV filed with the Securities and Exchange Commission, but since the firm does not have full trading discretion for these accounts, the assets will be excluded from total firm assets beginning with the third quarter of 2010. Total firm assets reported for periods prior to the third quarter of 2010 will not be revised to reflect the exclusion of UMA assets.

To provide some continuity for the reporting of firm assets, the table below provides a sample of historical total firm assets reflecting the inclusion of UMA accounts as reported as well as historical total firm assets excluding UMA accounts as though reported under the revised policy. These figures are provided as supplemental information.

CO6300

Non-U.S. Equity

40


b Composite Description: Templeton International ADR Equity SMA Composite consists of all the fully discretionary wrap-fee portfolios which have a non-U.S. equity investment objective with a restriction that accounts may invest in foreign securities only through American Depositary Receipts (ADRs) and for which the brokerage (including trading expenses), administrative, custodial, and investment management fees are charged together as a percentage of the portfolios' assets (known as a comprehensive fee, wrap-fee or bundled fee). The criterion for inclusion in this composite is that portfolios have bundled fees (i.e. where commission costs are not charged separately), 100% of the accounts in the composite have bundled fees for all time periods presented. Foreign investing, especially in developing countries, has additional risks such as currency and market volatility and political or social instability. No account in this composite uses leverage or derivatives. The inception date of the composite is November 30, 1999. The composite creation date is December 31, 2005. Templeton Separately Managed Accounts claims compliance with GIPS® for the period January 1, 2000 to the present. Certain accounts are deemed to be non-fee-paying because the sponsors involved billed the client directly without charging the account managed by Templeton Separately Managed Accounts or charged another account of the client not managed by Templeton Separately Managed Accounts. See footnote c. below for more information. Eligible new accounts and eligible accounts that have changed to this objective have historically been added to the composite after two full calendar months of performance following inception or the change in objective. Effective with accounts added on or after January 1, 2008, this policy was changed such that eligible accounts are added to the composite after one full calendar month of performance, excluding any first partial month following inception or notification of objective change. Accounts are removed from the composite at the end of the month prior to notification if they become non-discretionary due to client-directed restrictions according to the firm’s definition of what constitutes discretion.

c Basis of Presentation: The composite performance results are presented in U.S. Dollars and have been calculated using time-weighted total rates of return. For comprehensive fee composites, net of fee returns have been reduced by the total "comprehensive fee", which includes brokerage fees (i.e. trading expenses), investment management, administrative and custodial fees. Any administrative or custodial fees charged to accounts over and above the comprehensive fee that are specifically identified as such fees are treated as cash withdrawals and do not negatively impact performance. Gross of fee returns for comprehensive fee composites are "pure" gross before comprehensive fees, including brokerage fees related to trading expenses for transactions executed through the sponsor. "Pure" gross of fee returns are presented as supplemental information only. For "unbundled fees" composites, returns are inclusive of trading expenses and are shown both gross and net of investment management fees. For non-fee paying accounts that may be included in the composite, the maximum applicable fee is applied to the gross of fees return as a model fee to generate a net of fees return. All returns assume the reinvestment of dividends, interest, and realized and unrealized capital gains and losses. Dividends, interest income and capital gains are net of any applicable withholding taxes. Account portfolios are valued daily at fair market value on a trade date basis, and market values include accrued income for fixed income securities. Monthly composite returns are calculated by weighting each account’s monthly return by its beginning market value as a percent of the total composite beginning market value ("asset-weighted" performance). Quarterly and annual time-weighted returns are calculated by linking the monthly returns geometrically through compounded multiplication. Returns for periods of less than one year are not annualized. Past performance is not an indicator or a guarantee of future performance.

CO6300

Non-U.S. Equity

41


d Description of Index: The primary benchmark for this composite is the MSCI AC World ex-U.S. Index, which is a free float-adjusted market capitalization weighted equity index comprised of securities in MSCI's developed and emerging market country-specific indexes, excluding the U.S. Returns are also included for MSCI EAFE Index, which is a free float-adjusted market capitalization weighted equity index comprised of securities in MSCI's developed market country-specific indexes, excluding the U.S. and Canada. Returns for the MSCI benchmarks include dividends not adjusted for foreign withholding taxes (the “gross of dividends” series of MSCI) and are based on foreign exchange rates established at mid-day New York time (equivalent to the London close). FX rates used by index providers are obtained from their respective FX vendors and may differ slightly from the FX rates used by Franklin Templeton, particularly since index providers tend to use London close, whereas Templeton Separately Managed Accounts has been using New York close since 1 September 2004. Beginning 1 January 2008, Templeton Separately Managed Accounts reverted to the use of London FX rates for all time periods back to inception for converting composite base currency returns into other currencies and for reporting benchmark returns, in order to conform to more common industry practice. The benchmarks are used for comparative purposes only and are provided to represent the investment environment existing during the periods shown. Additionally, the benchmarks do not reflect any fees, expenses or sales charges.

All MSCI data is provided “as is”. The composite 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 date or the composite described herein. Copying or redistributing MSCI data is strictly prohibited.

e Minimum Account Size: Effective 1 July 2006, the minimum account size required for inclusion in the composite is $50,000 based on ending market value for the month. Accounts are removed from the composites for a given month if they fall below $50,000 based on ending market value for that month. Composite inclusion and exclusion occur with no grace period when implementing the minimum account size policy. Prior to 1 July 2006, all accounts, once accepted for management, were included in the composite regardless of asset size and were not removed from the composite by virtue of falling below any minimum account size.

f Standard Fee Schedule: The maximum applicable fee, which comprises brokerage (including trading expenses), administrative, custodial and investment management fees (together, the wrap-fee) is 3.0% of portfolio assets.

g Internal Dispersion: The dispersion of annual returns is measured by the standard deviation of equal-weighted portfolio returns for those accounts that were in the composite for each full calendar year, or partial year for the most recent year-to-date. Dispersion is not meaningful when there are five or fewer accounts in a given year or time period.

h Additional Information: The firm's policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. To receive a complete list and description of Templeton Separately Managed Accounts' composites and/or a presentation for any composite that adheres to the GIPS® standards for any composite, contact your Franklin Templeton separately managed account sales team at 1-800-822-8464 or visit www.franklintempleton.com.

CO6300

Non-U.S. Equity

42


templeton international adr equity sma composite

Documents