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Franklin Templeton Fixed Income Group
Data as of 31 March 2017
Franklin Templeton Investment Funds
Franklin High Yield Fund - A (acc) USD
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Franklin High Yield Fund
Table of Contents
Investment Platform Overview.................................................................................................3
Geographic Allocation...........................................................................................................27
W hy Consider This Fund?...................................................................................................... 4
Sector Allocation...................................................................................................................28
W ho Is Franklin Templeton Investments?................................................................................5
Quality Allocation..................................................................................................................29
Franklin Templeton Fixed Income—Global Investment Professional Presence.......................... 6
Maturity Allocation................................................................................................................30
Franklin Templeton Fixed Income Overview.............................................................................7
Top Ten Holdings..................................................................................................................31
Franklin Templeton Fixed Income............................................................................................8
Historical Performance..........................................................................................................32
Franklin Templeton Fixed Income—Deep and Experienced Capabilities................................... 9
Calendar Year Returns......................................................................................................... 33
Investment Philosophy and Process......................................................................................10
Performance Risk Statistics.................................................................................................. 34
Corporate Credit Research Team..........................................................................................11
Glossary...............................................................................................................................35
Franklin High-Yield Management Resources......................................................................... 12
Management Profile..............................................................................................................36
High-Yield Investment Process Overview...............................................................................13
Important Disclosures...........................................................................................................39
High-Yield Research Process................................................................................................14
Security Selection: Synthesizing Views from Multiple Sources................................................18
High-Yield Portfolio Construction...........................................................................................19
Portfolio Construction and Multi-Level Risk Management.......................................................20
Quantitative Portfolio Management Team...............................................................................21
Performance Analysis and Investment Risk (PAIR) Team.......................................................22
Risk Management Tools....................................................................................................... 23
Franklin High-Yield Advantage.............................................................................................. 24
Summary..............................................................................................................................25
Portfolio Characteristics........................................................................................................26
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2
Franklin High Yield Fund
Investment Platform Overview
FRANKLIN TEMPLETON INVESTMENTS
Total Combined Assets Under Management (Total AUM) : US$740.0 Billion
Franklin Equity
Group
Established
Focus
1947
U.S. Equity
Global Equity
International Equity
Templeton
Emerging
Markets Group
1987
Emerging Markets
Equity
Templeton Global Franklin Mutual
Equity Group
Series
Franklin
Templeton Fixed
Income Group
1940
1949
Global Equity
Global Equity
Corporate Credit
Global Sovereign
International Equity
International Equity
Global Sovereign/
Emerging Markets
Global Multi-Sector
Emerging Markets
Private Equity
U.S. Equity
Distressed Debt &
Merger Arbitrage
1970
Templeton Global Franklin Local
Macro
Asset
Management
Mortgages
1986
Emerging Market Debt
Bank Loans
Global Macro Hedge
Fund
Municipals
Global Currencies
1993
Franklin Real
Asset Advisors
1984
Global Equity & Fixed
Income
Global Private Real
Estate
Regional Equity &
Fixed Income
Global Listed Real
Estate Securities
Single-Country Equity
& Fixed Income
Global Listed
Infrastructure
Franklin
Templeton
Solutions
1994
Multi-Asset Strategy
Global Tactical Asset
Allocation
Custom / Advisory
Solutions - Alternative
& Traditional
Single-Country Private
Equity
Hedge Fund Portfolios
(Multi- & Single
Strategy) &
Replication
Style
Growth, Value,
Core/Hybrid
Core Value
Core Value
Deep Value
Single Sector,
Multi-Sector
Unconstrained
Multi-Sector, Single- or Multi-Sector,
Multi-Region
Multi-Region
Multi-Style,
Multi-Region, Hedged
AUM
US$185.7 Billion
US$26.5 Billion
US$100.0 Billion
US$62.9 Billion
US$151.9 Billion
US$123.5 Billion
US$51.1 Billion
US$40.9 Billion
US$3.4 Billion
Source: Franklin Templeton Investments (FTI), as of 31 March 2017 unless otherwise noted, based on latest available data. Total combined Assets Under Management (Total AUM) combines the U.S. and non-U.S. AUM of the investment management
subsidiaries of the parent company, Franklin Resources, Inc. (FRI) [NYSE: BEN], a global investment organisation operating as FTI. Total and platform AUM includes discretionary and advisory accounts, including pooled investment vehicles, separate
accounts and other vehicles, as well as some accounts that may not be eligible for inclusion in composites as defined by the firm’s policies. 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 Solutions (FT Solutions) invests in various investment platforms advised by a number of investment advisory entities within FTI. Platform AUM reported for FT Solutions therefore includes certain AUM separately reported under each
utilised investment platform. Total AUM also includes assets managed by certain FTI advisers that do not form part of the selected investment platforms shown. As a result, the combined platform AUMs may not equal Total AUM and may be calculated
and reported separately for regulatory or other purposes under each investment adviser.
Each local asset manager may be considered as an entity affiliated with or associated to FTI by virtue of being a direct or indirect wholly-owned subsidiary of FRI, an entity or joint venture in which FRI owns a partial interest, which may be a minority
interest, or a third party asset management company to which investment advisory services have been delegated by an FTI adviser.
Please refer to the “Important Disclosures” slide for additional information.
For firms claiming compliance with the Global Investment Performance Standards (GIPS®), figures for the assets under management above may not correspond to the assets under management as defined by GIPS®. For GIPS® purposes, Franklin
Equity Group, Franklin Templeton Fixed Income Group and Templeton Global Macro are units of the firm Franklin; Templeton Emerging Markets Group and Templeton Global Equity Group are both units of the firm Templeton.
For professional investor use only. Not for distribution to retail investors.
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Franklin High Yield Fund
Why Consider This Fund?
· For over 30 years, Franklin Templeton Investments has managed high yield assets through a variety of market environments on a global platform.
· Our global team includes 30+ credit investment professionals, with more than half the team focused on high yield, and is fully integrated with the
firm's broader fixed income and equity teams.
· Our fund managers employ a time-tested investment process with a focus on bottom-up fundamental research with key industry perspectives
seamlessly incorporated.
· Our investment process includes disciplined risk management practices which are overseen by an independent performance analysis and
investment risk group.
The information is not a complete analysis of every aspect of any market, country, industry, security or portfolio. Statements of fact are from sources considered to be reliable, but no representation or warranty 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 indicated. The views expressed may not be relied upon as investment advice and are not share class specific. An
investment in the Fund entails risks, which are described in the Fund’s prospectus and where available, in the relevant Key Investor Information Document. Special risks may be associated with a Fund’s investment in certain types of securities, asset
classes, sectors, markets, currencies or countries and in the Fund’s possible use of derivatives. These risks are more fully described in the Fund’s prospectus and should be read closely before investing.
For professional investor use only. Not for distribution to retail investors.
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Franklin High Yield Fund
Who Is Franklin Templeton Investments?
An Investment Management Organisation
• Focusing on research and investment management with more than 550
investment professionals covering all major asset classes
• Serving the needs of investors worldwide with a dedicated team of
2017
Franklin Templeton Investments total firm assets
US$740.0 billion as of 31 March 2017
investment professionals
2001
• Providing the resources, expertise, experience and commitment to ensure
outstanding service to our clients
2000
• Offering a broad range of investment strategies and vehicles
1998
1996
1992
1986
1973
1971
1947
Investment professionals include portfolio managers, analysts and traders.
As of 31 March 2017.
For professional investor use only. Not for distribution to retail investors.
Fiduciary Trust Company International joins
Franklin Templeton Investments
Bissett Investment Management joins Franklin
Templeton Investments
Franklin Resources, Inc. (BEN), stock is added
to S&P 500 Index
Mutual Series joins Franklin Templeton Investments
Templeton joins Franklin Templeton Investments
Franklin Resources, Inc., stock listed and begins
trading on New York Stock Exchange
Franklin Resources, Inc., moves offices from
New York to California
Franklin Resources, Inc., formed as a holding
company going public as BEN
Franklin Distributors, Inc., introduces its first
mutual funds
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Franklin High Yield Fund
Franklin Templeton Fixed Income―Global
Income—Global Investment Professional Presence
 Warsaw
 Calgary
■ London
■ San Mateo
■ New York
 Seoul
 Dubai
 Shanghai2
 Mumbai
 Mexico City
 Hyderabad
■ Singapore
■
 Kuala Lumpur
Global Fixed Income Offices
 Fixed Income Local Asset
Management (LAM) Offices1
 São Paulo
 Melbourne
Over 170 global fixed income investment professionals3
provide broad coverage of potential alpha opportunities across sectors
and around the world.
1. This unit is comprised of investment professionals located in affiliates of and joint venture partners with Franklin Templeton Investments. The Local Asset Management Group is not a part of, but does share research with, Franklin Templeton Fixed
Income Group.
2. Includes individuals that are not employees of Franklin Resources, Inc. (FRI) or wholly owned subsidiaries of FRI. However, these individuals are part of our joint venture or strategic partnership relationships worldwide and are an integral component
of our overall fixed income research efforts.
3. Investment professionals include portfolio managers, analysts and traders.
As of 31 March 2017.
For professional investor use only. Not for distribution to retail investors.
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Franklin High Yield Fund
Franklin Templeton Fixed Income Overview
Broad Capabilities and Deep Resources in One Platform
• Global platform with more than 40 years of investment experience
• Pursuit of diversified sources of potential alpha across securities, sectors and global markets
Multiple Sources of Expertise
• More than 170 investment professionals globally seek return opportunities across sectors around the world1
Top-Down
Bottom-Up
Fixed Income Policy Committee
(FIPC) and Multi-Sector Strategists
Quantitative
Sector Specialists
Quantitative Analysts
Senior leaders seek to capitalise on global
economic trends
Dedicated sector teams strive to add
value through security- and sectorspecific insights
Dedicated team builds proprietary
risk models to identify potential
alpha opportunities
•
•
•
•
•
•
•
•
•
•
• Active Risk Analysis
• Portfolio Optimisations and
Sector Rotation
Country Duration
Yield Curve
Currency
Volatility
Corporate Credit
Global Fixed Income
Expected Returns
Mortgages
Bank Loans
Municipals
• Relative Value Analysis
• Derivatives
Combination of Expertise Aiming to Build:
Diverse Portfolios of Low-Correlated Positions
1. Investment professionals include portfolio managers, analysts and traders.
As of 31 March 2017.
For professional investor use only. Not for distribution to retail investors.
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Franklin High Yield Fund
Franklin Templeton Fixed Income
Michael Hasenstab, Ph.D.
Chief Investment Officer
Christopher Molumphy, CFA
Chief Investment Officer
Stephen Dover, CFA
Chief Investment Officer
Global
Macro
Corporate
Credit
Global Sovereign/
Emerging Markets
Mortgages
Bank Loans
Municipals
Local Asset
Management1
Global Sovereign
Local Emerging Market Debt
Glenn Voyles, CFA
Matt Fey, CFA
John Beck
William Ledward, Ph.D.
Roger Bayston, CFA
Mark Boyadjian, CFA
Sheila Amoroso
Rafael Costas
Australia, Brazil, Canada,
China,2 India, Korea,
Malaysia, Mexico and UAE
36 Investment
Professionals
12 Investment
Professionals
9 Investment
Professionals
16 Investment
Professionals
32 Investment
Professionals
20 Investment Professionals
40 Investment Professionals
Quantitative: David Yuen, CFA, FRM, 8 Professionals
Fixed Income Policy Committee | Co-Chairs: Christopher Molumphy and Michael Materasso
170+
62
Dedicated Fixed
Income Investment
Professionals3
CFA Charterholders
13 Ph.D.s
60 M.B.A.s
1. This unit is comprised of investment professionals located in affiliates of and joint venture partners with Franklin Templeton Investments. The Local Asset Management Group is not a part of, but does share research with, Franklin Templeton Fixed
Income Group.
2. Includes individuals that are not employees of Franklin Resources, Inc. (FRI) or wholly owned subsidiaries of FRI. However, these individuals are part of our joint venture or strategic partnership relationships worldwide and are an integral component
of our overall fixed income research efforts.
3. Investment professionals include portfolio managers, analysts and traders.
CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
As of 31 March 2017.
For professional investor use only. Not for distribution to retail investors.
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Franklin High Yield Fund
Franklin
Income—Deep and
and Experienced
Experienced Capabilities
Capabilities
Franklin Templeton
Templeton Fixed
Fixed Income—Deep
Experience and History
• Senior professionals have been with the firm over 20 years on average
• More than 40 years of research, portfolio management and trading experience
Multiple Sources of Expertise
• Top-down, bottom-up and quantitative techniques provide a broad spectrum of opportunities that aim
to add value in a consistent, systematic fashion
• Research capabilities integrated across equity and fixed income platforms are designed to achieve
thorough company and sector coverage from multiple viewpoints
Global Scale and Resources
• With more than 170 dedicated fixed income investment professionals and US$275.4 billion in fixed
income assets under management, Franklin Templeton provides broad coverage of alpha
opportunities across sectors and around the world
• Deep and experienced sector teams conduct rigorous proprietary security analysis
– Dedicated teams draw on Franklin Templeton’s risk management, legal and operational resources
• Access to business leaders, central bankers and government officials
• Value-added trading platform that includes our ability to structure new issuance and trade in local markets
As of 31 March 2017.
For professional investor use only. Not for distribution to retail investors.
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Franklin High Yield Fund
Investment Philosophy
Philosophy and
and Process
Investment
Philosophy
We believe that strong high-yield returns can be best captured through the disciplined application of a research-based approach that
capitalises on inefficiencies across the high-yield market. Through rigorous bottom-up research, we seek to identify compelling
income and total return opportunities with the potential to add value over a three- to five-year horizon.
Process
Fundamental Analysis
• Conduct independent, bottom-up analysis focusing on critical factors that affect a company’s long-term performance, such as
financial structure, cash flow and earnings prospects, products, market share and strategic positioning
Long-Term Outlook
• Analyse securities whose projected return over three to five years surpasses the potential risk of adverse price movements
or default
Seek Valuation Inefficiencies
• Invest opportunistically in companies and sectors that are infrequently followed or are out of favour with the marketplace
Disciplined Approach
• Adhere to a long-term strategy through changing market environments, supported by separate in-house risk management and
quantitative research groups
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Franklin High Yield Fund
Corporate Credit Research Team
Comprehensive Coverage
Matt Fey, CFA
• Globally integrated team of experienced credit analysts fosters intensive
Director of Research for
Corporates/High Yield
industry and issuer coverage
• Global coverage facilitates cross-currency investment analysis and relative
value assessment
Research Orientation
27 Credit Research Analysts
Located in San Mateo,
New York, London and Singapore
• Consistent credit process emphasises in-depth fundamental analysis, with
analysts taking a proactive, forward-looking approach
• Joint investment-grade/high-yield team approach
• Collaboration, as permitted by confidentiality agreements, between global
equity analysts and the Floating Rate Debt Group
Equity Analysts
Floating Rate Debt Group
Provide Additional Perspective
on Companies Globally
16 Dedicated Professionals
Located in San Mateo
– Joint company visits
– Shared coverage responsibilities
– Ongoing dialogue
Market Presence
• Size of Franklin Templeton Investments can help provide access to senior
management teams and sellside resources
• Potential to influence new-issue deal structure and related covenants
Analysts include research analysts and research associates.
CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
As of 31 March 2017.
For professional investor use only. Not for distribution to retail investors.
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Franklin High Yield Fund
Franklin High-Yield Management Resources
Credit Research
Portfolio Management
Years
Experience
Years
Experience
Name
Industry Coverage
Matt Fey, CFA
Director of Corporate Credit Research,
Retail, Supermarkets
Aleck Beach, CFA
Automotive, Technology
19
Jonathan Belk, CFA
Construction Machinery, Environmental
12
Eric Chipin
Metals & Mining
3
Brendan Circle, CFA
Energy Services, Refining, Exploration & Production 6
Benjamin Cryer, CFA
Asian Corporates, Home Building, Broadcasting
10
Name
Title
Christopher Molumphy, CFA
CIO of Franklin Templeton Fixed Income Group,
Portfolio Manager
30
Glenn Voyles, CFA
Director of Corporate Credit Portfolio Management,
Portfolio Manager
24
Piero Del Monte
Portfolio Manager/Analyst
18
Betsy Hofman, CFA
Portfolio Manager
34
Jeff Holbrook, CFA
Portfolio Manager/Analyst
29
Piero Del Monte
European High Yield
18
Portfolio Manager
21
Bryant Dieffenbacher, CFA
Chemicals, Paper & Forest Products,
Exploration & Production
10
Brian French
Health Care
14
Title
Years
Experience
Bob Groenke
Lodging & Leisure, Gaming, Consumer Products
4
Jeff Holbrook, CFA
Metals & Mining, Wireless Telecom
29
Teodora Hristova
European Retail
9
Richard Hsu, CFA
Bank Loans
21
Elspeth Huscher
Food & Beverage
<1
Gary Kiang, CFA
Utilities, Containers & Packaging, Pipelines,
Shipping, Trucking/Railroads
9
S. James McGiveran III,
CFA, CPA
Food & Beverage, Restaurants, Aerospace &
Defence, Airlines
10
Latika Signorelli
Asian Corporates, Financials
11
Christine Villaluz
Pay Television, Wireline Telecom
20
Ray Xu
Health Care
1
Patricia O’Connor, CFA
Trading
Name
Eric Abrahamson
Director, High Yield Fixed Income Trading
33
Richard Narlock
Senior Trader
33
Risk Management and Quantitative
Performance Analysis and Investment Risk Group (PAIR)
Quantitative Portfolio Management Group
Legal
Internal Corporate Counsel
CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
As of 31 March 2017.
For professional investor use only. Not for distribution to retail investors.
22
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Franklin High Yield Fund
High-Yield Investment Process Overview
1
Identify
Best Opportunities
• Collaborative idea
generation
• Analysts develop Buy List
and industry
recommendations
For professional investor use only. Not for distribution to retail investors.
2
•
•
•
•
Construct and
Manage Portfolio
Security selection
Sector allocation
Portfolio structure
3
Conduct Ongoing
Portfolio Review
• Risk management systems
• Portfolio Review Committee
• Holdings surveillance
Benchmark analysis
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Franklin High Yield Fund
High-Yield Research Process
Buy List
• Changes in rationale communicated in daily morning meetings and electronically
• Recommendations stored in online document repository and performance quantitatively tracked
Investability
Screen
Snapshot
Financial Screen
Fundamental
Screen
Initial universe of 1,000+
issuers, screened for:
50–75 companies per
industry, screened for:
Close analysis of 10–25
companies per industry for:
• Size and liquidity
• $100–$150 million hurdle
• Capital structure
• Cash flow stability
•
•
•
•
over time
• Earnings prospects
Management team
Product lineup
Strategic positioning
Sensitivity analysis and
long-term forecasting
Buy List
100–150 companies with
favourable fundamental
characteristics:
•
•
•
•
Total return potential
Measured risk
Attractive valuation
Sound structure
• Downside asset protection
• Industry dynamic
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Franklin High Yield Fund
High-Yield Research Process (continued)
New Issue Analysis: New Issue Write Up
• Issue write-up provides information such as structure, pricing expectation
and covenant analysis
• Key credit ratios, issuer capitalisation, senior management team
assessment and liquidity outlook highlighted
• Fundamental assessment includes key credit strengths and weaknesses
as well as overall investment recommendation, including relative value
analysis
The above example is for illustration only, and any information may not be current and should not be relied upon. The illustration is only one example of aspects of our analytical process in evaluating securities. The characteristics and resulting
analysis of individual securities will vary depending on the security, date of analysis, prevailing market or economic conditions and other factors. The illustration is not intended to reflect any specific security held in a Franklin Templeton Investments
managed account or fund. Such security or securities may or may not be in one or more Franklin Templeton Investments managed account(s) or fund(s), from time to time. The illustration is not a recommendation to buy, sell or hold any security and is
not investment advice.
For professional investor use only. Not for distribution to retail investors.
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Franklin High Yield Fund
High-Yield Research Process (continued)
New Issue Analysis: Proprietary Models
• Shows current data as well as analyst projections
(up to five years going forward)
• Comprised of multiple inputs which can be “dialed” up or down to provide
an analyst with sensitivity analysis
The above example is for illustration only, and any information may not be current and should not be relied upon. The illustration is only one example of aspects of our analytical process in evaluating securities. The characteristics and resulting
analysis of individual securities will vary depending on the security, date of analysis, prevailing market or economic conditions and other factors. The illustration is not intended to reflect any specific security held in a Franklin Templeton Investments
managed account or fund. Such security or securities may or may not be in one or more Franklin Templeton Investments managed account(s) or fund(s), from time to time. The illustration is not a recommendation to buy, sell or hold any security and is
not investment advice.
For professional investor use only. Not for distribution to retail investors.
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Franklin High Yield Fund
High-Yield Research Process (continued)
Industry Recommendations
• Analysts develop industry recommendations
• Ideas discussed in weekly sector meetings
Industry Factors
•
•
•
•
•
Cyclical factors
Earnings/performance trends
Recommendations
• Over/underweights by industry
• Positioning within industry
Key fundamental drivers
Value considerations
Structural issues
For professional investor use only. Not for distribution to retail investors.
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Franklin High Yield Fund
Security
Security Selection:
Selection: Synthesizing
Synthesising Views
Views from
from Multiple
Multiple Sources
Sources
Portfolios of Active Positions
• Analysts, portfolio managers and traders work together seeking to develop
optimal portfolio positions
• Formal interactions structured to foster the development and debate of
investment ideas
• Ongoing informal discussions add a further level of insight
CREDIT ANALYSTS
PORTFOLIO
MANAGERS
• Conduct fundamental
•
•
•
•
analysis
• Meet with companies
• Recommend securities
and industries
Select securities
Monitor sector weightings
Facilitate peer review
Oversee risk management
Portfolio
Ideas
TRADERS
• Monitor market flows and valuations
• Identify trends in issuance and
market activity
• Watch portfolio “wish list”
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Franklin High Yield Fund
High-Yield
Portfolio Construction
Portfolio Construction
• Continual assessment of opportunities in light of their total return potential and portfolio risk impact
BUY DECISION
SELL DECISION
• Strong financials and risk-adjusted total
Warning signs:
return potential
• Deterioration in financials
• Financial structure, cash flow and earnings
prospects, products, market share,
strategic positioning
•
•
•
•
Sensitivity analysis and long-term forecasts
VERSUS
• Decline in earnings trends or liquidity ratios
• Management team becomes less disciplined
• Steady growth no longer probable
Downside asset support
Strong management team
Valuation
Current industry positioning
Negative changes in industry fundamentals
Positioning versus benchmark
Security exceeds fair value price target
Other opportunities become more compelling
RETURN
For professional investor use only. Not for distribution to retail investors.
RISK
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Franklin High Yield Fund
Portfolio Construction and Multi-Level Risk Management
• Internal risk controls and external review systems boost transparency and insight
Security Selection
Risk Management/Attribution
• Thorough evaluation of downside risk
• Dedicated team
• Emphasis on downside asset support
• Ongoing risk monitoring using:
Portfolio Construction
• Diversification
– Barclays POINT system
– Proprietary quantitative credit database
– Internal Bond/CDS/Equity/Loan Pricing Database
• Benchmarking
• Adherence to sell discipline
Portfolio Review Committee
• Position sizing
• Portfolio managers and senior analysts meet regularly to
review portfolios
Ongoing Surveillance
• Fundamentals monitored by analysts
• Discussion and debate regarding portfolio holdings and
positioning relative to benchmark
• Trading levels and market insights from trading desk
• Trading and portfolio compliance
– Dedicated compliance personnel on trading desk
– Charles River trading and portfolio management system
For professional investor use only. Not for distribution to retail investors.
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Franklin High Yield Fund
Quantitative Portfolio Management Team
Functions That Can Add Value
• Analytical tools
David Yuen, CFA, FRM
Senior Vice President
– Individual position sizing
– Allocations of risk capital
• Alpha generation potential sought
– Sector allocations and portfolio optimisations
Original Research Supports Idea Generation
• Team contributes active alpha ideas for portfolio consideration
• Topics may include:
– Quantitative credit modelling (default and recovery)
– Capital structure opportunities (loan, bond, convertible, preferred, hybrid,
equity)
– Credit curve dynamics
Tina Chou
Credit Derivatives, Basis Trades,
Long/Short Credit
William Chong, CFA, FRM
Currency and Rates Derivatives,
Cross Border Arbitrage
Anthony Pecore
Portfolio Construction, Hedging
Factor Modelling, Statistical and Risk Analyses
Patrick Klein, Ph.D.
Securitised and Structured Products,
Inflation, Portfolio Construction, Quant Modelling
David Luria
Credit and Currency Derivatives,
Basis Trades, Long/Short Credit
– Long-short basis opportunities
– Credit derivative and hedging strategies
Rick Li, Ph.D.
Macro-econometrics, Rates and Currencies
– Volatility and correlation
– Loan prepayment model
Professionals include portfolio managers, analysts and traders.
CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
As of 31 March 2017.
For professional investor use only. Not for distribution to retail investors.
Pururav Thoutireddy, Ph.D.
Derivative Modelling, Fundamental Factor Modelling
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Franklin High Yield Fund
Analysis and
and Investment
Investment Risk
Risk (PAIR)
(PAIR) Team
Team
Performance Analysis
Global integrated team that works independently of portfolio management.
Analysts seek to integrate timely and accurate risk management and
performance information into the investment process.
Value-Added Functions
• Summary level reporting/commentary
• Risk oversight
• Manager review (includes multi-portfolio comparison and relative
Mat Gulley
EVP, Head of Investment
Management Strategic Services
Kelsey Biggers
SVP, Head of
Performance Analysis &
Investment Risk
historical performance analysis)
• Detailed account analysis
Tom Wilkinson, CFA, FRM
VP, PAIR—Fixed Income
Portfolio Review Process
• Risk budgeting
– Utilise risk budgeting seeking to find an appropriate level of risk
(tracking error relative to the benchmark) consistent with portfolio
return objectives
43 PAIR Analysts
Located in Offices Worldwide
• Risk decomposition
– Identify and quantify primary sources of risk
• Performance attribution
– Confirm that the level of risk is consistent with portfolio objectives
CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
As of 31 March 2017.
For professional investor use only. Not for distribution to retail investors.
22
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Franklin High Yield Fund
Risk
Risk Management
Management Tools
Tools
• Customised Barclays POINT risk and benchmarking system provides key risk statistics for portfolio analysis
• Focus of quantitative analysis is to highlight key drivers for risk/tracking error to verify consistency with desired active risk positions
• Broad account versus benchmark comparisons provide indications for the portfolio’s beta positioning based on various metrics
(YTW, OAD, TE volatility, beta, duration by ratings), as illustrated in the example below:
FTIF Franklin High Yield Fund1 vs. Credit Suisse High Yield Index
As of 31 March 2017
Parameter
Portfolio
Benchmark
Positions
230
1,403
Issuers
143
971
4
1
Coupon (%)
6.34
6.68
Average Life (Yr)
6.90
5.72
Yield to Worst (%)
5.41
5.97
ISMA Yield (%)
5.94
6.54
Swap Spreads
0.61
OAS (bps)
332
400
Volatility
0.01
OAD (Yr)
4.07
3.63
Currencies
Total TE Volatility
Systematic Volatility
Percentage of Tracking Error
Systematic
Foreign Exchange
330.09
92.09
66.64
Default Volatility
177.36
202.23
Total Volatility
362.46
392.81
29.18
0.00
FX EUR
0.00
FX Other
0.00
Curve
YC USD—Yield/Swap Curve
Yield Curve
Spread Credit and EMG
128.55
302.40
Non-systematic Volatility
Global Risk Factor
Credit Investment Grade
Credit High Yield
Emerging Markets
Equity
8.17
8.17
0.01
21.79
21.38
1.10
-0.69
-1.40
Sector
-0.76
Fundamental
-0.12
Technical
-0.52
Idiosyncratic
57.19
Credit Default
13.63
Source: Franklin Templeton Investments.
Information shown is based on FTIF Franklin High Yield Fund. Percentages may not equal 100% due to rounding. The information is historical, may not reflect current or future portfolio characteristics. The information is shown solely to illustrate
aspects of our risk management analysis. All portfolio holdings are subject to change. Coupon, Average Life, Yield to Worst, ISMA Yield, OAS and OAD figures reflect certain derivatives held in the portfolio (or their underlying reference assets).
For professional investor use only. Not for distribution to retail investors.
23
0766
Franklin High Yield Fund
Franklin High-Yield Advantage
Experience
More than 40 years of high-yield research, portfolio management, and
trading experience
Experience in Key Functions
over Multiple Market Cycles
Scale
Dedicated team draws on Franklin Templeton’s risk management,
legal and operational resources
Large Team Supported by
Deep Resources
Integrated High-Yield Research Capabilities
High-yield analysts leverage insights of equity and fixed income platforms
Market Position
Leverage size and market relationships and insights
Thorough Company and Sector
Coverage from Multiple Viewpoints
Superior Execution,
Senior Management Contact,
and Deal Structuring Capabilities
Long-Term Fundamental Approach
Facilitates contrarian positioning and lower turnover
As of 31 March 2017.
For professional investor use only. Not for distribution to retail investors.
Consistent, Disciplined Investment
Philosophy and Application
24
Franklin High Yield Fund
Summary
Franklin High Yield Fund - A (acc) USD
As of 31 March 2017
Summary of Investment Objective
The Fund aims to earn a high level of current income and seeks capital appreciation
when consistent with its principal objective of high current income, by principally
investing either directly or through the use of financial derivative instruments in Fixed
Income debt Securities of US or Non-US issuers with investment grade or lower grade
ratings, if issued by US issuers, or, if issued by Non-US issuers or unrated, their
equivalent.
Morningstar Category™
USD High Yield Bond
Investment Style
Fixed Income - High Yield
Fund Inception Date
1 March 1996
Share Class Inception Date
2 July 2001
Benchmark
Credit Suisse High Yield Index
Base Currency for Fund
USD
Portfolio Manager(s)
Base Currency for Share Class
USD
Betsy Hofman, CFA
United States
Total Net Assets (USD)
2,577,421,863.82
Glenn Voyles, CFA
United States
Asset Allocation
Fixed Income: 96.78%
Cash & Cash Equivalents: 1.74%
Equity: 1.48%
Number of Holdings
227
Total Expense Ratio
1.53%
Fund Identifiers
ISIN Code
LU0131126228
SEDOL Code
7165872
Bloomberg Code
TEMFHAC LX
Fund Ratings (31 March 2017)
Overall Morningstar Rating™
««
© Morningstar, Inc. 2017. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither
Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.
Asset Allocation figures reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.
The fund offers other share classes subject to different fees and expenses, which will affect their performance. Please see the prospectus for details.
Past performance is not an indicator or a guarantee of future performance.
For professional investor use only. Not for distribution to retail investors.
25
Franklin High Yield Fund
Portfolio Characteristics
Franklin High Yield Fund
vs. Credit Suisse High Yield Index
As of 31 March 2017
Portfolio
Index
B+
B+
Average Duration
4.08 Yrs
3.63 Yrs
Average W eighted Maturity
4.77 Yrs
4.27 Yrs
Yield to Maturity
5.84%
6.31%
Yield to W orst
5.41%
5.92%
Average Credit Quality
Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.
Average Duration, Average Weighted Maturity, Yield to Maturity and Yield to Worst reflect certain derivatives held in the portfolio (or their underlying reference assets).
Source: Franklin Templeton Investments. The average credit quality (ACQ) rating may change over time. The portfolio itself has not been rated by an independent rating agency. The letter rating, which may be based on bond ratings from different
agencies, is provided to indicate the average credit rating of the portfolio’s underlying bonds and generally ranges from AAA (highest) to D (lowest). The ACQ is determined by assigning a sequential integer to all credit ratings AAA to D, taking a simple,
asset-weighted average of debt holdings by market value and rounding to the nearest rating. The risk of default increases as a bond’s rating decreases, so the ACQ provided is not a statistical measurement of the portfolio’s default risk because a simple,
weighted average does not measure the increasing level of risk from lower rated bonds. The ACQ is provided for informational purposes only. Derivative positions and unrated securities are not reflected in the ACQ.
Yield figures quoted should not be used as an indication of the income that has or will be received. Yield figures are based on the portfolio's underlying holdings and do not represent a payout of the portfolio.
For professional investor use only. Not for distribution to retail investors.
26
Franklin High Yield Fund
Geographic Allocation
Franklin High Yield Fund
vs. Credit Suisse High Yield Index
As of 31 March 2017
NORTH AMERICA
UNITED STATES
CANADA
EUROPE
EMU EUROPE
Luxembourg
Italy
Netherlands
Ireland
Germany
France
NON-EMU EUROPE
United Kingdom
LATIN AMERICA/CARIBBEAN
Mexico
Colombia
Bermuda
Bahamas
AUSTRALIA/NEW ZEALAND
Australia
ASIA
ASIA EX-JAPAN
Macau
ST CASH AND CASH EQUIVALENTS
United States
Canada
EMU Europe
Non-EMU Europe
Latin America/Caribbean
Australia/New Zealand
Asia ex-Japan
ST Cash and Cash Equivalents
0%
25%
50%
75%
Portfolio %
85.79
81.59
4.20
7.99
5.86
1.61
1.25
1.06
0.90
0.71
0.33
2.13
2.13
2.74
0.94
0.87
0.59
0.35
1.19
1.19
0.55
0.55
0.55
1.74
Index %
100.00
100.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Over/Under %
-14.21
-18.41
4.20
7.99
5.86
1.61
1.25
1.06
0.90
0.71
0.33
2.13
2.13
2.74
0.94
0.87
0.59
0.35
1.19
1.19
0.55
0.55
0.55
1.74
100%
Franklin High Yield Fund
Credit Suisse High Yield Index
Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.
Figures reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.
For professional investor use only. Not for distribution to retail investors.
27
Franklin High Yield Fund
Sector Allocation
Franklin High Yield Fund
vs. Credit Suisse High Yield Index
As of 31 March 2017
Energy
Technology
Cable Satellite
Finance
Health Care
Wireless
Metals & Mining
Media Non Cable
Utility
Packaging
Food & Beverage
Building
Gaming
Chemicals
Industrial
Restaurants
Automotive
Wired
Aerospace & Defence
Transportation
Retailers
Leisure
Paper
Consumer Cyclical Services
Consumer Products
Lodging
Others
Supermarkets
Treasury & Govt. Related
Cash & Cash Equivalents
0%
4%
8%
12%
16%
20%
Franklin High Yield Fund
Credit Suisse High Yield Index
Energy
Technology
Cable Satellite
Finance
Health Care
W ireless
Metals & Mining
Media Non Cable
Utility
Packaging
Food & Beverage
Building
Gaming
Chemicals
Industrial
Restaurants
Automotive
W ired
Aerospace & Defence
Transportation
Retailers
Leisure
Paper
Consumer Cyclical Services
Consumer Products
Lodging
Others
Supermarkets
Treasury & Govt. Related
Cash & Cash Equivalents
Portfolio %
10.53
9.30
8.56
8.48
7.92
6.41
6.32
5.93
5.62
4.70
4.24
3.98
3.37
2.41
2.35
1.92
1.59
1.26
1.01
1.01
0.99
0.35
0.02
0.00
0.00
0.00
0.00
0.00
0.00
1.74
Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.
Figures reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.
For professional investor use only. Not for distribution to retail investors.
Index %
15.26
8.16
5.45
7.05
7.26
4.69
4.82
4.50
2.64
2.28
2.26
3.58
3.43
3.23
4.45
0.99
2.71
1.83
1.87
1.90
3.37
1.47
0.81
2.33
1.82
0.45
0.02
0.97
0.38
0.00
Over/Under %
-4.73
1.14
3.11
1.43
0.66
1.72
1.50
1.43
2.98
2.42
1.97
0.40
-0.07
-0.82
-2.10
0.94
-1.12
-0.58
-0.86
-0.89
-2.38
-1.12
-0.80
-2.33
-1.82
-0.45
-0.02
-0.97
-0.38
1.74
28
Franklin High Yield Fund
Quality Allocation
Franklin High Yield Fund
vs. Credit Suisse High Yield Index
As of 31 March 2017
BBB
BB
B
CCC
CC
C
D
NR
N/A
Cash
Investment Grade
Non-Investment Grade
N/A
Cash
BBB
BB
B
CCC
CC
C
D
Portfolio %
2.30
38.00
39.29
15.60
1.29
0.00
0.00
1.71
0.08
1.74
2.30
95.88
0.08
1.74
Index %
0.00
30.34
43.64
19.68
0.79
0.21
0.26
5.09
0.00
0.00
0.00
100.00
0.00
0.00
Over/Under %
2.30
7.66
-4.35
-4.08
0.50
-0.21
-0.26
-3.38
0.08
1.74
2.30
-4.12
0.08
1.74
NR
N/A
Cash
0%
15%
30%
45%
60%
Franklin High Yield Fund
Credit Suisse High Yield Index
Weightings as percent of total. Percentage may not equal 100% due to rounding. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.
Ratings shown are assigned by one or more Nationally Recognized Statistical Rating Organizations ('NRSRO'), such as Standard & Poor's, Moody's and Fitch. The ratings are an indication of an issuer's creditworthiness and typically range from AAA or
Aaa (highest) to D (lowest). When ratings from all three agencies are available, the middle rating is used; when two are available, the lowest rating is used; and when only one is available, that rating is used. Foreign government bonds without a specific
rating are assigned the country rating provided by an NRSRO, if available. The NR category consists of rateable securities that have not been rated by an NRSRO. The N/A category consists of nonrateable securities (e.g., equities). Cash includes
equivalents, which may be rated. Derivatives are excluded from this breakdown.
For professional investor use only. Not for distribution to retail investors.
29
Franklin High Yield Fund
Maturity Allocation
Franklin High Yield Fund
vs. Credit Suisse High Yield Index
As of 31 March 2017
0 to 1 Year
1 to 2 Years
2 to 3 Years
3 to 5 Years
5 to 7 Years
7 to 10 Years
10 to 15 Years
15 to 20 Years
20 to 30 Years
N/A
0 to 1 Year
1 to 2 Years
2 to 3 Years
3 to 5 Years
5 to 7 Years
Portfolio %
10.86
5.58
7.83
18.91
36.19
19.15
0.00
0.00
0.00
1.48
Index %
12.44
9.59
11.21
30.60
21.53
12.57
0.99
0.12
0.95
0.00
Over/Under %
-1.58
-4.02
-3.38
-11.69
14.66
6.58
-0.99
-0.12
-0.95
1.48
7 to 10 Years
10 to 15 Years
15 to 20 Years
20 to 30 Years
N/A
0%
10%
20%
30%
40%
Franklin High Yield Fund
Credit Suisse High Yield Index
Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.
Figures reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.
For professional investor use only. Not for distribution to retail investors.
30
Franklin High Yield Fund
Top Ten Holdings
Franklin High Yield Fund
As of 31 March 2017
Issuer Name
% of Total
SPRINT COMMUNICATIONS INC
2.18
HCA INC
1.76
CCO HOLDINGS LLC / CCO HOLDING
1.62
NETFLIX INC
1.57
NAVIENT CORP
1.40
T-MOBILE USA INC
1.39
FIRST DATA CORP
1.37
CIT GROUP INC
1.29
REYNOLDS GROUP ISSUER INC / RE
1.29
FIRST QUANTUM MINERALS LTD
1.28
Total
15.15
The Ten Largest Holdings represent the ten largest holdings of the fund as of the date indicated. These securities do not represent all of the securities purchased, sold or recommended for advisory clients, and the reader should not assume that
investment in the securities listed was or will be profitable. All portfolio holdings are subject to change.
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.
For professional investor use only. Not for distribution to retail investors.
31
Franklin High Yield Fund
Historical Performance
Franklin High Yield Fund - A (acc) USD
As of 31 March 2017
Annualised Total Returns (%)
Franklin High Yield Fund - A (acc) USD—Net of Fees
Inception
Date
1 Yr
3 Yrs
5 Yrs
10 Yrs
Since
Incept
2.7.2001
19.14
0.52
3.91
4.47
5.40
17.40
4.43
6.63
7.08
8.28
Inception
Date
1 Mth
3 Mths
YTD
1 Yr
3 Yrs
5 Yrs
10 Yrs
Since
Incept
2.7.2001
-0.51
2.59
2.59
19.14
1.58
21.14
54.82
128.77
-0.33
2.35
2.35
17.40
13.89
37.87
98.25
249.92
Credit Suisse High Yield Index
Cumulative Performance (%)
Franklin High Yield Fund - A (acc) USD—Net of Fees
Credit Suisse High Yield Index
All performance data shown is in the Fund currency stated and net of management fees. Sales charges and other commissions, taxes and other relevant costs paid by the investor are not included in the calculations.
The value of shares in the Fund and income received from it can go down as well as up, and investors may not get back the full amount invested. Past performance is not an indicator or a guarantee of future performance. Current performance
may differ from figures shown. Currency fluctuations may affect the value of overseas investments. When investing in a fund denominated in a foreign currency, performance may also be affected by currency fluctuations. Please visit franklintempleton.lu
for current performance.
Performance data may represent blended share class performance, e.g., hybrid created from an A(dis) share class which was converted to A(acc).
The fund offers other share classes subject to different fees and expenses, which will affect their performance. Please see the prospectus for details.
For professional investor use only. Not for distribution to retail investors.
32
Franklin High Yield Fund
Calendar Year Returns
Franklin High Yield Fund - A (acc) USD
As of 31 March 2017
54.22
56%
42.25
35%
17.58
18.39
14.17
14%
6.53
2.59
2.35
-12.10
-4.90
-1.26
14.71
12.26
7.53
3.79
1.86
14.42
5.47
-26.38 -26.17
2.09
2.65
-7%
-28%
YTD 2017
2016
2015
Franklin High Yield Fund - A (acc) USD—Net of Fees
2014
2013
2012
2011
2010
2009
2008
2007
Credit Suisse High Yield Index
All performance data shown is in the Fund currency stated and net of management fees. Sales charges and other commissions, taxes and other relevant costs paid by the investor are not included in the calculations.
The value of shares in the Fund and income received from it can go down as well as up, and investors may not get back the full amount invested. Past performance is not an indicator or a guarantee of future performance. Current performance
may differ from figures shown. Currency fluctuations may affect the value of overseas investments. When investing in a fund denominated in a foreign currency, performance may also be affected by currency fluctuations. Please visit franklintempleton.lu
for current performance.
Performance data may represent blended share class performance, e.g., hybrid created from an A(dis) share class which was converted to A(acc).
The fund offers other share classes subject to different fees and expenses, which will affect their performance. Please see the prospectus for details.
For professional investor use only. Not for distribution to retail investors.
33
Franklin High Yield Fund
Performance Risk Statistics
Franklin High Yield Fund - A (acc) USD
As of 31 March 2017
Performance Risk Statistics
1 Yr
3 Yrs*
5 Yrs*
10 Yrs*
15 Yrs*
Franklin High Yield Fund - A (acc) USD
4.98
8.09
6.94
10.87
9.65
Credit Suisse High Yield Index
3.92
6.12
5.39
9.92
8.67
Tracking Error (%)^^
1.40
2.36
1.91
2.02
1.95
Information Ratio^^
1.24
-1.66
-1.42
-1.29
-1.46
Beta^^
1.24
1.30
1.27
1.08
1.09
Sharpe Ratio
3.78
0.05
0.55
0.36
0.45
Standard Deviation (%):
Past performance is not an indicator or a guarantee of future performance.
The base currency of a fund determines the risk-free rate index used in calculating certain risk statistics on this page. A fund that is based in USD uses the US T-Bill Index as the risk free rate return, a EUR-based fund uses the France Treasury Bills 3
Month Intraday Index, a GBP-based fund uses the UK Treasury Bills 3 Month Index, a JPY-based fund uses the Japan Financing Bill 3 Month Index, and an AUD-based fund uses the Australia T-Note 3 Month Index.
^^Measured against the Credit Suisse High Yield Index.
*Annualised.
For professional investor use only. Not for distribution to retail investors.
34
Franklin High Yield Fund
Glossary
Average Credit Quality: The credit rating of a bond is an assessment of the creditworthiness of individuals and corporations. It is based upon the history of borrowing and repayment,
as well as the availability of assets and extent of liabilities. The average credit quality of a fund reflects the holdings of the underlying issues, based on the size of each holding. Usually
we quote the average credit quality as per Standard & Poor's or Moody's credit rating agencies.
Average Duration: Also known as 'effective' or 'Macaulay' duration it is a measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in
interest rates. Duration is expressed as a number of years. It's an indication of an issue's coupon relative to its maturity. Rising interest rates mean falling bond prices; declining interest
rates mean rising bond prices. The bigger the duration number, the greater the interest-rate risk; (or reward for bond prices). The weighted average duration of a fund reflects the
effective duration of the underlying issues, based on the size of each holding. This value differs with 'Modified Duration' which is modified for the market (dirty) price of an issue.
Average Weighted Maturity: An estimate of the number of years to maturity, taking the possibility of early payments into account, for the underlying holdings. The calculation uses the
weighted average time to the receipt of all future cash flows for all holdings. Also known as 'average life' for fixed-term products. The weighted average maturity of a fund reflects the
maturity of the underlying issues, based on the size of each holding.
Beta: A measure of the magnitude of a portfolio's past share-price fluctuations in relation to the ups and downs of the overall market (or appropriate market index). The market (or index)
is assigned a beta of 1.00, so a portfolio with a beta of 1.20 would have seen its share price rise or fall by 12% when the overall market rose or fell by 10%.
Information Ratio: In investing terminology, the ratio of expected return to risk. Usually, this statistical technique is used to measure a manager's performance against a benchmark.
This measure explicitly relates the degree by which an investment has beaten the benchmark to the consistency by which the investment has beaten the benchmark.
Sharpe Ratio: To calculate a Sharpe ratio, an asset's excess returns (its return in excess of the return generated by risk-free assets such as Treasury bills) are divided by the asset's
standard deviation.
Standard Deviation: A measure of the degree to which a fund's return varies from the average of its previous returns. The larger the standard deviation, the greater the likelihood (and
risk) that a fund's performance will fluctuate from the average return.
Tracking Error: Measure of the deviation of the return of a fund compared to the return of a benchmark over a fixed period of time. Expressed as a percentage. The more passively the
investment fund is managed, the smaller the tracking error.
Yield to Maturity: Yield to Maturity ('YTM') also known as the 'Gross Redemption Yield' or 'Redemption Yield'. The rate of return anticipated on a bond if it is held until the maturity date.
YTM is considered a long-term bond yield expressed as an annual rate. The calculation of YTM takes into account the current market price, par value, coupon interest rate and time to
maturity. It is also assumed that all coupons are reinvested at the same rate.
Yield to Worst: The yield to maturity if the worst possible bond repayment takes place. If market yields are higher than the coupon, the yield to worst would assume no prepayment. If
market yields are below the coupon, the yield to worst would assume prepayment. In other words, yield to worst assumes that market yields are unchanged. Normally this value is not
aggregated since it varies but if a weighted average value is used for a Fund then the figure will reflect the values of the underlying issues, based on the size of each holding.
For professional investor use only. Not for distribution to retail investors.
35
Franklin High Yield Fund
Management Profile
CHRISTOPHER J. MOLUMPHY, CFA
Executive Vice President
Chief Investment Officer
Franklin Templeton Fixed Income Group
Franklin Advisers, Inc.
San Mateo, California, United States
Christopher J. Molumphy is executive vice president and chief investment officer of Franklin Templeton Fixed Income Group, a global fixed income platform
that includes the Municipal, High Yield, Investment Grade, Global, Money Market and Floating Rate groups. Mr. Molumphy is a portfolio manager for a number
of institutional separate accounts and funds, including Franklin Strategic Income Fund, Franklin High Income Fund and Franklin Total Return Fund.
Mr. Molumphy is also a member of Franklin Resources' executive committee, a nine-member group responsible for shaping the company's overall strategy. In
addition, he serves on the firm's management and investment committees, including the Fixed Income Policy Committee (FIPC).
Mr. Molumphy joined Franklin Templeton Investments as an analyst in 1988 and has served as a portfolio manager since 1991. Prior to assuming his current
role in 2000, he served as director of Franklin's high yield corporate bond department since 1994.
Mr. Molumphy earned his bachelor's degree in economics from Stanford University and an M.B.A. in finance from the University of Chicago Graduate School of
Business. He is a Chartered Financial Analyst (CFA) charterholder, as well as a member of the Security Analysts of San Francisco (SASF), the CFA Institute,
the Stanford Institute for Economic Policy Research (SIEPR), and the San Francisco Bond Club.
For professional investor use only. Not for distribution to retail investors.
36
Franklin High Yield Fund
Management Profile
BETSY HOFMAN, CFA
Vice President and Portfolio Manager
Franklin Templeton Fixed Income
Franklin Advisers, Inc.
San Mateo, California, United States
Betsy Hofman is a vice president and portfolio manager for the Franklin Templeton Fixed Income Group. She manages multiple US and global high yield
funds, as well as high yield allocations for several multi-sector funds.
Ms. Hofman began her career in the accounting department at Franklin Templeton Investments in 1981. She worked on the equity-trading desk for two years
and was a securities analyst prior to becoming a portfolio manager.
Ms. Hofman holds a B.S. in finance and an M.B.A. with an emphasis in finance, both from the College of Notre Dame in Belmont, California. Ms. Hofman is a
Chartered Financial Analyst (CFA) charterholder and a member of the CFA Institute and the CFA Society of San Francisco.
For professional investor use only. Not for distribution to retail investors.
37
Franklin High Yield Fund
Management Profile
GLENN VOYLES, CFA
Senior Vice President
Director of Portfolio Management, Corporate & High Yield Group
Franklin Templeton Fixed Income Group
Franklin Advisers, Inc.
San Mateo, California, United States
Glenn Voyles is a senior vice president and the Director of Portfolio Management, Corporate & High Yield Group. In addition to overseeing the corporate credit
portfolio management team, Mr. Voyles' is the lead or co-portfolio manager of various US and global high yield accounts. Additionally, Mr. Voyles is a member
of the firm's Fixed Income Policy Committee (FIPC).
Mr. Voyles joined Franklin Templeton in 1993. Prior to being appointed the Director of Portfolio Management, he was a high yield portfolio manager and
research analyst with primary coverage of the energy sector.
Mr. Voyles holds a B.A. in economics from Stanford University. He is a Chartered Financial Analyst (CFA) charterholder, a member of Security Analysts of San
Francisco (SASF), and the CFA Institute.
For professional investor use only. Not for distribution to retail investors.
38
Franklin High Yield Fund
Important Disclosures
This document is intended to be of general interest only and does not constitute legal or tax advice nor is it an offer for shares or invitation to apply for shares of the Luxembourg-domiciled
SICAV Franklin Templeton Investment Funds (the “Fund”). Nothing in this document should be construed as investment advice. Given the rapidly changing market environment, Franklin
Templeton Investments disclaim responsibility for updating this material.
Subscriptions to shares of the Fund can only be made on the basis of the current prospectus of the Fund, accompanied by the latest available audited annual report and the latest semi-annual
report if published thereafter. An investment in the Fund entails risks which are described in the Fund's prospectus.
The value of shares in the Fund and income received from it can go down as well as up, and investors may not get back the full amount invested. Past performance is not an indicator or a
guarantee of future performance. Currency fluctuations may affect the value of overseas investments. When investing in a fund denominated in a foreign currency, your performance may also be
affected by currency fluctuations.
In emerging markets, the risks can be greater than in developed markets. Investments in derivative instruments entail specific risks that may increase the risk profile of the fund and are more
fully described in the Fund’s prospectus. If the fund invests in a specific sector or geographical area, the returns may be more volatile than a more diversified fund.
No shares of the Fund may be directly or indirectly offered or sold to residents of the United States of America. Shares of the Fund are not available for distribution in all jurisdictions and
prospective investors should confirm availability with their local Franklin Templeton Investments representative before making any plans to invest.
Opinions expressed are the author’s at publication date and they are subject to change without prior notice. Any research and analysis contained in this document has been procured by Franklin
Templeton Investments for its own purposes and is provided to you only incidentally.
A copy of the latest prospectus, the annual report and semi-annual report, if published thereafter can be found, on our website: www.franklintempletongem.com or can be obtained, free of
charge, from the address below.
Issued by Franklin Templeton Investments (ME) Limited, authorized and regulated by the Dubai Financial Services Authority.
Dubai office: Franklin Templeton Investments, The Gate, East Wing, Level 2, Dubai International Financial Centre, P.O. Box 506613, Dubai, U.A.E., Tel.: +9714-4284100 Fax:+9714-4284140.
© 2017 Franklin Templeton Investments. All rights reserved.
Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges.
CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
Additional Information for Investment Platform Overview Slide:
Franklin Equity Group, a unit of Franklin, combines the expertise of the Franklin Advisers, Inc., and Fiduciary Global Advisors equity teams (with origin dating back to 1947 and 1931,
For professional investor use only. Not for distribution to retail investors.
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Franklin High Yield Fund
Important Disclosures (continued)
respectively). Franklin Templeton Fixed Income Group, a unit of Franklin, combines the expertise of the Franklin Advisers, Inc., and Fiduciary Trust Company International fixed income teams
(originating in 1970 and 1973, respectively). Franklin Real Asset Advisors originated in 1984 as the global real estate team of Fiduciary Trust Company International. Franklin Templeton
Solutions (formerly Franklin Templeton Multi-Asset Strategies prior to 31 December 2013) is a global investment management group dedicated to multi-strategy solutions and is comprised of
individuals representing various registered investment advisory entity subsidiaries of Franklin Resources, Inc., a global investment organisation operating as Franklin Templeton Investments
(FTI). Certain individuals advise Franklin Templeton Solutions (FT Solutions) mandates through K2 Advisors L.L.C. (“K2”), an FTI adviser that forms part of an investment group founded in 1994
through existing advisory entities or their predecessors. FT Solutions originated in 2007 to combine the research and oversight of the multi-strategy investment solutions offered by FTI. Franklin
Templeton Investments acquired a majority interest in K2 Advisors Holdings, LLC on 1 November 2012.
For professional investor use only. Not for distribution to retail investors.
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