franklin bissett fixed income funds - nbbn.ca

For Dealer Use Only | Not for Distribution to the Public

Franklin Bissett

Fixed Income Funds

Franklin Bissett Investment Management, part of Franklin Templeton Investments Canada.


Topics for Discussion

2

The Franklin Bissett Advantage

Franklin Bissett Core Plus Bond Fund

Franklin Bissett Corporate Bond Fund

Franklin Bissett Canadian Short Term Bond Fund

The Nature of the Opportunity

The Franklin Bissett Advantage

For Dealer Use Only | Not for Distribution to the Public 4

Franklin Bissett Investment ManagementA Legacy of Expertise in the Canadian Capital Markets

• Founded in 1982 and joined Franklin Templeton Investments in 2000

• CAD$20.6 billion in assets under management as of December 31, 2017

– Equity strategies: CAD$13.6 billion

– Fixed Income strategies: CAD$5.4 billion

Institutional

Traditional Institutional

(Pensions)

Insurance Platforms

White Label

Sub-Advisory

Retail

Open-End Mutual Funds

SMA/UMA

Exchange-Traded Funds

High Net Worth

Investment

Categories

Fundamental Equity

Active Quantitative Equity

Systematic Beta

Fixed Income

Multi-Asset


Broad capabilities and deep resources integrated into one platform

• Global platform with 70 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 world*

Fixed Income Capabilities & Process

5

*Source: Franklin Templeton Investments. Professionals include portfolio managers, analysts and traders.

Research Driven, Disciplined, Risk Focused

Top-Down Bottom-Up Quantitative

Fixed Income Policy Committee

and Multi-Sector Strategists

Senior leaders seek to capitalize

on global economic trends

Sector Specialists

Dedicated sector teams strive to

add value through security- and

sector-specific insights

Quantitative Analysts

Dedicated team builds proprietary

risk models to identify potential

alpha opportunities

Combination of Expertise Aiming to Build Diverse Portfolios of Low-Correlated Positions


1. Joint venture partners with Franklin Templeton Investments.

2. Majority ownership interest.

As of December 31, 2017.

One of the World’s Largest Investment Platforms

A Premier Global Asset Manager

70 years of experience

CAD$947.6 billion in total AUM

Over 650 investment professionals

worldwide, with over 170 dedicated to

fixed income

Boston

Coral Gables

Fort Lauderdale

New York City

Ridgefield Park

Short Hills

Stamford2

Toronto

Washington DC

Calgary

Dublin

Los Angeles

Rancho Cordova

San Mateo

Mexico City Nassau

Edinburgh

Frankfurt

Geneva

Leeds

London

Luxembourg

Vienna

Bratislava

Bucharest

Budapest

Poznań

Warsaw

Bangkok

Ho Chi Minh City¹

Hong Kong

Kuala Lumpur

Seoul

Shanghai¹

Singapore

TokyoChennai

Dubai

Hyderabad

Mumbai

Melbourne

Sydney Cape Town

Bogotá1

Buenos Aires

Rio de Janeiro

São Paulo

Research Offices Trading Platforms Risk Management Specialists

Istanbul


Canadian Expertise Grounded in Global

Perspective

7


LOCAL FIXED INCOME

ASSET MANAGEMENT

43 Investment

Professionals

Franklin Templeton Fixed Income Policy Committee

18 Investment Professionals

TOP-DOWN

BOTTOM-UP

Franklin Templeton Fixed Income

AUM: CAD$363.3 Billion

Quantitative Analysis

7 Professionals

Municipals

31 Professionals

Bank Loans

18 Professionals

Global Sovereign/EM

12 Professionals

Corporate Credit

33 Professionals

Mortgages

9 Professionals

Global Macro

21 Professionals

FRANKLIN BISSETTINVESTMENT

MANAGEMENT

FRANKLIN BISSETT FIXED INCOME TEAM

7 Investment Professionals • Average Experience: 18 Years


Potential Return Sources Can Vary with the Economic Cycle

Navigating the Landscape

This is a hypothetical example intended solely to illustrate our investment process. It is for illustrative purposes only and is not intended to reflect any actual positioning of

the portfolio and does not constitute investment advice.

Interest Rates (Duration) To position the

portfolio in seeking to benefit from declining interest

rates or to mitigate the potential impact to the

portfolio during periods of rising rates.

Currencies Seek to position the portfolio in currencies we view as the most attractive and hedge unwanted currency risks.

Credit Seek to capture potential strong growth and

improving credit quality, which may occur during

periods of rising inflation and/or growth.

Strong Growth Environment

Interest RatesCurrenciesCredit Quality

Weak Growth Environment

Interest RatesCurrenciesCredit Quality

Exposure

Duration

Currency

Credit

REDUCE

UNHEDGED

EXTEND

Exposure

Duration

Currency

Credit

EXTEND

HEDGED

REDUCEHypothetical

Hypothetical


14.06

10.72

9.52

4.82

4.28

4.17

3.56

2.68

1.78

1.47

0.70

0.57

0.10

-0.67

-2% 5% 12% 19%

Bank Loans

High Yield Bonds

Emerging Markets Sovereign Debt

Canadian Mortgage-Backed Securities

Canadian 91-Day Treasury Bills

Canadian Corporate Bonds

U.S. Investment-Grade Corporate Bonds

Sovereigns

G7 Sovereign Bonds

Canadian Bond Universe

Canadian Provincial & Municipal Bonds

Canadian Government Bonds

U.S. Government Bonds

Canadian Real Return Bonds

9

Average Return During

Periods of Falling Interest Rates

Average Return During

Periods of Rising Interest Rates

In an Uncertain Rate Environment, Fixed Income

Portfolios Need Diversity and Active Management

12.19

11.87

11.41

11.29

11.13

10.32

9.74

9.62

9.31

9.28

9.04

7.42

4.42

1.99

0% 5% 10% 15%

Canadian Government Bonds

Canadian Bond Universe

Canadian Real Return Bonds

Canadian Corporate Bonds

Emerging Markets Sovereign Debt

U.S. Government Bonds

G7 Sovereign Bonds

Canadian Mortgage-Backed Securities

Canadian Provincial & Municipal Bonds

Sovereigns

U.S. Investment-Grade Corporate Bonds

High Yield Bonds

Canadian 91-Day Treasury Bills

Bank Loans

Sources: Bloomberg and Morningstar Research Inc. All returns are based on the indices’ base currency. Periods of rising/falling interest rates are defined as calendar years when rates

on the 10-year Canadian Government Bond fell more than 50 basis points from January 1990 to December 2017. Average returns for each asset class only includes the years where

data is available. See “Important Disclosures” slide for index definitions.


Top 3 Performing Categories During Falling Interest Rates Top 3 Performing Categories During Rising Interest Rates Fixed Income Category


Multi-Sector Approach Capitalizes on the Broader Market Opportunities

10

Sources: Franklin Templeton Investments and Morningstar Research, Inc.

1. Series F.

5-Year Risk/Return ComparisonAs of December 31, 2017

2.0

2.5

3.0

3.5

3.0 3.5 4.0 4.5

Ret

urn

(%

)

Risk (%)

FTSE TMX Canada All Government Bond Index

Franklin Bissett Core Plus Bond Fund1

FTSE TMX Canada Universe Bond IndexFranklin Bissett Core Plus Bond Fund’s

strategic and dynamic asset allocation

can provide investors with lower overall

risk and competitive returns.


0%

3%

6%

9%

12%

0%

6%

12%

18%

24%

198

5

198

6

198

7

198

8

198

9

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

Yie

lds

4-Y

ea

r A

nn

uali

ze

d R

oll

ing

Retu

rns

FTSE TMX Canada All Government Bond Index FTSE TMX Canada Universe Bond Index

10-Year Canadian Government Bonds

FTSE TMX Canada Indices vs. 10-Year Canadian Government Bonds4-Year Annualized Rolling Returns vs. Yields

Resiliency of the Canadian Fixed Income Market

Sources: Morningstar Research, Inc. and Federal Reserve Bank of St. Louis (FRED).



1. Source: Franklin Templeton Investments and Morningstar Research Inc. Measurement based on the 12-Month Trailing Distribution Yield as of December 31, 2017.

Why Invest in Franklin Bissett Core Plus Bond Fund?

Higher Monthly

Income

Compared to peers

over the past five years

while providing a

competitive fund return1

Diversification

Flexible multi-sector

approach to benefit from

the best yield opportunities,

while limiting volatility

Global Exposure

Up to 30% of the

holdings can be invested

abroad for enhanced

returns from yields and

currencies

Canadian Core

A core fixed income

holding for Canadian

investors with emphasis

on total return


A Canadian fixed income mandate, focused on the entire Canadian

universe, with the objective of generating superior risk-adjusted

returns and a steady income stream over a full economic cycle.

• Diversification across country, sector, industry, issuer and maturity

• Overweight credit securities for added longer-term value

• Up to 25% exposure to high yield issues

• Up to 30% in non-Canadian dollar holdings of which 10% can be

unhedged


14

Strategy Overview

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

Tom O’Gorman, CFA SVP, Director of Fixed Income

Portfolio Manager

Darcy Briggs,

CFA, CPA, CGA, FRM SVP, Portfolio Manager


As of December 31, 2017

Portfolio Characteristics

15

Fund Benchmark1

Inception Date August 1, 1986 N/A

AUM CAD$2.18 billion N/A

Distribution Frequency Monthly N/A

Yield to Worst 3.29% 2.46%*

Effective Duration 7.02 Years 7.67 Years*

Average Quality A AA-

Current Holdings 378 N/A

Sources: Franklin Templeton Investments and PC-Bond Analytics.

*Source: FTSE TMX Global Debt Capital Markets Report.

1. FTSE TMX Canada Universe Bond Index.

Yield to Worst and Effective Duration figures reflect certain derivatives held in the portfolio (or their underlying reference assets).



Fixed Income Sector Allocation

16


Sector 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

derivatives, unsettled trades or other factors.

39.68%

23.51%

12.80%

8.45%6.00% 5.54%

4.02%

27.36%

34.01%36.75%

0.00%1.89%

0.00% 0.00%

CanadianInvestment GradeCorporate Bonds

Provincial Bonds Federal Bonds Non-CanadianInvestment GradeCorporate Bonds

Municipal Bonds Bank Loans High YieldCorporate Bonds

Franklin Bissett Core Plus Bond Fund FTSE TMX Canada Universe Bond Index



Franklin Bissett

Core Plus Bond Fund (%)

FTSE TMX Canada

Universe Bond Index (%)

Portfolio Term Structure

Short Term 45.10

Mid Term 22.30

Long Term 32.60

Floating Rate Notes 6.73

Short Term 25.62

Mid Term 30.57

Long Term 37.08


Short Term is less than 5 years, Mid Term is 5–10 years and Long Term is more than 10 years.

Totals may not equal 100% due to rounding.


The fund’s corporate bond exposure is 57.36% compared to 27.36% for the index.

Corporate Sector Allocation—Bonds OnlyCorporate Bonds Reweighted to 100%

30.73

25.98

9.73

9.61

8.26

7.37

6.45

1.87

39.50

20.39

15.91

0.00

9.66

5.81

6.78

1.94

0% 15% 30% 45%

Financial

Energy

Infrastructure

Bank Loans

Communication

Real Estate

Industrial

Securitization







Credit Rating Distribution Net and Gross Currency Allocation

Credit and Currency Allocation

15.52

21.34

32.49

22.87

3.54

3.15

1.09

40.79

31.71

16.96

10.53

0.00

0.00

0.00

0% 15% 30% 45%

AAA

AA

A

BBB

BB

B

CCC


91.91

7.73

0.35

0.00

78.88

20.55

0.53

0.03

0% 20% 40% 60% 80% 100%

Canadian Dollar

U.S. Dollar

Australian Dollar

British Pound

Net Gross

Sources: Franklin Templeton Investments and PC-Bond Analytics.Ratings shown are assigned by one or more Nationally Recognized Statistical Rating Organizations (NRSRO), such as Standard & Poor’s, Moody’s, DBRS 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 four or 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. Cash and equivalents as well as derivatives are excluded from this breakdown. As a result, the chart does not reflect the fund’s total net assets. The Fund may be managed to a different ratings methodology based on its Investment Policy Statement.Currency 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 derivatives, unsettled trades or other factors.As of December 31, 2017.


3.72%3.00% 3.25%

4.46%

6.74%

1.75% 1.90% 2.24%

3.79%

6.33%

1 Year 3 Years 5 Years 10 Years Since Inception¹

Franklin Bissett Core Plus Bond Fund – Series F Canadian Fixed Income Category

Performance StatisticsAnnualized Returns

Sources: Franklin Templeton Investments and Morningstar Research Inc.Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus or fund facts document before investing. The indicated rates of return are historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.Series F is available to investors participating in programs that do not require Franklin Templeton to incur distribution costs in the form of trailing commissions to dealers. As a consequence, the management fee on Series F is lower than on Series A. The gross of fees version of Series F does not exist and as a result, investors cannot purchase Series F securities on a gross of fees basis. Performance would have been lower with fees taken into account.1. Inception date is August 1, 1986.2. Canadian Fixed Income Category.Please refer to the “Important Disclosures” slide for additional information.


Franklin Bissett Core Plus Bond Fund – Series F 1 Year 3 Year 5 Year 10 Year

Quartile Ranking2 1 1 1 1

Franklin Bissett Core Plus Bond Fund – Series F Overall 3 Year 5 Year 10 Year

Morningstar Rating


12-Month Trailing Distribution Yield1


Fund Distribution Yield Consistently Outperforms Peers

4.31% 4.15%3.84% 3.83% 3.85% 3.90%

3.35%

3.99%

2.31%2.01%

2.71% 2.75%

3.42%

2.58% 2.42%2.63%

2010 2011 2012 2013 2014 2015 2016 2017

Franklin Bissett Core Plus Bond Fund – Series F Canadian Fixed Income Category

1.37x

Higher Yield than Peers2

Source: Morningstar Research Inc.

1. The Trailing 12-Month Distribution Yield is the sum of a fund’s total trailing 12-month interest and dividend payments (if any) divided by the last month’s ending unit price net asset

value (NAV) plus any capital gains distributed over the same period. For the Canadian Fixed Income Category, the amount shown is the average distribution yield of all currently active

funds in the category.

2. The yield comparison is calculated based on the average 12-month trailing distribution yield for the past five calendar years of the fund divided by that of the category.

Mutual fund distributions are not guaranteed, are set and may change at the discretion of Franklin Templeton Investments Canada. Distributions are not an indication of performance

or rate of return.


1. Sources: Franklin Templeton Investments and Morningstar Research Inc. Measurement based on the 12-Month Trailing Distribution Yield as of December 31, 2017.

Why Invest in Franklin Bissett Corporate Bond Fund?

Access to Non-

Traditional Sectors

Exposure to sectors

not readily available to

Canadian investors (High

Yield, Bank Loans, CMBS)

Higher Monthly

Income

Compared to peers

over the past five years

while providing a

competitive fund return1

Global Exposure

Up to 30% of the


abroad for enhanced


currencies

Complementary

Holding fits well

with a diversified income

portfolio and provides a

lower correlation to

government bonds



24

Strategy Overview


A Canadian fixed income mandate, focused on corporate bonds, with

the objective of generating superior risk-adjusted returns and a

steady income stream over a full economic cycle.

• Diversification across country, sector, industry, issuer and maturity

• Up to 25% exposure to high-yield issues


unhedged

Darcy Briggs,


Adrienne Young, CFA VP, Director of Credit Research




Fund Benchmark1

Inception Date December 18, 2006 N/A

AUM CAD$198.9 million N/A




Average Maturity 10.15 Years 9.46 Years*

Average Quality BBB A-


25



1. FTSE TMX Canada All Corporate Bond Index.

Yield to Worst, Effective Duration and Average Maturity figures reflect certain derivatives held in the portfolio (or their underlying reference assets).




26

69.11%

17.51%

7.68%2.98% 1.42% 1.31%

100.00%

0.00% 0.00% 0.00% 0.00% 0.00%


Non-CanadianInvestment GradeCorporate Bonds

High YieldCorporate Bonds

Bank Loans Provincial Bonds Federal Bonds

Franklin Bissett Corporate Bond Fund FTSE TMX Canada All Corporate Bond Index






Franklin Bissett

Corporate Bond Fund (%)

FTSE TMX Canada

All Corporate Bond Index (%)


Short Term 51.70

Mid Term 20.70

Long Term 27.70

Floating Rate Notes 4.14

Short Term 31.53

Mid Term 33.58

Long Term 30.74





28.97

28.34

11.91

11.46

8.05

7.04

3.06

1.18

20.39

39.50

15.91

9.66

5.81

6.78

0.00

1.94

0% 15% 30% 45%

Energy

Financial

Infrastructure

Communication

Real Estate

Industrial

Bank Loans

Securitization



Corporate Sector Allocation








2.31

6.61

35.69

46.08

5.62

2.54

1.14

3.13

12.08

46.32

38.47

0.00

0.00

0.00

0% 10% 20% 30% 40% 50%

AAA

AA

A

BBB

BB

B

CCC


91.60

8.08

0.32

0.00

72.21

27.26

0.49

0.03

0% 20% 40% 60% 80% 100%

Canadian Dollar

U.S. Dollar

AustralianDollar

British Pound

Net Gross

Sources: Franklin Templeton Investments and PC-Bond Analytics.Ratings shown are assigned by one or more Nationally Recognized Statistical Rating Organizations (NRSRO), such as Standard & Poor’s, Moody’s, DBRS 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 four or 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. Cash and equivalents as well as derivatives are excluded from this breakdown. As a result, the chart does not reflect the fund’s total net assets. The Fund may be managed to a different ratings methodology based on its Investment Policy Statement.Currency 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 derivatives, unsettled trades or other factors.As of December 31, 2017.


3.59%3.19% 3.31%

4.58%4.21%

1.75% 1.90%2.24%

3.79% 3.64%


Franklin Bissett Corporate Bond Fund – Series F Canadian Fixed Income Category


Sources: Franklin Templeton Investments and Morningstar Research Inc.Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus or fund facts document before investing. The indicated rates of return are historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.Series F is available to investors participating in programs that do not require Franklin Templeton to incur distribution costs in the form of trailing commissions to dealers. As a consequence, the management fee on Series F is lower than on Series A. The gross of fees version of Series F does not exist and as a result, investors cannot purchase Series F securities on a gross of fees basis. Performance would have been lower with fees taken into account. 1. Inception date is December 18, 2006.2. Canadian Fixed Income Category.Please refer to the “Important Disclosures” slide for additional information.


Franklin Bissett Corporate Bond Fund – Series F 1 Year 3 Year 5 Year 10 Year


Franklin Bissett Corporate Bond Fund – Series F Overall 3 Year 5 Year 10 Year

Morningstar Rating





4.45%4.08%

3.77% 3.70%3.99% 4.03%

3.54%

4.04%

2.31%2.01%

2.71% 2.75%

3.42%

2.58% 2.42% 2.63%

2010 2011 2012 2013 2014 2015 2016 2017

Franklin Bissett Corporate Bond Fund – Series F Canadian Fixed Income Category

1.40x




value (NAV) plus any capital gains distributed over the same period. For the Canadian Fixed Income Category, the amount shown is the average distribution yield of all currently active

funds in the category.



or rate of return.

Franklin Bissett Canadian

Short Term Bond Fund


Why Invest in Franklin Bissett

Canadian Short Term Bond Fund?

Reduce Risk

The portfolio is

defensively positioned

to minimize interest

rate risk in a rising

rate environment

Diversification

Flexible multi-sector

approach to benefit from

the best yield opportunities,

while limiting volatility

Global Exposure

Up to 30% of the


abroad for enhanced


currencies

Stable Income

Strives for above-

average monthly

distribution

rates with competitive

performance1

1. Sources: Franklin Templeton Investments and Morningstar Research Inc.


Franklin Bissett Canadian Short Term Bond Fund

34

Strategy Overview


A Canadian short-term fixed income mandate, focused on capital

preservation, limited volatility and a steady income stream. Modest

active duration and yield curve adjustments are the basis of our

approach.

• Diversification across fixed income sectors, issuers and maturity

• Overweight credit products for added longer-term value

• Up to 25% exposure to high-yield issues


unhedged

Darcy Briggs,


Jeffrey Johnson,

MBA, CFAVP, Portfolio Manager




Fund Benchmark1

Inception Date December 22, 2003 N/A

AUM CAD$440.9 million N/A




Average Maturity 4.65 Years 2.92 Years*

Average Quality A AA-


35



1. FTSE TMX Canada Short Term Overall Bond Index.

Yield to Worst, Effective Duration and Average Maturity figures reflect certain derivatives held in the portfolio (or their underlying reference assets).




49.72%

19.28%15.87%

6.78%3.74% 2.32% 2.28%

31.37%

17.72%

49.74%

0.00% 0.00% 0.00% 1.17%


Provincial Bonds Federal Bonds Non-CanadianInvestment GradeCorporate Bonds

High YieldCorporate Bonds

Bank Loans Municipal Bonds

Franklin Bissett Canadian Short Term Bond Fund FTSE TMX Canada Short Term Overall Bond Index

36






Franklin Bissett Canadian

Short Term Bond Fund (%)

FTSE TMX Canada

Short Term Overall Bond Index (%)


Short Term 100.00 Floating Rate Notes 9.27

Short Term 58.75

Mid Term 30.84

Long Term 1.15





43.95

17.72

10.02

8.28

6.77

5.39

4.16

3.71

62.30

9.14

8.96

5.84

5.92

4.08

3.75

0.00

0% 15% 30% 45% 60% 75%

Financial

Energy

Communication

Real Estate

Industrial

Infrastructure

Securitization

Bank Loans



Corporate Sector Allocation—Bonds OnlyCorporate Bonds Reweighted to 100%








21.51

24.06

20.67

29.28

2.70

1.16

0.63

53.77

20.74

15.12

10.37

0.00

0.00

0.00

0% 15% 30% 45% 60%

AAA

AA

A

BBB

BB

B

CCC


92.92

6.74

0.34

0.00

84.50

14.95

0.51

0.03

0% 20% 40% 60% 80% 100%

Canadian Dollar

U.S. Dollar

AustralianDollar

British Pound

Net Gross

Sources: Franklin Templeton Investments and PC-Bond Analytics.Ratings shown are assigned by one or more Nationally Recognized Statistical Rating Organizations (NRSRO), such as Standard & Poor’s, Moody’s, DBRS 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 four or 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. Cash and equivalents as well as derivatives are excluded from this breakdown. As a result, the chart does not reflect the fund’s total net assets. The Fund may be managed to a different ratings methodology based on its Investment Policy Statement.Currency 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 derivatives, unsettled trades or other factors.



1.25%

1.72% 1.91%

3.01% 3.04%

0.18%

1.00%1.26%

2.17% 2.33%


Franklin Bissett Canadian Short Term Bond Fund – Series F Canadian Short Term Fixed Income Category



Sources: Franklin Templeton Investments and Morningstar Research Inc.Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus or fund facts document before investing. The indicated rates of return are historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.Series F is available to investors participating in programs that do not require Franklin Templeton to incur distribution costs in the form of trailing commissions to dealers. As a consequence, the management fee on Series F is lower than on Series A. The gross of fees version of Series F does not exist and as a result, investors cannot purchase Series F securities on a gross of fees basis. Performance would have been lower with fees taken into account. 1. Inception date is December 22, 2003.2. Canadian Short Term Fixed Income Category.Please refer to the “Important Disclosures” slide for additional information.

Franklin Bissett Canadian Short Term Bond Fund – Series F 1 Year 3 Year 5 Year 10 Year


Franklin Bissett Canadian Short Term Bond Fund – Series F Overall 3 Year 5 Year 10 Year

Morningstar Rating





3.45%3.15% 3.09% 3.13%

4.00%

3.31%

2.95%

3.39%

2.12% 2.15% 2.17%2.06% 1.97%

1.83%1.65% 1.71%

2010 2011 2012 2013 2014 2015 2016 2017

Franklin Bissett Canadian Short Term Bond Fund – Series F Canadian Short Term Fixed Income Category

0.55x




value (NAV) plus any capital gains distributed over the same period. For the Canadian Short Term Fixed Income Category, the amount shown is the average distribution yield of all

currently active funds in the category.



or rate of return.

The Nature of the Opportunity



Market Review

• Financial markets continued to benefit from synchronized global economic growth, accommodative global central bank policies and

passage of U.S. tax reform legislation as volatility remained near record lows. While strong economic data provided further evidence that

the U.S. economy was gaining momentum, Canadian economic indicators were below expectations and the Canadian dollar weakened

over the period.

• Canadian and U.S. yields moved in the same direction over the quarter, leading to further flattening of both yield curves. Short maturity

Canadian bond yields rose late in the quarter as early 2017 economic strength was projected to continue leading investors to price more

aggressive Bank of Canada actions—a view we do not share. Provincial bonds finished the quarter on a strong note, outperforming nearly

all corporate subsectors. The FTSE TMX Canada Universe Bond Index returned 2.02% for the quarter.

Outlook

• Ebbing global central bank liquidity will likely continue to support financial markets and suppress volatility for another quarter.

• In the United States, the Fed’s expected meaningful tightening of policy by the end of Q4 2018 could be a catalyst for higher volatility.

Earnings growth and stimulus from recent tax cuts, while likely to contribute over the first half of 2018, will slowly be eroded given shifts in

central bank policy ending ultra-loose global monetary policy and the cresting of tax-cut effects.

• Despite core inflation increasing in both Canada and the U.S., global disinflation remains the overarching theme.

• In Canada, negative economic surprises could unwind a portion of the recent currency strength while also causing a near-term pause in

flattening of the yield curve.

• Relative to global interest rates, North American fixed income markets continue to offer some of the highest yields across developed

markets, making them an attractive destination for capital. This mitigates the likelihood of large and sustained moves higher in yield.

• Although late cycle, we remain constructive on credit and expect credit spreads will grind tighter.

• Canadian investment-grade credit “spread-as-a-percentage-of-yield” will likely continue to shrink, but still provide an acceptable cushion

against any sharp increase in government rates.

• We continue to look for opportunities to reduce risk and upgrade credit quality, while capitalizing on trading opportunities.

Market Review and Outlook

43

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, butno 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 onlyas of the date indicated. The views expressed may not be relied upon as investment advice and are not share class specific.

Appendix


Strategy Summary

45

1. Target returns and volatility are gross of fees and do not take into account investment management fees or other expenses an investor would incur in the management of an account, which would

reduce returns that would be realized by investors. There is no assurance that employment of any of the above strategies will result in the intended targets being achieved.

2. Maximum limits are determined at the time of investment.

3. Can be customized for clients depending on risk tolerance and return objectives.

Franklin Bissett Canadian Short Term

Bond Fund

Franklin BissettCanadian Government

Bond Fund

Franklin Bissett

Canadian

Bond Fund

Franklin BissettInstitutional

(B1) Model Fund

Franklin Bissett Core Plus

Bond Fund

Franklin BissettCorporate Bond Fund

Benchmark FTSE TMX Canada Short Overall

Bond Index

FTSE TMX Canada Government

Bond Index

FTSE TMX

Canada Universe

Bond Index

FTSE TMX

Canada Universe

Bond Index

FTSE TMX Canada Universe

Bond Index

FTSE TMX Canada All Corporate

Bond Index

Annual Excess Return Target1 50–150 bps 15–30 bps 50–150 bps 50–150 bps 50–150 bps 50–150 bps

Annual Tracking Error Volatility Target1 100–300 bps 30–60 bps 100–300 bps 100–300 bps 100–300 bps 100–300 bps

Credit Allocation Max 75% N/A Max 60% Max 75% Max 75% Max 100%

Duration Target1 < 3.5 years +/- 25% of BM +/- 1 year of BM +/- 25% of BM +/- 25% of BM +/- 25% of BM

Investment Universe

Government/Sovereign Bonds

Quasi-Sovereign and Gov’t Agencies

Currency/Foreign Exchange Max 30% (10% unhedged)3

Max 30% (10% unhedged)3

Max 30% (10% unhedged)3

Corporate Bonds and Other Spread Sectors

Quality

Investment Grade Max 15%3 in BBB Max 15%3 in BBB

Sub-Investment Grade2 Max 25%3 Max 25%3 Max 25%3

Derivative Usage

Separate Account Customization

Ability to Customize on Separate Accounts?

Utilize/Available Utilize Less/Limited Do Not Utilize/Not Available


For Strong Total Return, Diversification MattersAnnual Return of Key Asset Classes 2005–2017

All non-Canadian sectors’ returns are expressed in CAD. Source: Morningstar Direct.Canadian Universe Bonds are represented by the FTSE TMX Canada Universe Bond Index; Canadian Government Bonds are represented by the FTSE TMX Canada All Government Bond Index; Real Return Bonds are represented by the FTSE TMX Canada Real Return Bond Index; Canadian Corporates are represented by FTSE TMX Canada All Corporate Bond Index; Mortgages are represented by FTSE TMX Canada Residential Mortgage Market Index; Global Bonds are represented by Citi World Government Bond Index (WGBI); U.S. Government Bonds are represented Bloomberg Barclays U.S. Government Index; U.S. Corporate Bonds are represented by Bloomberg Barclays U.S. Corporate Investment Grade Index; High Yield Bonds are represented by Credit Suisse High Yield Index; Bank Loans are represented by the Credit Suisse Leveraged Loan Index. Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges.

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

REAL RETURN

BONDS

HIGH YIELD

BONDS

CANADIAN

GOVERNMENT

BONDS

U.S. GOVERNMENT

BONDS

HIGH YIELD

BONDS

REAL RETURN

BONDS

REAL RETURN

BONDS

HIGH YIELD

BONDS

HIGH YIELD

BONDS

U.S. CORPORATE

BONDS

U.S. GOVERNMENT

BONDS

HIGH YIELD

BONDS

CANADIAN

CORPORATES

15.20% 11.49% 4.45% 40.58% 30.97% 11.09% 18.35% 12.17% 14.75% 17.15% 20.96% 14.17% 3.38%CANADIAN

GOVERNMENT

BONDS

BANK LOANS MORTGAGES GLOBAL BONDS BANK LOANSHIGH YIELD

BONDS

U.S. GOVERNMENT

BONDS

U.S. CORPORATE

BONDSBANK LOANS

U.S. GOVERNMENT

BONDSBANK LOANS BANK LOANS MORTGAGES

6.63% 6.92% 4.09% 38.70% 23.02% 8.45% 11.72% 7.39% 13.27% 14.37% 19.47% 6.08% 2.54%

CANADIAN

UNIVERSE BONDSGLOBAL BONDS

CANADIAN

UNIVERSE BONDS

U.S. CORPORATE

BONDS

CANADIAN

CORPORATES

CANADIAN

CORPORATES

U.S. CORPORATE

BONDSBANK LOANS

U.S. CORPORATE

BONDS

REAL RETURN

BONDS

U.S. CORPORATE

BONDS

CANADIAN

CORPORATES

CANADIAN

UNIVERSE BONDS

6.46% 5.71% 3.68% 18.91% 16.26% 7.34% 10.82% 7.01% 5.07% 13.18% 19.11% 3.73% 2.52%

CANADIAN

CORPORATESMORTGAGES

CANADIAN

CORPORATESMORTGAGES

REAL RETURN

BONDS

CANADIAN

UNIVERSE BONDS

CANADIAN

GOVERNMENT

BONDS

CANADIAN

CORPORATES

U.S. GOVERNMENT

BONDSBANK LOANS GLOBAL BONDS MORTGAGES

CANADIAN

GOVERNMENT

BONDS

6.01% 5.44% 1.79% 10.58% 14.51% 6.74% 10.20% 6.22% 3.94% 11.25% 15.64% 3.42% 2.18%

MORTGAGESCANADIAN

CORPORATES

REAL RETURN

BONDS

CANADIAN

GOVERNMENT

BONDS

MORTGAGES

CANADIAN

GOVERNMENT

BONDS

CANADIAN

UNIVERSE BONDSMORTGAGES MORTGAGES

HIGH YIELD

BONDS

HIGH YIELD

BONDS

REAL RETURN

BONDS

REAL RETURN

BONDS

4.55% 4.39% 1.60% 9.03% 10.31% 6.51% 9.67% 4.90% 3.11% 11.04% 14.02% 2.86% 0.72%

BANK LOANSCANADIAN


CANADIAN

UNIVERSE BONDS

CANADIAN

UNIVERSE BONDSMORTGAGES GLOBAL BONDS

CANADIAN


CANADIAN

GOVERNMENT

BONDS

CANADIAN

GOVERNMENT

BONDS

U.S. CORPORATE

BONDSGLOBAL BONDS

3.04% 4.06% -5.90% 6.42% 5.41% 4.61% 8.99% 3.60% 2.44% 9.29% 3.84% 2.44% 0.43%

U.S. GOVERNMENT

BONDS

CANADIAN

GOVERNMENT

BONDS

U.S. GOVERNMENT

BONDS

REAL RETURN

BONDS

CANADIAN

GOVERNMENT

BONDS

BANK LOANSCANADIAN

CORPORATES

REAL RETURN

BONDS

CANADIAN

CORPORATES

CANADIAN

UNIVERSE BONDSMORTGAGES

CANADIAN

UNIVERSE BONDS

HIGH YIELD

BONDS

0.08% 3.92% -7.84% 0.41% 1.57% 4.24% 8.24% 2.85% 0.84% 8.79% 3.59% 1.66% -0.01%

HIGH YIELD

BONDS

U.S. CORPORATE

BONDS

U.S. CORPORATE

BONDS

CANADIAN

CORPORATES

U.S. CORPORATE

BONDS

U.S. CORPORATE

BONDS

HIGH YIELD

BONDS

CANADIAN

GOVERNMENT

BONDS

CANADIAN


CANADIAN

UNIVERSE BONDS

CANADIAN

GOVERNMENT

BONDS

U.S. CORPORATE

BONDS

-0.30% 3.90% -11.32% 0.23% 0.79% 3.31% 8.08% 2.65% -1.19% 8.49% 3.52% 0.89% -0.57%

U.S. CORPORATE

BONDS

U.S. GOVERNMENT

BONDS

HIGH YIELD

BONDS

HIGH YIELD

BONDSGLOBAL BONDS

U.S. GOVERNMENT

BONDSMORTGAGES

U.S. GOVERNMENT

BONDS

CANADIAN

GOVERNMENT

BONDS

CANADIAN

CORPORATES

REAL RETURN

BONDSGLOBAL BONDS BANK LOANS

-0.87% 3.08% -12.94% -7.65% -12.91% 0.02% 4.99% -0.24% -2.00% 7.58% 2.79% -1.91% -2.60%

GLOBAL BONDSREAL RETURN

BONDSBANK LOANS BANK LOANS

U.S. GOVERNMENT

BONDSGLOBAL BONDS BANK LOANS GLOBAL BONDS

REAL RETURN

BONDSMORTGAGES

CANADIAN

CORPORATES

U.S. GOVERNMENT

BONDS

U.S. GOVERNMENT

BONDS

-9.21% -2.89% -13.59% -10.88% -16.95% -0.32% 4.34% -0.60% -13.07% 4.95% 2.71% -2.45% -4.42%


• Interest-Rate Instruments—primarily to hedge and manage interest-rate risk

– Interest-Rate Swaps

– Options on Interest-Rate Swaps (“Swaptions”)

• Credit Instruments—primarily to hedge and manage credit risk

– Credit-Default Swaps

– Options on Credit-Default Swaps

– Securitized Credit Instruments (Cash CDOs, CLOs, etc.)

• Currency Instruments—primarily to hedge and manage currency risk

– Foreign-Currency Forwards

– Exchange-Traded-Currency Options

– OTC Currency Options

Managing Risks

47



Franklin Bissett Fixed Income Group: Years of Experience & Responsibilities

48

Name Industry Since Firm Since Responsibilities

Tom O’Gorman, CFA, MBA

SVP, Director of Fixed Income

1987 June, 2010 Portfolio Management: Strategy Development and Implementation

Credit Focus: Insurance and Other Financials, High Yield

Darcy Briggs, CFA, CPA, CGA, FRM

SVP, Portfolio Manager

1994 January, 2005 Portfolio Management: Strategy Development and Implementation Macro,

Rates and Currency Lead

Credit Focus: Energy (Exploration, Integrated), CMBS, High Yield

Adrienne Young, CFA, MBA

VP, Director of Credit Research

1994 June, 2014 Director of Credit Research

Portfolio Management: Strategy Development and Implementation Credit Lead

Credit Focus: Communication, Financials (Banks and Services), Industrials

(Consumer, Services and Transportation), Infrastructure (Health Care), Real Estate

Jeffrey Johnson, CFA, FRM, MBA

VP, Portfolio Manager

1996 May, 2005 Portfolio Management: Short-Term and Money Market Strategies

Credit Focus: Energy (Distribution, Generation and Pipelines), Auto Finance,

Industrials (Diversified, Manufacturing, Resources and Transportation),

Infrastructure (Utilities), Securitization (ABS, ABCP)

Brian Calder, CIM

VP, Senior Trader and Portfolio Manager

1999 August, 2001 Portfolio Management: Government and Core Strategies

Trading: Fixed Income, Currency and Derivative Trading

Credit Focus: Government (Federal, Provincial, Municipal and CMB/NHA)

Sevrika Galipeau, CFA

Portfolio Manager/Research Analyst

2007 December, 2009 Portfolio Management: Money Market Strategies

Credit Focus: Infrastructure (Transportation), Insurance, Energy

Darius Taheri

Junior Trader

2014 May, 2017 Trading: Fixed Income, Currency and Derivative Trading


Biography

TOM O’GORMAN, CFA

Senior Vice President

Director of Franklin Bissett Fixed Income

Franklin Bissett Investment Management

Calgary, Alberta, Canada

Tom O’Gorman is a senior vice president, director of fixed income at Franklin Bissett Investment

Management and has been with the organization since 2010. Mr. O’Gorman shares co-lead

responsibilities of Franklin Bissett Income Strategy Development and Implementation, including Franklin

Bissett Core Plus Bond Fund (2010), Franklin Bissett Canadian Balanced Fund (2011), Franklin Bissett

Canadian Bond Fund (2012), Franklin Bissett Canadian All Cap Balanced Fund (2013) and Franklin

Bissett Monthly Income and Growth Fund (since inception).

Prior to joining Franklin Bissett, Mr. O’Gorman spent 20 years managing U.S. and Canadian fixed

income. He spent 10 years with Prudential Financial as an analyst and was the head of portfolio

management for Munich Re in NYC for 10 years, overseeing a $30 billion portfolio of Canadian and U.S.

fixed income assets.

Mr. O’Gorman studied at Berklee College of Music, holds a bachelor's in business administration from

William Paterson University and an MBA from Rutgers University. He is a Chartered Financial Analyst

(CFA) charterholder.



Biography

DARCY BRIGGS, CFA, CPA, CGA, FRM

Senior Vice President, Portfolio Manager



Darcy Briggs is a senior vice president, portfolio manager with Franklin Bissett Investment Management and

has been with the organization since 2005. Mr. Briggs shares co-lead responsibilities of Franklin Bissett

Income Strategy Development and Implementation, including Franklin Bissett Canadian Short Term Bond

Fund (2009), Franklin Bissett Corporate Bond Fund (2012), Franklin Bissett Canadian Bond Fund (since

inception), Franklin Bissett Canadian All Cap Balanced Fund (2013), Franklin Bissett Core Plus Bond Fund

(2015), Franklin Bissett Canadian Government Bond Fund (since inception), Franklin Bissett Monthly Income

and Growth Fund (since inception) and Franklin Liberty Canadian Investment Grade Corporate ETF (since

inception).

Mr. Briggs has held various positions within Franklin Bissett's fixed income programs including lead manager

of Franklin Bissett's separately managed and private client fixed income programs.

Over the course of his career, Mr. Briggs worked as an equity analyst and as an accountant/analyst in the

derivatives division of a large global insurance company. He spent eight years with a regional investment

dealer assuming responsibilities in trading supervision, operations, and corporate finance, ending his tenure

as vice president, finance and interim chief financial officer. Prior to joining Franklin Bissett, he was a private

client portfolio manager with a Canadian chartered bank.

Mr. Briggs holds a bachelor's of commerce with distinction from the University of Saskatchewan. He is a

Chartered Financial Analyst (CFA) charterholder. Mr. Briggs also holds Chartered Professional Accountant

(CPA), Certified General Accountant (CGA), Financial Risk Manager (FRM), Canadian Investment Manager

(CIM), Fellow of the Canadian Securities Institute (FCSI) and Derivative Market Specialist (DMS)

designations.



Biography

ADRIENNE YOUNG, CFA

Vice President, Director of Credit Research



Adrienne Young is a vice president, director of Credit Research at Franklin Bissett Investment

Management and has been with the organization since 2014. Ms. Young is co-lead manager of the

Franklin Bissett Corporate Bond Fund (2016) and Franklin Liberty Canadian Investment Grade

Corporate ETF (since inception). She leads the Franklin Bissett Fixed Income team's fundamental credit

research process, collaborating with the portfolio management team and trading desk to drive the team's

overall allocation to credit sectors and exposures to individual issuers.

Prior to joining Franklin Bissett, Ms. Young was a senior vice president, Consumer, Communications

and Real Estate at DBRS. Prior to that position, she was a director RBC Capital Markets, in both the

Counterparty Risk Trading Group and the Strategic Portfolio Management Group, providing fundamental

credit analysis for fixed income portfolios spanning a variety of industries and geographies. She also

spent 10 years at Credit Suisse, progressing from analyst in the Canadian Corporate Banking Group to

director in the New York-based Portfolio Management Group.

Ms. Young holds a B.A. from University of Toronto (Trinity College), an M.A. from University of Western

Ontario and an International M.B.A. from York University. She earned her Chartered Financial Analyst

(CFA) charterholder designation in 1999.



Biography

JEFFREY JOHNSON, MBA, CFA

Vice President, Portfolio Manager



Jeffrey Johnson is a vice president, portfolio manager at Franklin Bissett Investment Management and

has been with the organization since 2005. Mr. Johnson shares co-lead management responsibilities of

Franklin Bissett Money Market Fund (2012), Franklin Bissett Canadian Short Term Bond Fund (2016)

and Franklin Liberty Canadian Investment Grade Corporate ETF (2017). Mr. Johnson's responsibilities

also include performing credit analysis on fixed income issuers and trading money market securities and

bonds.

Prior to joining the firm, Mr. Johnson worked for eight years at a Canadian chartered bank trading fixed

income and equity securities for retail and institutional clients.

Mr. Johnson is a graduate of the University of Alberta (bachelor of commerce, with distinction) and a

graduate of the Schulich School of Management, York University (masters of business administration).

He earned his FRM and Chartered Financial Analyst (CFA) charterholder designations in 2002.



The information presented herein is considered reliable at the present time, however, we do not represent that it is accurate or complete, or that it should

be relied upon as such. Speculation or stated beliefs about future events, such as market or economic conditions, company or security performance,

upcoming product offerings or other projections represent the beliefs of the speaker and do not necessarily represent the views of Franklin Templeton

Investments. General business, market, economic and political conditions could cause actual results to differ materially. The information presented is not

a recommendation or solicitation to buy or sell any securities.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus or

fund facts document before investing. The indicated rates of return are historical annual compounded total returns including changes in unit value and

reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any

securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be

repeated.

Series F is available to investors participating in programs that do not require Franklin Templeton to incur distribution costs in the form of trailing

commissions to dealers. As a consequence, the management fee on Series F is lower than on Series A. The gross of fees version of Series F does not

exist and as a result, investors cannot purchase Series F securities on a gross of fees basis. Performance would have been lower with fees taken into

account.

Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges.

© 2018 Franklin Templeton Investments Corp. All rights reserved. Franklin Templeton Investments Canada is a business name used by Franklin

Templeton Investments Corp.


STANDARD & POOR’S®, S&P® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC. Standard & Poor’s does no t

sponsor, endorse, sell or promote any S&P index-based product.

53

Important Disclosures


Additional Information for the Performance Statistics Slides:

As of December 31, 2017. The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life

subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are

considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed

product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product

category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall

Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five- and 10-year (if applicable) Morningstar

Ratings metrics. The weights are 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60–119 months of total returns, and

50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most

weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

Franklin Bissett Core Plus Bond Fund is rated within the Morningstar Canadian Fixed Income category.

All performance data refers to Series F units. Please refer to www.morningstar.ca for more details on the calculation of Morningstar Risk-Adjusted Ratings and the one-year

information. For each of the three-, five- and 10-year performance periods, there were in total 463, 373 and 151 funds, respectively, in the Morningstar Canadian Fixed Income

category.

Franklin Bissett Corporate Bond Fund is rated within the Morningstar Canadian Fixed Income category.


information. For each of the three-, five- and 10-year performance periods, there were in total 463, 373 and 151 funds, respectively, in the Morningstar Canadian Fixed Income

category.

Franklin Bissett Canadian Short Term Bond Fund is rated within the Morningstar Canadian Short Term Fixed Income category.


information. For each of the three-, five- and 10-year performance periods, there were in total 193, 138 and 49 funds, respectively, in the Morningstar Canadian Short Term Fixed

Income category.

Additional Information for the Uncertain Rate Environment Slide:

Index definitions: Sovereigns, Citi World Government Bond Index (USD); U.S. Government Bonds, Bloomberg Barclays U.S Government Bonds TR Index (USD); Canadian

Government Bonds, FTSE TMX Canada All Government Bond Index; Canadian Bond Universe, FTSE TMX Canada Universe Bond Index; U.S. Investment-Grade Corporate

Bonds, Bloomberg Barclays U.S. Credit TR Index (USD); Canadian Mortgage-Backed Securities: FTSE TMX Canada Residential Mortgage Market Index; Canadian Corporate

Bonds, FTSE TMX Canada All Corporate Bond Index; G7 Sovereign Bonds, Bloomberg Barclays Global G7 TR Index (USD); Canadian Provincial & Municipal Bonds, BoA

Merrill Lynch Canadian Provincial & Municipal Bond TR Index; Canadian Real Return Bonds, FTSE TMX Canada Real Return Bond Index; High Yield Bonds, Credit Suisse High

Yield Index (USD); Emerging Markets Sovereign Debt, Bloomberg Barclays Emerging Market Aggregate TR Index (USD); Canadian 91-Day Treasury Bills: FTSE TMX Canada

91-Day T-Bill Index; Bank Loans, Credit Suisse Leveraged Loan Index (USD).

54

Important Disclosures (continued)


Alpha: Alpha measures the difference between a fund’s actual returns and its expected returns given its risk level as measured by its beta. A positive alpha figure indicates the fund has performed better

than its beta would predict. In contrast, a negative alpha indicates a fund has underperformed, given the expectations established by the fund’s beta. Some investors see alpha as a measurement of the

value added or subtracted by a fund’s manager.

Average Credit Quality: The credit rating of a bond is an assessment of the credit worthiness 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 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 terms 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%.

Correlation: The linear relationship between two return series. Correlation shows the strength of the relationship between two return series. The higher the relationship, the more similar the returns.

Current Yield: In general, yield is the annual rate of return for any investment and is expressed as a percentage. With bonds, yield is the effective rate of interest paid on a bond, calculated by the coupon

rate divided by the bond’s market price. Bonds are typically issued with fixed coupon payments (regular cash payments of a fixed amount). Bonds are typically valued in terms of their yield—what dollar

amount as coupon payments is received as compared to the bond’s current market price. For a bond fund the current yield may be the disclosed yield paid out to investors.

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.

R-Squared: A measure of how much of a portfolio’s performance can be explained by the returns from the overall market (or a benchmark index). If a portfolio’s total return precisely matched that of the

overall market or benchmark, its R-squared would be 100. If a portfolio’s return bore no relationship to the market’s returns, its R-squared would be 0.

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 its previous returns from the average of all similar funds. 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. It is 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.

55

Glossary

© 2018 Franklin Templeton Investments Corp. All rights reserved.


Franklin Templeton Investments

Gain From Our Perspective®

Franklin Templeton Investments is a global leader in investment management with clients in over 170 countries. Here

in Canada and abroad, we're dedicated to one goal: delivering exceptional asset management for our clients. At the

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As a result, we've become a trusted partner to generations of advisors and investors.

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International offices:

ABU DHABI • AMSTERDAM • BEIJING • BRUSSELS • BUENOS AIRES • CAPE TOWN • CARACAS • CHENNAI

DUBAI • DUBLIN • EDINBURGH • FRANKFURT • GENEVA • HONG KONG • HYDERABAD • ISTANBUL • LONDON

LUXEMBOURG • MADRID • MELBOURNE • MEXICO CITY • MILAN • MUMBAI • NASSAU • PARIS • POZNAN

RIO DE JANEIRO • SAO PAULO • SEOUL • SHANGHAI • SINGAPORE • STOCKHOLM • SYDNEY • TAIPEI

TOKYO • VIENNA • WARSAW • ZURICH

NYSE: BEN

2545_4431_4875_CAN_CAD_SERIES F

franklin bissett fixed income funds - nbbn.ca

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