FTF Franklin UK Mid Cap Fund W (Acc) 31 August 2021 Franklin Templeton Funds

FTF Franklin UK Mid Cap Fund W (acc) 31 August 2021 Franklin Templeton Funds

Fund Commentary

Performance Review • UK equity markets maintained their run of positive performance in August, with the FTSE All-Share Index up 2.7% over the month. Mid- and small-cap stocks outpaced the broader market. • For the month, the fund’s W (acc) shares returned 4.92%, and its benchmark, the FTSE 250 ex-Investment Trusts Index, returned 5.90%. ONE-MONTH KEY PERFORMANCE DRIVERS

Stocks Sectors Genuit Group PLC Construction And Materials (Stock Selection) HELPED Spirent Communications plc Financial Services (Stock Selection) JTC Plc Telecommunications (Stock Selection, Overweight) Avon Protection PLC Industrial Goods And Services (Stock Selection) HURT Rotork plc Retail (Stock Selection) Serco Group plc Energy (Lack of Exposure)

• At a sector level, stock selection in industrial goods and services hindered relative returns. Conversely, stock selection in construction and materials, and financial services added relative value. • At a stock level, protective equipment manufacturer Avon Protection was the largest detractor from relative returns in August. The share price fell after it warned that, due to delays in expected large orders for key programmes and supply-chain issues, full-year performance would be weaker than current consensus. Nonetheless, we view these issues as temporary and continue to hold a positive medium- to longer-term view. • Specialist construction supplier Genuit was the greatest contributor to relative performance over the month. The group announced a solid set of first-half numbers, which highlighted the ongoing recovery across its end market. The management team is confident about the group’s prospects for the full year and the upgraded profit guidance. Telecoms testing business Spirent, which also announced a good set of first-half financial figures, was another contributor in August. We believe the group is well positioned to grow against a buoyant backdrop of continued spending and investment within the 5G telecoms upgrade.

Outlook & Strategy • We made no wholesale changes to the portfolio during the month. • Gross domestic product data released in August showed that the UK economy grew by 4.8% quarter-on-quarter during the second quarter of the year. The absolute size of the economy is now just 4.4% smaller than at the end of 2019; it is forecast to recoup this decline by the end of 2021. Meanwhile, official inflation figures remain benign, with data released in August showing a 2% broad increase in consumer prices, relative to 2.5% for the prior month. • However, the momentum in recent purchasing managers’ indices, which are forward-looking surveys, has softened and suggests that the peak rate of growth has passed. Equity markets have continued their strong run despite this. The more domestically focused FTSE 250 Index significantly outperformed the FTSE 100 Index in August, with the former returning 5.3% over the month. • Led by a dip in Chinese economic output, concerns over the level of global economic growth have continued to increase over the month as the Delta variant takes hold in less vaccinated populations. The threat that the Delta variant poses to unvaccinated populations remains front and centre. • Looking ahead, we have some trepidation over the potential for COVID-19 case growth as the school summer holidays end. However, we are hopeful that hospitalisations will remain manageable, and, in turn, restrictions will not be needed again. A more pressing concern, which we are monitoring closely, has been supply shortages across various domestic industries of late. This has been driven by a lack of heavy-goods vehicle drivers and, in our opinion, can only add to inflationary pressures.

Fund Details Fund Description

Inception Date 17/10/2011 The Fund aims to grow in value by more than the FTSE 250 (ex- Investment Trusts) Index, from a combination of income and investment Benchmark FTSE 250 ex-Investment Trusts Index growth over a three to five-year period after all fees and costs are deducted.

For Professional Client Use Only. Not for distribution to Retail Clients. FTF Franklin UK Mid Cap Fund 31 August 2021

Performance Data Discrete Annual Performance (%) as at 31/08/2021 8/20-8/21 8/19-8/20 8/18-8/19 8/17-8/18 8/16-8/17 W (acc) 40.09 -9.57 0.92 9.92 20.11 FTSE 250 ex-Investment 42.91 -9.30 -4.98 7.08 14.15 Trusts Index GBP

Performance Net of Management Fees as at 31/08/2021 (Dividends Reinvested) (%)a,b Since Inception 1 Mth 3 Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs (12/07/1999) W (acc) 4.92 8.14 23.11 40.09 8.53 11.04 13.15 11.15 FTSE 250 ex-Investment 5.90 7.38 22.42 42.91 7.19 8.53 11.61 9.63 Trusts Index

Prior to 7 August 2021, the Fund was named Franklin UK Mid Cap Fund. Performance data is based on Rensburg UK Mid Cap Growth Trust mid price from its launch 12/07/1999 to 17/10/2011 and the net asset value of the FTF Franklin UK Mid Cap Fund A (inc) shares thereafter. The W (acc) share class launched on 31/05/2012. Performance data prior to that date is for the A (inc) GBP share class launched on 12/07/1999 which has higher annual charges.

Please refer to the “How We Measure Performance” section for more details about the benchmark.

Investment Team

Richard Bullas Mark Hall Dan Green, CFA Years with Firm 21 Years with Firm 29 Years with Firm 5 Years Experience 21 Years Experience 33 Years Experience 11

Marcus Tregoning Years with Firm 2 Years Experience 15

What Are the Key Risks? 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. Performance may also be affected by currency fluctuations. Currency fluctuations may affect the value of overseas investments. There is no guarantee that the Fund will meet its objective. The Fund invests mainly in equity securities of mid-sized UK companies that are included in the FTSE 250 ex-Investment Trusts Index. Such securities have historically been subject to price movements, sometimes to a greater extent than securities of large UK companies, due to company-specific factors or movements in the UK equity markets generally. As a result, the performance of the Fund can fluctuate significantly over relatively short time periods. Other significant risks include: liquidity risk. For full details of all of the risks applicable to this Fund, please refer to the “Risk Factors” section of the Fund in the current prospectus of Franklin Templeton Funds.

How We Measure Performance We measure performance and price shares in the Fund in British pounds (GBP). • The FTSE 250 (ex-Investment Trusts) Index is the Fund’s performance target and constrains the Fund’s investment universe. It is widely available and reflects the performance of medium-sized companies. • The Fund’s performance may also be compared against the Investment Association UK All Companies sector average, which reflects the performance of the Fund’s competitors.

For Professional Client Use Only. Not for distribution to Retail Clients. franklintempleton.co.uk 2 FTF Franklin UK Mid Cap Fund 31 August 2021

Important Legal Information Prior to 7 August 2021, the Fund was named Franklin UK Mid Cap Fund. This document does not constitute legal or tax advice nor is it investment advice or an offer for shares of the UK-Domiciled OEIC, Franklin Templeton Funds (the “Fund”). Subscriptions to shares of the Fund can only be made on the basis of the current prospectus and, where available, the relevant Key Investor Information Document, accompanied by the latest available audited annual report and the latest semi-annual report accessible on our website or requested from the address below. For a free copy of the latest prospectus, annual report and semi-annual report, if published thereafter, or for more information about any Franklin Templeton Investments’ fund, UK investors should contact: Franklin Templeton, Telephone: 0800 313 4049, Email: [email protected] or write to us at the address below. Issued by Franklin Templeton Investment Management Limited (FTIML) Registered office: Cannon Place, 78 Cannon Street, London EC4N 6HL. FTIML is authorised and regulated by the Financial Conduct Authority. Past performance is not an indicator or a guarantee of future performance. 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. Investment in the Fund entails risks which are described in the Fund’s prospectus and, where available, in the relevant Key Investor Information Document. The Fund invests in a specific sector or geographical area and the returns may be more volatile than a more diversified fund. References to particular industries, sectors or companies are for general information and are not necessarily indicative of a fund’s holdings at any one time. 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. No shares of the Fund may be directly or indirectly offered or sold to residents of the United States of America. The information provided is not a complete analysis of every material fact regarding any country, market, industry, security or fund. Because market and economic conditions are subject to change, comments, opinions and analyses are rendered as of the date of this material and may change without notice. A portfolio manager’s assessment of a particular security, investment or strategy is not intended as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy; it is intended only to provide insight into the fund’s portfolio selection process. Holdings are subject to change. References to indexes are made for comparative purposes only and are provided to represent the investment environment existing during the time periods shown. An index is unmanaged and one cannot invest directly in an index. The performance of the index does not include the deduction of expenses and does not represent the performance of any Franklin Templeton fund. Source: FactSet. Important data provider notices and terms available at www.franklintempletondatasources.com. a. Source for all information is Franklin Templeton. Benchmark related data provided by FactSet. Past performance is not an indicator or a guarantee of future performance. Portfolio holdings are subject to change. Periods greater than one year are shown as average annual total returns. Sales charges and other commissions, taxes and other relevant costs paid by investor are not included. b. When performance for either the portfolio or its benchmark has been converted, different foreign exchange closing rates may be used between the portfolio and its benchmark.

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