FTF Franklin UK Managers' Focus Fund

FTF Franklin UK Managers’ Focus 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. • For the month, the fund’s W (acc) shares returned 2.21%, and its benchmark, the FTSE All-Share Index, returned 2.67%. ONE-MONTH KEY PERFORMANCE DRIVERS

Stocks Sectors Spirent Communications plc Telecommunications (Stock Selection) HELPED Vitec Group PLC Basic Resources (Stock Selection, Underweight) JTC Plc Financial Services (Stock Selection) Avon Protection PLC Industrial Goods And Services (Stock Selection) HURT Serco Group plc Travel And Leisure (Stock Selection) Phoenix Group Holdings plc Health Care (Stock Selection)

• At a sector level, stock selection in the industrial goods and services, and travel and leisure segments had a detrimental impact on relative returns. In contrast, stock selection in telecommunications, basic resources and financial services helped relative results. • Protection equipment business Avon Protection was the main detractor from relative results. Its share price fell 30.6% after the company warned that, due to delays in expected large orders for key programmes, 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. • Telecoms testing business Spirent Communications was the greatest contributor to relative returns. The company’s share price rallied 17.6% over the course of the month driven by a solid first-half update.

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, amongst other things, a lack of heavy-goods vehicle drivers and, in our opinion, can only add to short-run inflationary pressures.

Fund Details Fund Description

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

For Professional Client Use Only. Not for distribution to Retail Clients. FTF Franklin UK Managers’ Focus 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) 31.79 -4.90 -2.95 7.15 14.13 FTSE All-Share Index 26.95 -12.65 0.44 4.68 14.33 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 (01/09/2006) W (acc) 2.21 5.40 16.52 31.79 6.74 8.26 11.64 8.89 FTSE All-Share Index 2.67 3.38 14.66 26.95 3.65 5.92 7.71 5.77

Prior to 7 August 2021, the Fund was named Franklin UK Managers’ Focus Fund. Performance data is based on Rensburg UK Managers’ Focus Trust mid price from its launch 01/09/2006 to 17/10/2011 and the net asset value of the FTF Franklin UK Manager’s Focus Fund A (acc) shares thereafter. The W (acc) share class launched on 31/05/2012. Performance data prior to that date is for the A (acc) GBP share class launched on 01/09/2006 which has higher annual charges.

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

Investment Team

Richard Bullas Dan Green, CFA Colin Morton Years with Firm 21 Years with Firm 5 Years with Firm 32 Years Experience 21 Years Experience 11 Years Experience 38

Ben Russon, CFA Mark Hall Years with Firm 8 Years with Firm 29 Years Experience 21 Years Experience 33

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 a concentrated portfolio of equity securities of up to 50 small, medium and large UK companies. Such securities have historically been subject to price movements, particularly for the small to medium 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: Portfolio concentration 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). • We measure performance against the Fund’s performance target, the FTSE All-Share Index, as it is widely available and reflects investments in the UK stock market. • The Fund’s performance can 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 Managers’ Focus Fund 31 August 2021

Important Legal Information Prior to 7 August 2021, the Fund was named Franklin UK Managers’ Focus 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. CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute. 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.

Franklin Templeton Investment Management Limited Cannon Place 78 Cannon Street London EC4N 6HL 0800 313 4049 franklintempleton.co.uk

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