1. Franklin Quotential Diversified Income Portfolio
An Income Solution Designed For All Markets
December 31, 2017
For Internal Use Only / Not for Distribution to the Public

2. Presented by Portfolio Name, CFA PM Title PM other info
Presentation Title
Lit Code XX/XX
Presented by
Portfolio Name, CFA
PM Title
PM other info
9/15/2018

3. Agenda Market Environment Portfolio Strategy Key Benefits
Presentation Title
Agenda
Lit Code XX/XX
Market Environment
Portfolio Strategy
Key Benefits
Reasons to Invest
9/15/2018

4. Fixed Income Investments Are Not Created Equal
One year’s leading asset class, likely won’t lead the next
Calendar Year Return, Period Ending December 31, 2016
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Canadian Bonds
3.7%
U.S. Gov.
40.6%
High Yield
31.0%
8.5%
TIPS
16.4%
EM Bonds %
High Yield %
Municipal
18.9%
23.9%
14.17%
-5.3%
Global Bonds
38.7%
Floating Loans
23.0%
EM Bonds
7.0%
13.4%
High Yield %
13.3%
IG Corp.
17.2%
MBS
21.7%
6.08%
-5.9%
35.5%
14.0%
6.7%
U.S. Gov %
Floating Loans %
U.S. T-Bill
6.8%
15.6%
21.5%
-7.8%
28.1%
5.4%
4.2%
11.0%
IG Corp %
5.2%
14.4%
21.0%
1.97%
-9.3%
22.1%
-1.5%
2.8%
9.7%
TIPS %
4.6%
14.2%
20.0%
Canadian Bonds %
-10.8%
22.0%
-4.1%
0.8%
9.6
Municipal %
4.0%
13.0%
19.5%
1.06%
-10.9%
21.2%
-5.4%
0.0%
9.0%
Canadian Bonds %
3.9%
11.3%
19.0%
-1.84%
6.6%
-10.1%
-0.1%
8.9%
MBS %
2.4%
18.2%
-1.91%
-12.3%
6.4%
-12.9%
-0.3%
8.1%
U.S. Gov %
2.3%
9.1%
-2.45%
-7.7%
-14.8%
4.3%
Global Bonds %
-1.2%
8.8%
-3.09%
-13.6%
-17.0%
U.S. T Bills
-5.0%
2.6%
U.S. T-Bills %
-2.5%
3.5%
-3.22%
*Source: Morningstar Research Inc., as of December 31, Emerging Market Bonds - Barclays Emerging Markets TR CDN$; Municipal Bonds - Barclays Municipal Bond TR CDN$; IG, Investment-grade Corporates - Barclays U.S. Credit TR CDN$; U.S. Government Bonds - Barclays U.S. Government TR CDN$; MBS U.S. Mortgage-Backed Securities - Barclays U.S. Mortgage-Backed Securities TR CDN$; Treasury Inflation-Protected Securities (TIPS) - Barclays U.S. TIPS TR CDN$; Global Bonds - Citi World Government Bond Index CDN$; High Yield Bonds - Credit Suisse High Yield CDN$; Floating Loans - Credit Suisse Leveraged Loan Index CDN$; Canadian Bonds – FTSE TMX Canada Universe Bond Index; U.S. T-Bills - Barclays U.S. Treasury TR CDN$. Important data provider notices and terms available at Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

5. Opportunities Exist Regardless of the Prevailing Interest Rate Environment
Average Return During Periods of Falling Interest Rates (%)
Average Return During Periods of Rising Interest Rates (%)
Source: Morningstar Research Inc. All returns are based on indices’ base currency. Periods of rising/falling interest rates are defined as calendar years when rates on the ten-year U.S. Treasury rose/fell more than 100 basis points for the period from December 1986 to December Average returns for each asset class only include the years where data is available. Important data provider notices and terms available at Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

6. An Income Solution Designed for All Markets
Franklin Quotential Diversified Income Portfolio
Consistent Performance Over Time*
Carefully Constructed for Less Risk
Consistently Managed For Income
*See Slide 7 for historical performance.

7. Consistently Managed For Income: 80% Income | 20% Equity
Tactical adjustments capitalize on short-term opportunities and aim to manage risk in shifting market and interest rate environments
Foreign Fixed Income
Domestic Fixed Income
Fixed Income Target
Foreign Equity
Equity Target
Domestic Equity
Axis dates as shown are as of month end between December and December ‘Other’ consists of Cash and the iShares Gold Trust ETF.
Source: Franklin Templeton Investments, based on Franklin Quotential Diversified Income Portfolio.

8. Consistent Monthly Payout
With a 5% monthly distribution, market value is virtually intact
Flexible Series T with 5% Distribution Plan
As of December 31, 2017
Annual Compounded Performance
3 Month
6 Month
1 Year
3 Year
5 Year
10 Year
Inception
Diversified Income Portfolio Series T
1.71
1.00
3.53
2.80
3.95
4.24
4.85
Category Median*
-0.56
-0.18
1.36
4.06
5.35
4.13
4.44
Source: Franklin Templeton Investments, Morningstar Direct as of December 31, The inception date of Franklin Quotential Diversified Income Portfolio Series T is February 17, Please see Notes for important information about these calculations. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
*Morningstar Global Fixed Income Balanced. Important data provider notices and terms available at

9. An Efficient Tax Treatment For Cash Flow
Series T, OT, FT, V & PFT distributions receive preferred tax treatment
Interest/Income
Eligible Dividends
Capital Gain
Return of Capital
You keep 100%
(taxes are deferred)
Inefficient
cash flow
Efficient
Assumes a marginal tax rate of 46.41% (MTR) for Ontario in 2016; MTR 29.52% for eligible dividends and 36.97% for non-eligible dividends in Ontario in 2016.
Return of capital (ROC) reduces the adjusted cost base (ACB) of the investment. Once the ACB has been depleted any further cash flow is taxable as a capital gain.
Effective October 3, 2016, Series M was renamed Series PF, Series R was renamed Series OT, Series S was renamed Series FT, Series W was renamed Series PFT.

10. An Efficient Tax Treatment For Cash Flow
$1,000 Income from Bond or GIC
$1,000 Income Franklin Quotential Diversified Income Portfolio
$1,000
65% More After Tax
 Interest Income  Dividends  Return of Capital
Assumes a marginal tax rate of 46.41% (MTR) for Ontario in 2016; MTR 29.52% for eligible dividends and 36.97% for non-eligible dividends in Ontario in 2016.
Return of capital (ROC) reduces the adjusted cost base (ACB) of the investment. Once the ACB has been depleted any further cash flow is taxable as a capital gain.

11. Carefully Constructed for Less Risk
Franklin Quotential Portfolios draw from over 80 unique strategies
Structuring for broad exposure to each asset class, portfolios include:
Canadian mutual funds, sub-advised funds, Luxembourg-based SICAVs* and ETFs for targeted allocation exposure
Result: diversification with minimal investment duplication
Fixed income, equity, currency and commodity allocations are actively shifted to address market and economic opportunities
Integrity of the investment objective is always maintained in order to achieve long-term investment results
*FTIF (SICAV) Funds are not available for direct purchase in Canada. Société d’Investissement à Capital Variable (SICAV) is an open-end investment company governed by the laws of Luxembourg.

12. Consistent Performance Over Time
Five-Year Risk/Return Through December 31, 2017
Diversified Income Portfolio (T)
As of December 31, 2017: Morningstar Category Median – Global Fixed Income Balanced; Canadian Bond – FTSE TMX Canada Universe Bond Index; Global Bond – Barclays Multiverse Hedged Index; Canadian Equity – S&P/TSX Composite TR Index; U.S. Equity – S&P 500 TR Index; International Equity – MSCI EAFE GR Index; Emerging Markets Equity – MSCI EM GR Index. Important data provider notices and terms available at Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Indexes are unmanaged and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. 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. The information presented herein is not a recommendation or solicitation to buy or sell securities

13. Reasons to Invest 1. The Strategy 2. The Benefits 3. The Results
Deliver long-term income by actively shifting allocations among yield-oriented opportunities worldwide.
Consistently Managed For Income
Carefully Constructed for Less Risk
Consistent Performance Over Time
A consistent monthly payout through Series T, OT, FT, V & PFT
Positive returns in 100% of the rolling 5-year periods since inception*
Tax-efficient cash flow through Series T, OT, FT, V & PFT
*Source: Franklin Templeton Investments as of December 31, The inception date of Franklin Quotential Diversified Income Portfolio is February 17, Effective October 3, 2016, Series M was renamed Series PF, Series R was renamed Series OT, Series S was renamed Series FT, Series W was renamed Series PFT.

14. Notes
Cash flow is based on targeted Return of Capital (“ROC”) payout rate input for Series T, calculated annually based on the prior year’s closing NAV. The maximum target annual distribution rate on Franklin Quotential Diversified Income Portfolio Series T is 5%. You may choose your desired ROC cash payout rate between 0%to the maximum rate of 5%; the remainder will be reinvested in additional Series T units of the Portfolio. The calculation assumes a 5% ROC payout rate. Maximum rate of distribution may change at the discretion of Franklin Templeton Investments Corp. Any year-end distributions consisting of income and capital gains must be reinvested and are taxable in the year they are received. The payment of income distributions is not guaranteed and may fluctuate. Income distributions and ROC payments are not an indication of performance, rate of return, or yield. If distributions paid by a fund are greater than the return of the fund, the value of the investor’s investment will decrease. An investor’s adjusted cost base (ACB) will be reduced by the amount of the ROC payments. If the investment’s ACB goes below zero, the investor will have to pay capital gains tax on any further ROC distributions. Unrealized capital gain is calculated as (Market Value –ACB). Negative ACB on the Series T investment is recognized as a capital gain in the year it is received. Rates of return in this example are historical returns for Franklin Quotential Diversified Income Portfolio Series T, assume that the 5% ROC distributions were not reinvested in additional units and do not take into account sales, redemptions, or optional charges payable by any security holder that would have reduced return 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 security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The portfolio manager for a Fund reserves the right to withhold release of information with respect to holdings that would otherwise be included in the complete list of holdings. 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 and economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the views of Franklin Templeton Investments Corp. General business, market, economic and political conditions could differ materially from what the author presently anticipates or projects. The information presented is not a recommendation or solicitation buy or sell any securities. Franklin Templeton Investments Canada is a business name used by Franklin Templeton Investments Corp.

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