Franklin K2 Long Short Credit Fund

Franklin Templeton Investment Funds

Summary of Fund Objective

The Fund seeks total return over a complete market cycle (through a combination of current income, capital preservation and capital appreciation), by allocating its assets across multiple non-traditional strategies, including but not limited to, alternative fixed income and credit strategies.

  • A fixed income alternative: Alternative fixed income strategies seek to provide investors with additional sources of returns with lower correlations to traditional fixed income markets.
  • Focused on risk-adjusted performance: K2’s fund managers focus on trying to participate in market upturns while seeking to limit the impact of negative market events that can be damaging to fixed income investments.
  • Access to hedge strategies: K2’s robust manager research process seeks to provide access to a talented group of hedge fund managers and strategies.
  • Disciplined capabilities steeped in experience: Built with 20 years of experience, K2 focuses on manager research, strategy allocation and portfolio construction within a culture deeply focused on managing risk.
  • Risk management: The investment team applies extensive risk processes, systems and data to help ensure risks can be continually measured, monitored and managed.

FUND MANAGERS

Robert Christian

  • Years With Firm: 10
  • Years Of Experience: 30

Brooks Ritchey

  • Years With Firm: 14
  • Years Of Experience: 36

Art Vinokur

  • Years With Firm: 15
  • Years Of 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.

  • The Fund seeks to achieve total return over a full market cycle by allocating its assets across multiple “alternative” Long/Short strategies and by investing in a wide range of assets, with the ability to actively use financial derivative instruments. Such securities and investment instruments have historically been subject to price movements due to such factors as sudden changes in interest rates, changes in the financial outlook or perceived credit worthiness of securities issuers, or fluctuations in currency markets. As a result, the performance of the Fund can fluctuate moderately over time.
  • Other significant risks include:
    Counterparty risk: the risk of failure of financial institutions or agents (when serving as a counterparty to financial contracts) to perform their obligations, whether due to insolvency, bankruptcy or other causes.
    Credit risk: the risk of loss arising from default that may occur if an issuer fails to make principal or interest payments when due. This risk is higher if the Fund holds low-rated, sub-investment-grade securities.
    Foreign Currency risk: the risk of loss arising from exchange-rate fluctuations or due to exchange control regulations.
    Derivative Instruments risk: the risk of loss in an instrument where a small change in the value of the underlying investment may have a larger impact on the value of such instrument. Derivatives may involve additional liquidity, credit and counterparty risks.
    Emerging markets risk: the risk related to investing in countries that have less developed political, economic, legal and regulatory systems, and that may be impacted by political/economic instability, lack of liquidity or transparency, or safekeeping issues.
    Multi-Manager risk: the risk that independent decisions of Investment Co-Managers may conflict with one another thus resulting in loss of efficiency.
For full details of all of the risks applicable to this Fund, please refer to the “Risk Considerations” section of the Fund in the current prospectus of Franklin Templeton Investment Funds.