Benefits of investing in the Franklin Australian Absolute Return Bond Fund - Class W

The significant benefits of the Fund are:

• Actively managed absolute return fixed income portfolio which seeks to deliver defensive and stable Australian dollar hedged returns;

• Access to a portfolio with a fundamental, research-driven approach focused on identifying potential sources of total investment return;
• Exposure to domestic market opportunities and select strategies from the broader global universe; and
• Access to an experienced local fixed income investment team, leveraging the Franklin Templeton's Group's well-established global fixed income research platform.

Investor suitability

The Fund may be suitable for investors who wish to gain exposure to fixed income opportunities in both the domestic market and select strategies from the broader global universe.

About the Fund

The investment objective of the Fund is to provide investors with access to an actively managed portfolio of fixed income strategies with an aim to deliver returns in excess of the Bloomberg AusBond Bank Bill Index, after fees (but before taxes), over the short to medium term. The Fund seeks to achieve this objective by investing primarily in fixed income instruments and debt obligations of government, government-related issuers and corporations. The Fund may purchase Australian dollar and non-Australian dollar-denominated fixed income instruments.

The significant features of the Fund are:

• The investment objective of the Fund is to provide investors with access to an actively managed portfolio of fixed income strategies with an aim to deliver returns in excess of the Bloomberg AusBond Bank Bill Index, after fees and expenses (but before taxes), over the short to medium term.

• The Fund will primarily invest in Australian dollar and non-Australian dollar-denominated fixed income instruments and debt obligations of government, government-related issuers and corporations. The Fund seeks to take advantage of fixed income opportunities in domestic markets and select strategies from the broader global universe, as well, including emerging markets. The Fund is permitted to invest up to 20% in non-investment grade securities with a minimum rating of BB- at the time of purchase (according to long term ratings by Standard & Poor's or an equivalent rating issued by a recognised rating agency).

• The Fund draws on a wide range of well developed, diversified and transparent investment strategies from across the traditional Australian and global fixed income universes. Importantly, the portfolio includes individual decisions in relatively small sizes such that no single decision can overwhelm portfolio performance.

How we invest your money

Investment Universe

High quality short-term call deposits and cash equivalent securities, government bonds, corporate and asset backed securities in Australia and overseas. The Fund invests mainly in investment grade securities, but may invest up to 20% of its assets in non-investment grade securities with a minimum rating of BB-.

Derivatives will primarily be used to increase the Fund's diversification and investment returns. The Responsible Entity uses derivatives primarily because of their liquidity and efficiency and flexibility in implementing investment strategies. Derivatives will not be used to gear or leverage the Fund.

At the date of the PDS, the Fund does not intend to borrow to achieve the stated investment objectives.