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TEMPLETON GLOBAL BOND FUND
Fund Objective
FTIF Templeton Global Bond Fund seeks to maximise total return consisting of a combination of interest income, capital appreciation and currency gains, by investing in fixed income securities worldwide.
Why Invest in Bonds?
Provides Regular Income and Reduce Impact of Stock Market Volatility.
- Bonds Can Help Reduce Risk
Historically, you would have been subject to more volatility by investing in stocks alone than by diversifying with bonds. As shown below, adding bonds to stocks lowered the overall risk profile of a hypothetical portfolio, without a significant sacrifice in return. For example, during this time period, a 40% allocation to bonds would have reduced volatility by 38%, while achieving 11% higher annualised return than an all-stock portfolio.
Blending Bonds with Stocks Historically Reduced Risk1,2
20-Year Period Ended 31 October 2008
- Bonds Can Help Balance a Stock Portfolio
Stocks may potentially outperform bonds over the long term. However, over the short term, stocks can be volatile, with severe fluctuations in share prices. When the stock market tumbled from 2000 to 2003 and again in 2008, for example, an all-stock portfolio, as represented by the MSCI AC World Index in the chart, would have experienced a much more severe decline than a diversified portfolio that included stocks and bonds.
Effect of a Stock Market Downturn Using Index Performance1
1 January 2000 - 31 October 2008
- Bonds Can Help Preserve Wealth
While bonds' long-term gains have not been as substantial as those of stocks, they historically have experienced less downside risk.
Stocks and Bonds: Best and Worst Annual Returns1
20-Year Period Ended 31 December 2007
The Strategy
FOR OVER 17 YEARS, FTIF TEMPLETON GLOBAL BOND FUND HAS SCOURED THE GLOBE FOR THE BEST BOND VALUES in order to meet its stated goal of providing current income with capital appreciation and growth of income.
- Global Economic Overview
We take a top-down approach, looking at countries around the world and their respective economies, geopolitical risks, interest rates and currencies, to find investment opportunities for the fund. The fund's flexibility to invest in any country or currency, including emerging markets, allows us to take advantage of prevailing macroeconomic trends.
- Local Market Research
Our quantitative and qualitative analysis is supplemented with on-the-ground research. In addition to our own travels and meetings with foreign government and bank officials, we leverage the resources of our offices around the world to provide us with additional local insight on the countries we are considering investing in. We believe this hands-on research is essential to our process and has enabled us to identify investment opportunities and risks over the years that a single country-based manager might miss.
- Portfolio Construction
Our investment decisions are ultimately driven by valuations. We invest in countries where we believe bonds are underpriced and country fundamentals offer the potential for price appreciation. We typically invest in local currencies, though we may hedge our currency exposure depending on valuations. We also take country interest rate environments into account. If rates are poised to rise, we'll invest in short duration debt. In this way, we actively manage interest rate risk on a country-by-country basis.
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"We invest in countries that benefit from strong currencies, solid economic growth and even the potential for falling interest rates, which can boost the value of existing
long-term bonds."
Dr. Michael Hasenstab, Portfolio Manager
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The Benefits
Why Invest in FTIF Templeton Global Bond Fund?
- Regular Monthly Income
The fund aims to provide investors with additional income every month in the form of dividends.3
Attractive Monthly Payouts
(12 months as of November 2008)
| Month/Year |
Dividend Rate3 |
| December 2007 |
0.32% |
| January 2008 |
0.30% |
| February 2008 |
0.34% |
| March 2008 |
0.28% |
| April 2008 |
0.30% |
| May 2008 |
0.29% |
| June 2008 |
0.35% |
| July 2008 |
0.31% |
| August 2008 |
0.42% |
| September 2008 |
0.38% |
| October 2008 |
0.31% |
| November 2008 |
0.28% |
| Total (12 Months) |
3.88% |
- Global Diversification
As of 31 October 2008, FTIF Templeton Global Bond Fund included investments in 123 securities, 21 countries and 20 currencies. Global diversification may help provide a hedge against interest rate cycles, economic conditions and other domestic risks of individual countries.3
Geographic Breakdown
(As of 31 October 2008)
Fund Data
(As of 31 October 2008)
| Monthly Dividend |
on or near the 15th |
| Avg. Credit Quality |
A |
| Avg. Weighted Maturity |
8.39 years |
| Avg. Weighted Duration5 |
4.22 years |
| Assets |
SGD 12.7 billion |
- High Credit Quality
The fund invests primarily in investment grade global government bonds (average credit quality rating "A") backed by the full faith and credit of each respective government, including principal and interest.
Industry Breakdown6
(As of 31 October 2008)
The Results
Strong Performance Against Peer Group and Benchmark
If you had invested S$10,000 in FTIF Templeton Global Bond Fund Class A over the last 5 years and reinvested your dividends, your investment would have grown to S$12,6227 by 31 October 2008. By comparison, a S$10,000 investment in the fund's peer group would have grown to S$9,4368 on average over the same period. If you were to invest S$10,000 in the JP Morgan Global Government Bond Index over the same period, your investment would have grown to S$10,9459.
Growth of a $10,000 Investment Without Sales Charge
31 October 2003 - 31 October 2008
Average Annual Total Return
Periods Ended 31 October 2008 (in SGD)
|
1-Year |
3-Year |
5-Year |
10-Year |
Since Inception
(28 Feb 1991) |
| FTIF Templeton Global Bond Fund |
2.73% |
4.05% |
4.77% |
6.18% |
6.16% |
| Adjusted for 5% Sales Charge |
-2.40% |
2.29% |
3.70% |
5.64% |
5.85% |
BENCHMARK
JP Morgan Global Govt Bond Index |
5.69% |
1.13% |
1.82% |
3.93% |
5.76% |
MORNINGSTAR PEER GROUP10
Morningstar Intl Sector Average |
-5.10% |
-3.34% |
-1.15% |
1.86% |
3.86% |
| Percentile |
Top 16% |
Top 1% |
Top 2% |
Top 6% |
Top 5% |
| Rank/# of Funds |
19/125 |
1/115 |
1/94 |
3/58 |
1/21 |
Awards & Ratings
Recipient of Multiple Awards and Accolades
Awards
The fund has received numerous awards in Singapore for its outstanding performance among peers.
| Award |
Description |
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The Edge-Lipper Singapore Fund Awards 2008
- Best Global Bond Fund over 5 years
- Best Global Bond Fund over 10 years |
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Standard & Poor's Singapore Fund Awards 2007
- Best Fund Fixed Income Global USD-Based over 5 years |
Fund Ratings11
Accolades from rating agencies include:
| Ratings |
Description |
S&P Fund Management Rating12 |
"The fund is top decile over one, three and five years ... (t)he solid performance and flair shown by the manager enable the fund to retain its S&P AA/V5 rating." - S&P |
Lipper Leader Total Return13
Lipper Leader Consistent Return13
Lipper Leader Preservation13 |
Ranked Top 20% for:
Total Return - income from dividends and interest as well as capital
appreciation;
Consistent Return - relatively superior consistency and risk-adjusted
returns; and
Preservation - superior ability to preserve capital in a variety of markets |
Overall Morningstar RatingTM14 |
The Fund received a 5-Star Overall Morningstar RatingTM. |
Source: Franklin Templeton Investments and Morningstar. All performance figures calculated based on NAV-NAV, in SGD terms and dividends reinvested, as at 31 October 2008. Fund performance relates to A(Mdis) USD Class. Past performance is not indicative of future performance.
1Source: Morningstar, 31 October 2008. Bonds as represented by JP Morgan Global Government Bond Index. Performance in SGD terms and includes reinvestment of interest and dividends. |
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| 2Risk is measured by the annualised standard deviation of monthly total returns. Successive data points on the line represent incremental changes of 20% in the portfolio allocations from 100% bonds/0% stocks to 0% bonds/100% stocks. Portfolios were rebalanced monthly. Indexes are unmanaged, and one cannot invest directly in an index. |
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| 3Dividend rate is calculated as dividend per share divided by the NAV on record date. Dividends are not guaranteed and are at the discretion of the manager. |
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| 4Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment losses. |
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| 5Duration shown is the option-adjusted duration. Duration is an indication of a fund's sensitivity to changes in interest rates. The option-adjusted duration formula takes into account embedded call options and redemption features that impact a bond's expected cash flow, and thus its interest rate sensitivity. |
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| 6Figures as percentage of total fixed income. Due to rounding, the sum of portfolio holdings may not equal to 100%. |
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| 7Assuming no sales charge. Investment in fund over period would be worth S$11,991 after 5% sales charge. |
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| 8Assuming no sales charge. Investment in peer group would be worth S$8,965 after 5% sales charge. Morningstar International Sector refers to the Morningstar Fixed Income Global USD Based category. |
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| 9Index is unmanaged and includes reinvestment of dividends or interest. One cannot invest directly in an index. |
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| 10Morningstar Intl Sector Average referred to is the Morningstar Fixed Income Global USD Based Category. |
| 11All fund ratings as of 31 October 2008. |
| 12S&P Fund Rating - © 2008 The McGraw-Hill Companies, Limited trading as Standard & Poor's. All rights reserved. |
| 13Lipper ratings for Total Return reflect funds' historical total return performance relative to peers. Lipper ratings for Consistent Return reflect funds' historical risk-adjusted returns, adjusted for volatility, relative to peers. Lipper ratings for Preservation reflect funds' historical loss avoidance relative to peers. The ratings are subject to change every month and are based on an equal-weighted average of percentile ranks for the Total Return and Consistent Return metric over three-, five-, and ten-year periods (if applicable). Lipper Leader ratings are not intended to predict future results, and Lipper does not guarantee the accuracy of this information. More information is available at www.lipperweb.com. Lipper Leader Copyright - © 2008, Reuters, All Rights Reserved. |
| 14Overall Morningstar Rating - © 2008 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. |
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