Where Do Fixed Income Markets Stand?

Finding Opportunities in the Market with Franklin Templeton

Investment Returns

Over the past 2 years, characterized first by unprecedented volatility and then by an indiscriminate rally across assets, many fixed income sectors have delivered strong, positive returns¹ .

Total Returns of Various Fixed Income Sectors as of 28 February 2010²
Investors have been strongly rewarded in the fixed income spectrum over the past 2 years.

Credit Spreads

After witnessing dramatic widening and then tightening of credit spreads, valuations in many sectors currently are at more normalized levels. However many areas of the market continue to have risk premiums above historical averages. This means that in these areas, valuations still remain attractive. Moreover, fundamentals have improved and markets have stabilized.

Current Credit Spreads vs. 20-Year Average (or since index inception)³
Spreads have narrowed from historic wide levels, but opportunities remain in many sectors such as credit and emerging market debt.

Yields

On a nominal basis, yields remain healthy in many sectors and spread tightening has resulted in strong demand and an improved fundamental outlook. Therefore, total returns from fixed income investments in 2010 will likely come more from interest income as compared to price gains.

	Award-Winning Franklin Templeton Funds to Tap on Fixed Income Opportunities
	Fund	Award	Category
	FTIF Templeton Global Bond Fund Mainly invests in a portfolio of global government bonds Aims to achieve investment return from a combination of interest income, capital appreciation and currency gains 12-months yield4: 4.6%	The Edge-Lipper Singapore Fund Awards 2010	Best Global Bond Fund over 10 Years
		The Edge-Lipper Singapore Fund Awards 2009	Best Global Bond Fund over 3 Years Best Global Bond Fund over 5 Years Best Global Bond Fund over 10 Years
		The Morningstar Fund Awards 2008 Singapore	Best in Dollar Bond category
		Asia Asset Management Awards 2009	Best Global Bond Fund over 3 Years
		The Edge-Lipper Singapore Fund Awards 2008	Best Global Bond Fund over 5 Years Best Global Bond Fund over 10 Years
		Standard & Poor's 2007 Singapore Fund Awards	Best Fund Fixed Income Global USD-based over 5 Years
		Standard & Poor's 2006 Singapore Fund Awards	Best Fund Fixed Income Global USD-based over 3 Years Best Fund Fixed Income Global USD-based over 5 Years Best Fund Fixed Income Global USD-based over 10 Years
		The Edge-Lipper Singapore Fund Awards 2006	Best Global Bond Fund over 3 Years Best Global Bond Fund over 5 Years Best Global Bond Fund over 10 Years
	FTIF Templeton Global Total Return Fund Mainly invests in a portfolio of global government and corporate bonds Aims to achieve investment return from a combination of interest income, capital appreciation and currency gains 12-months yield4: 6.8%	The Edge-Lipper Singapore Fund Awards 2010	Best Global Bond Fund over 3 Years    Best Global Bond Fund over 5 Years
		Standard & Poor's 2007 Singapore Fund Awards	Best Fund Fixed Income Global USD-based over 3 Years
	FTIF Templeton Asian Bond Fund Mainly invests in Asian government bonds Aims to achieve investment return from a combination of interest income, capital appreciation and currency gains 12-months yield4: 4.3%	The Edge-Lipper Singapore Fund Awards 2010	Best Asia Pacific Bond Fund over 3 Years
		The Edge-Lipper Singapore Fund Awards 2009	Best Asia Pacific Bond Fund over 3 Years
	FTIF Templeton Emerging Markets Bond Fund Mainly invests in emerging market bonds Aims to achieve investment return from a combination of interest income and capital appreciation. 12-months yield4: 5.9%	The Edge-Lipper Singapore Fund Awards 2010	Best Global Emerging Markets Bond Fund over 3 Years Best Global Emerging Markets Bond Fund over 5 Years
		Morningstar Fund Awards 2007 Singapore	Best in Emerging Markets Bond category

For more information on the Luxembourg domiciled Franklin Templeton Funds, please contact our authorized distributors.

Important Information

This document is for information only and does not constitute investment advice or a recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. Investments in Franklin Templeton Investment Funds ("Fund") are not obligations of, deposits in, or guaranteed by the distributors or any of their affiliates. You may contact Templeton Asset Management Ltd or its appointed distributors for copies of the prospectus. An investment in the Fund is subject to investment risks, including the possible loss of the principal amount invested. Investors should read the prospectus for details before investing. The value of the shares and the income from them may fall as well as rise. Past performance is not necessarily a guide to future performance. This investment product is not available to U.S. and Canadian residents and U.S. citizens. Investors may wish to seek advice from a financial adviser before making a commitment to invest in shares of the Fund.

Footnotes

1. Past performance is not necessarily indicative of future results.
2. Source: Morningstar Workstation, as of 28/02/2010, in USD terms. US high yield refers to the Credit Suisse High Yield Index, Bank Loans refer to the Credit Suisse Leveraged Loan Index, US CMBS refers to the Barclays Capital CMBS ERISA Eligible Total Return Index, Emerging Markets refer to the JP Morgan EMBI Global Traded Index, US ABS refer to the Barclays Capital ABS Total Return Index, US IG Corporates refer to the Barclays Capital US Corp IG Total Return Index, US Municipal Bonds refer to the Barclays Capital Minicipal Total Return Index, US TIPS refer to the Barclays Capital US Treasury US TIPS Total Return Index, US MBS refer to the Barclays Capital US MBS Total Return Index, Global Bonds refer to the Citi WGBI Index, US Agencies refer to the Barclays Capital US Agency Total Return Index and US Treasuries refer to the Barclays Capital Treasury Total Return Index. Indexes are unmanaged and one cannot directly invest in an index.
3. Source: Barclays Capital, Credit Suisse and JP Morgan, as of 28/02/2010. Please refer to footnote 2 for the indices used.
4. As of 5 March 2010. 12-months yield is calculated as the sum of the monthly dividend per share divided by the NAV on record dates, for the 12-month period of 7 April 2009 to 5 March 2010, and relates to the A(mdis)USD share class. Dividends are not guaranteed and are at the discretion of the manager.