Templeton - The Uncompromising Pursuit of Value

More than sixty years ago, Sir John Templeton created what has become one of the most distinguished investment management firms in the world. The Templeton organisation was based on a unique vision combining five ideas:

• A global perspective rooted in the belief that opportunity has no citizenship
• A strong commitment to value investing
• A disciplined investment process
• A reliance on original research
• An unwavering faith in the long term

Investment Philosophy

Templeton are value investors who use a rigorous bottom-up approach. We examine all of the traditional measures of value, with emphasis on a company's current price relative to its future earnings potential, typically within a 5-year horizon. We look for bargain stocks that we believe are underpriced relative to their future potential. Templeton analysts present candidate companies to their fellow analysts for review prior to placing them on the Bargain List, a central point of the Templeton investment process and a tool used in constructing all of our portfolios.

The Templeton equity investment approach, which focuses on absolute value and long-term appreciation, distinguishes our portfolios from others. We believe international diversification provides investors with greater opportunities and may reduce overall portfolio risk.

We often invest in companies that are currently out-of-favour. This requires discipline, courage, patience and the ability to discriminate between short-term noise and long-term trends and values. We believe that by systematically removing emotion from investment decisions, our clients may benefit from the long-term efficiency of the market.

Global Investors

At Templeton, we have always been global investors for the simple reason that we believe global diversification offers investors the optimum risk/reward profile. We seek value wherever it can be found, without rigid geographic limitations. Country and industry weightings are residuals of the stock selection process; they do not drive it. This enables us to incorporate our best ideas into every portfolio, subject only to its specific geographic mandate and investment guidelines.

Focused Research

Original research is a crucial element of the Templeton investment approach. We were one of the first money managers to establish a worldwide research presence that covers industries on a global basis. Today, the research organisation has offices in Edinburgh, Fort Lauderdale, Hong Kong, Melbourne, Nassau and Toronto. Emerging markets are covered from additional research offices located across the globe.

Our early entry and long-standing presence in many markets gives us direct access to economic and corporate decision-makers. Our network of research sources includes local analysts, bankers, accountants, and independent research firms throughout the world.

These resources are used in conjunction with our internal analytical efforts to evaluate securities for possible inclusion in individual portfolios. The end product of all research efforts is Templeton's proprietary research database, which is created by the collaborative efforts of the entire global equity research team.

A portion of this dynamic database consists of securities that we believe are bargains and can be used to construct new portfolios, as well as to invest new cash. As a security's valuation changes, it may move to the hold list or to the source of funds list.