TAKEN ON TRUST DISRUPTING MONEY DISRUPTION Not FDIC

TAKEN ON TRUST: DISRUPTING MONEY DISRUPTION Not FDIC Insured | May Lose Value | No Bank Guarantee

Disruptive technologies are changing our world CRYPTOCURRENCIES Revolutionizing how we create, store, value, and exchange money BLOCKCHAIN Disrupting financial services DIGITAL PAYMENTS Transforming virtual monetary exchange across the globe 1

Agenda • Deciphering the value of cryptocurrencies • The expanding role of blockchain • Moving towards a cashless society 2

CRYPTOCURRENCIES— DECIPHERING THE VALUE

Crypto craze Why bitcoin could soon be worth more than gold Bitcoin trades full speed ahead Bitcoin may now be the biggest financial bubble of all time Time Magazine The Wall Street Journal CNBC February 23, 2017 June 7, 2017 December 14, 2017 Bitcoin tumbles nearly 30%; Coinbase temporarily halts trading Bitcoin loses more than a third of value over a week The thrill is gone as the frenzy over bitcoin fizzles BBC News The Wall Street Journal December 2017 April 13, 2018 Los Angeles Times December 2017 4

What is cryptocurrency, exactly? Fiat Money Physical Bills and coins Unlimited supply Government can produce as needed Issued by a government Centralized: issued and controlled by laws and banks Cryptocurrency Digital 1 private and 1 public piece of code Limited supply Most have a set maximum Produced by computers Decentralized: no government involvement 5

Key characteristics of cryptocurrencies Uses encryption techniques to control the creation of money and to verify the transfer of funds Has no intrinsic value in that it is not redeemable for another commodity, such as gold Has no physical form and exists only in the network Its supply is not determined by a central bank and the network is completely decentralized 6

How a bitcoin transaction is processed 2 This transaction, among others, is broadcast to the network. 1 Bitcoin payer opens bitcoin “wallet” and initiates payment. 4 Miners processing 6 Miners publish the “block” reach consensus on what the “blockchain” will look like. 3 Specialized computers on the network, “miners” are continuously combining transactions into a “block. ” 5 Miners are compensated with newly minted bitcoin for providing computing power. 8 The payee the new blockchain to the network. receives bitcoin into their “wallet. ” 7 Transactions are recorded in the latest block. 7

Increasing popularity: red hot or red flag? Capital raised by ICOs $12 B 2018 55. 8% of Initial Coin Offerings (ICOs) die within four months 2 $240 M 20161 January 2017 April 20182 1. Source: Fabric Ventures Token Data, “The State of the Token Market: A Year in Review and an Outlook for 2018, ” January 2018. 2. Source: Boston College, “Digital Tulips? Returns to Investors in Initial Coin Offerings, ” May 2018. 8

The challenge for authorities: who regulates and how? Cryptocurrency Designation Approach US Internal Revenue Service Property Subject to capital gains tax US Treasury Department Money-Like Does not consider it legal tender US Commodity Futures Trading Commission Commodity Has placed virtual currencies on “heightened review” Security The SEC takes increasingly strong action against unregistered initial coin offerings Regulatory Body US Securities and Exchange Commission 9

Cryptocurrencies CURRENT FUTURE The media has overly focused on the price. It’s worth paying attention to what’s happening within the area of cryptocurrencies, beyond price fluctuations, to how these technologies may disrupt businesses in many industries. We expect only a handful to survive. A clearer regulatory framework is likely to take hold. The cryptocurrencies that survive will likely have a particular use case where there is value added by applying the underlying technology, like blockchain. This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy, including investing in cryptocurrencies or the technologies mentioned in this presentation. 10

BLOCKCHAIN’S EXPANDING ROLE

What is blockchain? Record of transactions, like a traditional ledger A blockchain allows participants to reach consensus on a shared digital history, without a middleman Designed to store information in a way so that it is transparent and unalterable, where tampering is easily detected by other users 12

Example: mortgage process using private blockchain 1 The mortgage application is represented online as a “block” 4 Loan offer contract is generated 7 Land title is also transferred and recorded 2 The block is broadcasted to third parties in home buying process 5 Homebuyer signs with their private key 8 Homebuyer is now a homeowner 3 Through data sharing on the blockchain network, homebuyer’s application is verified 6 Funds are transferred, and transaction is recorded 13

Pan-sector opportunities for blockchain Insurance • Fraud detection • Risk prevention • Claims prevention and management • New distribution and payment models Real Estate • Payments • Record keeping transfers • Paperless mortgage applications and payments Healthcare • Allow hospitals to safely store medical records Ride Sharing • Decentralized versions of peer-topeer ride sharing • Secure medical record sharing • Improved data security This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy, including investing in cryptocurrencies or the technologies mentioned in this presentation. 14

Blockchain • We think blockchain may have promising use cases and we are actively exploring investment opportunities in this area. • In terms of long-term winners and losers, we see opportunities in places where large networks have been built up, whether they are physical, technological or people. This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy, including investing in cryptocurrencies or the technologies mentioned in this presentation. 15

MOVING TOWARD A CASHLESS SOCIETY

The evolution of payment methods Biometrics FROM BARTER TO BIOMETRICS Mobile Chip Barter Gold, silver, copper Minted coins Paper money Credit, debit cards Checks For illustrative purposes only. 17

Factors supporting the pace of change IMPACT OF TECHNOLOGY SHIFTING CUSTOMER EXPECTATIONS CHANGING GLOBAL DEMOGRAPHICS RISE OF E-COMMERCE Logos are trademarks of their respective owners and are used for illustrative purposes and should not be construed as an endorsement or sponsorship of Franklin Templeton Investments. 18

Emerging markets’ sweet spot Emerging markets account for 83% of the global population 1 54% of the emerging market population is under the age of 301 The need for financial inclusion: nearly 2 billion adults worldwide are unbanked 2 Connected: In 2017, nearly 80% of adults in emerging economies had a mobile phone. 2 1. Source: United Nations, Department of Economics and Social Affairs, Population Division, June 2017. 2. Source: The Global Findex Database, World Bank Group, 2017. 19

E-payments ecosystem • Western Union Remittance • Independent Service • Venmo • Square Provider Point of Sale (POS) • Merchant Service Provider Mobile money Merchant acquirers • Apple Pay • Google Wallet • Mastercard Master. Pass Merchant processors Card networks Mobile wallet • Apple Watch Wearables • Jawbone • UP 4 Financial institution Card issuer Merchant's bank Consumer’s bank Social Payment Systems Chip and pin cards • Paypal • Samsung • Visa • Mastercard Stored value wallet • Snapcash • Twitter Buy • Digital Gift Cards 20

Digital payment systems CURRENT FUTURE New forms of innovative technology and digital payment systems have the potential to facilitate the exchange of goods and services within global economies in ways we are only just beginning to see. Our interactions with the firms we are researching indicate the next several years will be an important time for the advancement of digital payments. This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy, including investing in cryptocurrencies or the technologies mentioned in this presentation. 21

Recap- our views • Cryptocurrencies—still early days, closely monitoring, waiting for more regulatory clarity • Blockchain—we are actively exploring ways the technology can be embedded in the right industries and companies • Digital payments—plenty of opportunity today and in the future This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy, including investing in cryptocurrencies or the technologies mentioned in this presentation. 22

IMPORTANT LEGAL INFORMATION This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy, including investing in cryptocurrencies or the technologies mentioned in this article. Companies named in this article may or may not be held by any investment vehicle advised by Franklin Equity Group. This material does not constitute legal or tax advice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. All investments involve risks, including possible loss of principal. Buying and using a blockchainenabled cryptocurrency, such as bitcoin, carries risks. Speculative trading in cryptocurrencies, many of which have exhibited extreme price volatility, carries significant risks. Among other risks, interactions with companies claiming to offer cryptocurrency payment platforms and other related products and services may expose users to fraud. Blockchain technology is a new and relatively untested technology and may never be implemented to a scale that provides identifiable benefits. Investing in cryptocurrencies and ICOs is highly speculative, and an investor can lose the entire amount of their investment. If a cryptocurrency is deemed a security, it may be deemed to violate federal securities laws. There may be a limited or no secondary market for cryptocurrencies. Data from third-party sources may have been used in the preparation of this material and Franklin Templeton Investments (“FTI”) has not independently verified, validated or audited such data. FTI accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments opinions and analyses in the material is at the sole discretion of the user. Important data provider notices and terms available at www. franklintempletondatasources. com. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information, talk to your financial advisor, call us at (800) DIAL BEN/342 -5236 or visit franklintempleton. com. Please carefully read the prospectus before you invest or send money. Franklin Templeton Distributors, Inc. One Franklin Parkway San Mateo, CA 94403 -1906 franklintempleton. com © 2018 Franklin Templeton Investments. All rights reserved. DMNY PPT 8/18