Franklin Advisers Inc

Item 5 (“Fees and Compensation – FAV’s Other Fees and Expenses – Underlying Manager Fees
and Transition-Related Costs in Manager-of-Managers Arrangements”) for more information
regarding fees charged in Manager-of-Managers arrangements.

FAV addresses such conflicts of interest in several ways. First, the asset allocation and Underlying
Manager selection and retention advice provided by FAV is based on a combination of quantitative
and fundamental and market-related investment analyses. Additionally, any asset allocation
decisions are subject to any guidelines established between FAV and the client for the Account
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(e.g., target asset allocations, allocation bands, or limitations on the aggregate investments that
may be made in Funds or Sleeves managed by FAV or its affiliates). Likewise, FAV’s asset
allocation and fund/manager selection is subject to specific quantitative and qualitative criteria
and/or the review and oversight of the client or its designee and may be subject to the prior approval
of the client (in the case of a non-discretionary client relationship). In addition to the foregoing, FAV
seeks to act in accordance with its fiduciary obligations to each client when making allocation
recommendations.

Proprietary Index Methodologies and Self-Indexing Funds
From time to time, FAV will develop an index using a proprietary methodology. With respect to
certain Affiliated Funds that seek to track the investment results of one or more of such indices
(each a “Self-Indexing Fund”), FAV’s activities relating to the development of, and any subsequent
changes to, these indices could result in the potential ability of FAV to manipulate the underlying
indices to the benefit or detriment of the Self-Indexing Funds or other Affiliated Funds. FAV further
recognizes the potential for conflicts of interest that arise for FAV and certain of its personnel who
have access to, or knowledge of, changes to an underlying index’s composition methodology or
the constituent securities in an underlying index prior to the time that the holdings of the Self-
Indexing Funds are publicly disseminated. This information could be deemed material, non-public
information. FAV believes that protections under the 1940 Act, its Code of Ethics and FAV’s policies
and procedures, including applicable “firewall” procedures, help to mitigate these potential
conflicts of interest.

Please see Item 11 (“Code of Ethics, Participation or Interest in Client Transactions and Personal
Trading”) for additional information regarding the Code of Ethics for FAV and the other Advisers.

Related Service Providers for Certain Separate Accounts and Model Programs
FAV has engaged its affiliate, Franklin Templeton Private Portfolio Group, LLC (formerly known as
Legg Mason Private Portfolio Group, LLC) (“FTPPG”)) to act as a service provider to FAV with
respect to a limited number of separate accounts, typically with high net-worth individuals. Under
this engagement, FTPPG provides operational support on behalf of FAV (the “Support Services”).
FTPPG has retained Market Street Advisors, Inc., dba “Archer,” a company not affiliated with FAV
or FTPPG, to provide some or all of the Support Services as its delegate with respect to separate
accounts. FAV engages FTPPG to provide FAV with Support Services with respect to Fund Model
Portfolios utilized in FAV’s non-discretionary advisory arrangements for Model Portfolio programs.
In exchange for the Support Services for separate accounts, FAV pays FTPPG a blended fee
depending on the Account’s assets under management and Account type. Such fees are paid by
FAV out of its own resources.

In certain model delivery and digital advisory programs, FAV provides Model Portfolios, on a non-
discretionary basis, to Model Program Sponsors through a platform operated by AdvisorEngine Inc.
(“AdvisorEngine”), an affiliate, who provides various non-advisory services to the Model Program
Sponsors in separate arrangements. FAV pays or credits a license fee to AdvisorEngine in
connection with these arrangements.

Item 7          Types of Clients
The Advisers currently provide investment advisory and portfolio management services under
investment management agreements to clients in jurisdictions worldwide, which include registered
open-end and closed-end funds and unregistered funds, as well as Separate Accounts. In addition,
certain Advisers’ assets under management include assets in funds that are sold outside of the
United States, including those that are similar to U.S. Registered Funds (“Non-U.S. Registered
Funds”) and those that are similar to U.S. Private Funds. Certain Advisers also provide sub-
advisory services to Sub-Advised Accounts sponsored by other companies, which may be sold to
the public under the brand names of those other companies or on a co-branded basis, and advisory
or sub-advisory services to clients, other investment advisers and program sponsors in connection
with SMA Programs as described in FAV’s SMA Program Brochure, which is available upon
request. Additionally, at least one Adviser provides model investment portfolios to certain
unaffiliated investment advisers and other financial institutions for use in connection with advisory
service programs they provide to their clients, as well as advisory services through digital programs
using proprietary investment algorithms. For information about the types of clients of a particular
Adviser, please see that Adviser’s brochure, including below for FAV.

An Adviser, if applicable, will consider each prospective Separate Account or Sub-Advised Account
client on an individual basis. An Adviser generally will accept management of a new Separate
Account only if a minimum amount of assets is invested unless special circumstances are present.
See an Adviser’s brochure for more details, including below for FAV. An Adviser generally will
accept management of a new Sub-Advised Account only if a minimum of $250 million in assets is
invested by the end of the Sub-Advised Account’s third year under management with the Adviser,
unless special circumstances are present. Special circumstances for Separate Account and Sub-
Advised Account clients include the existence of a related account already managed by the
Advisers or an affiliate. Minimum investment requirements for investing in U.S. Registered Funds,
Private Funds and other pooled investment vehicles managed by the Advisers are generally set
forth in the prospectus, PPM or other offering documents of such client. In some cases, Account
minimums are negotiated or waived at the applicable Adviser’s discretion.

U.S. REGISTERED FUNDS
Franklin Templeton’s proprietary retail open-end and closed-end investment companies are
registered under the 1940 Act and their securities are registered under the Securities Act of 1933
(“Securities Act”) and are offered under one of the Franklin Templeton brand names. These funds
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consist of various open-end investment companies serving the institutional and retail market,
including variable insurance funds and smart beta, passive and actively managed ETFs.
Additionally, certain Advisers provide investment management and related services to a number
of closed-end investment companies and/or a number of money market funds whose shares are
traded on various major U.S. stock exchanges. Funds managed by separate Advisers will, from
time to time, have a common board of directors/board of trustees. Some Advisers also provide
sub-advisory services to products regulated under the 1940 Act that are sponsored by third parties.

INSTITUTIONAL SEPARATE ACCOUNTS
Advisers with institutional Separate Account clients generally provide investment management
services to these clients in accordance with the investment objectives, strategies, guidelines and
restrictions that are agreed to between the client and the Adviser in the investment management
agreement or other similar agreement, which may be amended from time to time when mutually
agreed to in writing.
The Advisers provide a broad array of investment management services to their institutional clients,
which include, from time to time, corporations and other business entities, charitable foundations,
endowment funds, insurance companies, state or municipal entities, sovereign wealth funds and
foreign government and private institutions, and government and corporate defined contribution
and pension plans.

PRIVATE FUNDS
As a general matter, each Private Fund is managed in accordance with its investment objective,
strategy, guidelines and restrictions, as described within the Private Fund’s PPM . A Private Fund
is not tailored to the individualized needs of any particular Private Fund Investor, except in limited
cases where the Private Fund is established for the benefit of a single Private Fund Investor. In
addition, an investment in a Private Fund does not, in and of itself, create an advisory relationship
between the Private Fund Investor and an Adviser. Therefore, Private Fund Investors must consider
whether a Private Fund meets their investment objectives and risk tolerance prior to making an
investment in that Private Fund. Information about each Private Fund can be found in its PPM or
other offering documents, which are available to current and prospective Private Fund Investors only
through a broker-dealer affiliated with the Advisers or another authorized intermediary. In addition,
certain non-U.S. affiliates of the Advisers may act as placement agents with respect to the
distribution of certain Private Funds to Private Fund Investors outside the United States. While this
brochure may be provided to, and include information relevant to, Private Fund Investors, it is
designed solely to provide information about the Advisers and should not be construed as an offer
or solicitation for interest in any Private Fund.
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