Hedged strategies,a flexible anddiversifiedapproach

What Are the Risks?

All investments involve risks, including possible loss of principal. The market values of securities owned by the fund will go up or down, sometimes rapidly or unpredictably. The fund's performance depends on the manager's skill in selecting, overseeing, and allocating fund assets to the sub-advisors. The fund is actively managed and could experience losses if the investment manager's and sub-advisors' judgment about particular investments made for the fund's portfolio prove to be incorrect. Some sub-advisors may have little or no experience managing the assets of a registered investment company. Foreign investments are subject to greater investment risk such as political, economic, credit and information risks as well as risk of currency fluctuations. Investments in derivatives involve costs and create economic leverage, which may result in significant volatility and cause the fund to participate in losses (as well as gains) that significantly exceed the fund's initial investment. Lower-rated or high yield debt securities involve greater credit risk, including the possibility of default or bankruptcy. Currency management strategies could result in losses to the fund if currencies do not perform as the investment manager or sub-advisor expects. The fund may make short sales of securities, which involves the risk that losses may exceed the original amount invested. Merger arbitrage investments risk loss if a proposed reorganization in which the fund invests is renegotiated or terminated. Liquidity risk exists when securities have become more difficult to sell, or are unable to be sold, at the price at which they have been valued. Please see the prospectus for information on these as well as other risk considerations.

Investment Risk

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Performance data quoted represents past performance, which does not guarantee future results. Most funds offer multiple share classes. Share classes are subject to different fees and expenses, which will affect their performance. Certain share classes are only offered to eligible investors as stated in the prospectus. Different minimums may apply to clients of certain service agents. All classes of shares are not available through all distribution channels. See the Fund's prospectus for additional information. CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute. Indexes are unmanaged and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. Important data provider notices and terms available at www.franklintempletondatasources.com. You need Adobe Acrobat Reader to view and print PDF documents. Download a free version from Adobe's website. Investors should carefully consider a fund's investment goals, risks, sales charges and expenses before investing. The prospectus contains this and other information. Please read the prospectus carefully before investing or sending money. Franklin Distributors, LLC. Member FINRA, SIPC All entities mentioned are Franklin Templeton affiliates companies. Prior to July 7, 2021, Franklin Templeton Distributors, Inc., and Legg Mason Investor Services, LLC served as mutual fund distributors for Franklin Templeton. Investment Products: NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE. Reports and other information about the fund are available on the EDGAR Database on the SEC's Internet site at www.sec.gov. FINANCIAL ADVISORS: Please note that not all share classes may be available for sale at your firm. Please call Franklin Templeton at (800) DIAL BEN/342-5236 for more information.

1. Value-at-Risk (VAR): Measures potential loss in value for a portfolio over a defined period for a given confidence level. For example, a projected one-month VaR calculated at a 95% confidence level implies there is a 5% chance the portfolio will lose that VaR amount or more over that time period, assuming that portfolio holdings remain the same. It's important to note that the actual risk an investment experiences may be higher or lower than the projected VaR estimate, as both portfolio positions and market volatility levels are subject to change.
2. Beta: A measure of an investment product's volatility relative to the market, as represented by stated market index. A beta greater than 1.0 indicates volatility greater than the market.
3. Standard Deviation: A measure of the degree to which an investment product's return varies from the average of its previous returns. The larger the standard deviation, the greater likelihood (and risk) that a product's performance will fluctuate from the average return.
4. (For Class A only) Prior to 9/10/18 these shares were offered at a higher initial sale charge of 5.75%; thus actual returns would have differed. Total returns with sales charges have been restated to reflect the current maximum initial sales charge of 5.50%.
5. Public Offering Price – the purchase price for each share of the fund on a given day. It includes the maximum initial sales charge, if any.
6. Net Asset Value - the amount per share you would receive if you sold shares that day. NAV Change indicates a change in the Net Asset Value from the previous business day.
7. The index data referenced herein is the property of Intercontinental Exchange ("ICE") and/or its licensors and has been licensed for use by Franklin Templeton. ICE and its licensors accept no liability in connection with this use. See www.franklintempletondatasources.com for a full copy of the Disclaimer.
8. The S&P 500 Index is solely utilized as a reference benchmark to illustrate difference in behavior between U.S. equity markets and the fund. However, the S&P 500 Index is not fully reflective of the risk profile of the fund, which is not limited to investing solely for long U.S. equity market exposures.
10. (For Class A only) Maximum sales charges have been updated as of August 15, 2022, please refer to the Fund's prospectus for more information.
11. Gross Expense Ratio reflects the total annual operating expenses for the share class shown, prior to the deduction of any waiver or reimbursement. Actual expenses may be higher and may impact portfolio returns. Net Expense Ratio reflects total expenses after any fee waivers, implemented expense caps or reimbursements. If a fund has contractual fee waivers, expense caps and/or reimbursements, the expiration date can be found by clicking on the information button next to the net expense ratio. Additional amounts may be voluntarily waived and/or reimbursed and may be modified or discontinued at any time without notice. Expense ratios are as of the most recent prospectus or annual report.
12. Net Expense Ratio represents the expense ratio applicable to investors.
13. (For Class A shares only) For net asset value (NAV) purchases, a 1% contingent deferred sales charge (CDSC) may apply to shares redeemed within 18 months. (For Class C shares only) A 1% contingent deferred sales charge (CDSC) may apply to shares redeemed within 12 months.
14. Dividend Expense and Borrowing Fees for Securities Sold Short: Costs associated with the fund's short positions. The fund's manager and sub-advisors use short positions in an attempt to either protect against losses or provide an additional source of returns versus long-only strategies. There is no guarantee that these positions will perform as the fund's manager or sub-advisors intended, and losses may occur.
15. Additional Expenses: Includes distribution and service (12b-1) fees; acquired fund fees and expenses; and other expenses.
16. Source: Hedgemark. Actual Allocation is a percentage of invested capital into fund managers (sub-advisors or co-managers) as of the end of the period. Percentage may not total 100% due to rounding. Target Allocations reflect end of period target allocations. The Fund may shift allocations among strategies at any time. Further, K2 may determine in its sole discretion not to allocate to one or more of the strategies and or to add new strategies. Accordingly the above target allocations are presented for illustrative purposes only, and should not be viewed as predictive of the ongoing composition of the fund's portfolio (and its managers), which may change at any time.
17. Gross Exposure: Gross exposure is the sum of the absolute value of all exposures, directly or through derivatives, as a percentage of total assets. The sum of the percentage of long positions and short (in absolute terms) positions.
18. Long Exposure: Sum of the long exposures, directly or through derivatives, as a percentage of the total assets.
19. Net Exposure: Net exposure is the sum of the total value of all exposures, directly or through derivatives, as a percentage of total assets. The percentage value of the long positions less the percentage value of the short positions.
20. Short Exposure: Sum of the short exposures, directly or through derivatives, as a percentage of total assets.
21. Source: Hedgemark. The Top Ten Long and Short Exposures represent the ten largest long and short equity issuer exposures of Franklin K2 Alternative Strategies Fund as of the date indicated. Issuer exposures include actual security holdings and single security exposures obtained through the use of derivatives. Direct security holdings and derivatives exposures are combined for calculation purposes. The portfolio manager for the fund reserves the right to withhold release of information with respect to holdings that would otherwise be included in the top 10 holdings list. The information provided is not a recommendation to purchase, sell, or hold any particular security. Information is historical and may not reflect current or future portfolio characteristics.