FRANKLIN K2 GLOBAL MACRO OPPORTUNITIES FUND CLASS R (FKMRX) Exchange: NMFQS

The Fund seeks capital appreciation over a full market cycle. A full market cycle is a period of time that spans a full business and economic cycle, which may include periods of rising and declining interest rates. The Fund seeks to achieve this goal by allocating its assets across global macro-focused investment strategies, which are "non-traditional" or "alternative" strategies that generally focus on macro-economic opportunities across numerous markets and investments. Macro-economic refers to economy-wide factors such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels. Investments may be long or short and are based on the relative value or direction of a market, an index, a currency, an interest rate, a commodity or any macroeconomic variable. Long positions benefit from an increase in the price of the underlying instrument or asset class, while short positions benefit from a decrease in that price.The Fund is structured as a multi-manager fund (meaning the Fund's assets are managed by multiple investment advisors) and the Fund’s investment manager, K2/D&S Management Co., L.L.C. ("K2 Advisors" or the “Investment Manager”), has overall responsibility for the Fund’s investments. The Investment Manager principally allocates the Fund’s assets among multiple sub-advisors who, as of the date of this prospectus, are unaffiliated with K2 Advisors and who are implementing one or more global macro strategies ("Sub-Advisors"). The Investment Manager is responsible for allocating and re-allocating the Fund’s assets among the Sub-Advisors and/or any investments in which the Fund may invest and for cash management. The Investment Manager’s quantitative and qualitative oversight of the Fund’s investment program aims to allocate assets among various strategies and select Sub-Advisors and/or investments that it believes are well-positioned to take advantage of investment opportunities while preserving capital.In order to achieve the Fund’s investment goal, the Sub-Advisors use macroeconomic data, market data, and/or their knowledge of the geopolitical landscape (i.e., knowledge of current events and conditions and the impact such events and conditions may have on financial markets and various trading strategies), which are central to the global macro investment process. Global macro strategies are broadly categorized into two categories – discretionary (seeking to profit by tactically investing across different asset classes, markets, including emerging markets, and investment opportunities through a combination of fundamental market analysis and quantitative modeling) and systematic (seeking to profit by utilizing quantitative models to identify investment opportunities across different asset classes and markets in order to construct a portfolio of investments). Quantitative trading models are proprietary systems that rely on mathematical computations to identify trading opportunities. Sub-Advisors may use strategies which include a combination of discretionary and systematic focused strategies.The Fund’s principal investments include both U.S. and foreign (including emerging markets) securities and exchange traded and over-the-counter (“OTC”) derivative instruments, and may include asset classes such as equities, fixed income, interest rates, currencies or commodities. The Fund invests primarily in a wide range of derivative instruments that provide the Fund with broad exposure, either long or short, to these various asset classes. Long positions benefit from an increase in the price of the underlying instrument or asset class, while short positions benefit from a decrease in that price. The Fund may use derivatives for both hedging and non-hedging (investment) purposes, although no Sub-Advisor is required to hedge any of the Fund’s positions or to use derivatives. When used for hedging purposes, a derivative instrument could be used to protect against possible declines in a security’s or other investment’s value. In addition, derivatives may be used for currency management to hedge exposure to one or more currencies.The Sub-Advisors will use a variety of derivatives to implement their respective investment strategies, which may include: (i) futures contracts, including equity index futures, currency and currency index futures, interest rate/bond futures and commodity and commodity index futures, and options thereon; (ii) swaps, including commodity total return swaps, currency swaps, interest rate swaps and credit default swaps, and options thereon; (iii) currency forward contracts; and (iv) options, including call options and put options on indices, individual securities, currency and exchange-traded funds. As a result of the Fund's use of derivatives, the Fund may have economic leverage, which means the sum of the Fund's investment exposures through its use of derivatives may significantly exceed the amount of assets invested in the Fund, although these exposures may vary over time.In addition, K2 Advisors may utilize derivatives in connection with its conditional risk overlay strategy intended to hedge against undesirable portfolio sensitivities or against negative market events (CRO Strategy).The Fund intends to hold its commodity-linked derivative instruments indirectly through a wholly-owned subsidiary established in the Cayman Islands (the “Subsidiary”).The securities in which the Fund may invest include equities and various debt instruments, such as securities of the U.S. government, its agencies and instrumentalities and sovereign, quasi-sovereign and corporate bonds. Such debt instruments may have variable or fixed interest rates, may be of any maturity, duration or credit rating and may include high yield (“junk”) bonds and distressed debt securities (securities of companies that are, or are about to be, involved in reorganizations, financial restructurings, or bankruptcy). The Fund also may, from time to time, hold significant amounts of cash or cash equivalents due to its investments in derivative instruments. The Fund may engage in active and frequent trading as part of its investment strategies. The Investment Manager and/or the Sub-Advisors will sell a security or enter into or close out of a derivative position when they believe it is appropriate to do so, regardless of how long the Fund has held the instrument, which may cause the Fund’s turnover rate to exceed 100% per year.The Investment Manager allocates among the Fund's strategies using a top-down approach, generating the Fund’s strategy weightings by taking into account market conditions, risk factors, diversification, liquidity, and availability of various Sub-Advisors and other investment options, among other things. The Investment Manager allocates the Fund’s assets to specific Sub-Advisors utilizing a bottom-up approach, selecting Sub-Advisors and their weighting within the Fund’s portfolio by taking into account their correlation to various markets and to each other, risk profiles and their return expectations. From time to time, the Fund may have little or no assets allocated to any one particular Sub-Advisor or strategy in light of economic or other conditions, as determined by the Investment Manager in its sole discretion.