The fund invests primarily in investment-grade debt securities, including government and corporate debt securities and mortgage- and asset-backed securities, targeting an estimated average portfolio duration of three years or less. Some of the fund's investments may include securities issued by U.S. government-sponsored entities, such as Fannie Mae or Freddie Mac.
Performance data quoted represents past performance, which does not guarantee
future results. Current performance may differ from figures shown. Investment
return and principal value will fluctuate with market conditions, and you may
have a gain or loss when you sell your shares.
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Interest rate movements will affect Franklin Low Duration Total Return Fund's share price and yield. Bond prices generally move in the opposite direction from interest rates. Thus, as the prices of bonds in the fund adjust to a rise in interest rates, the fund's share price may decline. The risks of foreign securities include currency fluctuations and political uncertainty. The fund's investment in derivatives, such as financial futures and option contracts, and the fund's use of foreign currency techniques involve special risks as such may not achieve the anticipated benefits and/or may result in losses to the fund. During periods of declining interest rates, principal prepayments tend to increase as borrowers refinance their mortgages at lower rates; therefore, the fund may be forced to reinvest returned principal at lower interest rates, reducing its income. These and other risks are described in the fund's prospectus.
The fund's manager has agreed in advance to waive all or a portion of its management fees and to make certain payments to reduce expenses. If the manager had not taken this action, the fund's total return, yield and distribution rate would have been lower.
For more information on any of our funds, contact your financial advisor or download a free prospectus. 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.
Footnotes
1.
Portfolio holdings are subject to change.
2.
All of the funds are subject to certain risks. Generally, investments offering potential for higher returns are accompanied by a higher degree of risk. Stocks and other equities representing an ownership interest in a corporation have historically outperformed other asset classes over the long term, but tend to fluctuate more dramatically over the short term. Bond prices are affected by interest rate changes. Bond prices, and thus a bond fund's share price, generally move in the opposite direction of interest rates. As the price of bonds in a fund adjust to a rise in interest rates, the fund's share price may decline. High-yield, lower-rated (junk) bonds generally have greater price swings and higher default risks. Foreign investing, especially in emerging markets, has additional risks such as currency and market volatility and political and social instability. These and other risks pertaining to specific funds, such as those involving investments in specialized industry sectors, such as the technology sector, which has been among the most volatile sectors in the market, or use of complex securities, are discussed in each fund's prospectus.
3.
Although U.S. government-sponsored entities may be chartered or sponsored by acts of Congress, their securities are neither insured nor guaranteed by the U.S. Treasury. Please see the fund's prospectus for a detailed discussion regarding various levels of credit support for government agency or instrumentality securities. The fund's yield and share price are not guaranteed and will vary with market conditions.
4.
After-tax average annual total returns represent the average change in value of an investment on an annualized basis. Returns are calculated using the highest individual federal income tax rates; state and local taxes are not considered. Your actual after-tax returns depend on your particular tax situation and may differ from those shown. The before shares sold calculation assumes taxes are paid on fund distributions (dividends and capital gains) but does not reflect taxes that may be incurred upon sale or exchange of shares. The after shares sold calculation also adjusts for taxes due if the fund investment is sold at the end of the measurement period.
5.
For performance reporting purposes, the inception date for Classes A, R, Z and Advisor Class shares of all Franklin Templeton Funds is the date of effectiveness of the fund's registration statement or the first day the fund commenced operations. For Classes B and C shares of those funds, except Mutual Series, Class B of the Franklin Income Fund, and Class C of the Franklin International Small Cap Growth Fund and the Franklin Large Cap Equity Fund, inception date is the first day the fund commenced offering such shares. Franklin Income Fund Class B uses the inception date of the old Class B shares, renamed Class B1, for performance reporting purposes. For Mutual Series Funds and Franklin International Small Cap Growth and Franklin Large Cap Equity Funds, the inception date for Classes A, B, C and R shares is the funds' oldest class', Z or Advisor, inception date.
6.
The fund's manager has agreed in advance to waive all or a portion of its management fees and to make certain payments to reduce expenses.
7.
Represents the maximum amount of Rule 12b-1 distribution and service fees the Fund may pay.
8.
A measure of the fund's volatility relative to the market, as represented by the Barclays Capital 1-5 Year Government Credit Bond Index. A beta greater than 1.00 indicates volatility greater than the market. Based on the 3-years ended as of the date of the calculation.
9.
The value of one share of the fund on a given day.
10.
Purchase price for each share of the fund on a given day. It includes the maximum initial sales charge, if any.
