Fund Description

The fund seeks to provide high total return (a combination of high current income and capital appreciation) relative to the performance of the general mortgage securities market. The fund invests substantially in mortgage securities that are issued or guaranteed by the U.S. government, its agencies or instrumentalities, including securities issued by Ginnie Mae and government-sponsored entities such as Fannie Mae and Freddie Mac. The fund also invests in other types of residential and commercial mortgage securities, including securities that are not issued or guaranteed by the U.S. government, its agencies or instrumentalities.

Strategy Statement

"We strive to produce competitive total returns with reduced overall volatility, using our proprietary research and risk management models."

Management

Roger Bayston, CFA

Roger Bayston, CFA®

  • Joined Franklin Templeton in 1991
  • Managed Fund Since 1993
Paul Varunok

Paul Varunok

  • Joined Franklin Templeton in 2001
  • Managed Fund Since 2001
David Yuen, CFA

David Yuen, CFA®

  • Joined Franklin Templeton in 1988
  • Managed Fund Since 2005

Rating

Overall Morningstar Rating As of 04/30/2018

Rating Category: Intermediate-Term Bond

Morningstar
The fund's overall Morningstar Rating measures risk-adjusted returns and is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) rating metrics.

Historical Morningstar Rating As of 04/30/2018

Years Ratings Funds
in category
3
3 Stars
863
5
Stars
10
Stars

Morningstar Style Box As of03/31/2018

Strategy, Benefits, Results

Strategy

  • We focus on the most attractive investments across the broad mortgage-related markets.
  • Our investments may include securities issued by Ginnie Mae and government-sponsored entities such as Fannie Mae and Freddie Mac, as well as other types of residential and commercial mortgage securities, including securities that are not issued or guaranteed by the U.S. government, its agencies or instrumentalities.
  • We utilize the entire opportunity set of mortgage-backed securities and mortgage-related, asset-backed securities to offer shareholders access to the U.S. mortgage finance market, one of the largest capital markets in the world.

Benefits

  • Investment Selection Flexibility. Ability to invest across the broad mortgage markets, focusing on the top investment ideas available within each sector.
  • Experienced, Professional Management. Portfolio manager Roger Bayston has managed the fund since inception, while Paul Varunok and David Yuen joined the team in 2001 and 2005, respectively.

Investing In The Fund

What Are the Risks?

  • All investments involve risks, including possible loss of principal.
  • The share price and yield of Franklin Strategic Mortgage Portfolio will be affected by interest rate movements and mortgage prepayments.
  • 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 income.
  • Bond prices generally move in the opposite direction of 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.
  • Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value.
  • The fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results.
  • These and other risk considerations are discussed in the fund’s prospectus.

Minimum Investment

See Prospectus

How Financial Advisors Help You

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