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.
- We target an estimated average portfolio duration of three years or less.
- We invest across multiple investment-grade debt sectors, including government and corporate debt securities, and mortgage- and asset-backed securities.
- Some of our investments may include securities issued by government-sponsored entities, such as Fannie Mae and Freddie Mac.i
- Low Duration. The fund's low average duration, targeted at three years or less, may potentially make the fund less sensitive to interest rate changes than funds with higher average durations.
- Sector Diversification. We have the flexibility to allocate investments across multiple fixed-income sectors to maximize income and capital appreciation potential.
- High Credit Quality. We invest primarily in investment-grade debt.
- Investment Expertise. With access to research resources of the Franklin Templeton Fixed Income Group® and the perspective provided by Franklin equity research analysts, our combined "top-down" macroeconomic and "bottom-up" fundamental analysis helps identify bonds with the best prospects for income and capital appreciation.
What Are the Risks?
- All investments involve risks, including possible loss of principal.
- As the prices of bonds in the fund adjust to a rise in interest rates, the fund’s share price may decline.
- Investing in derivative securities, such as financial futures and option contracts, as well as our 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. Some derivatives are particularly sensitive to changes in interest rates.
- Risks of foreign securities include currency fluctuations and political uncertainty.
- 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 risk considerations are described in the fund’s prospectus.
Speak to your financial advisor about whether this fund is appropriate for you. If you don't have a financial advisor, request a referral.
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Important Legal Information
- CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
- Total Returns include change in share price, assume reinvestment of all distributions, and reflect the deduction of fund expenses and applicable fees. Total Returns With Sales Charge: returns reflect the deduction of the stated sales charge. Total returns, distribution rate, and yields reflect any applicable expense reductions, without which the results for those impacted funds would have been lower.
- Most Franklin Templeton funds offer multiple share classes. Share classes are subject to different fees and expenses, which will affect their performance. In general, Class A shares have a maximum initial sales charge; Class C shares have a 1% contingent deferred sales charge; Class Z, Advisor Class and Class R6 shares have no sales charges nor Rule 12b-1 fees; Class R shares have no sales charges, but do have a Rule 12b-1 fee.
- Performance data 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.
- 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.
- All investments involve risks, including possible loss of principal. Interest rate movements will affect the fund's share price and yield. Bond prices generally move in the opposite direction of interest rates. As the prices of bonds in the fund adjust to a rise in interest rates, the fund's share price may decline. 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. Some derivatives are particularly sensitive to changes in interest rates. Foreign securities involve special risks, including currency fluctuations and economic and political uncertainty. 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 risks are described in the fund's prospectus.
- Percentage of the fund's returns explained by movements in the Barclays US Government & Credit (1-3 Year) Index. 100 equals perfect correlation to the index. Based on the 3-year period ended as of the date of the calculation.
- The fund's 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the fund's actual income distribution rate, which reflects the fund's past dividends paid to shareholders.
- Net Asset Value — The amount per share you would receive if you sold shares that day.
- For performance reporting purposes, the inception date for Classes A, R, R6, 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 Class C shares, generally the inception date is the first day the fund commenced offering such shares. Exceptions: Templeton Global Balanced Fund Classes A and C use the inception date of the old Class A and C shares, renamed Class A1 and Class C1. For Franklin Mutual Series Funds, Franklin International Small Cap Growth Fund and Franklin Pelagos Commodities Strategy Fund, the inception date for Classes A, C, R and R6 shares is the funds' oldest class', Z or Advisor, inception date. Franklin U.S. Government Money Fund Class R6 inception date is the first day it commenced offering such shares. For Franklin California Ultra-Short Tax-Free Income Fund Classes A1 and Advisor Class use the inception date of its predecessor, Franklin California Tax-Exempt Money Fund.
- U.S. government-sponsored entities, such as Fannie Mae and Freddie Mac, may be chartered by acts of Congress; their securities are neither issued nor guaranteed by the U.S. government. Although the U.S. government has recently provided financial support to Fannie Mae and Freddie Mac, no assurance can be given that the U.S. government will always do so.
- The Gross Expense Ratio does not include an expense reduction contractually guaranteed through at least 2/28/17. Please see the prospectus for additional information.
- Source: Morningstar®, 3/31/16. For each fund with at least a 3-year history, Morningstar calculates a risk-adjusted return measure that accounts for variation in a fund's monthly performance (including the effects of all sales charges), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive a Morningstar Rating™ of 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund and rated separately.) Past performance does not guarantee future results. Morningstar Rating™ is for the named share class only; other classes may have different performance characteristics.
- The annualized percentage difference between a fund's actual returns and its expected performance given its level of market risk, as measured by beta. Based on the 3-year period ended as of the date of the calculation.
- A statistical measurement of the range of a fund's total returns. In general, a higher standard deviation means greater volatility. Based on the fund's monthly returns over the 3-year period ended as of the date of the calculation.
- The Gross Expense Ratio does not include a fee reduction related to the Fund's investment in a Franklin Templeton money fund, as applicable. The fee reduction is contractually guaranteed for at least the next 12-month period. Please see the prospectus for additional information.
- ©2015 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
- Public Offering Price — Purchase price for each share of the fund on a given day. It includes the maximum initial sales charge, if any.
- A measure of the fund's volatility relative to the market, as represented by the Barclays US Government & Credit (1-3 Year) Index. A beta greater than 1.00 indicates volatility greater than the market. Based on the 3-year period ended as of the date of the calculation.
- A statistical measurement of a fund's historical risk-adjusted performance. It is calculated by taking a fund's excess return over that of the three-month Treasury bill divided by its standard deviation. Higher values generally indicate better historical risk-adjusted performance. Based on the 3 years ended as of the date of the calculation.
- Source: Morningstar, 3/31/13. The style box reveals a fund's investment style. For credit quality of the bonds owned, Morningstar combines credit rating information provided by the fund companies (only using ratings assigned by a Nationally Recognized Statistical Rating Organization - "NRSRO") with an average default rate calculation to come up with a weighted-average credit quality. The weighted-average credit quality is currently a letter that roughly corresponds to the scale used by a leading NRSRO. Funds with a low credit quality style box placement are those whose weighted-average credit quality is less than BBB-; medium are those less than AA- but greater or equal to BBB-; and high are those of AA- or higher. When classifying a bond portfolio, Morningstar first maps the NRSRO credit ratings of the underlying holdings to their respective default rates (as determined by Morningstar's analysis of actual historical default rates). Morningstar then averages these default rates to determine the average default rate for the entire bond fund. Finally, Morningstar maps this average default rate to its corresponding credit rating along a convex curve. For interest-rate sensitivity, Morningstar obtains from fund companies the average effective duration. Generally, Morningstar classifies a fixed-income fund's interest-rate sensitivity based on effective duration of the Morningstar Core Bond Index (MCBI), which is currently three years. The classification of Limited will be assigned to those funds whose average effective duration is between 25% to 75% of MCBI's average effective duration; average effective duration between 75% to 125% of the MCBI will be classified as Moderate; and those at 125% or greater of the MCBI will be classified as Extensive. Shaded areas show the past 3 years of quarterly data. Past performance does not guarantee future results.
- Indices are unmanaged and one cannot invest directly in them.