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Franklin Pelagos Commodities Strategy Fund

Fund Category: AlternativeGo to Prices & Performance page
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Symbol
CUSIP 352 41W 609
Fund Number 995
Inception Date1 Dec 07, 2011
Distributions Annually
Total Net Assets
(all share classes)
As of 03/31/2014
$67.9
(millions)

As of  04/22/2014

NAV2 $9.66  
NAV Change $0.01  
POP3 $10.25  
YTD Total Return at NAV 6.50%
Distribution Rate at NAV N/A
30-day Standardized Yield
N/A

Average Annual Total Returns4
As of Quarter End 03/31/2014

w/ Sales Charge w/o Sales Charge
1 Yr -9.86% -4.33%
5 Yrs
10 Yrs
Life -4.85% -2.40%

Expense Ratio and Sales Charge As of 01/10/2014 (updated annually)

Gross Expense Ratio5,6 1.80%
Net Expense Ratio 1.26%
Max Initial Sales Charge 5.75%
CDSC 0.00%
12b-1 Fee 0.30%

Fund Description

Strategy Statement
Portfolio Managers
Stephen Burke
"We believe the commodity markets are supported by population increases, economic expansion, urbanization trends and supply-side dynamics."

Stephen Burke
Joined Pelagos Capital Management in 2005
Managed Fund since 2011

Strategy, Benefits

Strategy

  • The derivatives market is a relatively efficient way to gain commodities exposure, without taking on the costs and logistical challenges of direct commodities investments.
  • Portfolio managers identify investment opportunities through a combination of top-down analysis of global growth and financial trends and bottom-up research on the commodities market, including supply, demand, price, momentum and seasonal dynamics.
  • The managers seeks to add value relative to the fund’s benchmark through their portfolio construction decisions regarding sector allocations, individual commodities, spot versus futures prices and seasonal issues.
  • To help manage volatility and satisfy asset coverage requirements, the portfolio managers also invest in securities of the U.S. government, its agencies and instrumentalities and other fixed income securities.

Benefits

  • Diversification. With its focus on commodities, the fund may help further diversify portfolios heavily weighted in stocks and bonds.
  • Inflation Protection Potential. An allocation to the fund may help a portfolio preserve purchasing power when inflation rises. Commodities, particularly food and energy, historically have represented a significant portion of the Consumer Price Index (CPI), one of the leading indicators for the U.S. inflation rate. i
  • Growth Potential. The fund provides access to a market with attractive growth potential. As populations grow and economies expand, notably in Asia and Africa, demand for commodities will likely follow.
  • Experienced Management. The fund’s portfolio managers have over 60 years of combined industry experience, with extensive backgrounds in commodities and asset allocation.
i. Source: U.S. Bureau of Labor Statistics. CPI data is based on the All Items Consumer Price Index for All Urban Consumers for the U.S. City Average. Indexes are unmanaged, and one cannot invest directly in an index.

Results

Hypothetical $10K Investment

Hypothetical $10K Investment

Investing in the Fund

What Are the Risks?
  • All investments involve risks, including possible loss of principal.
  • Investing in physical commodities, either directly or through complex instruments such as commodity-linked total return swaps, commodity futures, commodity index futures and options on commodities and commodities index futures, presents unique risks, is speculative and can be extremely volatile.
  • Market prices of commodities may fluctuate rapidly based on numerous factors, including: changes in supply and demand relationships; weather; agriculture; trade; domestic and foreign political and economic events and policies; diseases; pestilence; technological developments; and monetary and other governmental policies, action and inaction.
  • Derivatives involve costs and can create leverage in the fund’s portfolio, which may result in significant volatility and cause the fund to participate in losses (as well as gains) in an amount that exceeds the fund’s initial investment.
  • The fund may not achieve the anticipated benefits; and may realize losses when a counterparty fails to perform as promised.
  • 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.
  • Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks which are heightened in developing countries.
  • These and other risk considerations are discussed in the fund’s prospectus.

Minimum Investment

$1,000.00

How Financial Advisors Help You

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

Footnotes

For U.S. residents only.