To seek to maximise income while maintaining some degree of capital preservation. The Fund mainly invests in investment grade US corporate and government bonds. The Fund has a comparatively low targeted duration that is usually less than 3 years (meaning it is less sensitive to changes in interest rates).

• Seeking a high level of income consistent with capital preservation.
• Seeking to invest in fixed income securities from US issuers with a duration of less than 3 years.
• Planning to hold their investment for the medium term.

A Consistent Investment Philosophy. Franklin’s management style relies on a top down approach, combined with a rigorous bottom up security selection. The portfolio managers have a long-term focus and do not make decisions based on interest rate predictions, but rather add value through sector allocation and security selection.

Managing portfolio risk is an integral part of the investment process. The portfolio is diversified by security type, coupon and maturity. Portfolio stress-tests are used to help reduce interest rate and prepayment risk is minimized. A compliance team monitors investment guidelines before and after execution of trades. A dedicated risk management team monitors portfolio performance and market exposure.

Experienced Management Team. The investment team has over three decades of experience managing fixed income assets.

The value of shares in the Fund and income received from it can go down as well as up and investors may not get back the full amount invested. Performance may also be affected by currency fluctuations. Currency fluctuations may affect the value of overseas investments.

• The Fund invests in relatively short-term debt securities mainly in the U.S., but may invest up to 25% in non-U.S. issuers. Such securities have historically been subject to price movements, generally due to interest rates or movements in the bond market. As a result, the performance of the Fund can fluctuate to a small degree over time.
• Other significant risks include:
  Credit risk: the risk of loss arising from default that may occur if an issuer fails to make principal or interest payments when due. This risk is higher if the Fund holds low-rated, sub-investment-grade securities.
  Foreign Currency risk: the risk of loss arising from exchange-rate fluctuations or due to exchange control regulations.
  Derivative Instruments risk: the risk of loss in an instrument where a small change in the value of the underlying investment may have a larger impact on the value of such instrument. Derivatives may involve additional liquidity, credit and counterparty risks.
  Liquidity risk: the risk that arises when adverse market conditions affect the ability to sell assets when necessary. Such risk may be triggered by (but not limited to) unexpected events such as environmental disasters or pandemics. Reduced liquidity may have a negative impact on the price of the assets.
  Securitisation risk: investment in securities which generate return from various underlying groups of assets such as mortgages, loans or other assets may bear a greater risk of loss due to possible default of some of the underlying assets.

For full details of all of the risks applicable to this Fund, please refer to the “Risk Considerations” section of the Fund in the current prospectus of Franklin Templeton Investment Funds.