57BUY396
PROSPECTUS SUPPLEMENT
DATED MARCH 28, 1996
FRANKLIN STRATEGIC MORTGAGE PORTFOLIO
Dated February 1, 1996
(as may be supplemented from time-to-time)
The section titled "How to Buy Shares of the Fund" is modified in the following
respects:
I. The following replaces the discussion under categories (xi) and
(xii) regarding investors qualifying to purchase shares of the Fund at
net asset value:
(xi) trustees or other fiduciaries purchasing securities for certain
retirement plans of organizations with collective retirement plan
assets of $1 million or more, without regard to where such assets
are currently invested; or
(xii) Designated Retirement Plans. Non-Designated Retirement Plans
may also qualify to purchase shares of the Fund under this privilege
if they meet the requirements for Designated Retirement Plans and
those described under "Group Purchases," above.
II. IF YOU QUALIFY TO BUY SHARES AT NET ASSET VALUE, PLEASE SPECIFY IN
WRITING THE PRIVILEGE THAT APPLIES TO YOUR PURCHASE AND INCLUDE THAT
WRITTEN STATEMENT WITH YOUR PURCHASE ORDER. WE WILL NOT BE RESPONSIBLE FOR
PURCHASES THAT ARE NOT MADE AT NET ASSET VALUE IF THIS WRITTEN STATEMENT
IS NOT INCLUDED WITH YOUR ORDER.
