Strategy. Franklin Advisers, Inc. (Franklin Advisers or Subadviser), subadviser to the Portfolio, invests, under normal market conditions, at least 80% of the Portfolios net assets in bonds. Bonds include debt securities of any maturity, such as bonds, notes, bills and debentures, as well as inflation-indexed securities issued by governments and government agencies located around the world. The Portfolio may also invest in securities that are linked to or derive their value from another security, asset or currency of any nation. In addition, the Portfolios assets will be invested in issuers located in at least three countries (including the U.S.). The Portfolios investments in U.S. issuers will not exceed 20% of its net assets. The Portfolio may invest a significant portion of … Show more… Franklin Advisers, Inc. (Franklin Advisers or Subadviser), subadviser to the Portfolio, invests, under normal market conditions, at least 80% of the Portfolios net assets in bonds. Bonds include debt securities of any maturity, such as bonds, notes, bills and debentures, as well as inflation-indexed securities issued by governments and government agencies located around the world. The Portfolio may also invest in securities that are linked to or derive their value from another security, asset or currency of any nation. In addition, the Portfolios assets will be invested in issuers located in at least three countries (including the U.S.). The Portfolios investments in U.S. issuers will not exceed 20% of its net assets. The Portfolio may invest a significant portion of its total assets in developing or emerging markets. Although the Portfolio may buy bonds rated in any category, it focuses on investment grade bonds. These are issues rated in the top four rating categories by independent rating agencies such as Standard & Poors Ratings Services or Moodys Investors Service, Inc., or, if unrated, determined by Franklin Advisers to be of comparable quality. The Portfolio may invest up to 25% of its total assets in bonds that are rated below investment grade (or unrated but determined to be of comparable quality). Such securities are sometimes referred to as junk bonds. Split rated bonds (bonds that receive different ratings from two or more rating agencies) will be considered to have the higher credit rating. The Portfolio may invest in debt securities of any maturity, and the average maturity or duration of debt securities in the Portfolios portfolio will fluctuate depending on Franklin Advisers outlook on changing market, economic, and political conditions. For purposes of pursuing its investment objective, the Portfolio regularly enters into currency-related transactions involving certain derivative instruments, including currency and cross currency forwards, currency and currency index futures contracts, and currency options. The use of derivative currency transactions may allow the Portfolio to obtain net long or net negative (short) exposure to selected currencies. The Portfolio may also enter into various other transactions involving derivatives, including financial futures contracts (such as interest rate or bond futures), swap agreements (which may include interest rate and credit default swaps), and options (including options on such contracts). The use of these derivative transactions may allow the Portfolio to obtain net long or net negative (short) exposures to selected interest rates, countries, duration or credit risks. The Portfolio may use any of the above currency techniques or other derivative transactions for the purposes of enhancing Portfolio returns, increasing liquidity, gaining exposure to particular instruments in more efficient or less expensive ways and/or hedging risks relating to changes in currency exchange rates, interest rates and other market factors. The Portfolio may buy and sell futures contracts that trade on U.S. and foreign exchanges. Franklin Advisers considers various factors, such as availability and cost, in deciding whether to use a particular derivative instrument or strategy. The Portfolio may, at times, maintain a large position in cash and cash equivalents (including money market funds). The Portfolio is non-diversified, which means that it can hold securities of a smaller number of issuers and can invest a larger percentage of its assets in a single issuer than a diversified portfolio. Franklin Advisers allocates the Portfolios assets based upon its assessment of changing market, political and economic conditions. Franklin Advisers considers various factors, including evaluation of interest and currency exchange rate changes and credit risks. Franklin Advisers assessment may lead to investments that deviate significantly from its benchmark and therefore the Portfolios performance may vary significantly from its benchmark. Show less