Franklin Templeton (BEN) 10-K risk factor changes: FY2021 vs FY2020

Our business and operations are subject to adverse effects from the outbreak and spread of contagious diseases such as COVID-19, [removed: and we expect such] [added: which] adverse effects [removed: to] [added: may] continue.

The outbreak and spread of contagious diseases such as [removed: COVID-19, a highly transmissible and pathogenic disease,] [added: COVID-19] has adversely affected, and [removed: we expect will] [added: may] continue to adversely affect, our business, financial condition and results of operations.

The COVID-19 pandemic has resulted [removed: and will likely continue to result] in a widespread [removed: national and] global public health crisis.

The COVID-19 pandemic has [removed: already] adversely affected [removed: and will likely continue to adversely affect] global economies and markets, and has resulted in [removed: a global economic downturn and] disruptions in commerce that will continue to evolve, including with respect to financial and other economic activities, services, travel and supply chains.

Global [removed: and national] health [removed: concerns,] [added: concerns] and uncertainty regarding the impact of [removed: COVID-19,] [added: COVID-19] could lead to further and/or increased volatility in global capital and credit markets, adversely affect our key executives and other personnel, clients, investors, providers, suppliers, lessees, and other third parties, and negatively impact our AUM, revenues, income, business and operations.

Our business has been and [removed: will likely] [added: may] continue to be negatively impacted by the current COVID-19 pandemic, including by the potential reoccurrence of periods of increased spread of [removed: COVID-19,] [added: COVID-19 and/or COVID-19 variants,] and ensuing economic downturn in global financial markets.

The global spread of COVID-19, and the various governmental actions and economic effects related to the pandemic, have had, and [removed: are expected to] [added: may] continue to have, negative impacts on our business and operations, including volatility in asset values, reduced demand for our products and services, concerns for and restrictions on our personnel (including health concerns, quarantines, shelter-in-place orders and restrictions on travel), and increased privacy and cybersecurity risks.

Past economic [removed: downturns] [added: downturns, including in connection with COVID-19,] have caused, and [removed: the current] [added: future] economic [removed: downturn is causing and is expected to continue to] [added: downturns may] cause, periods of significant volatility in our stock [removed: price, decreases and] [added: price;] fluctuations in our AUM, revenues and [removed: income,] [added: income;] increased liquidity risks and redemptions from our funds and other [removed: products, resulting in] [added: products;] difficulties obtaining cash to settle [removed: redemptions,] [added: redemptions;] fund [removed: closures,] [added: closures;] poor investment performance of our products and corporate [removed: investments, increased focus on expense management, capital resources and related planning,] [added: investments;] and [removed: could cause] reputational harm, legal [removed: claims,] [added: claims] and other factors that may arise or develop.

[removed: Current increased] [added: Increased] liquidity risks and redemptions in our funds and other products have required, and may [removed: continue to] [added: at times] require, increased cash in the form of loans or other lines of credit for them to draw on to help settle redemptions and for other related purposes.

We have in some cases voluntarily determined to, and without obligation could in the future, extend such [removed: loans.][added: loans to our products.]

We have implemented our business continuity plans globally to manage our business during this pandemic, including broad and extended work-from-home capabilities for our personnel where feasible and, as governmental [removed: shelter-in-place restrictions have been lifted] [added: health orders may allow] in various [removed: jurisdictions,] [added: jurisdictions based on applicable conditions,] we have implemented [added: and are continuing to implement] measures for the return of [removed: a portion of our] personnel to [removed: certain of] our offices.

Further, we depend on a number of third-party providers to support our operations, and any failure of our [removed: providers to fulfill their obligations could adversely impact our business.]

Moreover, [added: since implementing broad work-from-home measures during the pandemic,] we [removed: now] have an increased dependency on remote equipment and connectivity infrastructure to access critical business systems that may be subject to failure, disruption or unavailability that could negatively impact our business operations.

Additionally, multiple regions in which we operate have [removed: shelter-in-place] [added: had, and as conditions change may again have or continue to have,] movement restrictions on our personnel and third-party vendors and service providers that may impact our ability to satisfy or respond timely to potential technology issues or needs impacting our business and operations.

[removed: an increase in] [added: Further, we, like many others during this time, have been subject to increased] phishing and other social engineering attempts by malicious actors to manipulate individuals into divulging confidential or personal information.

As of the time of this filing, as the COVID-19 pandemic continues to evolve, it is not possible to predict the full extent to which the [removed: coronavirus will] [added: pandemic may] adversely impact our business, liquidity, capital resources, financial results and operations, which impacts will depend on numerous developing factors that [removed: are highly] [added: remain] uncertain and [removed: rapidly changing.][added: subject to change.]

Volatility and disruption of our business and [removed: the capital and credit] [added: financial] markets and adverse changes in the global economy may significantly affect our results of operations and [removed: may] put pressure on our financial results.

The asset management industry continues to experience disruption and challenges, including [removed: a shift to lower-fee passively managed products,] increased fee pressure, regulatory changes, an increasing and changing role of technology in asset management services, the continuous introduction of new products and [removed: services] [added: services,] and the consolidation of financial services firms through mergers and acquisitions.

Further, [removed: the capital and credit] [added: financial] markets have and may continue, from time to time, to experience volatility and disruption worldwide.

Declines in global [removed: financial market] [added: economic] conditions have in the past resulted in significant decreases in our AUM, revenues and income, and future declines may further negatively impact our financial results.

Such declines have had, and may in the future have, a material adverse impact on our [removed: results of operations.][added: business.]

The amount and mix of our AUM are subject to significant [removed: fluctuations.][added: fluctuations, and a shift in our asset mix toward lower-fee products may negatively impact our revenues and income.]

We derive substantially all of our operating revenues and [removed: net] income from providing investment management and related services to investors in jurisdictions worldwide through our investment products, which include our [removed: sponsored] funds, as well as institutional and high-net-worth separate accounts, retail separately managed account programs, sub-advised products, and other investment vehicles.

Any decrease in the value or amount of our AUM because of market volatility or other factors, such as asset outflows or a decline in the price of stocks, [removed: in particular market segments or in the securities market generally, negatively impacts our revenues and income.]

Changing market conditions and investor preferences may cause a shift in our asset mix toward certain lower fee products, such as fixed income [removed: products,] [added: products] and [added: ETFs, and] away from [added: higher fee] equity and multi-asset [removed: products.][added: products, which may cause a related decline in our revenues and income.]

[removed: Increases] [added: In addition, increases] in interest rates, particularly if rapid, as well as uncertainty in the future direction of interest rates, may have a negative impact on our fixed income [removed: products.][added: products and decrease the total return on bond investments due to lower market valuations of existing bonds.]

[removed: The selection of SOFR as] [added: Although] the [added: Secured Overnight Financing Rate (“SOFR”) has been identified as a recommended] alternative reference [removed: rate, however, currently] [added: rate to LIBOR, the selection of SOFR] presents certain market concerns because a term structure for SOFR has not yet [removed: developed,] [added: developed] and there is not yet a generally accepted methodology for adjusting SOFR.

INVESTMENT [removed: AND] PERFORMANCE [added: AND REPUTATIONAL] RISKS

If we fail, or appear to fail, to address successfully and promptly the underlying causes of poor investment performance, [removed: we may be unsuccessful in repairing any existing or continuing harm to] our [removed: performance and our] future business prospects would likely be negatively affected.

If our brands or reputation are harmed, existing clients may reduce amounts held in, or withdraw entirely from, our products, or our clients and products may terminate their management agreements with us, [removed: which could reduce the amount of our AUM and cause us to suffer a corresponding loss in our revenues and income.]

On July 31, 2020, we completed our acquisition of Legg Mason, Inc. pursuant to the terms and conditions of [removed: the Merger Agreement,] [added: an agreement] and [added: plan of merger, and] Legg Mason became a wholly-owned subsidiary of Franklin.

Our failure to meet the challenges involved in [removed: successfully integrating] [added: continuing to integrate] the operations of Legg Mason or to otherwise realize any of the anticipated benefits of the acquisition could adversely impair our business and operations as noted above.

Continued attempts to circumvent our policies and controls or repeated incidents involving violation of controls and policies, fraud or conflicts of interests could [added: negatively impact our business and reputation and result in adverse publicity, regulatory investigations and actions, legal proceedings and losses and adversely affect our operations, reputation, AUM and financial results.]

We sell our [removed: products, such as our funds and strategies,] [added: products] and offer our [added: strategies and] investment management and related [removed: services,] [added: services] in many different regulatory jurisdictions around the world, and intend to continue to expand our operations internationally.

While we maintain a significant portion of our operations in the U.S., we also provide services and earn revenues in [removed: Asia-Pacific,] [added: Asia-Pacific;] Europe, Middle East and [removed: Africa,] [added: Africa;] Latin [removed: America] [added: America;] and Canada.

International trading markets, particularly in some emerging market countries, are often smaller, less liquid, less regulated and significantly more volatile than those in the U.S. Any ongoing and future business, economic, political or social unrest affecting these markets, in addition to any direct consequences such unrest may have on our personnel and facilities located in the affected area, also may have [added: a lasting impact on the long-term investment climate in these and other areas and, as a result, our AUM and the corresponding revenues and income that we generate from them may be negatively affected.]

[removed: Acquisitions, including our recent acquisition of Legg Mason,] [added: Acquisitions] and related transactions pose the risk that any business we acquire may [removed: lose] [added: result in the loss of clients,] customers or personnel or could underperform relative to expectations.

The asset management industry is facing transformative pressures and trends from a variety of different sources including increased fee pressure; a continued shift away from actively managed core equities and fixed income strategies towards alternative, passive and smart beta strategies; increased demands from clients and distributors for client engagement and services; a trend towards institutions developing fewer relationships and partners and reducing the number of investment managers they work with; increased regulatory activity and scrutiny of many aspects of the asset management industry, including [added: ESG practices and related matters,] transparency/unbundling of fees, inducements, conflicts of interest, capital, liquidity, solvency, leverage, operational risk management, controls and compensation; addressing the key emerging markets in the world, such as China and India, which often have populations with different needs, preferences and horizons than the more developed U.S. and European markets; and advances in technology and increasing client interest in interacting digitally with their investment portfolios.

Competition is based on various factors, including, among others, business reputation, investment performance, product mix and offerings, [added: ESG strategies and considerations,] service quality and innovation, distribution relationships, and fees charged.

Further, although we may offer certain types of ETFs, to the extent that there is a trend among existing or potential clients in favor of [removed: lower fee] [added: lower-fee] index and other ETFs, it may favor our competitors who may offer such products that are more established or on a larger scale than we do.

providers to fulfill their obligations could adversely impact our business.

in particular market segments or in the securities market generally, negatively impacts our revenues and income.

In March 2021, the FCA in the U.K., which regulates LIBOR, announced that LIBOR will no longer be provided for various currency settings after 2021, including all sterling, euro and certain U.S. dollar settings.

which could reduce the amount of our AUM and cause us to suffer a corresponding loss in our revenues and income.

Moreover, ESG topics and activities have been the subject of increased focus by certain investors and regulators in the asset management industry, and any inability to meet applicable requirements or expectations may adversely impact our reputation and business.

Our ability to

Potential system disruptions, failures or breaches of the technology we use or the security infrastructure we rely upon, including the third-party applications we use, could result in: (i) material financial loss or costs, (ii) delays in clients’ ability to access account information or in our ability to process transactions, (iii) the unauthorized disclosure or modification of sensitive or confidential client and business information, (iv) loss of valuable information, (v) breach of

additional compliance and administrative burdens and costs.

and assess additional taxes.

Changes in tax laws or rulings, including corporate tax rate increases, capital gains rate increases for fund investors and other tax rate increases impacting our clients and their willingness to invest in our products, may at times materially impact our financial condition.

In addition, we are named as a party in litigation in the ordinary course of business.

Regulatory enforcement and civil litigation matters can result in the imposition of a range of sanctions or orders against us, including, as applicable, monetary damages, injunctions, disgorgements, fines, penalties, cease and desist orders, censures, reprimands, and the revocation, cancellations, suspension or restriction of licenses, registration status or approvals held by us or our business.

Further, we, like many others during this time, have been subject to

We are subject to significant risk of asset volatility from changes in the global financial, equity, debt and commodity markets.

For example, changes in financial market prices, currency exchange rates and/or interest rates have in the past caused, and could in the future cause, the value of our AUM to decline, which would result in lower investment management fee revenues.

A shift in our asset mix toward lower fee products may negatively impact our revenues.

This may cause a related decline in our revenues and income, as we generally derive higher fee revenues and income from our equity and certain multi-asset products than from our fixed income products.

Although the shorter duration of the bond investments in many of these products may help mitigate interest rate risk, rising interest rates or interest rate uncertainty typically decrease the total return on many bond investments due to lower market valuations of existing bonds.

Further, changing market conditions and investor preferences also may cause a shift in our asset mix toward lower fee ETFs.

The FCA in the U.K., which regulates LIBOR, has announced that it will no longer compel panel banks to submit rates for LIBOR after 2021.

The publication of LIBOR is therefore not guaranteed beyond 2021, and it appears highly likely that LIBOR will be discontinued or modified by the end of 2021.

At this time, no consensus exists as to which reference rate or rates or benchmarks may become acceptable alternatives to LIBOR, although the Alternative Reference Rates Committee, a group of market participants convened by the Federal Reserve Board and the Federal Reserve Bank of New York, has identified the Secured Overnight Financing Rate (“SOFR”) as the recommend alternative to LIBOR.

negatively impact our business and reputation and result in adverse publicity, regulatory investigations and actions, legal proceedings and losses and adversely affect our operations, reputation, AUM and financial results.

For example, with respect to Brexit, although the U.K. has now formally left the EU as of January 31, 2020, it is still unclear what final terms may be agreed to among the parties through the December 31, 2020 implementation period, and the ultimate impact on us.

a lasting impact on the long-term investment climate in these and other areas and, as a result, our AUM and the corresponding revenues and income that we generate from them may be negatively affected.

our business.

costs and/or take remedial actions.

We may be required to continue to invest significant additional management

The industry’s response to the unbundling rules is still evolving and could lead to increased research costs.

GDPR also addresses export of personal data outside the EU.

The primary objectives of GDPR are to give citizens control of their personal data and to simplify the regulatory environment for international business by unifying data protection regulation within the EU.

Compliance with the stringent data protection rules under GDPR requires an extensive review of all of our global data processing systems.

Changes in tax laws or tax rulings may at times materially impact our effective tax rate.

Further, pursuant to ongoing efforts to encourage global tax compliance, the OECD has adopted certain common reporting standards aimed at ensuring that persons with financial assets located outside of their tax residence country pay required taxes.

Such standards may subject us to additional reporting, compliance and administrative costs, and burdens in jurisdictions where we operate as a qualifying financial institution.

In addition, from time to time, we are named as a party in litigation.

Examinations, investigations, allegations, findings or judgments of wrongdoing by regulatory or governmental authorities or in litigation against us, or settlements with respect thereto, could affect our regulatory licenses, reputation, increase our costs of doing business and/or negatively impact our revenues, any of which could have a material negative impact on our financial results.

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We [removed: are a global investment management organization and derive] [added: deliver] our [removed: operating revenues and net income from providing] investment [removed: management and related services in jurisdictions worldwide for investors in our] [added: capabilities through a variety of] investment products, which include our sponsored funds, as well as institutional and high-net-worth separate accounts, retail separately managed account programs, sub-advised products, and other investment vehicles.

We offer our services and products under our various distinct brand names, including, but not limited to, Franklin®, Templeton®, Legg Mason®, [removed: Balanced Equity Management®,] Benefit Street Partners®, [removed: Darby®, Edinburgh Partners™,] [added: Brandywine Global Investment Management®, Clarion Partners®, ClearBridge Investments®,] Fiduciary [removed: Trust™,] [added: Trust International™,] Franklin Bissett®, Franklin Mutual Series®, [removed: K2®] [added: K2®, LibertyShares®, Martin Currie®, Royce® Investment Partners] and [removed: LibertyShares®.][added: Western Asset Management Company®.]

As noted in the “Risk Factors” section set forth above in Item 1A of Part I of this Annual Report, the amount and mix of our AUM are subject to significant fluctuations [removed: and] [added: that] can negatively impact our revenues and income.

The level of our revenues also depends on [removed: mutual fund sales,] the [removed: number of shareholder transactions and accounts, and the] fees charged for our services, which are based on contracts with our funds and [removed: our clients.][added: customers, fund sales, and the number of shareholder transactions and accounts.]

As further noted in the “Risk Factors” section, the outbreak and spread of contagious diseases such as the coronavirus disease 2019 (“COVID-19”), a highly transmissible and pathogenic disease, has adversely affected, and [removed: we expect will] [added: may] continue to adversely affect, our business, financial condition and results of operations.

[removed: Global] [added: Ongoing global] health concerns, and uncertainty regarding the impact of COVID-19, could lead to further and/or increased volatility in global capital and credit markets, adversely affect our key executives and other personnel, clients, investors, providers, suppliers, lessees, and other third parties, and negatively impact our AUM, revenues, income, business and operations.

As of the time of this filing, as the COVID-19 pandemic continues to evolve, it is not possible to predict the full extent to which [removed: COVID-19 will] [added: the pandemic may] adversely impact our business, liquidity, capital resources, financial results and [removed: operations due to] [added: operations, which impacts will depend on] numerous developing factors that [removed: are highly] [added: remain] uncertain and [removed: rapidly changing.][added: subject to change.]

The S&P 500 Index and MSCI World Index increased [removed: 15.2%] [added: 30.0%] and [removed: 11.0%] [added: 29.4%] for the fiscal year.

Our total AUM was [removed: $1,418.9] [added: $1,530.1] billion at September 30, [removed: 2020,] [added: 2021,] which was [removed: 105%] [added: 8%] higher than at September 30, [removed: 2019 reflecting an increase of $806.5] [added: 2020 driven by $148.0] billion from [removed: acquisitions,] [added: net market change, distributions and other, and $3.5 billion from an acquisition,] partially offset by [removed: $61.6] [added: $25.2] billion of long-term net [removed: outflows, $9.9] [added: outflows and $15.1] billion of cash management net [removed: outflows and $8.7 billion from net market change, distributions and other.][added: outflows.]

Simple monthly average AUM (“average AUM”) increased [removed: 19%] [added: 81%] during fiscal year [removed: 2020.][added: 2021, reflecting a full year of AUM from the acquisition of Legg Mason.]

| *(in millions, except per share data)* | | | | | | | | | | | | | | [removed: 2020] [added: | | | | | | | | | | 2021] vs. [removed: 2019] [added: 2020] | | | [removed: 2019] [added: | | | 2020] vs. [removed: 2018] [added: 2019] | | [added: |]

| for the fiscal years ended September 30, | | [removed: 20201] | | | | [added: 2021 | | | | | | 2020 | | | | | |] 2019 | | | | [removed: 2018] | | | | | | | | | [added: | |]

| Operating [removed: revenues2] [added: revenues] | | [added: | | | |] $ | [added: 8,425.5 | | | | | $ |] 5,566.5 | | | [added: | |] $ | 5,669.4 | | | [removed: $] | [removed: 6,204.5] | [added: 51] | | [removed: (2] [added: %] | [removed: %)] | | [removed: (9] | [added: (2 | |] %) |

| Operating [removed: income2] [added: income] | | [added: | | | | 1,875.0 | | | | | |] 1,048.9 | | | | [added: | |] 1,466.9 | | | | [removed: 2,028.2] | | [added: 79] | | [removed: (28] [added: %] | [removed: %)] | | [added: |] (28 | [added: |] %) |

| Operating [removed: margin3] [added: margin1] | | [added: | | | | 22.3 | | % | | | |] 18.8 | | % | | [added: | |] 25.9 | | % | | [removed: 32.7] | | [removed: %] | | | | | | | [added: | |]

| [removed: Net] [added: Net] income attributable to Franklin Resources, [removed: Inc.] [added: Inc.] | | [removed: $] | [removed: 798.9] | | | [removed: $] [added: $] | [removed: 1,195.7] [added: 1,831.2] | | | [removed: $] | [removed: 764.4] | [added: $] | [added: 798.9] | [removed: (33] | [removed: %)] | | [removed: 56] | [removed: %] [added: $] | [added: 1,195.7 | |]

| [removed: Diluted] [added: Diluted] earnings per [removed: share] [added: share] | | [removed: $] | [removed: 1.59] | | | [removed: $] [added: $] | [removed: 2.35] [added: 3.57] | | | [removed: $] | [removed: 1.39] | [added: $] | [added: 1.59] | [removed: (32] | [removed: %)] | | [removed: 69] | [removed: %] [added: $] | [added: 2.35 | |]

| As adjusted [removed: (non-GAAP):4] [added: (non-GAAP):2] | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | |]

| Adjusted operating income | | [added: | | | |] $ | [added: 2,379.3 | | | | | $ |] 1,491.1 | | | [added: | |] $ | 1,654.2 | | | [removed: $] | [removed: 2,093.5] | [added: 60] | | [removed: (10] [added: %] | [removed: %)] | | [removed: (21] | [added: (10 | |] %) |

| Adjusted operating margin | | [added: | | | | 37.7 | | % | | | |] 38.5 | | % | | [added: | |] 42.6 | | % | | [removed: 49.8] | | [removed: %] | | | | | | | [added: | |]

| Adjusted net income | | [added: | | | |] $ | [removed: 1,311.0] [added: 1,915.2] | | | [added: | |] $ | [removed: 1,331.3] [added: 1,311.0] | | | [added: | |] $ | [removed: 798.1] [added: 1,331.3] | | | [removed: (2] | [removed: %)] | [added: 46] | [removed: 67] | % | [added: | | | (2 | | %) |]

| Adjusted diluted earnings per share | | [added: | | | |] $ | [removed: 2.61] [added: 3.74] | | | [added: | |] $ | [removed: 2.62] [added: 2.61] | | | [added: | |] $ | [removed: 1.45] [added: 2.62] | | | [removed: 0] | [added: | 43 | |] % | | [removed: 81] | [added: | 0 | |] % |

[removed: | 3 | Defined] [added: 1Defined] as operating income divided by total operating revenues. [removed: |]

[removed: | 4 | “Adjusted] [added: 2“Adjusted] operating income,” “adjusted operating margin,” “adjusted net income” and “adjusted diluted earnings per share” are based on methodologies other than generally accepted accounting principles. [removed: See “Supplemental Non-GAAP Financial Measures” for definitions and reconciliations of these measures. |]

The Company acquired Legg Mason effective July 31, 2020, and the results of operations for [added: the] fiscal year [added: ended September 30,] 2020 [added: (“fiscal year 2020”)] include two months of Legg Mason’s results.

Net income attributable to Franklin Resources, Inc. decreased $396.8 million primarily due to the decrease in operating income, as the impact of declines in market valuations amid global concerns about the COVID-19 pandemic resulted in net investment and other losses of $38.4 million, as compared to net gains of $141.4 million in the prior year, less the portion attributable to noncontrolling interests, [added: which] was largely offset by lower taxes on income.

Diluted earnings per share [removed: decreased] [added: increased] in fiscal year [removed: 2020] [added: 2021] and [removed: increased] [added: decreased] in fiscal year [removed: 2019,] [added: 2020,] consistent with the changes in net income [removed: and the impacts of 2% and 6% decreases in diluted average common shares outstanding primarily resulting from repurchases of shares of our common stock.][added: attributable to Franklin Resources, Inc.]

Adjusted diluted earnings per share [removed: decreased] [added: increased] in fiscal year [removed: 2020] [added: 2021] and [removed: increased] [added: decreased] in fiscal year [removed: 2019,] [added: 2020,] consistent with the changes in adjusted net [removed: income and the impacts of the decreases in diluted average common shares outstanding.][added: income.]

| *(in billions)* | | | | | | | | | | | | | | [removed: 2020] [added: | | | | | | | | | | 2021] vs. [removed: 2019] [added: 2020] | | | [removed: 2019] [added: | | | 2020] vs. [removed: 2018] [added: 2019] | | [added: |]

| as of September 30, | | [added: | | | | 2021 | | | | | |] 2020 | | | | [added: | |] 2019 | | | | [removed: 2018] | | | | | | | | | [added: | |]

| Fixed Income | | [added: | | | |] $ | [removed: 656.7] [added: 650.3] | | | [added: | |] $ | [removed: 250.6] [added: 656.9] | | | [added: | |] $ | [removed: 258.5] [added: 250.6] | | | [removed: 162] | [removed: %] | [added: (1] | [removed: (3] | %) | [added: | | | 162 | | % |]

| Multi-Asset | | [removed: 133.8] | | | | [removed: 123.6] [added: 152.4] | | | | [removed: 126.7] | | [added: 129.4] | | [removed: 8] | [added: | | | 123.6 | | | | | | 18 | |] % | | [removed: (2] | [removed: %)] | [added: 5 | | % |]

| Cash Management | | [added: | | | | 58.6 | | | | | |] 72.4 | | | | [added: | |] 9.5 | | | | [removed: 9.3] | | [added: (19] | | [removed: 662] [added: %)] | [removed: %] | | [removed: 2] | [added: 662 | |] % |

| Total | | [added: | | | |] $ | [removed: 1,418.9] [added: 1,530.1] | | | [added: | |] $ | [removed: 692.6] [added: 1,418.9] | | | [added: | |] $ | [removed: 717.1] [added: 692.6] | | | [removed: 105] | [added: | 8 | |] % | | [removed: (3] | [removed: %)] | [added: 105 | | % |]

| Average for the Year | | [added: | | | |] $ | [removed: 832.9] [added: 1,504.1] | | | [added: | |] $ | [removed: 697.0] [added: 832.9] | | | [added: | |] $ | [removed: 740.5] [added: 697.0] | | | [removed: 19] | [added: | 81 | |] % | | [removed: (6] | [removed: %)] | [added: 19 | | % |]

AUM [removed: at September 30, 2020] increased [removed: 105% from September 30, 2019 driven by $806.5] [added: $111.2] billion [added: or 8% during fiscal year 2021 due to $148.0 billion of net market change, distributions and other, and $3.5 billion] from [removed: acquisitions,] [added: an acquisition,] partially offset by [removed: $61.6] [added: $25.2] billion of long-term net [removed: outflows, $9.9] [added: outflows and $15.1] billion of cash management net [removed: outflows and $8.7 billion from net market change, distributions and other.][added: outflows.]

| *(in billions)* | | [added: | | | |] Average AUM | | | | | | | | | | | | [removed: 2020] [added: | | | | | | 2021] vs. [removed: 2019] [added: 2020] | | | [removed: 2019] [added: | | | 2020] vs. [removed: 2018] [added: 2019] | | [added: |]

| for the fiscal years ended September 30, | | [added: | | | | 2021 | | | | | |] 2020 | | | | [added: | |] 2019 | | | | [removed: 2018] | | | | | | | | | [added: | |]

| Fixed Income | | [added: | | | |] $ | [removed: 330.5] [added: 657.5] | | | [added: | |] $ | [removed: 256.1] [added: 330.5] | | | [added: | |] $ | [removed: 275.2] [added: 256.1] | | | [removed: 29] | [added: | 99 | |] % | | [removed: (7] | [removed: %)] | [added: 29 | | % |]

| Multi-Asset | | [removed: 123.0] | | | | [removed: 122.2] [added: 146.4] | | | | [removed: 129.3] | | [added: 122.7] | | [removed: 1] | [added: | | | 122.2 | | | | | | 19 | |] % | | [removed: (5] | [removed: %)] | [added: 0 | | % |]

Franklin is a holding company with subsidiaries operating under our Franklin Templeton® and/or subsidiary brand names.

We are a global investment management organization that derives operating revenues and net income from providing investment management and related services to investors in jurisdictions worldwide.

During the fiscal year ended September 30, 2021 (“fiscal year 2021”), the global equity markets continued to provide strong positive returns, reflecting among other things, an accelerated rollout of COVID-19 vaccines in most developed economies, government stimulus and other support in many countries, and a decline in U.S. 10-year treasury yields.

The global bond markets declined as the Bloomberg Barclays Global Aggregate Index decreased 0.9% for the fiscal year.

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See “Supplemental Non-GAAP Financial Measures” for definitions and reconciliations of these measures.

Operating income increased $826.1 million in fiscal year 2021 as a 51% increase in operating revenues was partially offset by a 45% increase in operating expenses.

The increase in operating revenues and operating expenses was primarily due to the acquisition of Legg Mason.

Net income attributable to Franklin Resources, Inc. increased $1,032.3 million due to the increase in operating income and higher other income, net, less the portion attributable to noncontrolling interests, partially offset by higher taxes on income.

Adjusted operating income increased $888.2 million in fiscal year 2021 primarily due to a 66% increase in investment management fees, partially offset by a 69% increase in compensation and benefits expense.

The increase in investment management fees and compensation and benefits expenses was primarily due to the acquisition of Legg Mason.

Adjusted net income increased $604.2 million primarily due to the increase in adjusted operating income, partially offset by lower other income, net, less the portion attributable to noncontrolling interests.

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| Equity | | | | | | 523.6 | | | | | | 438.1 | | | | | | 263.9 | | | | | | 20 | | % | | | | 66 | | % |

| Alternative | | | | | | 145.2 | | | | | | 122.1 | | | | | | 45.0 | | | | | | 19 | | % | | | | 171 | | % |

In the first quarter of the fiscal year 2021, we revised our presentation of AUM to reflect changes in asset class of certain legacy Legg Mason AUM as part of our post-acquisition onboarding process.

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| Equity | | | | | | 502.9 | | | | | | 290.8 | | | | | | 275.5 | | | | | | 73 | | % | | | | 6 | | % |

| Alternative | | | | | | 132.6 | | | | | | 63.7 | | | | | | 33.7 | | | | | | 108 | | % | | | | 89 | | % |

| Cash Management | | | | | | 64.7 | | | | | | 25.2 | | | | | | 9.5 | | | | | | 157 | | % | | | | 165 | | % |

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| *(in billions)* | | | | | | | | | | | | | | | | | | | | | | | | 2021 vs. 2020 | | | | | | 2020 vs. 2019 | | |

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| AUM at October 1, 2020 | | | | | | $ | 656.9 | | | | | $ | 438.1 | | | | | $ | 129.4 | | | | | $ | 122.1 | | | | | $ | 72.4 | | | | | $ | 1,418.9 | |

| Long-term inflows | | | | | | 176.5 | | | | | | 132.1 | | | | | | 36.3 | | | | | | 19.8 | | | | | | — | | | | | | 364.7 | | |

| Long-term outflows | | | | | | (188.2) | | | | | | (154.2) | | | | | | (35.7) | | | | | | (11.8) | | | | | | — | | | | | | (389.9) | | |

| Long-term net flows | | | | | | (11.7) | | | | | | (22.1) | | | | | | 0.6 | | | | | | 8.0 | | | | | | — | | | | | | (25.2) | | |

| Total net flows | | | | | | (11.7) | | | | | | (22.1) | | | | | | 0.6 | | | | | | 8.0 | | | | | | (15.1) | | | | | | (40.3) | | |

| Acquisition | | | | | | 3.5 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3.5 | | |

| Net market change, distributions and other | | | | | | 1.6 | | | | | | 107.6 | | | | | | 22.4 | | | | | | 15.1 | | | | | | 1.3 | | | | | | 148.0 | | |

In addition, pursuant to our acquisition of Legg Mason, Inc. (“Legg Mason”) on July 31, 2020, we acquired certain additional brand names including Brandywine Global Investment Management®, Clarion Partners®, ClearBridge Investments®, Martin Currie®, QS Investors®, Royce® Investment Partners and Western Asset Management Company®.

During the fiscal year ended September 30, 2020 (“fiscal year 2020”), the global equity markets experienced volatility reflecting, among other things, ongoing global concerns about the COVID-19 pandemic, but provided overall strong positive returns.

Despite easing of shutdown measures and some signs of economic recovery following significant accommodative economic efforts by governments and central banks, concerns about the severe economic impact of the ongoing COVID-19 pandemic persist.

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___________________

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| 1 | Includes the impact of the Company’s acquisition of Legg Mason, Inc. which was effective July 31, 2020. See Note 3 – Acquisitions in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report for information. |

| 2 | In fiscal year 2020, the Company changed the presentation of its consolidated statements of income to include dividend and interest income and other expenses from consolidated investment products in non-operating income (expense). Amounts for the comparative prior fiscal years have been reclassified to conform to the current presentation. These reclassifications had no impact on previously reported net income attributable to Franklin Resources, Inc. |

Operating income decreased $561.3 million in the fiscal year ended September 30, 2019 (“fiscal year 2019”) due to a 9% decrease in operating revenues and a 1% increase in operating expenses.

Net income attributable to Franklin Resources, Inc. increased $431.3 million primarily due to a prior year estimated income tax charge of $968.8 million resulting from enactment of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), partially offset by the decrease in operating income.

Adjusted operating income decreased $439.3 million in fiscal year 2019 primarily due to an 8% decrease in adjusted operating revenues and a 6% increase in compensation and benefits expense, excluding non-GAAP adjustments.

Adjusted net income attributable to Franklin Resources, Inc. increased $533.2 million primarily due to a prior-year estimated income tax charge of $968.8 million resulting from enactment of the Tax Act, partially offset by the decrease in adjusted operating income.

In the fourth quarter of fiscal year 2020, we revised our presentation of AUM to disclose AUM by asset class and introduced a simplified presentation of long-term net flows to incorporate all client-driven flow activity, which is defined as long-term inflows net of long-term outflows.

Additionally, we report cash management net flows as a separate component of total net flows.

These changes reflect the new breadth of our business and the expansion of our client base and investment vehicle offerings, both of which expanded significantly beyond retail mutual funds following the acquisition of Legg Mason.

| Equity | | 432.0 | | | | 263.9 | | | | 304.6 | | | | 64 | % | | (13 | %) |

| Alternative | | 124.0 | | | | 45.0 | | | | 18.0 | | | | 176 | % | | 150 | % |

AUM at September 30, 2019 decreased 3% from September 30, 2018 as $31.8 billion of long-term net outflows and $20.0 billion of net market change, distributions and other, were partially offset by $26.4 billion from an acquisition and $0.9 billion of cash management net inflows.

| Equity | | 290.3 | | | | 275.5 | | | | 310.8 | | | | 5 | % | | (11 | %) |

| Alternative | | 63.8 | | | | 33.7 | | | | 17.2 | | | | 89 | % | | 96 | % |

| Cash Management | | 25.3 | | | | 9.5 | | | | 8.0 | | | | 166 | % | | 19 | % |

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| Acquisitions | | 449.4 | | | | 183.2 | | | | 22.5 | | | | 75.8 | | | | 75.6 | | | | 806.5 | | |

| AUM at September 30, 2020 | | $ | 656.7 | | | $ | 432.0 | | | $ | 133.8 | | | $ | 124.0 | | | $ | 72.4 | | | $ | 1,418.9 | |

| AUM at October 1, 2017 | | $ | 286.0 | | | $ | 311.7 | | | $ | 132.5 | | | $ | 16.7 | | | $ | 6.3 | | | $ | 753.2 | |

| Long-term inflows | | 71.2 | | | | 63.9 | | | | 25.6 | | | | 4.8 | | | | — | | | | 165.5 | | |

| Long-term outflows | | (82.4 | | ) | | (88.5 | | ) | | (29.0 | | ) | | (3.6 | | ) | | — | | | | (203.5 | | ) |

| Long-term net flows | | (11.2 | | ) | | (24.6 | | ) | | (3.4 | | ) | | 1.2 | | | | — | | | | (38.0 | | ) |

| Total net flows | | (11.2 | | ) | | (24.6 | | ) | | (3.4 | | ) | | 1.2 | | | | 3.5 | | | | (34.5 | | ) |

| Acquisition | | — | | | | 9.8 | | | | — | | | | — | | | | — | | | | 9.8 | | |

| Net market change, distributions and other | | (16.3 | | ) | | 7.7 | | | | (2.4 | | ) | | 0.1 | | | | (0.5 | | ) | | (11.4 | | ) |

| AUM at September 30, 2018 | | $ | 258.5 | | | $ | 304.6 | | | $ | 126.7 | | | $ | 18.0 | | | $ | 9.3 | | | $ | 717.1 | |

Net

AUM decreased $24.5 billion or 3% during fiscal year 2019 due to $31.8 billion of long-term net outflows and $20.0 billion of net market change, distributions and other, partially offset by $26.4 billion from an acquisition.

Long-term inflows increased 6% to $175.0 billion due to higher inflows in all the long-term asset classes except the equity asset class, and long-term outflows increased 2% to $206.8 billion due to higher outflows in the multi-asset and alternative asset classes, partially offset by lower outflows in the equity asset class.

Our exposure to these risks is [removed: minimized] [added: reduced] as we sponsor a broad range of investment products in various global jurisdictions, which serves to mitigate the impact of changes in any particular market or region.

Assuming the respective effective fee rates [added: and asset mix] remain unchanged, a proportional 10% change in the value of our average AUM would result in corresponding 10% changes in our investment management fees and asset-based distribution fee [removed: revenues and expenses,] [added: revenues,] excluding performance-based investment management fees.

Such a change for the fiscal year ended September 30, [removed: 2020] [added: 2021] would have resulted in an increase or decrease in [removed: pre-tax earnings] [added: operating revenues] of [removed: $366.5] [added: $758.5] million.

We are exposed to changes in interest rates primarily through our investments in [removed: sponsored] funds that invest in debt securities, which were [removed: $1,338.4] [added: $1,606.0] million at September 30, [removed: 2020.][added: 2021.]

Our exposure to interest rate risks from these investments is [removed: minimized] [added: mitigated] by the low average duration exposure [removed: mandate of] [added: and] a [removed: substantial majority] [added: broad range] of [removed: the funds.][added: products in various global jurisdictions.]

We had no exposure to changes in interest rates from debt obligations at September 30, [removed: 2020] [added: 2021] as all of our outstanding debt was issued at fixed rates.

As of September 30, [removed: 2020,] [added: 2021,] we have considered the potential impact of a 100 basis point movement in market interest rates on our [removed: portfolio of sponsored] [added: investments in] funds that invest in debt securities.

While the majority of our revenues are earned in the U.S., we also provide services and earn revenues in Europe, Middle East and Africa, Asia-Pacific and Americas excluding U.S. Our exposure to foreign currency exchange risk is [removed: minimized] [added: reduced] in relation to our results of operations since a significant portion of these revenues is denominated in U.S. dollars.

The exposure to foreign currency exchange risk in our consolidated balance sheet mostly relates to cash and cash equivalents and investments that are denominated in foreign currencies, primarily in the Euro, Pound Sterling, Indian [removed: Rupee and] [added: Rupee,] Canadian [added: dollar and Australian] dollar.

These assets accounted for [removed: 19%] [added: 22%] of the total cash and cash equivalents and investments at September 30, [removed: 2020.][added: 2021.]

Such a weakening as of September 30, [removed: 2020] [added: 2021] would result in a [removed: $76.7] [added: $93.4] million increase in accumulated other comprehensive income and a [removed: $23.0] [added: $29.7] million decrease in pre-tax earnings.

The following is a summary of the effect of a 10% increase or decrease in the carrying values of our financial instruments subject to market valuation risks at September 30, [removed: 2020.][added: 2021.]

If such a 10% increase or decrease in carrying values were to occur, the changes from investments measured at fair value and direct investments in CIPs would result in a [removed: $129.0] [added: $163.1] million increase or decrease in our pre-tax earnings.

| *(in millions)* | | [added: | | | |] Carrying Value | | | | [added: | |] Carrying [removed: Value Assuming] [added: Value Assuming] a 10% Increase | | | | [added: | |] Carrying [removed: Value Assuming] [added: Value Assuming] a 10% Decrease | | |

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| Investments, at fair value | | | | | | $ | 588.3 | | | | | $ | 647.1 | | | | | $ | 529.5 | |

| Direct investments in CIPs | | | | | | 1,042.8 | | | | | | 1,147.1 | | | | | | 938.5 | | |

| Total | | | | | | $ | 1,631.1 | | | | | $ | 1,794.2 | | | | | $ | 1,468.0 | |

The investment mandates of the remaining funds consist of a broad range of products in various global jurisdictions, mitigating the impact of changes in any particular market or region.

Changes in the values of these assets resulting from changes in U.S. dollar exchange rates are recorded in accumulated other comprehensive income (loss), except for cash and cash equivalents held by subsidiaries for which the U.S. dollar is the functional currency, for which the changes are recorded in earnings.

We also have exposure to foreign exchange revaluation of cash and cash equivalents and investments that are denominated in U.S. dollars and held by non-U.S. subsidiaries for which their local currency is the functional currency.

These assets accounted for 6% of the total cash and cash equivalents and investments at September 30, 2020.

Changes in the values of these assets resulting from changes in U.S. dollar exchange rates are recorded in earnings.

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| Investments, at fair value | | $ | 504.8 | | | $ | 555.3 | | | $ | 454.3 | |

| Direct investments in CIPs | | 785.3 | | | | 863.8 | | | | 706.8 | | |

| Total | | $ | 1,290.1 | | | $ | 1,419.1 | | | $ | 1,161.1 | |

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We offer our services and products under our various distinct brand names, including, but not limited to, Franklin®, Templeton®, Legg Mason®, [removed: Balanced Equity Management®,] Benefit Street Partners®, [removed: Darby®, Edinburgh Partners™,] [added: Brandywine Global Investment Management®, Clarion Partners®, ClearBridge Investments®,] Fiduciary [removed: Trust™,] [added: Trust International™,] Franklin Bissett®, Franklin Mutual Series®, [removed: K2®] [added: K2®, LibertyShares®, Martin Currie®, Royce® Investment Partners] and [removed: LibertyShares®.][added: Western Asset Management Company®.]

We are a global investment management organization with [removed: $1,418.9] [added: $1,530.1] billion in assets under management (“AUM”) as of September 30, [removed: 2020.][added: 2021.]

Our mission is to help [removed: clients] [added: people all over the world] achieve [removed: better outcomes] [added: the most important milestones of their lives] through investment management expertise, wealth management and technology solutions.

Through our [removed: investment adviser subsidiaries (“specialist] [added: specialist] investment [removed: managers”), including those acquired through our Legg Mason acquisition,] [added: managers,] we bring extensive capabilities in fixed income, equity, [removed: custom] multi-asset solutions and alternatives.

[removed: With] [added: For] more than 70 [removed: years of investment experience,] [added: years,] we [removed: are] [added: have been] committed to providing clients with exceptional investment management services and have developed a globally diversified business, including through strategic acquisitions.

Our specialist investment managers offer diverse perspectives and specialized expertise across asset classes and [removed: strategies, distributed to both institutional and retail clients.][added: strategies.]

[removed: Through our investment products, we] [added: We] provide [added: our] investment management and related services to retail, institutional and high-net-worth investors in jurisdictions worldwide.

We deliver our investment capabilities through a variety of products and vehicles and [removed: via] multiple points of access, including directly to investors and through financial intermediaries.

Our [removed: sponsored] funds include registered funds (including exchange-traded funds, or “ETFs”) and unregistered funds.

We offer a broad product mix [removed: of] [added: under our] fixed income, equity, multi-asset, alternative and cash management asset classes and [removed: solutions that meet a variety of investment goals and needs for investors.][added: solutions.]

We [removed: aim] [added: are committed] to [removed: deliver] [added: delivering] strong investment performance for our clients by offering a broad range of strategies and drawing on the extensive experience and perspective gained through our long history in the investment management business.

We have added, among others: (i) the Templeton [removed: family of funds,] [added: investment firm,] known for its global investing strategies and value style of investing, in 1992, (ii) the Franklin Mutual Series [removed: family of funds,] [added: investment firm,] known for its value-oriented equity funds, in 1996, (iii) the Franklin Bissett [removed: family of funds,] [added: investment firm,] known for its Canadian [removed: taxable] fixed income funds and growth-oriented equity funds, in 2000, (iv) the Fiduciary Trust [removed: investment management,] [added: International investment,] trust and fiduciary services firm, in 2001, (v) the [removed: Darby family of funds, known for its emerging markets investing strategies,] [added: K2 Advisors hedge funds solutions firm,] in [removed: 2003,] [added: 2012,] (vi) the [removed: Balanced Equity Management Pty.][added: Benefit Street Partners U.S. alternative credit manager firm, in 2019, (vii) the Athena Capital Advisors investment and wealth management firm, in March 2020, (viii) The Pennsylvania Trust Company investment, trust and fiduciary services firm, in May 2020, and (ix) the Legg Mason global investment firm, including certain specialist investment managers, on July 31, 2020.]

We generally derive our revenues and [removed: net] income from providing investment management and related services to our products and [removed: sub-advised products.][added: the products we sub-advise.]

Our investment management fees, which represent the majority of our revenues, depend to a large extent on the level and relative mix of our AUM and the types of services [removed: provided.][added: provided, which are subject to change.]

Our [removed: business is conducted through our subsidiaries, including those] specialist investment managers [added: include subsidiaries] registered with the U.S. Securities and Exchange Commission (the “SEC”) as investment advisers under the Investment Advisers Act of 1940 (the “Advisers Act”), [removed: those] [added: as well as subsidiaries] registered as investment adviser equivalents in jurisdictions including Australia, Brazil, Canada, China, Hong Kong, Ireland, India, Japan, Luxembourg, Malaysia, Mexico, Singapore, Switzerland, South Korea, Commonwealth of The Bahamas, the United Arab [removed: Emirates, the U.K.,] [added: Emirates] and [removed: certain other subsidiaries.][added: the United Kingdom (“U.K.”).]

Most of our funds are registered open-end [removed: funds] [added: funds, or mutual funds,] that continuously offer their shares to investors.

We also offer [added: or manage] registered [added: or listed] closed-end funds that issue a set number of shares to investors in a public offering which shares are then traded on a public stock exchange.

We [removed: have outsourced] [added: outsource] certain administration [added: and other] services for our funds to third-party providers.

An investor may purchase shares of [removed: an open-end] [added: a mutual] fund [added: directly from us or] through a broker-dealer, financial adviser, bank or other similar financial intermediary that provides investment advice to the investor, or an investor may purchase shares of a closed-end fund [added: or ETF] on the stock exchange where the fund is traded.

Our AUM by Asset [removed: Class][added: Class and Product Type]

[removed: We] [added: Through our specialist investment managers, we] offer a broad [removed: product mix] [added: range of services and capabilities] under our fixed income, equity, multi-asset, alternative and cash management asset [removed: classes and solutions to meet a variety of investment goals.][added: classes.]

Our fees for providing investment management services are generally based on a percentage of AUM in the accounts that we advise, the asset classes of the accounts, and the types of services that we [removed: provide for the accounts.][added: provide.]

See “Assets under Management” under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this Annual Report for additional [removed: information.][added: information about our AUM.]

Broadly speaking, other than changes in [removed: net assets] [added: AUM] due to acquisitions or dispositions by [removed: us (such as our acquisition of Legg Mason), the change] [added: us, changes] in [removed: the net assets of] our [removed: products depends] [added: AUM depend] primarily upon two factors: (i) the increase or decrease in the market value of the securities and instruments held in the portfolio of investments, and (ii) the level of inflows as compared to the level of outflows.

[removed: In addition, changing] [added: Changing] market conditions and the evolving needs of our clients may cause [added: asset volatility and] a shift in our asset mix, potentially resulting in an increase or decrease in our revenues and income depending upon the nature of our AUM and the level of management fees we earn based on our AUM.

| *(in billions)* [removed: Asset Class] [added: as of September 30, 2021] | | [added: | | | |] U.S. Funds | | | | [added: | |] Non-U.S. Funds | | | | [added: | |] Institutional Separate Accounts | | | | [added: | |] Retail Separately Managed Accounts | | | | [removed: Other Accounts, Alternative Investment Products and Trusts] | | [added: Other] | | [added: | | | |] Total | | | [added: | | | Percentage of Total AUM | | |]

[removed: U.S. Funds.] Our U.S. funds include [removed: U.S.-registered open-end and] [added: U.S. mutual funds,] closed-end funds, ETFs and other products.

[removed: Non-U.S. Funds.] Our non-U.S. funds include a variety of [added: cross-border] funds principally domiciled in Luxembourg or Ireland, registered for sale to non-U.S. investors in certain other countries, and [added: international locally domiciled funds and] products for the particular local market.

[removed: Institutional Separate Accounts.] Our institutional separate [removed: accounts] [added: account services] are [removed: for] [added: provided to] various institutions for which we serve as an investment adviser.

[removed: Retail Separately Managed Accounts.] Our retail separately managed accounts, commonly known as managed accounts or wrap programs, are sponsored by various financial institutions.

[removed: Other Accounts, Alternative Investment Products and Trusts.] We also offer and serve as investment adviser to [added: various] other [removed: accounts, alternative investment products and trusts.][added: products.]

[removed: Our] [added: Across our business, our] specialist investment managers generally focus on a portion of the asset management industry in terms of the types of assets managed (primarily fixed income, equity or alternatives) and each [removed: differs] [added: may differ] in the types of products and services offered, the investment styles utilized, [removed: the distribution channels used,] and the types and geographic locations of its clients.

We have in place revenue sharing arrangements with certain of our specialist investment [removed: managers acquired through the Legg Mason transaction.][added: managers.]

Our [added: Broad] Range of Services and Capabilities

Our investment products include [removed: registered open-end and] [added: mutual funds,] closed-end funds, private funds, institutional separate accounts, retail separately managed accounts, and other [removed: accounts, alternative investment products and trusts.][added: products.]

We distribute and market globally our different capabilities under our brand names through various [removed: subsidiaries.][added: subsidiaries and multiple points of access, including directly to investors and through financial intermediaries.]

We primarily [removed: attract] [added: engage] new institutional business through our relationships with pension, defined contribution and management consultants, direct sales efforts and additional mandates from our existing client relationships, as well as from our responses to requests for proposals.

[removed: A few of] our subsidiaries also serve as direct marketing broker-dealers for institutional investors for certain of our private funds, and some of our private funds may utilize third-party placement agents.

Our specialist investment managers provide investment management services pursuant to agreements in effect with each of our investment products [removed: and the] [added: and/or clients, including] products for which we provide sub-advisory services.

For our [removed: U.S.-registered] [added: U.S. mutual] funds, the board of directors or trustees of each fund and our management personnel regularly review the investment management fee structures for the funds in light of fund performance, the level and range of services provided, industry conditions and other relevant factors.

We have one operating segment, investment management and related services.

Our sales and distribution services include distribution-related financial technology.

Recent Developments

As previously announced, on November 1, 2021, we entered into a definitive agreement to acquire Lexington Partners L.P. (“Lexington”), a leading global manager of secondary private equity and co-investment funds.

We expect this acquisition to bolster our alternative asset capabilities, complementing our existing strengths in real estate, private credit, and hedge fund strategies.

The transaction is structured to provide continuity for Lexington’s experienced team and continued alignment with investors.

The transaction is subject to customary closing conditions and is expected to close by the end of the second fiscal quarter of 2022.

On September 30, 2021, we also announced that we will acquire O’Shaughnessy Asset Management, LLC (“OSAM”), a leading quantitative asset management firm.

Through this acquisition, we expect to add to our offerings in the separately managed account industry.

OSAM’s capabilities are expected to serve as an important expansion and enhancement of our existing strengths in separately managed account and custom solutions capabilities.

The transaction is subject to customary closing conditions and is expected to close in the first quarter of fiscal year 2022.

Our business is conducted through our subsidiaries, including our specialist investment managers.

Our fixed income capabilities include government, municipals, corporate credit, bank loans, securitized, multi-sector, currencies and other investments.

Our equity capabilities include value, deep value, core value, blend, growth at a reasonable price (GARP), growth, convertibles, sector, Shariah, smart beta and thematic investments.

Our multi-asset solutions capabilities include income, real return, balanced/hybrid, total return, target data/risk, absolute return, tactical asset allocation and managed volatility investments.

Our alternative capabilities include private debt, hedge funds, private equity, real estate and infrastructure investments.

AUM by asset class and product type was as follows (primarily based on where product is domiciled):

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Fixed Income | | | | | | $ | 206.3 | | | | | $ | 55.5 | | | | | $ | 338.6 | | | | | $ | 34.3 | | | | | $ | 15.6 | | | | | $ | 650.3 | | | | | 43 | | % |

| Equity | | | | | | 260.1 | | | | | | 87.3 | | | | | | 66.3 | | | | | | 87.8 | | | | | | 22.1 | | | | | | 523.6 | | | | | | 34 | | % |

| Multi-Asset | | | | | | 96.5 | | | | | | 8.7 | | | | | | 4.3 | | | | | | 2.9 | | | | | | 40.0 | | | | | | 152.4 | | | | | | 10 | | % |

| Alternative | | | | | | 7.4 | | | | | | 10.8 | | | | | | 34.2 | | | | | | — | | | | | | 92.8 | | | | | | 145.2 | | | | | | 9 | | % |

| Cash Management | | | | | | 34.9 | | | | | | 22.9 | | | | | | 0.8 | | | | | | — | | | | | | — | | | | | | 58.6 | | | | | | 4 | | % |

| Total | | | | | | $ | 605.2 | | | | | $ | 185.2 | | | | | $ | 444.2 | | | | | $ | 125.0 | | | | | $ | 170.5 | | | | | $ | 1,530.1 | | | | | 100 | | % |

Our Specialist Investment Managers

Our specialist investment managers include: Benefit Street Partners, Brandywine Global, Clarion Partners, ClearBridge Investments, Fiduciary Trust International, Franklin Templeton Equity, Franklin Templeton Fixed Income, Franklin Templeton Investment Solutions, Martin Currie, Royce Investment Partners, Templeton Global Macro, and Western Asset Management.

We also offer diverse strategies across active, smart beta and passive approaches, in a broad range of vehicles.

Our investment products are offered globally to retail, institutional and high-net-worth clients, which may include, among others, individual investors, institutional investors, sovereign wealth funds, defined benefit and contribution plans, endowments and charitable foundations, healthcare systems and insurance companies.

Our products and capabilities are designed to accommodate a variety of investment goals and preferences, from capital appreciation to capital preservation, as well as certain environmental, social and governance (“ESG”) preferences.

We are committed to partnering closely with our clients to understand their challenges and aspirations, and drawing on our investment capabilities and resources to offer and/or design the right investment solutions for them.

A few of

Our global distribution framework is organized into two groups.

Our global advisory services group is responsible for sales, marketing and business development, and maintains a regional distribution model.

Our global alliances and new business strategies group oversees our digital wealth management and distribution-related financial technology, joint ventures, seed capital allocations, and direct-to-consumer initiatives.

Our groups work closely together to meet the needs of our advisors, clients and investors.

There are many sales channels across each region, which may include retail, institutional, private wealth, retirement, insurance, and other specialty sales.

Our global footprint and breadth of investment capability provides the opportunity for us to work with global financial institutions to add value through and beyond investing, including by building business relationships and global economic partnerships.

In addition, certain of our specialist investment managers have their own sales and marketing teams that distribute their products and services, primarily to institutional investors, both directly and through consultants.

Consultants play a large role in institutional investment management by helping clients select and retain investment managers.

In addition, pursuant to our acquisition of Legg Mason, Inc. (“Legg Mason”) on July 31, 2020, as described further below, we acquired certain additional brand names including Brandywine Global Investment Management®, Clarion Partners®, ClearBridge Investments®, Martin Currie®, QS Investors®, Royce® Investment Partners and Western Asset Management Company®.

Acquisition of Legg Mason

On July 31, 2020, we completed our acquisition of Legg Mason pursuant to the terms and conditions of the Agreement and Plan of Merger, dated as of February 17, 2020, by and among Franklin, Legg Mason and Alpha Sub, Inc., a wholly-owned subsidiary of Franklin (the “Merger Agreement”), pursuant to which Legg Mason became a wholly-owned subsidiary of Franklin.

Under the Merger Agreement, at the effective time of the acquisition, we acquired all of the outstanding common stock of Legg Mason for a purchase consideration of $4.5 billion in cash and $0.2 billion related to the settlement of historical compensation arrangements.

Legg Mason has outstanding debt with an aggregate maturity value of $2.0 billion.

The transaction increased our assets under management by $797.4 billion as of the date of the acquisition.

The acquisition significantly deepens our presence in key geographies and creates an expansive investment platform that is well balanced between institutional and retail client AUM.

Other Recent Development

Effective October 1, 2020, the capabilities of QS Investors, which became one of our specialist investment managers through the Legg Mason acquisition, were combined with our Franklin Templeton Multi-Asset Solutions group to form Franklin Templeton Investment Solutions, a solutions platform designed to deliver an expanded range of investment capabilities to clients.

Our combined teams of investment professionals oversee various multi-asset strategies, leveraging a broad spectrum of investment capabilities from fundamental to quantitative.

Limited specialty Australian equity manager, in 2011, (vii) the K2 Advisors hedge funds solutions provider, in 2012, (viii) the Edinburgh Partners global value investment manager based in the United Kingdom (the “U.K.”), in 2018, (ix) the Benefit Street Partners U.S. alternative credit manager, in 2019, (x) the Athena Capital Advisors investment and wealth management firm, in March 2020, (xi) The Pennsylvania Trust Company investment management,

trust and fiduciary services firm, in May 2020, and (xii) the Legg Mason global investment management organization, including certain specialist investment managers, on July 31, 2020.

We believe in the value of active investment management.

Through our investment products, including our expanded products acquired through the Legg Mason transaction, we serve a variety of clients including retail, institutional and high-net-worth investors in regions and jurisdictions worldwide.

These fees and arrangements change from time to time.

The funds themselves do not have employees.

As of September 30, 2020, our total AUM by asset class on a worldwide basis was as follows:

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| Asset Class | | Value in Billions | | | | Percentage of Total AUM | |

| Fixed Income | | $ | 656.7 | | | 46 | % |

| Equity | | 432.0 | | | | 31 | % |

| Multi-Asset | | 133.8 | | | | 9 | % |

| Alternative | | 124.0 | | | | 9 | % |

| Cash Management | | 72.4 | | | | 5 | % |

| Total | | $ | 1,418.9 | | | 100 | % |

We are subject to the risk of asset volatility resulting from changes in the global capital markets.

Our AUM by Product Type

As of September 30, 2020, our total AUM by product type was as follows:

| | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Fixed Income | | $ | 199.1 | | | $ | 69.0 | | | $ | 342.8 | | | $ | 30.1 | | | $ | 15.7 | | | $ | 656.7 | |

| Equity | | 215.4 | | | | 71.2 | | | | 57.2 | | | | 65.4 | | | | 22.8 | | | | 432.0 | | |

| Multi-Asset | | 81.9 | | | | 8.0 | | | | 6.4 | | | | 7.8 | | | | 29.7 | | | | 133.8 | | |

| Alternative | | 6.0 | | | | 9.0 | | | | 33.1 | | | | — | | | | 75.9 | | | | 124.0 | | |

| Cash Management | | 36.4 | | | | 35.0 | | | | 1.0 | | | | — | | | | — | | | | 72.4 | | |

| Total | | $ | 538.8 | | | $ | 192.2 | | | $ | 440.5 | | | $ | 103.3 | | | $ | 144.1 | | | $ | 1,418.9 | |

As of September 30, 2020, our five largest U.S. funds represented, in the aggregate, 11% of total AUM.

Certain Specialist Investment Managers Acquired Through the Legg Mason Transaction

We acquired certain specialist investment managers through the Legg Mason transaction.

| | |

| --- | --- |

[removed: FORM 10-K][added: FORM 10-K]

| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year ended September 30, [removed: 2020][added: 2021]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

| Delaware | | [added: | | | |] 13-2670991 | [added: | |]

| (State or other jurisdiction of incorporation or organization) | | [added: | | | |] (I.R.S. Employer Identification No.) | [added: | |]

One Franklin [removed: Parkway, San Mateo, CA 94403][added: Parkway, San Mateo, CA 94403]

[removed: (650) 312-2000][added: (650) 312-2000]

| Title of each class | [added: | |] Trading symbol(s) | [added: | |] Name of each exchange on which registered | [added: | |]

| Common Stock, par value $0.10 per share | [added: | |] BEN | [added: | |] New York Stock Exchange | [added: | |]

| Large Accelerated Filer | [added: | |] ☒ | | [added: | | | |] Accelerated Filer | [added: | |] ☐ | [added: | |]

| Non-accelerated Filer | [added: | |] ☐ | | [added: | | | |] Smaller Reporting Company | [added: | |] ☐ | [added: | |]

| | | | [added: | | | | | |] Emerging Growth Company | [added: | |] ☐ | [added: | |]

The aggregate market value of the voting common equity (“common stock”) held by non-affiliates of the registrant, as of March 31, [removed: 2020] [added: 2021] (the last business day of registrant’s second quarter of fiscal year [removed: 2020),] [added: 2021),] was [removed: $4.6] [added: $8.5] billion based upon the last sale price reported for such date on the New York Stock Exchange.

Number of shares of the registrant’s common stock outstanding at October 31, [removed: 2020: 504,591,594.][added: 2021: 501,795,099.]

Certain portions of the registrant’s definitive proxy statement for its annual meeting of stockholders, to be filed with the Securities and Exchange Commission within 120 days after September 30, [removed: 2020,] [added: 2021,] are incorporated by reference into Part III of this report.

| FORM [removed: 10-K ITEM] [added: 10-K ITEM] | | | [removed: PAGE NUMBER] | [added: | | | | | PAGE NUMBER | | |]

| | [added: | |] ITEM 1. | [removed: [BUSINESS](#s65C5B9E95EAD5D629277AC9F6E0CD92A)] | [removed: 3] | [added: [BUSINESS](#i346fd55fe425424da9c47e366c278670_16) | | | [3](#i346fd55fe425424da9c47e366c278670_13) | | |]

| | [added: | |] ITEM 1A. | [added: | |] [RISK [removed: FACTORS](#sDEB7362F7E025C19B84C1A6B0ABFBA67)] [added: FACTORS](#i346fd55fe425424da9c47e366c278670_43)] | [removed: 18] | [added: | [16](#i346fd55fe425424da9c47e366c278670_43) | | |]

| | [added: | |] ITEM 1B. | [added: | |] [UNRESOLVED STAFF [removed: COMMENTS](#sD3639721E846546E982663272025E16C)] [added: COMMENTS](#i346fd55fe425424da9c47e366c278670_46)] | [removed: 29] | [added: | [27](#i346fd55fe425424da9c47e366c278670_46) | | |]

| | [added: | |] ITEM 2. | [removed: [PROPERTIES](#sFD6DEC8E36B2552D9E0E5C0A4296CB15)] | [removed: 30] | [added: [PROPERTIES](#i346fd55fe425424da9c47e366c278670_49) | | | [28](#i346fd55fe425424da9c47e366c278670_49) | | |]

| | [added: | |] ITEM 3. | [added: | |] [LEGAL [removed: PROCEEDINGS](#s2F7026F3148556BEAC0DBF010A8A0AD3)] [added: PROCEEDINGS](#i346fd55fe425424da9c47e366c278670_52)] | [removed: 30] | [added: | [28](#i346fd55fe425424da9c47e366c278670_52) | | |]

| | [added: | |] ITEM 4. | [added: | |] [MINE SAFETY [removed: DISCLOSURES](#s3F70644D944956BC8E041DE5B846A778)] [added: DISCLOSURES](#i346fd55fe425424da9c47e366c278670_55)] | [removed: 30] | [added: | [28](#i346fd55fe425424da9c47e366c278670_55) | | |]

| | [added: | |] [INFORMATION ABOUT OUR EXECUTIVE [removed: OFFICERS](#s7408DE036F505E77978F1811839B311A)] [added: OFFICERS](#i346fd55fe425424da9c47e366c278670_58)] | | [removed: 31] | [added: | | | [29](#i346fd55fe425424da9c47e366c278670_58) | | |]

| | [added: | |] ITEM 5. | [added: | |] [MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES](#s181F1F732E585159A3C2B9E91A9717AA)] [added: SECURITIES](#i346fd55fe425424da9c47e366c278670_64)] | [removed: 33] | [added: | [31](#i346fd55fe425424da9c47e366c278670_64) | | |]

| | [added: | |] ITEM 7. | [added: | |] [MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS](#sEF2BF1C07D8F58A2B2A3C45938A9166F)] [added: OPERATIONS](#i346fd55fe425424da9c47e366c278670_70)] | [removed: 35] | [added: | [31](#i346fd55fe425424da9c47e366c278670_70) | | |]

| | [added: | |] ITEM 7A. | [added: | |] [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET [removed: RISK](#sB470196B8E9D5FBB86F11765BE2089B1)] [added: RISK](#i346fd55fe425424da9c47e366c278670_136)] | [removed: 63] | [added: | [57](#i346fd55fe425424da9c47e366c278670_136) | | |]

| | [added: | |] ITEM 8. | [added: | |] [FINANCIAL STATEMENTS AND SUPPLEMENTARY [removed: DATA](#sA801C6DCB2B7576D803B7E7C9D256F9E)] [added: DATA](#i346fd55fe425424da9c47e366c278670_139)] | [removed: 65] | [added: | [59](#i346fd55fe425424da9c47e366c278670_139) | | |]

| | [added: | |] ITEM 9. | [added: | |] [CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL [removed: DISCLOSURE](#s3703B7C6C86D58CB832E090105F0C7B2)] [added: DISCLOSURE](#i346fd55fe425424da9c47e366c278670_265)] | [removed: 107] | [added: | [100](#i346fd55fe425424da9c47e366c278670_265) | | |]

| | [added: | |] ITEM 9A. | [added: | |] [CONTROLS AND [removed: PROCEDURES](#sA501B0B6985755DC90523ABB8880F9E9)] [added: PROCEDURES](#i346fd55fe425424da9c47e366c278670_268)] | [removed: 107] | [added: | [100](#i346fd55fe425424da9c47e366c278670_268) | | |]

| | [added: | |] ITEM 9B. | [added: | |] [OTHER [removed: INFORMATION](#s84CDBC44DD465802851AA772E6B1CC2E)] [added: INFORMATION](#i346fd55fe425424da9c47e366c278670_271)] | [removed: 107] | [added: | [100](#i346fd55fe425424da9c47e366c278670_271) | | |]

| [removed: [PART III](#s7EE3FE9A54E055CBB546D0E5414B8EC9)] [added: [PART III](#i346fd55fe425424da9c47e366c278670_274)] | | | | [added: | | | | | | | |]

| | [added: | |] ITEM 10. | [added: | |] [DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE [removed: GOVERNANCE](#s765555F981DA556EAE203E7C5375F047)] [added: GOVERNANCE](#i346fd55fe425424da9c47e366c278670_277)] | [removed: 108] | [added: | [101](#i346fd55fe425424da9c47e366c278670_277) | | |]

| | [added: | |] ITEM 11. | [added: | |] [EXECUTIVE [removed: COMPENSATION](#sD8EB538E1F84588DB591D3722AA47CCD)] [added: COMPENSATION](#i346fd55fe425424da9c47e366c278670_280)] | [removed: 108] | [added: | [101](#i346fd55fe425424da9c47e366c278670_280) | | |]

| | [added: | |] ITEM 12. | [added: | |] [SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER [removed: MATTERS](#s84D77634020B59DCB2C6FBF2B58286F4)] [added: MATTERS](#i346fd55fe425424da9c47e366c278670_283)] | [removed: 108] | [added: | [101](#i346fd55fe425424da9c47e366c278670_283) | | |]

| | [added: | |] ITEM 13. | [added: | |] [CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR [removed: INDEPENDENCE](#sB051C1BCA6BB55C4A4DF9FC44EB4740E)] [added: INDEPENDENCE](#i346fd55fe425424da9c47e366c278670_286)] | [removed: 108] | [added: | [101](#i346fd55fe425424da9c47e366c278670_286) | | |]

| | [added: | |] ITEM 14. | [added: | |] [PRINCIPAL ACCOUNTANT FEES AND [removed: SERVICES](#s933AEA8C5E1956C5B6DD050BFE1D412D)] [added: SERVICES](#i346fd55fe425424da9c47e366c278670_289)] | [removed: 108] | [added: | [101](#i346fd55fe425424da9c47e366c278670_289) | | |]

| | [added: | |] ITEM 15. | [added: | |] [EXHIBITS AND FINANCIAL STATEMENT [removed: SCHEDULES](#s6019837507585C07BCF624C1F43CCF9C)] [added: SCHEDULES](#i346fd55fe425424da9c47e366c278670_295)] | [removed: 109] | [added: | [102](#i346fd55fe425424da9c47e366c278670_295) | | |]

| | [added: | |] ITEM 16. | [added: | |] [FORM 10-K [removed: SUMMARY](#s81CE1AF5EC125738A039BD7F062FFD98)] [added: SUMMARY](#i346fd55fe425424da9c47e366c278670_298)] | [removed: 109] | [added: | [102](#i346fd55fe425424da9c47e366c278670_298) | | |]

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| [PART I](#i346fd55fe425424da9c47e366c278670_10) | | | | | | | | | | | |

| [PART II](#i346fd55fe425424da9c47e366c278670_61) | | | | | | | | | | | |

| | | | ITEM 6. | | | [\[RESERVED\]](#i346fd55fe425424da9c47e366c278670_2849) | | | [31](#i346fd55fe425424da9c47e366c278670_2849) | | |

| | | | ITEM 9C. | | | [DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](#i346fd55fe425424da9c47e366c278670_2867) | | | [100](#i346fd55fe425424da9c47e366c278670_2867) | | |

| [PART IV](#i346fd55fe425424da9c47e366c278670_292) | | | | | | | | | | | |

| [EXHIBIT INDEX](#i346fd55fe425424da9c47e366c278670_301) | | | | | | | | | [102](#i346fd55fe425424da9c47e366c278670_301) | | |

| [SIGNATURES](#i346fd55fe425424da9c47e366c278670_304) | | | | | | | | | [105](#i346fd55fe425424da9c47e366c278670_304) | | |

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| --- | --- | --- | --- |

| [PART I](#sDF9F4B2A3E3E5636B70C5E9CACA09266) | | | |

| [PART II](#s207578E86BD75349BE64A12570F55B4A) | | | |

| | ITEM 6. | [SELECTED FINANCIAL DATA](#s66D68296148E5A8683AE9F796B14CE52) | 34 |

| [PART IV](#sD2B5A574212551859E706658CB8272D9) | | | |

| [EXHIBIT INDEX](#s50E759F2B4235D79AB904F56B0D79507) | | | 109 |

| [SIGNATURES](#sE80983CA732252D7A69C261663822F2C) | | | 112 |

| | |

| --- | --- |

| Location | | [added: | | | |] Owned [removed: Square Footage] [added: Square Footage] | | | [added: | | |] Owned [removed: Square Footage Leased to] [added: Square Footage Leased to] Third Parties | | [added: |]

| San Mateo, California | | [added: | | | |] 743,793 | | | [added: | | |] 357,383 | | [added: |]

| St. Petersburg, Florida | | [added: | | | |] 560,948 | | | [removed: 314,685] | | [added: | 320,477 | | |]

| Rancho Cordova, California | | [added: | | | |] 445,023 | | | [removed: 62,660] | | [added: | 26,962 | | |]

| Hyderabad, India | | [added: | | | |] 379,052 | | | [added: | | |] — | | [added: |]

| Poznan, Poland | | [added: | | | |] 284,436 | | | [added: | | |] — | | [added: |]

| Ft. Lauderdale, Florida | | [added: | | | |] 102,246 | | | [added: | | |] 20,264 | | [added: |]

| Edinburgh, Scotland | | [added: | | | |] 87,016 | | | [added: | | |] 26,210 | | [added: |]

We lease office space in [removed: 16] [added: 15] states in the U.S. and Washington, D.C., and internationally, [removed: including, for example, in] [added: including] Australia, Brazil, Canada, the People’s Republic of China (including Hong Kong), Germany, India, Japan, Luxembourg, Mexico, Poland, Singapore, South Korea, United Arab Emirates and the U.K. As of September 30, [removed: 2020,] [added: 2021,] we leased and occupied approximately [removed: 2,175,000] [added: 2,029,000] square feet of office space worldwide, and subleased to third parties approximately [removed: 417,000] [added: 460,000] square feet of excess leased space.

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Other | | | | | | 78,391 | | | | | | 9,724 | | |

| Total | | | | | | 2,680,905 | | | | | | 761,020 | | |

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| Other | | 90,891 | | | 12,091 | |

| Total | | 2,693,405 | | | 793,293 | |

| | |

| --- | --- |

Age [removed: 56][added: 57]

President of Franklin since December 2016, and Chief Executive Officer and director of Franklin since February 2020; formerly, Chief Operating Officer of Franklin from February 2017 to February 2020, Co-President of Franklin from October 2015 to December 2016, Executive Vice President and Chief Operating Officer of Franklin from March 2010 to September 2015, Executive Vice President–Operations and Technology of Franklin from December 2005 to March 2010, and Senior Vice President and Chief Information Officer of Franklin from May 2003 to December 2005; officer and/or director of certain subsidiaries of [removed: Franklin, including certain of the specialist investment managers acquired through the Legg Mason transaction;] [added: Franklin; officer,] director [removed: or] [added: and/or] trustee of certain funds registered as investment companies managed or advised by subsidiaries of Franklin.

Age [removed: 59][added: 81]

Executive Chairman of Franklin since February 2020, Chairman of the Board of Franklin since June 2013 and director of Franklin since January 2007; Chairman of the San Francisco Giants, a professional baseball organization, since November 2019; formerly, Chief Executive Officer of Franklin from July 2005 to February 2020, Co-Chief Executive Officer of Franklin from January 2004 to July 2005, and President of Franklin from December 1999 to September 2015; officer and/or director of certain subsidiaries of Franklin; [added: officer,] director [removed: or] [added: and/or] trustee of certain funds registered as investment companies managed or advised by subsidiaries of Franklin.

Age [removed: 80][added: 50]

Vice Chairman of Franklin since December 1999 and director of Franklin since 1971; officer and/or director of certain subsidiaries of Franklin; [added: officer,] director [removed: or] [added: and/or] trustee of certain funds registered as investment companies managed or advised by subsidiaries of Franklin.

Age [removed: 48][added: 60]

Executive Vice President and Chief Financial Officer of Franklin since May 2019; officer and/or director of certain subsidiaries of [removed: Franklin, including certain of the specialist investment managers acquired through the Legg Mason transaction since August 2020.][added: Franklin.]

Executive Vice President of Franklin since April 2019, formerly, Senior Vice President from June 2018 to April 2019; officer and/or director of certain subsidiaries of Franklin, including [removed: certain of the specialist investment managers acquired through the Legg Mason transaction, for example,] as Manager of Brandywine Global Investment Management, LLC and [added: Director of] Clarion Partners Holdings [removed: LLC since August 2020, and Director of] [added: LLC,] ClearBridge Investments, LLC and Western Asset Management Company, LLC since August 2020; as well as Executive Vice President of Franklin Templeton Institutional, LLC since April 2009, President and director of Templeton Institutional, Inc. since September 2009, and President since February 2017 and director since December 2016 of Templeton Worldwide, Inc.

[removed: Officer] [added: Executive Vice President, Technology and Operations, of Franklin since October 18, 2021; officer] and/or director of various investment adviser, operations, and technology related subsidiaries of Franklin for more than the past five years, [removed: including, for example,] [added: including] as Senior Vice President of Franklin Advisers, Inc., Franklin Templeton Institutional, LLC and Templeton Investment Counsel, LLC since July 2014, Vice President of FASA, LLC since June 2014, and Vice President of Franklin Templeton Companies, LLC since June 2010.

Age [removed: 58][added: 53]

Chief Accounting Officer of Franklin since April 2019; officer and/or director of certain subsidiaries of Franklin, including [removed: certain of the specialist investment managers acquired through the Legg Mason transaction, including, for example,] as Vice President and Chief Financial Officer of Legg Mason, Inc., Director of ClearBridge Investments, LLC and Manager of Royce & Associates GP, LLC since August 2020; as well as Director of Franklin Templeton Fund Management Limited since May 2019, Manager of Franklin Templeton International Services S.à r.l.

Age [removed: 52][added: 61]

Executive Vice President, Global Advisory Services, of Franklin since October [removed: 1,] 2020, [added: and Head of Global Distribution,] responsible for global retail and institutional distribution, including marketing and product strategy, and Managing Partner of Brandywine Global Investment Management, [removed: LLC, a specialist investment manager acquired through the Legg Mason transaction,] [added: LLC] since November 2014, responsible for the overall management of Brandywine including infrastructure, legal and compliance, business strategy, and sales and client service; formerly, Managing Director of Brandywine from 2012 to 2014, Head of Marketing, Sales and Client Service of Brandywine from 2003 to 2014, and Senior Vice President of Client Service of Brandywine from 1997 to 2003; officer and/or director of certain other subsidiaries of Franklin.

| | |

| --- | --- |

Our common stock is traded on the NYSE under the ticker symbol “BEN.” At October 31, [removed: 2020,] [added: 2021,] there were [removed: 2,731] [added: 2,645] stockholders of record of our common stock.

The following table provides information with respect to the shares of our common stock that we repurchased during the three months ended September 30, [removed: 2020.][added: 2021.]

| Month | | [added: | | | |] Total Number [removed: of Shares] [added: of Shares] Purchased | | | [added: | | |] Average [removed: Price Paid] [added: Price Paid] per Share | | | | [added: | |] Total Number [removed: of Shares Purchased As] [added: of Shares Purchased As] Part of [removed: Publicly Announced Plans or] [added: Publicly Announced Plans or] Programs | | | [removed: Maximum Number] [added: | | | Maximum Number] of [removed: Shares that] [added: Shares that] May Yet [removed: Be Purchased Under the] [added: Be Purchased Under the] Plans [removed: or Programs] [added: or Programs] | | [added: |]

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| July 2021 | | | | | | 181,621 | | | | | | $ | 29.55 | | | | | 181,621 | | | | | | 32,899,416 | | |

| August 2021 | | | | | | 1,431,110 | | | | | | 32.25 | | | | | | 1,431,110 | | | | | | 31,468,306 | | |

| September 2021 | | | | | | 600,434 | | | | | | 31.35 | | | | | | 600,434 | | | | | | 30,867,872 | | |

| Total | | | | | | 2,213,165 | | | | | | | | | | | | 2,213,165 | | | | | | | | |

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| July 2020 | | — | | | $ | — | | | — | | | 39,722,462 | |

| August 2020 | | 669,887 | | | 21.06 | | | | 669,887 | | | 39,052,575 | |

| September 2020 | | 838,451 | | | 20.26 | | | | 838,451 | | | 38,214,124 | |

| Total | | 1,508,338 | | | | | | | 1,508,338 | | | | |

| | |

| --- | --- |

FINANCIAL HIGHLIGHTS

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| as of and for the fiscal years ended September 30, | | 20201 | | | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | |

| Summary of Operations2 *(in millions)* | | | | | | | | | | | | | | | | | | | | |

| Operating revenues | | $ | 5,566.5 | | | $ | 5,669.4 | | | $ | 6,204.5 | | | $ | 6,305.0 | | | $ | 6,534.6 | |

| Operating income | | 1,048.9 | | | | 1,466.9 | | | | 2,028.2 | | | | 2,199.6 | | | | 2,295.1 | | |

| Operating margin | | 18.8 | | % | | 25.9 | | % | | 32.7 | | % | | 34.9 | | % | | 35.1 | | % |

| Net income attributable to Franklin Resources, Inc. | | 798.9 | | | 3 | 1,195.7 | | | 4 | 764.4 | | | 5 | 1,696.7 | | | | 1,726.7 | | |

| Financial Data *(in millions)* | | | | | | | | | | | | | | | | | | | | |

| Total assets | | $ | 20,220.9 | | | $ | 14,532.2 | | | $ | 14,383.5 | | | $ | 17,534.0 | | | $ | 16,098.8 | |

| Debt | | 3,017.1 | | | | 696.9 | | | | 695.9 | | | | 1,044.2 | | | | 1,401.2 | | |

| Debt of consolidated investment products | | 1,333.4 | | | | 50.8 | | | | 32.6 | | | | 53.4 | | | | 682.2 | | |

| Franklin Resources, Inc. stockholders’ equity | | 10,114.5 | | | | 9,906.5 | | | | 9,899.2 | | | | 12,620.0 | | | | 11,935.8 | | |

| Operating cash flows | | 1,021.4 | | | | 201.6 | | | | 2,229.7 | | | | 1,135.4 | | | | 1,727.7 | | |

| Investing cash flows | | (3,243.1 | | ) | | (1,077.1 | | ) | | (290.4 | | ) | | 52.0 | | | | 192.2 | | |

| Financing cash flows | | 194.2 | | | | (40.5 | | ) | | (3,761.7 | | ) | | (956.0 | | ) | | (1,800.7 | | ) |

| Assets Under Management *(in billions)* | | | | | | | | | | | | | | | | | | | | |

| Ending | | $ | 1,418.9 | | | $ | 692.6 | | | $ | 717.1 | | | $ | 753.2 | | | $ | 733.3 | |

| Average6 | | 832.9 | | | | 697.0 | | | | 740.5 | | | | 736.9 | | | | 749.3 | | |

| Per Common Share | | | | | | | | | | | | | | | | | | | | |

| Earnings | | | | | | | | | | | | | | | | | | | | |

| Basic | | $ | 1.59 | | | $ | 2.35 | | | $ | 1.39 | | | $ | 3.01 | | | $ | 2.94 | |

| Diluted | | 1.59 | | | | 2.35 | | | | 1.39 | | | | 3.01 | | | | 2.94 | | |

| Cash dividends declared | | 1.08 | | | | 1.04 | | | | 3.92 | | | | 0.80 | | | | 0.72 | | |

| Book value | | 20.43 | | | | 19.84 | | | | 19.07 | | | | 22.74 | | | | 20.93 | | |

__________________

| | |

| --- | --- |

| 1 | Includes the impact of the Company’s acquisition of Legg Mason, Inc. which was effective July 31, 2020. See Note 3 – Acquisitions in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report on Form 10‑K for more information. |

| 2 | In fiscal year 2020, the Company changed the presentation of its consolidated statements of income to include dividend and interest income and other expenses from consolidated investment products in non-operating income. Amounts for the comparative prior fiscal years have been reclassified to conform to the current presentation. These reclassifications had no impact on previously reported net income attributable to Franklin Resources, Inc. |

| 3 | Includes an income tax benefit of $27.0 million, net of valuation allowance, from capital losses subsequent to the change in corporate tax structure of a foreign holding company to a U.S. branch. |

| 4 | Includes an income tax charge of $86.0 million due to a revision to the estimated income tax charge that was recognized in fiscal year 2018 resulting from enactment of the Tax Cuts and Jobs Act of 2017 (“the Tax Act”). |

| 5 | Includes an estimated income tax charge of $968.8 million resulting from enactment of the Tax Act. |

| 6 | Represents simple monthly average AUM. |

Index of Consolidated Financial Statements for the fiscal years ended September 30, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018.][added: 2019.]

| CONTENTS | | [added: | | | |] Page | [added: | |]

| [Management’s Report on Internal Control Over Financial [removed: Reporting](#sF12C3968EDA45376B39B7CCD929815C7)] [added: Reporting](#i346fd55fe425424da9c47e366c278670_145)] | | [removed: 66] | [added: | | | [60](#i346fd55fe425424da9c47e366c278670_145) | | |]

| [Report of Independent Registered Public Accounting [removed: Firm](#s1064978D23D75285A447F27D44B30FEC)] [added: Firm](#i346fd55fe425424da9c47e366c278670_148)] | | [removed: 67] | [added: | | | [61](#i346fd55fe425424da9c47e366c278670_148) | | |]

| Consolidated Financial Statements of Franklin Resources, Inc. and its consolidated subsidiaries: | | | [added: | | | | | |]

| [Consolidated Statements of [added: Comprehensive] Income for the fiscal years ended September 30, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018](#sA5CB606CB056557DB532796625F18F95)] [added: 2019](#i346fd55fe425424da9c47e366c278670_154)] | | [removed: 70] | [added: | | | [64](#i346fd55fe425424da9c47e366c278670_154) | | |]

| [Consolidated Statements of [removed: Comprehensive] Income for the fiscal years ended September [removed: 30, 2020, 2019 and 2018](#s158DEDEB6BEF5190B309B0C6A81707FD)] [added: 30,](#i346fd55fe425424da9c47e366c278670_151) [2021](#i346fd55fe425424da9c47e366c278670_151)[,](#i346fd55fe425424da9c47e366c278670_151) [2020](#i346fd55fe425424da9c47e366c278670_151) [](#i346fd55fe425424da9c47e366c278670_151)[an](#i346fd55fe425424da9c47e366c278670_151)[d](#i346fd55fe425424da9c47e366c278670_151) [](#i346fd55fe425424da9c47e366c278670_151)[2019](#i346fd55fe425424da9c47e366c278670_151)] | | [removed: 71] | [added: | | | [63](#i346fd55fe425424da9c47e366c278670_151) | | |]

| [Consolidated Balance Sheets as of September [removed: 30, 2020 and 2019](#sF78F046D906A5CACB4A24A71C09D8F67)] [added: 30,](#i346fd55fe425424da9c47e366c278670_157) [2021](#i346fd55fe425424da9c47e366c278670_157) [and](#i346fd55fe425424da9c47e366c278670_157) [20](#i346fd55fe425424da9c47e366c278670_157)[20](#i346fd55fe425424da9c47e366c278670_157)] | | [removed: 72] | [added: | | | [65](#i346fd55fe425424da9c47e366c278670_157) | | |]

| [Consolidated Statements of Stockholders’ Equity as of and for the fiscal years ended September 30, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018](#sDDC90369B03E5C038CDA159214E732C7)] [added: 2019](#i346fd55fe425424da9c47e366c278670_163)] | | [removed: 73] | [added: | | | [66](#i346fd55fe425424da9c47e366c278670_163) | | |]

| [Consolidated Statements of Cash Flows for the fiscal years ended September 30, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018](#s88352B6F9F555B10995A37DE58A49051)] [added: 2019](#i346fd55fe425424da9c47e366c278670_169)] | | [removed: 74] | [added: | | | [67](#i346fd55fe425424da9c47e366c278670_169) | | |]

| [Notes to Consolidated Financial [removed: Statements](#s09ECDE5FA29F5194A1975B6CE67C0CD3)] [added: Statements](#i346fd55fe425424da9c47e366c278670_172)] | | [removed: 76] | [added: | | | [69](#i346fd55fe425424da9c47e366c278670_172) | | |]

Management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, [removed: 2020,] [added: 2021,] based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013).

Based on that assessment, management concluded that, as of September 30, [removed: 2020,] [added: 2021,] the Company’s internal control over financial reporting was effective.

The effectiveness of the Company’s internal control over financial reporting as of September 30, [removed: 2020] [added: 2021] has been audited by PricewaterhouseCoopers LLP, the independent registered public accounting firm that audits the Company’s consolidated financial statements, as stated in their report immediately following this report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of September 30, [removed: 2020.][added: 2021.]

We have audited the accompanying consolidated balance sheets of Franklin Resources, Inc. and its subsidiaries (the “Company”) as of September 30, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the related consolidated statements of income, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended September 30, [removed: 2020,] [added: 2021,] including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of September 30, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended September 30, [removed: 2020] [added: 2021] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of [removed: management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.]

[removed: redeemable] [added: | Redeemable] noncontrolling [removed: interest.][added: interests | | | | | | (186.4) | | | | | | — | | | | | | (186.4) | | |]

[removed: |] FRANKLIN RESOURCES, INC. [removed: CONSOLIDATED STATEMENTS OF INCOME | | | | | | | | | | | | |]

| *(in millions, except per share data)* | | | | | | | | | | | | | [added: | | | | | | | |]

| for the fiscal years ended September 30, | | [removed: 2020] | | | | [removed: 2019] [added: 2021] | | | | [removed: 2018] | | [added: 2020] | [added: | | | | | 2019 | | |]

| Operating Revenues | | | | | | | | | | | | | [added: | | | | | | | |]

| Investment management fees | | [added: | | | |] $ | [removed: 3,981.7] [added: 6,541.6] | | | [added: | |] $ | [removed: 3,985.2] [added: 3,981.7] | | | [added: | |] $ | [removed: 4,367.5] [added: 3,985.2] | |

| Sales and distribution fees | | [removed: 1,362.0] | | | | [removed: 1,444.6] [added: 1,635.5] | | | | [removed: 1,599.8] | | [added: 1,362.0] | [added: | | | | | 1,444.6 | | |]

| Shareholder servicing fees | | [removed: 195.1] | | | | [removed: 216.3] [added: 211.2] | | | | [removed: 221.9] | | [added: 195.1] | [added: | | | | | 216.3 | | |]

| Other | | [removed: 27.7] | | | | [removed: 23.3] [added: 37.2] | | | | [removed: 15.3] | | [added: 27.7] | [added: | | | | | 23.3 | | |]

| Total operating revenues | | [removed: 5,566.5] | | | | [removed: 5,669.4] [added: 8,425.5] | | | | [removed: 6,204.5] | | [added: 5,566.5] | [added: | | | | | 5,669.4 | | |]

| Operating Expenses | | | | | | | | | | | | | [added: | | | | | | | |]

| Compensation and benefits | | [removed: 1,873.9] | | | | [removed: 1,584.7] [added: 2,971.3] | | | | [removed: 1,390.6] | | [added: 1,873.9] | [added: | | | | | 1,584.7 | | |]

| Sales, distribution and marketing | | [removed: 1,703.1] | | | | [removed: 1,819.6] [added: 2,105.8] | | | | [removed: 2,039.7] | | [added: 1,703.1] | [added: | | | | | 1,819.6 | | |]

| Information systems and technology | | [removed: 288.4] | | | | [removed: 258.5] [added: 486.1] | | | | [removed: 243.9] | | [added: 288.4] | [added: | | | | | 258.5 | | |]

| Occupancy | | [removed: 147.9] | | | | [removed: 133.6] [added: 218.1] | | | | [removed: 128.6] | | [added: 147.9] | [added: | | | | | 133.6 | | |]

| Amortization of intangible assets | | [removed: 54.0] | | | | [removed: 14.7] [added: 232.0] | | | | [removed: 1.8] | | [added: 54.0] | [added: | | | | | 14.7 | | |]

| General, administrative and other | | [removed: 450.3] | | | | [removed: 391.4] [added: 537.2] | | | | [removed: 371.7] | | [added: 450.3] | [added: | | | | | 391.4 | | |]

| Total operating expenses | | [removed: 4,517.6] | | | | [removed: 4,202.5] [added: 6,550.5] | | | | [removed: 4,176.3] | | [added: 4,517.6] | [added: | | | | | 4,202.5 | | |]

| Operating Income | | [removed: 1,048.9] | | | | [removed: 1,466.9] [added: 1,875.0] | | | | [removed: 2,028.2] | | [added: 1,048.9] | [added: | | | | | 1,466.9 | | |]

| Other Income (Expenses) | | | | | | | | | | | | | [added: | | | | | | | |]

| Investment and other income (losses), net | | [removed: (38.4] | | [removed: )] | | [removed: 141.4] [added: 264.7] | | | | [removed: 200.3] | | [added: (38.4)] | [added: | | | | | 141.4 | | |]

management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

As described in Note 14 to the consolidated financial statements, the Company had gross deferred tax assets of $1,169.8 million as of September 30, 2021, reduced by a $319.3 million valuation allowance.

Management records a valuation allowance to reduce the carrying values of deferred tax assets to the amount that is more likely than not to be realized.

In assessing whether a valuation allowance should be established against a deferred income tax asset, management considers all positive and negative evidence, which includes timing of expiration, projected sources of taxable income, limitations on utilization under the statute, and effectiveness of prudent and feasible tax planning strategies.

The principal considerations for our determination that performing procedures relating to the realizability of deferred tax assets is a critical audit matter are the significant judgment by management when assessing the realizability of deferred tax assets, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to management’s assessment of the realizability of deferred tax assets and significant assumptions relating to the timing of expiration, projected sources of taxable income, limitations on utilization under the statute, and effectiveness of prudent and feasible tax planning strategies.

These procedures included testing the effectiveness of controls relating to the realizability of deferred tax assets, including controls over the completeness and accuracy of data relevant to the analysis, determination of projected sources of taxable income and expected utilization of deferred tax assets.

These procedures also included, among others: (i) evaluating management’s assessment of the realizability of deferred tax assets and the need for a valuation allowance, (ii) evaluating the reasonableness of management’s significant assumptions related to timing of expiration, projected sources of taxable income, limitations on utilization under the statute and effectiveness of prudent and feasible tax planning strategies, (iii) evaluating the prudence and feasibility of the implementation of available tax planning strategies, and (iv) testing the completeness and accuracy of the data utilized in the assessment of the realizability of deferred tax assets.

November 19, 2021

CONSOLIDATED STATEMENTS OF INCOME

| Redeemable noncontrolling interests | | | | | | 94.1 | | | | | | 48.6 | | | | | | 6.2 | | |

| Nonredeemable noncontrolling interests | | | | | | 169.3 | | | | | | (60.4) | | | | | | 3.6 | | |

CONSOLIDATED BALANCE SHEETS

| Receivables | | | | | | 1,428.2 | | | | | | 1,233.1 | | |

| Investments, at fair value | | | | | | 5,820.1 | | | | | | 4,074.0 | | |

| Total Assets | | | | | | $ | 24,168.4 | | | | | $ | 21,684.5 | |

| Debt | | | | | | 3,671.0 | | | | | | 2,800.6 | | |

| Total liabilities | | | | | | 11,424.8 | | | | | | 10,273.5 | | |

FRANKLIN RESOURCES, INC.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Acquisition | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 194.8 | | | | | | 194.8 | | |

| Net income | | | | | | | | | | | | | | | | | | | | | | | | 1,831.2 | | | | | | | | | | | | 1,831.2 | | | | | | 169.3 | | | | | | 2,000.5 | | |

| Repurchase of common stock | | | | | | (7.3) | | | | | | (0.7) | | | | | | (192.8) | | | | | | (14.7) | | | | | | | | | | | | (208.2) | | | | | | | | | | | | (208.2) | | |

| Issuance of common stock | | | | | | 14.0 | | | | | | 1.4 | | | | | | 132.0 | | | | | | | | | | | | | | | | | | 133.4 | | | | | | | | | | | | 133.4 | | |

| Net deconsolidation of investment products | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (552.4) | | | | | | (552.4) | | |

| Adjustment to fair value of redeemable noncontrolling interests | | | | | | | | | | | | | | | | | | | | | | | | (159.2) | | | | | | | | | | | | (159.2) | | | | | | | | | | | | (159.2) | | |

| Balance at September 30, 2021 | | | | | | 501.8 | | | | | | $ | 50.2 | | | | | $ | — | | | | | $ | 11,550.8 | | | | | $ | (377.6) | | | | | $ | 11,223.4 | | | | | $ | 587.2 | | | | | $ | 11,810.6 | |

FRANKLIN RESOURCES, INC.

| Amortization of intangible assets | | | | | | 232.0 | | | | | | 54.0 | | | | | | 14.7 | | |

| Net (gains) losses on investments | | | | | | (75.5) | | | | | | 15.5 | | | | | | 9.7 | | |

| Other | | | | | | 16.0 | | | | | | (28.7) | | | | | | 17.2 | | |

| Decrease in investments, net | | | | | | 12.8 | | | | | | 537.3 | | | | | | 142.4 | | |

| Net cash provided by operating activities | | | | | | 1,245.4 | | | | | | 1,083.3 | | | | | | 268.5 | | |

| Purchase of investments | | | | | | (770.4) | | | | | | (481.4) | | | | | | (401.9) | | |

| Decrease (increase) in loan receivables, net | | | | | | 42.7 | | | | | | (40.6) | | | | | | — | | |

| Payments of contingent consideration asset | | | | | | 20.3 | | | | | | — | | | | | | — | | |

| Net cash used in investing activities | | | | | | (2,615.9) | | | | | | (4,061.9) | | | | | | (1,275.4) | | |

FRANKLIN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

| Proceeds from issuance of debt | | | | | | 1,193.9 | | | | | | — | | | | | | — | | |

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Certain required quarterly information is included in Item 7 of Part II of this Annual Report under the heading “Selected Quarterly Financial Data (Unaudited)” and incorporated herein by reference.

On July 31, 2020, Franklin Resources, Inc. completed its acquisition of Legg Mason, Inc. (“Legg Mason”).

Consistent with guidance issued by the Securities and Exchange Commission that an assessment of a recently acquired business may be omitted from management’s report on internal control over financial reporting in the year of acquisition, management excluded an assessment of the effectiveness of the Company’s internal control over financial reporting related to Legg Mason.

Total assets and operating revenues of Legg Mason that were excluded from management’s assessment constitute 12% of the Company’s consolidated total assets as of September 30, 2020 and 9% of consolidated total operating revenues for the fiscal year ended September 30, 2020.

Management’s basis for exclusion included the size and complexity of the acquired business, the timing between acquisition and fiscal year end, and expected integration plans during the fiscal year ending September 30, 2021.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded Legg Mason, Inc. from its assessment of internal control over financial reporting as of September 30, 2020 because Legg Mason, Inc. was acquired by the Company in a purchase business combination during 2020.

We have also excluded Legg Mason, Inc. from our audit of internal control over financial reporting.

Legg Mason, Inc. is a wholly-owned subsidiary whose total assets and total operating revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 12% and 9%, respectively, of the related consolidated financial statement amounts as of and for the year ended September 30, 2020.

*Acquisition of Legg Mason, Inc. - Fair Value of Indefinite-lived and Definite-lived Investment Management Contract Intangible Assets and One Redeemable Noncontrolling Interest*

As described in Notes 1 and 3 to the consolidated financial statements, in July 2020, the Company completed its acquisition of Legg Mason, Inc. for a purchase consideration of $4.7 billion, which resulted in management recording $2.7 billion of indefinite-lived investment management contract intangible assets, $1.1 billion of definite-lived investment management contract intangible assets, and $186.4 million of redeemable noncontrolling interests.

Fair values of acquired indefinite-lived and definite-lived investment management contract intangible assets are based on the net present value of estimated future cash flows attributable to the contracts, which include significant assumptions about forecasts of the assets under management (“AUM”) growth rate, pre-tax profit margin, discount rate, average effective fee rate and effective tax rate.

Fair values of redeemable noncontrolling interests are determined using discounted cash flows and guideline public company methods, which include significant assumptions about forecasts of the AUM growth rate, pre-tax profit margin, discount rate and public company earnings multiples.

The principal considerations for our determination that performing procedures relating to the fair value of indefinite-lived and definite-lived investment management contract intangible assets and redeemable noncontrolling interest from the acquisition of Legg Mason, Inc. is a critical audit matter are the significant judgment by management when developing the estimated fair value of indefinite-lived and definite-lived investment management contract intangible assets and redeemable noncontrolling interest; this in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to (i) the AUM growth rate and discount rate assumptions utilized within the net present value of estimated future cash flows for the valuation of the investment management contract intangible assets and redeemable noncontrolling interest and (ii) the public company earnings multiples utilized within the guideline public company method for the valuation of the redeemable noncontrolling interest.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge.

These procedures included testing the effectiveness of controls relating to the fair value of indefinite-lived and definite-lived investment management contract intangible assets and redeemable noncontrolling interest in the acquisition of Legg Mason, Inc., including controls over development of (i) the AUM growth rate and discount rate assumptions utilized within the net present value of estimated future cash flows and (ii) the public company earnings multiples utilized within the guideline public company method.

These procedures also included, among others, identifying the acquired contracts by reading the purchase agreement and testing management’s process for estimating the fair value of the acquired indefinite-lived and definite-lived investment management contract intangible assets and

Testing management’s process included (i) evaluating the appropriateness of the methods, (ii) testing the completeness, accuracy, and relevance of underlying data used in the methods, and (iii) evaluating management’s significant assumptions related to the AUM growth rate and discount rate for the valuation of the investment management contract intangible assets and redeemable noncontrolling interest, and the public company earnings multiples for the valuation of the redeemable noncontrolling interest.

Evaluating the reasonableness of the AUM growth rate and public company earnings multiples involved considering the past performance of the acquired business, the consistency with external market and industry data and whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the Company’s discounted cash flow method and guideline public company method and the reasonableness of the discount rate.

November 20, 2020

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| Receivables | | 1,114.8 | | | | 740.0 | | |

| Receivables | | 85.8 | | | | 99.0 | | |

| Dividends | | 143.2 | | | | 137.4 | | |

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| Balance at October 1, 2017 | | 554.9 | | | $ | 55.5 | | | $ | — | | | $ | 12,849.3 | | | $ | (284.8 | ) | | $ | 12,620.0 | | | $ | 315.8 | | | $ | 12,935.8 | |

| Net income (loss) | | | | | | | | | | | | | 764.4 | | | | | | | | 764.4 | | | | (8.9 | | ) | | 755.5 | | |

| Repurchase of common stock | | (39.9 | ) | | (4.0 | | ) | | (170.4 | | ) | | (1,252.3 | | ) | | | | | | (1,426.7 | | ) | | | | | | (1,426.7 | | ) |

| Issuance of common stock | | 3.3 | | | 0.3 | | | | 130.8 | | | | | | | | | | | | 131.1 | | | | | | | | 131.1 | | |

| Acquisition | | 0.8 | | | 0.1 | | | | 26.9 | | | | | | | | | | | | 27.0 | | | | | | | | 27.0 | | |

| Purchase of noncontrolling interest | | | | | | | | | | | | | (10.6 | | ) | | | | | | (10.6 | | ) | | 5.4 | | | | (5.2 | | ) |

| Acquisition | | | | | | | | | | | | | | | | | | | | | | | | | 216.1 | | | | 216.1 | | |

| Other | | (26.1 | | ) | | 11.8 | | | | 28.0 | | |

| Decrease (increase) in receivables of consolidated investment products | | (4.2 | | ) | | (34.3 | | ) | | 68.5 | | |

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The Company’s management evaluated, with the participation of the Company’s principal executive and principal financial officers, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, [removed: 2020.][added: 2021.]

Based on their evaluation, the Company’s principal executive and principal financial officers concluded that the Company’s disclosure controls and procedures as of September 30, [removed: 2020] [added: 2021] were designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by the Company in reports filed under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s (“SEC”) rules and forms, and (ii) accumulated and communicated to management, including the principal executive and principal financial officers, as appropriate, to allow timely decisions regarding disclosure.

There has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company’s fiscal quarter ended September 30, [removed: 2020,] [added: 2021,] that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

The effectiveness of the Company’s internal control over financial reporting as of September 30, [removed: 2020] [added: 2021] has been audited by PricewaterhouseCoopers LLP, the independent registered public accounting firm that audits the Company’s consolidated financial statements, as stated in their report which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of September 30, [removed: 2020.][added: 2021.]

On July 31, 2020, Franklin Resources, Inc. completed its acquisition of Legg Mason, Inc. (“Legg Mason”).

Consistent with guidance issued by the SEC that an assessment of a recently acquired business may be omitted from management’s report on internal control over financial reporting in the year of acquisition, management excluded an assessment of the effectiveness of the Company’s internal control over financial reporting related to Legg Mason.

Total assets and operating revenues of Legg Mason that were excluded from management’s assessment constitute 12% of the Company’s consolidated total assets as of September 30, 2020 and 9% of consolidated total operating revenues for the fiscal year ended September 30, 2020.

Management’s basis for exclusion included the size and complexity of the acquired business, the timing between acquisition and fiscal year end, and expected integration plans during the fiscal year ending September 30, 2021.

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PART III

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Not applicable.

[Table](#i346fd55fe425424da9c47e366c278670_7) [of Contents](#i346fd55fe425424da9c47e366c278670_7)

PART III

The other information required by this Item 10 is incorporated by reference from the information to be provided under the sections titled “Proposal No. 1 Election of Directors–Nominees” and “Information about the Board and its Committees–The Audit Committee” from Franklin’s definitive proxy statement for its annual meeting of stockholders to be filed with the SEC within 120 days after September 30, [removed: 2020 (“2021] [added: 2021 (“2022] Proxy Statement”).

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The information required by this Item 11 is incorporated by reference from the information to be provided under the sections of our [removed: 2021] [added: 2022] Proxy Statement titled “Director Fees,” “Compensation Discussion and Analysis” and “Executive Compensation.”

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The information required by this Item 12 is incorporated by reference from the information to be provided under the sections of our [removed: 2021] [added: 2022] Proxy Statement titled “Stock Ownership of Certain Beneficial Owners,” “Stock Ownership and Stock-Based Holdings of Directors and Executive Officers” and “Executive Compensation–Equity Compensation Plan Information.”

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The information required by this Item 13 is incorporated by reference from the information to be provided under the sections of our [removed: 2021] [added: 2022] Proxy Statement titled “Proposal No. 1 Election of Directors–General,” “Corporate Governance–Director Independence Standards” and “Certain Relationships and Related Transactions.”

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The information required by this Item 14 is incorporated by reference from the information to be provided under the section of our [removed: 2021] [added: 2022] Proxy Statement titled “Fees Paid to Independent Registered Public Accounting Firm.”

[Table](#i346fd55fe425424da9c47e366c278670_7) [of Contents](#i346fd55fe425424da9c47e366c278670_7)

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| (a)(1) | [added: | |] The financial statements filed as part of this report are listed in Item 8 of this Annual Report. | [added: | |]