UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07851
Franklin Fund Allocator Series
(Exact name of registrant as specified in charter)
One Franklin Parkway, San Mateo, CA 94403-1906
(Address of principal executive offices) (Zip code)
Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906
(Name and address of agent for service)
Registrant’s telephone number, including area code: (650) 312-2000
Date of fiscal year end: 12/31
Date of reporting period: 6/30/17
| Item 1. | Reports to Stockholders. |
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 | | Semiannual Report and Shareholder Letter June 30, 2017 |
Franklin Fund Allocator Series
Franklin Conservative Allocation Fund
Franklin Moderate Allocation Fund
Franklin Growth Allocation Fund
Sign up for electronic delivery at franklintempleton.com/edelivery
Franklin Templeton Investments
Gain From Our Perspective®
At Franklin Templeton Investments, we’re dedicated to one goal: delivering exceptional asset management for our clients. By bringing together multiple, world-class investment teams in a single firm, we’re able to offer specialized expertise across styles and asset classes, all supported by the strength and resources of one of the world’s largest asset managers. This has helped us to become a trusted partner to individual and institutional investors across the globe.
Dear Shareholder:
The six months ended June 30, 2017, benefited from mostly upbeat economic data, improved U.S. corporate earnings and generally supportive monetary policies. The U.S. job market continued to improve as the unemployment rate declined.
In March, the U.S. Federal Reserve (Fed) raised its target range 0.25% for the second time in three months to 0.75%–1.00%. The Fed once again raised its target range a quarter point to 1.00%–1.25% at its June meeting. Despite low inflation, the Fed made its most recent decision amid signs of a strengthening labor market and moderately rising economic activity.
In this environment, U.S. stocks, as measured by the Standard & Poor’s® 500 Index, ended the period with a +9.34% total return.1 Stocks in global developed markets, as measured by the MSCI World Index, returned +11.82%.1 Investment-grade bonds, as measured by the Bloomberg Barclays U.S. Aggregate Bond Index, posted a +2.27% 6-month total return.1
We are committed to our long-term perspective and disciplined investment approach as we conduct a diligent, fundamental analysis of securities with a regular emphasis on investment risk management.
We believe active, professional investment management serves investors well. We also recognize the important role of financial advisors in today’s markets and encourage investors to continue to seek their advice. Amid changing markets and economic conditions, we are confident investors with a
well-diversified portfolio and a patient, long-term outlook should be well positioned for the years ahead.
In addition, Franklin Fund Allocator Series’ semiannual report includes more detail about prevailing conditions and a discussion about investment decisions during the period. Please remember all securities markets fluctuate, as do mutual fund share prices.
We thank you for investing with Franklin Templeton, welcome your questions and comments, and look forward to serving your future investment needs.
Sincerely,
Rupert H. Johnson, Jr.
Chairman
Franklin Fund Allocator Series
This letter reflects our analysis and opinions as of June 30, 2017, unless otherwise indicated. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.
1. Source: Morningstar.
See www.franklintempletondatasources.com for additional data provider information.
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| Not FDIC Insured | | | | | May Lose Value | | | | | No Bank Guarantee |
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Contents
Semiannual Report
Visit franklintempleton.com for fund updates, to access your account, or to find helpful financial planning tools.
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Semiannual Report
Economic and Market Overview
The global economy generally expanded during the period under review. In this environment, global developed and emerging market stocks rose, as measured by the MSCI All Country World Index. Global markets were aided by improved industrial commodity prices at certain points during the period, generally upbeat economic data across regions, investor optimism about pro-growth and pro-business policies in the U.S., hopes of tax reforms under the Trump administration, Emmanuel Macron’s election as France’s president and encouraging corporate earnings reports.
However, investors expressed concerns about the timing and economic effects of the U.K.’s exit from the European Union (also known as “Brexit”) and the U.S. executive order banning entry from some Muslim-majority countries. Other headwinds included the health of European banks, concerns about political uncertainty in the U.S. and European Union, geopolitical tensions in certain regions, worries about global oversupply in oil production despite a pact to extend cuts, and hawkish comments from key central bankers around the world toward period-end.
U.S. economic growth decelerated in 2017’s first quarter, largely due to slower growth in consumer spending and declines in private inventory investment and government spending. However, growth accelerated in the second quarter due to increases consumer spending, business investment and federal government spending. The unemployment rate decreased from 4.7% in December 2016 to 4.4% at period-end.1 Annual inflation, as measured by the Consumer Price Index, decreased from 2.1% to 1.6% during the period. After increasing its benchmark interest rate in March, the U.S. Federal Reserve (Fed), at its June meeting, made the widely anticipated increase to its target range for the federal funds rate from 0.75%–1.00% to 1.00%–1.25%, amid signs of a growing U.S. economy, a strengthening labor market and an improvement in business spending.
In Europe, the U.K.’s economy grew at a slower rate in 2017’s first quarter over the previous quarter, largely due to slower growth in household spending. The eurozone’s growth increased in the first quarter over the previous quarter. The bloc’s annual inflation rate fluctuated during the reporting period and ended slightly higher from where it began. During the period, the European Central Bank kept its key policy rates unchanged.
In Asia, Japan’s quarterly gross domestic product (GDP) remained unchanged in 2017’s first quarter compared to 2016’s fourth quarter. In April 2017, the Bank of Japan (BOJ) slightly increased its GDP forecasts for the 2017–2018 fiscal year. However, the BOJ lowered its inflation forecast.
In emerging markets, Brazil’s quarterly GDP grew for the first time in two years, as its first-quarter 2017 GDP grew compared to the previous quarter. The country’s central bank cut its benchmark interest rate four times between January and June 2017 to spur economic growth. Russia’s GDP grew in 2017’s first quarter compared to the prior-year period. The Bank of Russia reduced its key interest rate in March, April and June 2017 to try to revive its economy. China’s economy grew faster in the first half of 2017 compared to the first half of 2016, driven by solid growth in industrial production, services, fixed-asset investment, retail sales, and imports and exports. The People’s Bank of China left its benchmark interest rate unchanged during the period. Overall, emerging market stocks, as measured by the MSCI Emerging Markets Index, rose during the period.
The foregoing information reflects our analysis and opinions as of June 30, 2017. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.
1. Source: Bureau of Labor Statistics.
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Franklin Conservative Allocation Fund
This semiannual report for Franklin Conservative Allocation Fund covers the period ended June 30, 2017.
Your Fund’s Goal and Main Investments
The Fund seeks the highest level of long-term total return consistent with an acceptable level of risk.1
Asset Allocation*
Based on Total Net Assets as of 6/30/17
*The asset allocation is based on the Statement of Investments (SOI), which classifies each underlying fund and other fund investments into a broad asset class based on its predominant investments under normal market conditions.
Performance Overview
The Fund’s Class A shares delivered a +5.83% cumulative total return for the six months under review. In comparison, the Fund’s equity benchmark, the MSCI All Country World Index (ACWI), which measures equity market performance in global developed and emerging markets, had a +11.82% total return.2 The Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index, a broad-based measure of the global fixed income bond market, had a +4.58% total return.2 You can find the Fund’s long-term performance data in the Performance Summary beginning on page 6.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell
your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
Investment Strategy
Whenever possible, we attempt to hold the same underlying Franklin Templeton funds and other fund investments (collectively, “fund investments”) in each Allocation Fund’s portfolio and will vary the allocation percentages of the fund investments based upon each Allocation Fund’s risk/return level. Maintaining similarity of the fund investments across the Conservative, Moderate and Growth Allocation Funds is intended to increase the consistency of their results relative to one another. We allocate the Fund’s assets among the broad asset classes, and when selecting equity funds, we consider the fund investments’ foreign and domestic exposure, market capitalization ranges and investment styles (growth versus value). When selecting fixed income funds, we focus primarily on maximizing income appropriate to the Fund’s risk profile.
| | | | |
| Top 10 Fund Holdings | | | |
| 6/30/17 | | | |
| | | % of Total
Net Assets | |
Franklin Low Duration Total Return Fund – Class R6 | | | 16.9% | |
Franklin U.S. Government Securities Fund – Class R6 | | | 10.6% | |
Templeton Global Total Return Fund – Class R6 | | | 9.8% | |
Franklin Strategic Income Fund – Class R6 | | | 9.2% | |
Franklin Growth Fund – Class R6 | | | 9.1% | |
Franklin DynaTech Fund – Class R6 | | | 6.0% | |
Franklin Rising Dividends Fund – Class R6 | | | 4.8% | |
Franklin K2 Alternative Strategies Fund – Class R6 | | | 4.6% | |
Franklin Mutual European Fund – Class R6 | | | 4.0% | |
Franklin International Small Cap Growth Fund – Class R6 | | | 3.9% | |
Manager’s Discussion
The Fund’s performance can be attributed to its allocation among equities and fixed income securities and to the actual performance of the fund investments.
At period-end, Franklin Conservative Allocation Fund allocated 51.6% of total net assets to fixed income, 41.6% to
1. The risk/reward potential is based on the Fund’s goal and level of risk. It is not indicative of the Fund’s actual or implied performance or portfolio composition, which may change on a continuous basis.
2. Source: Morningstar.
The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any feed, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s SOI which begins on page 24.
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FRANKLIN CONSERVATIVE ALLOCATION FUND
equity and 6.9% to alternative strategies. Domestic fixed income exposure was 81.0% of the total fixed income weighting, with the balance represented by foreign fixed income. Franklin Low Duration Total Return Fund – Class R6, representing 16.9% of the Fund’s total net assets, was our largest fixed income fund weighting at period-end. On the equity side, domestic exposure was 66.1% of the Fund’s total equity weighting, with the balance represented by foreign equity. The portfolio was diversified across capitalization sizes and investment styles, and on June 30, 2017, we held shares in large-, mid- and small-capitalization equity funds, representing both growth and value styles. Franklin Growth Fund – Class R6 was our largest equity fund weighting at 9.1% of total net assets.
During the six month reporting period, our largest domestic growth fund holding, Franklin Growth Fund – Class R6, outperformed the MSCI ACWI, while our largest foreign equity fund holding, Franklin Mutual European Fund – Class R6, underperformed the MSCI ACWI. Our largest domestic value fund holding, Franklin Rising Dividends Fund – Class R6, underperformed the MSCI ACWI. On the fixed income side, Franklin Low Duration Total Return Fund – Class R6 and Templeton Global Total Return Fund – Class R6 underperformed the Bloomberg Barclays Multiverse Index.
Thank you for your continued participation in Franklin Conservative Allocation Fund. We look forward to serving your future investment needs.
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T. Anthony Coffey, CFA |
| | |
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Thomas A. Nelson, CFA |
| | James D. Macey, CFA |
| | Portfolio Management Team |
CFA® is a trademark owned by CFA Institute.
The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
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FRANKLIN CONSERVATIVE ALLOCATION FUND
Performance Summary as of June 30, 2017
The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 6/30/171
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
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| Share Class | | Cumulative
Total Return2 | | | Average Annual
Total Return3 | |
| | |
| A | | | | | | | | |
6-Month | | | +5.83% | | | | -0.26% | |
1-Year | | | +8.75% | | | | +2.50% | |
5-Year | | | +29.32% | | | | +4.04% | |
10-Year | | | +51.25% | | | | +3.61% | |
| | |
| Advisor | | | | | | | | |
6-Month | | | +5.97% | | | | +5.97% | |
1-Year | | | +9.07% | | | | +9.07% | |
5-Year | | | +31.01% | | | | +5.55% | |
10-Year | | | +55.14% | | | | +4.49% | |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
See page 7 for Performance Summary footnotes.
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FRANKLIN CONSERVATIVE ALLOCATION FUND
PERFORMANCE SUMMARY
Distributions (1/1/17–6/30/17)
| | | | | | | | |
| Share Class | | | | | Net Investment
Income | |
| | |
A | | | | | | | $0.0812 | |
| | |
C | | | | | | | $0.0309 | |
| | |
R | | | | | | | $0.0649 | |
| | |
R6 | | | | | | | $0.1046 | |
| | |
Advisor | | | | | | | $0.0999 | |
| | | | | | | | |
|
Total Annual Operating
Expenses4 | |
| | |
| Share Class | | With Waiver | | | Without Waiver | |
| | |
A | | | 1.24% | | | | 1.24% | |
| | |
Advisor | | | 0.99% | | | | 0.99% | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
All investments involve risks, including possible loss of principal. Because this Fund invests in underlying funds, it is subject to the same risks, and indirectly bears the fees and expenses, of the underlying funds. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in a fund adjust to a rise in interest rates, that fund’s share price may decline. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks which are heightened in developing countries. Investors should consult their financial advisor for help selecting the appropriate fund of funds, or fund combination, based on an evaluation of their investment objectives and risk tolerance. The Fund’s prospectus also includes a description of the main investment risks.
1. As of 1/1/13, the Fund changed its target allocation, with short-term investments (formerly a targeted allocation of 20%) combined into the fixed income allocations; such a change can impact performance.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Figures are as stated in the Fund’s current prospectus, including the effect of acquired fund fees and expenses, and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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FRANKLIN CONSERVATIVE ALLOCATION FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual
(actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
Share
Class | | Beginning
Account
Value 1/1/17 | | Ending
Account
Value 6/30/171 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Net
Annualized
Expense
Ratio2 |
| | | | | | |
A | | $1,000 | | $1,058.30 | | $3.22 | | $1,021.67 | | $3.16 | | 0.63% |
C | | $1,000 | | $1,055.00 | | $7.03 | | $1,017.95 | | $6.90 | | 1.38% |
R | | $1,000 | | $1,056.60 | | $4.49 | | $1,020.43 | | $4.41 | | 0.88% |
R6 | | $1,000 | | $1,060.90 | | $1.43 | | $1,023.41 | | $1.40 | | 0.28% |
Advisor | | $1,000 | | $1,059.70 | | $1.94 | | $1,022.91 | | $1.91 | | 0.38% |
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above–in the far right column–multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
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Franklin Moderate Allocation Fund
This semiannual report for Franklin Moderate Allocation Fund covers the period ended June 30, 2017.
Your Fund’s Goal and Main Investments
The Fund seeks the highest level of long-term total return consistent with an acceptable level of risk.1
Asset Allocation*
Based on Total Net Assets as of 6/30/17
*The asset allocation is based on the Statement of Investments (SOI), which classifies each underlying fund and other fund investments into a broad asset class based on its predominant investments under normal market conditions.
Performance Overview
The Fund’s Class A shares delivered a +8.05% cumulative total return for the six months under review In comparison, the Fund’s equity benchmark, the MSCI All Country World Index (ACWI), which measures equity market performance in global developed and emerging markets, had a +11.82% total return.2 The Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index, a broad-based measure of the global fixed income bond market, had a +4.58% total return.2 You can find the Fund’s long-term performance data in the Performance Summary beginning on page 11.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell
your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
Investment Strategy
Whenever possible, we attempt to hold the same underlying Franklin Templeton funds and other fund investments (collectively, “fund investments”) in each Allocation Fund’s portfolio and will vary the allocation percentages of the fund investments based upon each Allocation Fund’s risk/return level. Maintaining similarity of the fund investments across the Conservative, Moderate and Growth Allocation Funds is intended to increase the consistency of their results relative to one another. We allocate the Fund’s assets among the broad asset classes, and when selecting equity funds, we consider the fund investments’ foreign and domestic exposure, market capitalization ranges and investment styles (growth versus value). When selecting fixed income funds, we focus primarily on maximizing income appropriate to the Fund’s risk profile.
| | | | |
| Top 10 Fund Holdings | | | |
| 6/30/17 | | | |
| | | % of Total
Net Assets | |
Franklin Growth Fund – Class R6 | | | 13.9% | |
Franklin Low Duration Total Return Fund – Class R6 | | | 10.6% | |
Franklin DynaTech Fund – Class R6 | | | 8.4% | |
Franklin Rising Dividends Fund – Class R6 | | | 7.1% | |
Franklin U.S. Government Securities Fund – Class R6 | | | 6.4% | |
Franklin Mutual European Fund – Class R6 | | | 6.0% | |
Franklin International Small Cap Growth Fund – Class R6 | | | 6.0% | |
Templeton Global Total Return Fund – Class R6 | | | 5.8% | |
Franklin Strategic Income Fund – Class R6 | | | 5.6% | |
Templeton Foreign Fund – Class R6 | | | 4.9% | |
Manager’s Discussion
The Fund’s performance can be attributed mainly to its allocation among equities and fixed income securities and to the actual performance of the fund investments.
At period-end, Franklin Moderate Allocation Fund allocated 61.8% of total net assets to equity, 31.5% to fixed income, and
1. The risk/reward potential is based on the Fund’s goal and level of risk. It is not indicative of the Fund’s actual or implied performance or portfolio composition, which may change on a continuous basis.
2. Source: Morningstar.
The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any feed, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s SOI, which begins on page 30.
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FRANKLIN MODERATE ALLOCATION FUND
6.9% to alternative strategies. Domestic equity exposure was 65.4% of the total equity weighting, with the balance represented by foreign equity. The portfolio was diversified across capitalization sizes and investment styles, and on June 30, 2017, we held shares in large-, mid- and small-capitalization equity funds, representing both growth and value styles. Franklin Growth Fund – Class R6 was our largest equity fund weighting at 13.9% of total net assets. On the fixed income side, domestic exposure was 81.6% of the Fund’s total income weighting, with the balance represented by foreign fixed income. Franklin Low Duration Total Return Fund – Class R6 was our largest fixed income fund weighting at 10.6% of total net assets.
During the six month reporting period, our largest domestic growth fund holding, Franklin Growth Fund – Class R6, outperformed the MSCI ACWI, while our largest foreign equity fund holding, Franklin Mutual European Fund – Class R6, underperformed the MSCI ACWI. Our largest domestic value fund holding, Franklin Rising Dividends Fund – Class R6, underperformed the MSCI ACWI. On the fixed income side, Franklin Low Duration Total Return Fund – Class R6 and Templeton Global Total Return Fund – Class R6 underperformed the Bloomberg Barclays Multiverse Index.
Thank you for your continued participation in Franklin Moderate Allocation Fund. We look forward to serving your future investment needs.
| | |
| |
T. Anthony Coffey, CFA |
| | |
| |
Thomas A. Nelson, CFA |
| | James D. Macey, CFA |
| | Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
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FRANKLIN MODERATE ALLOCATION FUND
Performance Summary as of June 30, 2017
The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 6/30/171
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | | | | | |
| Share Class | | Cumulative
Total Return2 | | | Average Annual
Total Return3 | |
| | |
| A | | | | | | | | |
| | |
6-Month | | | +8.05% | | | | +1.82% | |
| | |
1-Year | | | +11.77% | | | | +5.37% | |
| | |
5-Year | | | +40.21% | | | | +5.73% | |
| | |
10-Year | | | +60.90% | | | | +4.25% | |
| | |
| Advisor | | | | | | | | |
| | |
6-Month | | | +8.11% | | | | +8.11% | |
| | |
1-Year | | | +12.02% | | | | +12.02% | |
| | |
5-Year | | | +41.91% | | | | +7.25% | |
| | |
10-Year | | | +64.88% | | | | +5.13% | |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
See page 12 for Performance Summary footnotes.
| | | | | | |
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| franklintempleton.com | | Semiannual Report | | | 11 | |
FRANKLIN MODERATE ALLOCATION FUND
PERFORMANCE SUMMARY
Distributions (1/1/17–6/30/17)
| | | | | | | | | | | | |
Share Class | | Net Investment
Income | | | Long-Term
Capital Gain | | | Total | |
| | | |
A | | | $0.0775 | | | | $0.1378 | | | | $0.2153 | |
| | | |
C | | | $0.0775 | | | | $0.1378 | | | | $0.2153 | |
| | | |
R | | | $0.0775 | | | | $0.1378 | | | | $0.2153 | |
| | | |
R6 | | | $0.0775 | | | | $0.1378 | | | | $0.2153 | |
| | | |
Advisor | | | $0.0775 | | | | $0.1378 | | | | $0.2153 | |
| | | | |
| Total Annual Operating Expenses4 | |
| |
Share Class | | | |
| |
A | | | 1.27% | |
| |
Advisor | | | 1.02% | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
All investments involve risks, including possible loss of principal. Because this Fund invests in underlying funds, it is subject to the same risks, and indirectly bears the fees and expenses, of the underlying funds. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in a fund adjust to a rise in interest rates, that fund’s share price may decline. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks which are heightened in developing countries. Investors should consult their financial advisor for help selecting the appropriate fund of funds, or fund combination, based on an evaluation of their investment objectives and risk tolerance. The Fund’s prospectus also includes a description of the main investment risks.
1. As of 1/1/13, the Fund changed its target allocation, with short-term investments (formerly a targeted allocation of 20%) combined into the fixed income allocations; such a change can impact performance.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Figures are as stated in the Fund’s current prospectus, including the effect of acquired fund fees and expenses, and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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| 12 | | Semiannual Report | | franklintempleton.com |
FRANKLIN MODERATE ALLOCATION FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual
(actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
Share
Class | | Beginning
Account
Value 1/1/17 | | Ending
Account
Value 6/30/171 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Net
Annualized
Expense
Ratio2 |
| | | | | | |
A | | $1,000 | | $1,080.50 | | $3.30 | | $1,021.62 | | $3.21 | | 0.64% |
C | | $1,000 | | $1,075.70 | | $7.15 | | $1,017.90 | | $6.95 | | 1.39% |
R | | $1,000 | | $1,078.70 | | $4.59 | | $1,020.38 | | $4.46 | | 0.89% |
R6 | | $1,000 | | $1,082.60 | | $1.45 | | $1,023.41 | | $1.40 | | 0.28% |
Advisor | | $1,000 | | $1,081.10 | | $2.01 | | $1,022.86 | | $1.96 | | 0.39% |
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
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| franklintempleton.com | | Semiannual Report | | | 13 | |
Franklin Growth Allocation Fund
This semiannual report for Franklin Growth Allocation Fund covers the period ended June 30, 2017.
Your Fund’s Goal and Main Investments
The Fund seeks the highest level of long-term total return consistent with an acceptable level of risk.1
Asset Allocation*
Based on Total Net Assets as of 6/30/17
*The asset allocation is based on the Statement of Investments (SOI), which classifies each underlying fund and other fund investments into a broad asset class based on its predominant investments under normal market conditions.
Performance Overview
The Fund’s Class A shares delivered a +10.27% cumulative total return for the six months under review In comparison, the Fund’s equity benchmark, the MSCI All Country World Index (ACWI), which measures equity market performance in global developed and emerging markets, had a +11.82% total return.2 The Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index, a broad-based measure of the global fixed income bond market, had a +4.58% total return.2 You can find the Fund’s long-term performance data in the Performance Summary beginning on page 16.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell
your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
Investment Strategy
Whenever possible, we attempt to hold the same underlying Franklin Templeton funds and other fund investments (collectively, “fund investments”) in each Allocation Fund’s portfolio and will vary the allocation percentages of the fund investments based upon each Allocation Fund’s risk/return level. Maintaining similarity of the fund investments across the Conservative, Moderate and Growth Allocation Funds is intended to increase the consistency of their results relative to one another. We allocate the Fund’s assets among the broad asset classes, and when selecting equity funds, we consider the fund investments’ foreign and domestic exposure, market capitalization ranges and investment styles (growth versus value). When selecting fixed income funds, we focus primarily on maximizing income appropriate to the Fund’s risk profile.
| | | | |
| Top 10 Fund Holdings | | | |
| 6/30/17 | | | |
| | | % of Total
Net Assets | |
Franklin Growth Fund – Class R6 | | | 17.4% | |
Franklin DynaTech Fund – Class R6 | | | 11.2% | |
Franklin Rising Dividends Fund – Class R6 | | | 9.3% | |
Franklin International Small Cap Growth Fund – Class R6 | | | 8.4% | |
Franklin Mutual European Fund – Class R6 | | | 8.0% | |
Templeton Foreign Fund – Class R6 | | | 6.8% | |
Franklin LibertyQ Emerging Markets ETF | | | 6.2% | |
Franklin K2 Alternative Strategies Fund – Class R6 | | | 4.7% | |
Franklin Utilities Fund – Class R6 | | | 4.0% | |
Financial Select Sector SPDR ETF | | | 3.9% | |
Manager’s Discussion
The Fund’s performance can be attributed mainly to its allocation among equities and fixed income securities and to the actual performance of the fund investments.
At period-end, Franklin Growth Allocation Fund allocated 82.1% of total net assets to equity, 11.2% to fixed income and
1. The risk/reward potential is based on the Fund’s goal and level of risk. It is not indicative of the Fund’s actual or implied performance or portfolio composition, which may change on a continuous basis.
2. Source: Morningstar.
The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any feed, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s SOI which begins on page 36.
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| 14 | | Semiannual Report | | franklintempleton.com |
FRANKLIN GROWTH ALLOCATION FUND
6.9% to alternative strategies. Domestic equity exposure was 64.2% of the total equity weighting, with the balance represented by foreign equity. The portfolio was diversified across capitalization sizes and investment styles, and on June 30, 2017, we held shares in large-, mid- and small-capitalization equity funds, representing both growth and value styles. Franklin Growth Fund – Class R6 was our largest equity fund weighting at 17.4% of total net assets. On the fixed income side, domestic exposure was 82.1% of the Fund’s total income weighting, with the balance represented by foreign fixed income. Franklin Low Duration Total Return Fund –Class R6 was our largest fixed income fund weighting at 3.8% of total net assets.
During the six-month reporting period, our largest domestic growth fund holding, Franklin Growth Fund – Class R6, and our largest foreign equity fund holding, Franklin International Small Cap Growth Fund – Class R6, outperformed the MSCI ACWI. Our largest domestic value fund holding, Franklin Rising Dividends Fund – Class R6, underperformed the MSCI ACWI. On the fixed income side, Franklin Low Duration Total Return Fund – Class R6 and Templeton Global Total Return Fund – Class R6 underperformed the Bloomberg Barclays Multiverse Index.
Thank you for your continued participation in Franklin Growth Allocation Fund. We look forward to serving your future investment needs.
| | |
| |
T. Anthony Coffey, CFA |
| | |
| |
Thomas A. Nelson, CFA |
| | James D. Macey, CFA |
| | Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
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| franklintempleton.com | | Semiannual Report | | | 15 | |
FRANKLIN GROWTH ALLOCATION FUND
Performance Summary as of June 30, 2017
The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 6/30/171
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | | | | | |
| Share Class | | Cumulative
Total Return2 | | | Average Annual
Total Return3 | |
| | |
| A | | | | | | | | |
6-Month | | | +10.27% | | | | +3.94% | |
1-Year | | | +14.82% | | | | +8.21% | |
5-Year | | | +54.98% | | | | +7.88% | |
10-Year | | | +64.20% | | | | +4.47% | |
| | |
| Advisor | | | | | | | | |
6-Month | | | +10.40% | | | | +10.40% | |
1-Year | | | +15.09% | | | | +15.09% | |
5-Year | | | +56.84% | | | | +9.42% | |
10-Year | | | +68.38% | | | | +5.35% | |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
See page 17 for Performance Summary footnotes.
| | | | |
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| 16 | | Semiannual Report | | franklintempleton.com |
FRANKLIN GROWTH ALLOCATION FUND
PERFORMANCE SUMMARY
Distributions (1/1/17–6/30/17)
| | | | | | | | | | | | |
| Share Class | | Net Investment
Income | | | Long-Term
Capital Gain | | | Total | |
A | | | $0.0926 | | | | $0.4355 | | | | $0.5281 | |
C | | | $0.0926 | | | | $0.4355 | | | | $0.5281 | |
R | | | $0.0926 | | | | $0.4355 | | | | $0.5281 | |
R6 | | | $0.0926 | | | | $0.4355 | | | | $0.5281 | |
Advisor | | | $0.0926 | | | | $0.4355 | | | | $0.5281 | |
Total Annual Operating Expenses4
| | | | | | | | |
| Share Class | | With Waiver | | | Without Waiver | |
A | | | 1.32% | | | | 1.36% | |
Advisor | | | 1.07% | | | | 1.11% | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
All investments involve risks, including possible loss of principal. Because this Fund invests in underlying funds, it is subject to the same risks, and indirectly bears the fees and expenses, of the underlying funds. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in a fund adjust to a rise in interest rates, that fund’s share price may decline. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks which are heightened in developing countries. Investors should consult their financial advisor for help selecting the appropriate fund of funds, or fund combination, based on an evaluation of their investment objectives and risk tolerance. The Fund’s prospectus also includes a description of the main investment risks.
1. The Fund has an expense reduction contractually guaranteed through 4/30/18. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower. As of 1/1/13, the Fund changed its target allocation, with short-term investments (formerly a targeted allocation of 20%) combined into the fixed income allocations; such a change can impact performance.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Figures are as stated in the Fund’s current prospectus, including the effect of acquired fund fees and expenses, and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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| franklintempleton.com | | Semiannual Report | | | 17 | |
FRANKLIN GROWTH ALLOCATION FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual
(actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
Share
Class | | Beginning
Account
Value 1/1/17 | | Ending
Account
Value 6/30/171 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Net
Annualized
Expense
Ratio2 |
| | | | | | |
A | | $1,000 | | $1,102.70 | | $3.39 | | $1,021.57 | | $3.26 | | 0.65% |
C | | $1,000 | | $1,098.20 | | $7.28 | | $1,017.85 | | $7.00 | | 1.40% |
R | | $1,000 | | $1,101.00 | | $4.69 | | $1,020.33 | | $4.51 | | 0.90% |
R6 | | $1,000 | | $1,104.70 | | $1.36 | | $1,023.51 | | $1.30 | | 0.26% |
Advisor | | $1,000 | | $1,104.00 | | $2.09 | | $1,022.81 | | $2.01 | | 0.40% |
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
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| 18 | | Semiannual Report | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Financial Highlights
Franklin Conservative Allocation Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $13.74 | | | | $13.40 | | | | $14.53 | | | | $14.65 | | | | $14.06 | | | | $13.33 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.07 | | | | 0.14 | | | | 0.28 | | | | 0.40 | | | | 0.31 | | | | 0.27 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.73 | | | | 0.45 | | | | (0.60 | ) | | | 0.09 | | | | 1.12 | | | | 0.79 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.80 | | | | 0.59 | | | | (0.32 | ) | | | 0.49 | | | | 1.43 | | | | 1.06 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.08 | ) | | | (0.15 | ) | | | (0.28 | ) | | | (0.42 | ) | | | (0.32 | ) | | | (0.30 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.10 | ) | | | (0.53 | ) | | | (0.19 | ) | | | (0.52 | ) | | | (0.03 | ) |
| | | | |
| | | | | | |
Total distributions | | | (0.08 | ) | | | (0.25 | ) | | | (0.81 | ) | | | (0.61 | ) | | | (0.84 | ) | | | (0.33 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $14.46 | | | | $13.74 | | | | $13.40 | | | | $14.53 | | | | $14.65 | | | | $14.06 | |
| | | | |
| | | | | | |
Total returnd | | | 5.83% | | | | 4.39% | | | | (2.26)% | | | | 3.35% | | | | 10.39% | | | | 7.99% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 0.63% | | | | 0.63% | | | | 0.62% | | | | 0.63% | | | | 0.60% | | | | 0.53% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 0.63% | g | | | 0.63% | g | | | 0.62% | g | | | 0.63% | g | | | 0.59% | | | | 0.50% | |
| | | | | | |
Net investment incomec | | | 0.93% | | | | 1.01% | | | | 1.97% | | | | 2.67% | | | | 2.11% | | | | 1.98% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $790,697 | | | | $809,039 | | | | $905,537 | | | | $910,523 | | | | $871,541 | | | | $794,429 | |
| | | | | | |
Portfolio turnover rate | | | 13.83% | | | | 34.83% | | | | 17.69% | | | | 16.67% | | | | 57.59% | | | | 25.82% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.59% for the period ended June 30, 2017.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 19 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Conservative Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $13.47 | | | | $13.15 | | | | $14.27 | | | | $14.40 | | | | $13.83 | | | | $13.13 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.01 | | | | 0.04 | | | | 0.17 | | | | 0.28 | | | | 0.20 | | | | 0.17 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.73 | | | | 0.43 | | | | (0.58 | ) | | | 0.09 | | | | 1.11 | | | | 0.76 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.74 | | | | 0.47 | | | | (0.41 | ) | | | 0.37 | | | | 1.31 | | | | 0.93 | |
| | | | |
| | | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.03 | ) | | | (0.05 | ) | | | (0.18 | ) | | | (0.31 | ) | | | (0.22 | ) | | | (0.20) | |
| | | | | | |
Net realized gains | | | — | | | | (0.10 | ) | | | (0.53 | ) | | | (0.19 | ) | | | (0.52 | ) | | | (0.03) | |
| | | | |
| | | | | | |
Total distributions | | | (0.03 | ) | | | (0.15 | ) | | | (0.71 | ) | | | (0.50 | ) | | | (0.74 | ) | | | (0.23) | |
| | | | |
| | | | | | |
Net asset value, end of period | | | $14.18 | | | | $13.47 | | | | $13.15 | | | | $14.27 | | | | $14.40 | | | | $13.83 | |
| | | | |
| | | | | | |
Total returnd | | | 5.50% | | | | 3.55% | | | | (2.96)% | | | | 2.58% | | | | 9.61% | | | | 7.09% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 1.38% | | | | 1.37% | | | | 1.37% | | | | 1.38% | | | | 1.35% | | | | 1.28% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 1.38% | g | | | 1.37% | g | | | 1.37% | g | | | 1.38% | g | | | 1.34% | | | | 1.25% | |
| | | | | | |
Net investment incomec | | | 0.18% | | | | 0.27% | | | | 1.22% | | | | 1.92% | | | | 1.36% | | | | 1.23% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $440,472 | | | | $470,582 | | | | $536,548 | | | | $549,222 | | | | $524,756 | | | | $452,211 | |
| | | | | | |
Portfolio turnover rate | | | 13.83% | | | | 34.83% | | | | 17.69% | | | | 16.67% | | | | 57.59% | | | | 25.82% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.59% for the period ended June 30, 2017.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | |
| | | |
| 20 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Conservative Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class R | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $13.69 | | | | $13.35 | | | | $14.48 | | | | $14.60 | | | | $14.01 | | | | $13.29 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.05 | | | | 0.10 | | | | 0.24 | | | | 0.35 | | | | 0.26 | | | | 0.24 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.72 | | | | 0.45 | | | | (0.59 | ) | | | 0.10 | | | | 1.14 | | | | 0.78 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.77 | | | | 0.55 | | | | (0.35 | ) | | | 0.45 | | | | 1.40 | | | | 1.02 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.06 | ) | | | (0.11 | ) | | | (0.25 | ) | | | (0.38 | ) | | | (0.29 | ) | | | (0.27 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.10 | ) | | | (0.53 | ) | | | (0.19 | ) | | | (0.52 | ) | | | (0.03 | ) |
| | | | |
| | | | | | |
Total distributions | | | (0.06 | ) | | | (0.21 | ) | | | (0.78 | ) | | | (0.57 | ) | | | (0.81 | ) | | | (0.30 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $14.40 | | | | $13.69 | | | | $13.35 | | | | $14.48 | | | | $14.60 | | | | $14.01 | |
| | | | |
| | | | | | |
Total returnd | | | 5.66% | | | | 4.15% | | | | (2.52)% | | | | 3.10% | | | | 10.14% | | | | 7.68% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 0.88% | | | | 0.88% | | | | 0.87% | | | | 0.88% | | | | 0.85% | | | | 0.78% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 0.88% | g | | | 0.88% | g | | | 0.87% | g | | | 0.88% | g | | | 0.84% | | | | 0.75% | |
| | | | | | |
Net investment incomec | | | 0.68% | | | | 0.76% | | | | 1.72% | | | | 2.42% | | | | 1.86% | | | | 1.73% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $123,961 | | | | $124,018 | | | | $139,592 | | | | $159,897 | | | | $166,927 | | | | $178,520 | |
| | | | | | |
Portfolio turnover rate | | | 13.83% | | | | 34.83% | | | | 17.69% | | | | 16.67% | | | | 57.59% | | | | 25.82% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
f Does not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.59% for the period ended June 30, 2017.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 21 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Conservative Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class R6 | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $13.72 | | | | $13.39 | | | | $14.52 | | | | $14.63 | | | | $14.62 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.09 | | | | 0.18 | | | | 0.36 | | | | 0.33 | | | | 0.54 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 0.74 | | | | 0.44 | | | | (0.63 | ) | | | 0.22 | | | | 0.32 | |
| | | | |
| | | | | |
Total from investment operations | | | 0.83 | | | | 0.62 | | | | (0.27 | ) | | | 0.55 | | | | 0.86 | |
| | | | |
| | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.10 | ) | | | (0.19 | ) | | | (0.33 | ) | | | (0.47 | ) | | | (0.33 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.10 | ) | | | (0.53 | ) | | | (0.19 | ) | | | (0.52 | ) |
| | | | |
| | | | | |
Total distributions | | | (0.10 | ) | | | (0.29 | ) | | | (0.86 | ) | | | (0.66 | ) | | | (0.85 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $14.45 | | | | $13.72 | | | | $13.39 | | | | $14.52 | | | | $14.63 | |
| | | | |
| | | | | |
Total returne | | | 6.09% | | | | 4.69% | | | | (1.93)% | | | | 3.79% | | | | 6.06% | |
| | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesg | | | 0.29% | | | | 0.30% | | | | 0.29% | | | | 0.28% | | | | 1.06% | |
| | | | | |
Expenses net of waiver and payments by affiliatesg | | | 0.28% | | | | 0.28% | | | | 0.28% | | | | 0.28% | h | | | 0.28% | |
| | | | | |
Net investment incomed | | | 1.28% | | | | 1.36% | | | | 2.31% | | | | 3.02% | | | | 2.44% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $2,364 | | | | $2,197 | | | | $2,282 | | | | $1,654 | | | | $37 | |
| | | | | |
Portfolio turnover rate | | | 13.83% | | | | 34.83% | | | | 17.69% | | | | 16.67% | | | | 57.59% | |
aFor the period May 1, 2013 (effective date) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return is not annualized for periods less than one year.
f Ratios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.59% for the period ended June 30, 2017.
hBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | |
| | | |
| 22 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Conservative Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Advisor Class | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $13.74 | | | | $13.39 | | | | $14.52 | | | | $14.64 | | | | $14.05 | | | | $13.32 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.09 | | | | 0.17 | | | | 0.32 | | | | 0.41 | | | | 0.35 | | | | 0.31 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.73 | | | | 0.45 | | | | (0.60 | ) | | | 0.11 | | | | 1.12 | | | | 0.79 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.82 | | | | 0.62 | | | | (0.28 | ) | | | 0.52 | | | | 1.47 | | | | 1.10 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.10 | ) | | | (0.17 | ) | | | (0.32 | ) | | | (0.45 | ) | | | (0.36 | ) | | | (0.34 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.10 | ) | | | (0.53 | ) | | | (0.19 | ) | | | (0.52 | ) | | | (0.03 | ) |
| | | | |
| | | | | | |
Total distributions | | | (0.10 | ) | | | (0.27 | ) | | | (0.85 | ) | | | (0.64 | ) | | | (0.88 | ) | | | (0.37 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $14.46 | | | | $13.74 | | | | $13.39 | | | | $14.52 | | | | $14.64 | | | | $14.05 | |
| | | | |
| | | | | | |
Total returnd | | | 5.97% | | | | 4.69% | | | | (2.02)% | | | | 3.61% | | | | 10.67% | | | | 8.27% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 0.38% | | | | 0.38% | | | | 0.37% | | | | 0.38% | | | | 0.35% | | | | 0.28% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 0.38% | g | | | 0.38% | g | | | 0.37% | g | | | 0.38% | g | | | 0.34% | | | | 0.25% | |
| | | | | | |
Net investment incomec | | | 1.18% | | | | 1.26% | | | | 2.22% | | | | 2.92% | | | | 2.36% | | | | 2.23% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $35,895 | | | | $27,578 | | | | $82,234 | | | | $90,263 | | | | $105,657 | | | | $85,662 | |
| | | | | | |
Portfolio turnover rate | | | 13.83% | | | | 34.83% | | | | 17.69% | | | | 16.67% | | | | 57.59% | | | | 25.82% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
f Does not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.59% for the period ended June 30, 2017.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 23 | |
FRANKLIN FUND ALLOCATOR SERIES
Statement of Investments, June 30, 2017 (unaudited)
| | | | | | | | | | |
| Franklin Conservative Allocation Fund | | | | | | |
| | | | | Shares | | | Value | |
| | Investments in Underlying Funds and Exchange Traded Funds 100.1% | | | | | | | | |
| | Alternative Strategies 6.9% | | | | | | | | |
| a Franklin K2 Alternative Strategies Fund, Class R6 | | | 5,731,980 | | | $ | 64,255,495 | |
| a,b Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 5,120,808 | | | | 31,800,220 | |
| | | | | | | | | | |
| | | | | | | | | 96,055,715 | |
| | | | | | | | | | |
| | Domestic Equity 27.5% | | | | | | | | |
| | Financial Select Sector SPDR ETF | | | 1,119,400 | | | | 27,615,598 | |
| a,b Franklin DynaTech Fund, Class R6 | | | 1,387,304 | | | | 84,084,463 | |
| a Franklin Growth Fund, Class R6 | | | 1,455,003 | | | | 126,919,911 | |
| a Franklin LibertyQ U.S. Equity ETF | | | 712,100 | | | | 18,357,938 | |
| a Franklin Rising Dividends Fund, Class R6 | | | 1,179,188 | | | | 66,518,016 | |
| a,b Franklin Small Cap Growth Fund, Class R6 | | | 406,346 | | | | 8,703,922 | |
| a Franklin Utilities Fund, Class R6 | | | 1,480,846 | | | | 28,047,224 | |
| | iShares S&P 500 Value ETF | | | 222,255 | | | | 23,327,885 | |
| | | | | | | | | | |
| | | | | | | | | 383,574,957 | |
| | | | | | | | | | |
| | Domestic Fixed Income 41.8% | | | | | | | | |
| a Franklin Floating Rate Daily Access Fund, Class R6 | | | 4,763,295 | | | | 42,202,797 | |
| a Franklin Low Duration Total Return Fund, Class R6 | | | 23,817,159 | | | | 235,789,874 | |
| a Franklin Strategic Income Fund, Class R6 | | | 13,022,331 | | | | 128,269,955 | |
| a Franklin U.S. Government Securities Fund, Class R6 | | | 24,064,293 | | | | 147,995,404 | |
| | iShares iBoxx $ Investment Grade Corporate Bond ETF | | | 240,000 | | | | 28,922,400 | |
| | | | | | | | | | |
| | | | | | | | | 583,180,430 | |
| | | | | | | | | | |
| | Foreign Equity 14.1% | | | | | | | | |
| a Franklin International Small Cap Growth Fund, Class R6 | | | 2,698,615 | | | | 53,891,340 | |
| a Franklin LibertyQ Emerging Markets ETF | | | 1,393,000 | | | | 41,817,860 | |
| a Franklin Mutual European Fund, Class R6 | | | 2,697,423 | | | | 55,512,955 | |
| a Templeton Foreign Fund, Class R6 | | | 5,902,004 | | | | 45,150,333 | |
| | | | | | | | | | |
| | | | | | | | | 196,372,488 | |
| | | | | | | | | | |
| | Foreign Fixed Income 9.8% | | | | | | | | |
| a Templeton Global Total Return Fund, Class R6 | | | 11,051,017 | | | | 136,038,021 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds before Short Term Investments (Cost $1,213,125,741) | | | | | | | 1,395,221,611 | |
| | | | | | | | | | |
| | | |
| | Short Term Investments (Cost $2,533,221) 0.2% | | | | | | | | |
| | Money Market Funds 0.2% | | | | | | | | |
| a,c Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 2,533,221 | | | | 2,533,221 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds
(Cost $1,215,658,962) 100.3% | | | | | | | 1,397,754,832 | |
| | Other Assets, less Liabilities (0.3)% | | | | | | | (4,365,837 | ) |
| | | | | | | | | | |
| | Net Assets 100.0% | | | | | | $ | 1,393,388,995 | |
| | | | | | | | | | |
See Abbreviations on page 52.
aSee Note 3(f) regarding investments in FT Underlying Funds.
bNon-income producing.
c The rate shown is the annualized seven-day yield at period end.
| | | | |
| | | |
| 24 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Financial Highlights
Franklin Moderate Allocation Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $14.86 | | | | $14.49 | | | | $15.71 | | | | $15.78 | | | | $14.59 | | | | $13.69 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.04 | | | | 0.14 | | | | 0.24 | | | | 0.34 | | | | 0.27 | | | | 0.29 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.16 | | | | 0.56 | | | | (0.51 | ) | | | 0.32 | | | | 1.78 | | | | 0.97 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.20 | | | | 0.70 | | | | (0.27 | ) | | | 0.66 | | | | 2.05 | | | | 1.26 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.08 | ) | | | (0.12 | ) | | | (0.25 | ) | | | (0.37 | ) | | | (0.30 | ) | | | (0.32 | ) |
| | | | | | |
Net realized gains | | | (0.14 | ) | | | (0.21 | ) | | | (0.70 | ) | | | (0.36 | ) | | | (0.56 | ) | | | (0.04 | ) |
| | | | |
| | | | | | |
Total distributions | | | (0.22 | ) | | | (0.33 | ) | | | (0.95 | ) | | | (0.73 | ) | | | (0.86 | ) | | | (0.36 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $15.84 | | | | $14.86 | | | | $14.49 | | | | $15.71 | | | | $15.78 | | | | $14.59 | |
| | | | |
| | | | | | |
Total returnd | | | 8.05% | | | | 4.94% | | | | (1.89)% | | | | 4.07% | | | | 14.35% | | | | 9.34% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 0.64% | | | | 0.63% | | | | 0.63% | | | | 0.65% | | | | 0.61% | | | | 0.53% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 0.64% | g | | | 0.63% | g | | | 0.63% | g | | | 0.65% | g | | | 0.59% | | | | 0.50% | |
| | | | | | |
Net investment incomec | | | 0.50% | | | | 0.93% | | | | 1.52% | | | | 2.08% | | | | 1.74% | | | | 2.00% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $1,387,917 | | | | $1,416,532 | | | | $1,594,882 | | | | $1,667,201 | | | | $1,636,122 | | | | $1,452,659 | |
| | | | | | |
Portfolio turnover rate | | | 11.85% | | | | 29.22% | | | | 22.08% | | | | 17.95% | | | | 46.14% | | | | 25.36% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.62% for the period ended June 30, 2017.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 25 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Moderate Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $14.48 | | | | $14.12 | | | | $15.33 | | | | $15.42 | | | | $14.28 | | | | $13.40 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income (loss)b,c | | | (0.02 | ) | | | 0.03 | | | | 0.12 | | | | 0.21 | | | | 0.15 | | | | 0.17 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.12 | | | | 0.55 | | | | (0.49 | ) | | | 0.31 | | | | 1.74 | | | | 0.97 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.10 | | | | 0.58 | | | | (0.37 | ) | | | 0.52 | | | | 1.89 | | | | 1.14 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.08 | ) | | | (0.01 | ) | | | (0.14 | ) | | | (0.25 | ) | | | (0.19 | ) | | | (0.22 | ) |
| | | | | | |
Net realized gains | | | (0.14 | ) | | | (0.21 | ) | | | (0.70 | ) | | | (0.36 | ) | | | (0.56 | ) | | | (0.04 | ) |
| | | | |
| | | | | | |
Total distributions | | | (0.22 | ) | | | (0.22 | ) | | | (0.84 | ) | | | (0.61 | ) | | | (0.75 | ) | | | (0.26 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $15.36 | | | | $14.48 | | | | $14.12 | | | | $15.33 | | | | $15.42 | | | | $14.28 | |
| | | | |
| | | | | | |
Total returnd | | | 7.57% | | | | 4.25% | | | | (2.68)% | | | | 3.35% | | | | 13.41% | | | | 8.51% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 1.39% | | | | 1.37% | | | | 1.38% | | | | 1.40% | | | | 1.36% | | | | 1.28% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 1.39% | g | | | 1.37% | g | | | 1.38% | g | | | 1.40% | g | | | 1.34% | | | | 1.25% | |
| | | | | | |
Net investment income (loss)c | | | (0.25)% | | | | 0.19% | | | | 0.77% | | | | 1.33% | | | | 0.99% | | | | 1.25% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $575,477 | | | | $595,911 | | | | $692,872 | | | | $716,712 | | | | $701,224 | | | | $605,490 | |
| | | | | | |
Portfolio turnover rate | | | 11.85% | | | | 29.22% | | | | 22.08% | | | | 17.95% | | | | 46.14% | | | | 25.36% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
f Does not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.62% for the period ended June 30, 2017.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | |
| | | |
| 26 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Moderate Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class R | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $14.82 | | | | $14.44 | | | | $15.66 | | | | $15.73 | | | | $14.55 | | | | $13.64 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.02 | | | | 0.10 | | | | 0.19 | | | | 0.28 | | | | 0.22 | | | | 0.25 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.15 | | | | 0.57 | | | | (0.51 | ) | | | 0.34 | | | | 1.78 | | | | 0.99 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.17 | | | | 0.67 | | | | (0.32 | ) | | | 0.62 | | | | 2.00 | | | | 1.24 | |
| | | | |
| | | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.08 | ) | | | (0.08 | ) | | | (0.20 | ) | | | (0.33 | ) | | | (0.26 | ) | | | (0.29 | ) |
| | | | | | |
Net realized gains | | | (0.14 | ) | | | (0.21 | ) | | | (0.70 | ) | | | (0.36 | ) | | | (0.56 | ) | | | (0.04 | ) |
| | | | |
| | | | | | |
Total distributions | | | (0.22 | ) | | | (0.29 | ) | | | (0.90 | ) | | | (0.69 | ) | | | (0.82 | ) | | | (0.33 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $15.77 | | | | $14.82 | | | | $14.44 | | | | $15.66 | | | | $15.73 | | | | $14.55 | |
| | | | |
| | | | | | |
Total returnd | | | 7.87% | | | | 4.71% | | | | (2.18)% | | | | 3.89% | | | | 13.97% | | | | 9.11% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 0.89% | | | | 0.88% | | | | 0.88% | | | | 0.90% | | | | 0.86% | | | | 0.78% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 0.89% | g | | | 0.88% | g | | | 0.88% | g | | | 0.90% | g | | | 0.84% | | | | 0.75% | |
| | | | | | |
Net investment incomec | | | 0.25% | | | | 0.68% | | | | 1.27% | | | | 1.83% | | | | 1.49% | | | | 1.75% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $143,370 | | | | $158,192 | | | | $202,854 | | | | $263,864 | | | | $286,688 | | | | $274,881 | |
| | | | | | |
Portfolio turnover rate | | | 11.85% | | | | 29.22% | | | | 22.08% | | | | 17.95% | | | | 46.14% | | | | 25.36% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.62% for the period ended June 30, 2017.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 27 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Moderate Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class R6 | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $14.86 | | | | $14.49 | | | | $15.72 | | | | $15.79 | | | | $15.33 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.07 | | | | 0.19 | | | | 0.31 | | | | 0.25 | | | | 0.77 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 1.16 | | | | 0.57 | | | | (0.54 | ) | | | 0.47 | | | | 0.56 | |
| | | | |
| | | | | |
Total from investment operations | | | 1.23 | | | | 0.76 | | | | (0.23 | ) | | | 0.72 | | | | 1.33 | |
| | | | |
| | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.08 | ) | | | (0.18 | ) | | | (0.30 | ) | | | (0.43 | ) | | | (0.31 | ) |
| | | | | |
Net realized gains | | | (0.14 | ) | | | (0.21 | ) | | | (0.70 | ) | | | (0.36 | ) | | | (0.56 | ) |
| | | | |
| | | | | |
Total distributions | | | (0.22 | ) | | | (0.39 | ) | | | (1.00 | ) | | | (0.79 | ) | | | (0.87 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $15.87 | | | | $14.86 | | | | $14.49 | | | | $15.72 | | | | $15.79 | |
| | | | |
| | | | | |
Total returne | | | 8.26% | | | | 5.34% | | | | (1.59)% | | | | 4.52% | | | | 8.93% | |
| | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesg | | | 0.28% | | | | 0.28% | | | | 0.28% | | | | 0.27% | | | | 0.45% | |
| | | | | |
Expenses net of waiver and payments by affiliatesg | | | 0.28% | h | | | 0.28% | h | | | 0.28% | h | | | 0.27% | h | | | 0.26% | |
| | | | | |
Net investment incomed | | | 0.86% | | | | 1.28% | | | | 1.87% | | | | 2.46% | | | | 2.07% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $4,371 | | | | $5,106 | | | | $4,779 | | | | $4,205 | | | | $253 | |
| | | | | |
Portfolio turnover rate | | | 11.85% | | | | 29.22% | | | | 22.08% | | | | 17.95% | | | | 46.14% | |
aFor the period May 1, 2013 (effective date) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.62% for the period ended June 30, 2017.
hBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | |
| | | |
| 28 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Moderate Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Advisor Class | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $14.88 | | | | $14.50 | | | | $15.72 | | | | $15.79 | | | | $14.60 | | | | $13.69 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.06 | | | | 0.17 | | | | 0.25 | | | | 0.33 | | | | 0.32 | | | | 0.36 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.15 | | | | 0.58 | | | | (0.49 | ) | | | 0.37 | | | | 1.76 | | | | 0.95 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.21 | | | | 0.75 | | | | (0.24 | ) | | | 0.70 | | | | 2.08 | | | | 1.31 | |
| | | | |
| | | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.08 | ) | | | (0.16 | ) | | | (0.28 | ) | | | (0.41 | ) | | | (0.33 | ) | | | (0.36 | ) |
| | | | | | |
Net realized gains | | | (0.14 | ) | | | (0.21 | ) | | | (0.70 | ) | | | (0.36 | ) | | | (0.56 | ) | | | (0.04 | ) |
| | | | |
| | | | | | |
Total distributions | | | (0.22 | ) | | | (0.37 | ) | | | (0.98 | ) | | | (0.77 | ) | | | (0.89 | ) | | | (0.40 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $15.87 | | | | $14.88 | | | | $14.50 | | | | $15.72 | | | | $15.79 | | | | $14.60 | |
| | | | |
| | | | | | |
Total returnd | | | 8.11% | | | | 5.26% | | | | (1.66)% | | | | 4.39% | | | | 14.56% | | | | 9.61% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 0.39% | | | | 0.38% | | | | 0.38% | | | | 0.40% | | | | 0.36% | | | | 0.28% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 0.39% | g | | | 0.38% | g | | | 0.38% | g | | | 0.40% | g | | | 0.34% | | | | 0.25% | |
| | | | | | |
Net investment incomec | | | 0.75% | | | | 1.18% | | | | 1.77% | | | | 2.33% | | | | 1.99% | | | | 2.25% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $50,118 | | | | $39,052 | | | | $52,975 | | | | $87,612 | | | | $159,303 | | | | $123,176 | |
| | | | | | |
Portfolio turnover rate | | | 11.85% | | | | 29.22% | | | | 22.08% | | | | 17.95% | | | | 46.14% | | | | 25.36% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.62% for the period ended June 30, 2017.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 29 | |
FRANKLIN FUND ALLOCATOR SERIES
Statement of Investments, June 30, 2017 (unaudited)
Franklin Moderate Allocation Fund
| | | | | | | | | | |
| | | | | Shares | | | Value | |
| | Investments in Underlying Funds and Exchange Traded Funds 100.2% | | | | | | | | |
| | Alternative Strategies 6.9% | | | | | | | | |
| a Franklin K2 Alternative Strategies Fund, Class R6 | | | 8,929,097 | | | $ | 100,095,173 | |
| a,b Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 7,988,097 | | | | 49,606,085 | |
| | | | | | | | | | |
| | | | | | | | | 149,701,258 | |
| | | | | | | | | | |
| | Domestic Equity 40.4% | | | | | | | | |
| Financial Select Sector SPDR ETF | | | 2,579,500 | | | | 63,636,265 | |
| a,b Franklin DynaTech Fund, Class R6 | | | 2,993,036 | | | | 181,407,912 | |
| a Franklin Growth Fund, Class R6 | | | 3,431,594 | | | | 299,337,918 | |
| a Franklin LibertyQ U.S. Equity ETF | | | 1,676,400 | | | | 43,217,592 | |
| a Franklin Rising Dividends Fund, Class R6 | | | 2,705,466 | | | | 152,615,315 | |
| a,b Franklin Small Cap Growth Fund, Class R6 | | | 995,142 | | | | 21,315,948 | |
| a Franklin Utilities Fund, Class R6 | | | 3,562,065 | | | | 67,465,523 | |
| | iShares S&P 500 Value ETF | | | 424,869 | | | | 44,594,250 | |
| | | | | | | | | | |
| | | | | | | | | 873,590,723 | |
| | | | | | | | | | |
| | Domestic Fixed Income 25.7% | | | | | | | | |
| a Franklin Floating Rate Daily Access Fund, Class R6 | | | 4,443,912 | | | | 39,373,056 | |
| a Franklin Low Duration Total Return Fund, Class R6 | | | 23,143,717 | | | | 229,122,802 | |
| a Franklin Strategic Income Fund, Class R6 | | | 12,306,389 | | | | 121,217,932 | |
| a Franklin U.S. Government Securities Fund, Class R6 | | | 22,511,700 | | | | 138,446,956 | |
| | iShares iBoxx $ Investment Grade Corporate Bond ETF | | | 216,500 | | | | 26,090,415 | |
| | | | | | | | | | |
| | | | | | | | | 554,251,161 | |
| | | | | | | | | | |
| | Foreign Equity 21.4% | | | | | | | | |
| a Franklin International Small Cap Growth Fund, Class R6 | | | 6,499,973 | | | | 129,804,469 | |
| a Franklin LibertyQ Emerging Markets ETF | | | 3,205,700 | | | | 96,235,114 | |
| a Franklin Mutual European Fund, Class R6 | | | 6,310,376 | | | | 129,867,538 | |
| a Templeton Foreign Fund, Class R6 | | | 13,781,923 | | | | 105,431,710 | |
| | | | | | | | | | |
| | | | | | | | | 461,338,831 | |
| | | | | | | | | | |
| | Foreign Fixed Income 5.8% | | | | | | | | |
| a Templeton Global Total Return Fund, Class R6 | | | 10,257,861 | | | | 126,274,263 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds before Short Term Investments (Cost $1,756,802,513) | | | | | | | 2,165,156,236 | |
| | | | | | | | | | |
| | | |
| | Short Term Investments (Cost $4,923,949) 0.2% | | | | | | | | |
| | Money Market Funds 0.2% | | | | | | | | |
| a,c Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 4,923,949 | | | | 4,923,949 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds (Cost $1,761,726,462) 100.4% | | | | | | | 2,170,080,185 | |
| | Other Assets, less Liabilities (0.4)% | | | | | | | (8,826,358 | ) |
| | | | | | | | | | |
| | Net Assets 100.0% | | | | | | $ | 2,161,253,827 | |
| | | | | | | | | | |
See Abbreviations on page 52.
aSee Note 3(f) regarding investments in FT Underlying Funds.
bNon-income producing.
c The rate shown is the annualized seven-day yield at period end.
| | | | |
| | | |
| 30 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Financial Highlights
Franklin Growth Allocation Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $17.43 | | | | $17.01 | | | | $18.57 | | | | $18.40 | | | | $15.81 | | | | $14.53 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.01 | | | | 0.14 | | | | 0.21 | | | | 0.24 | | | | 0.19 | | | | 0.21 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.78 | | | | 0.75 | | | | (0.48 | ) | | | 0.67 | | | | 3.09 | | | | 1.32 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.79 | | | | 0.89 | | | | (0.27 | ) | | | 0.91 | | | | 3.28 | | | | 1.53 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.14 | ) | | | (0.21 | ) | | | (0.29 | ) | | | (0.25 | ) | | | (0.25 | ) |
| | | | | | |
Net realized gains | | | (0.44 | ) | | | (0.33 | ) | | | (1.08 | ) | | | (0.45 | ) | | | (0.44 | ) | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.53 | ) | | | (0.47 | ) | | | (1.29 | ) | | | (0.74 | ) | | | (0.69 | ) | | | (0.25 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $18.69 | | | | $17.43 | | | | $17.01 | | | | $18.57 | | | | $18.40 | | | | $15.81 | |
| | | | |
| | | | | | |
Total returnd | | | 10.27% | | | | 5.36% | | | | (1.66)% | | | | 4.95% | | | | 20.98% | | | | 10.52% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 0.68% | | | | 0.69% | | | | 0.67% | | | | 0.68% | | | | 0.65% | | | | 0.55% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 0.65% | | | | 0.65% | | | | 0.65% | | | | 0.63% | | | | 0.59% | | | | 0.50% | |
| | | | | | |
Net investment incomec | | | 0.08% | | | | 0.83% | | | | 1.10% | | | | 1.25% | | | | 1.10% | | | | 1.34% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $831,800 | | | | $822,833 | | | | $888,096 | | | | $887,856 | | | | $814,901 | | | | $655,585 | |
| | | | | | |
Portfolio turnover rate | | | 10.72% | | | | 30.19% | | | | 20.40% | | | | 17.55% | | | | 30.45% | | | | 31.36% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.64% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 31 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Growth Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $16.99 | | | | $16.59 | | | | $18.15 | | | | $18.00 | | | | $15.50 | | | | $14.25 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income (loss)b,c | | | (0.06 | ) | | | 0.02 | | | | 0.07 | | | | 0.09 | | | | 0.06 | | | | 0.09 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.73 | | | | 0.72 | | | | (0.47 | ) | | | 0.67 | | | | 3.01 | | | | 1.29 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.67 | | | | 0.74 | | | | (0.40 | ) | | | 0.76 | | | | 3.07 | | | | 1.38 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.01 | ) | | | (0.08 | ) | | | (0.16 | ) | | | (0.13 | ) | | | (0.13 | ) |
| | | | | | |
Net realized gains | | | (0.44 | ) | | | (0.33 | ) | | | (1.08 | ) | | | (0.45 | ) | | | (0.44 | ) | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.53 | ) | | | (0.34 | ) | | | (1.16 | ) | | | (0.61 | ) | | | (0.57 | ) | | | (0.13 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $18.13 | | | | $16.99 | | | | $16.59 | | | | $18.15 | | | | $18.00 | | | | $15.50 | |
| | | | |
| | | | | | |
Total returnd | | | 9.82% | | | | 4.59% | | | | (2.41)% | | | | 4.21% | | | | 20.04% | | | | 9.71% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 1.43% | | | | 1.43% | | | | 1.42% | | | | 1.43% | | | | 1.40% | | | | 1.30% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 1.40% | | | | 1.39% | | | | 1.40% | | | | 1.38% | | | | 1.34% | | | | 1.25% | |
| | | | | | |
Net investment income (loss)c | | | (0.67)% | | | | 0.09% | | | | 0.35% | | | | 0.50% | | | | 0.35% | | | | 0.59% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $304,574 | | | | $308,736 | | | | $336,557 | | | | $336,213 | | | | $309,869 | | | | $241,787 | |
| | | | | | |
Portfolio turnover rate | | | 10.72% | | | | 30.19% | | | | 20.40% | | | | 17.55% | | | | 30.45% | | | | 31.36% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.64% for the period ended June 30, 2017.
| | | | |
| | | |
| 32 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Growth Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class R | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $17.22 | | | | $16.80 | | | | $18.34 | | | | $18.18 | | | | $15.63 | | | | $14.37 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income (loss)b,c | | | (0.02 | ) | | | 0.09 | | | | 0.14 | | | | 0.17 | | | | 0.14 | | | | 0.16 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.76 | | | | 0.75 | | | | (0.44 | ) | | | 0.68 | | | | 3.05 | | | | 1.31 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.74 | | | | 0.84 | | | | (0.30 | ) | | | 0.85 | | | | 3.19 | | | | 1.47 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.09 | ) | | | (0.16 | ) | | | (0.24 | ) | | | (0.20 | ) | | | (0.21 | ) |
| | | | | | |
Net realized gains | | | (0.44 | ) | | | (0.33 | ) | | | (1.08 | ) | | | (0.45 | ) | | | (0.44 | ) | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.53 | ) | | | (0.42 | ) | | | (1.24 | ) | | | (0.69 | ) | | | (0.64 | ) | | | (0.21 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $18.43 | | | | $17.22 | | | | $16.80 | | | | $18.34 | | | | $18.18 | | | | $15.63 | |
| | | | |
| | | | | | |
Total returnd | | | 10.10% | | | | 5.12% | | | | (1.93)% | | | | 4.72% | | | | 20.67% | | | | 10.22% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 0.93% | | | | 0.94% | | | | 0.92% | | | | 0.93% | | | | 0.90% | | | | 0.80% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 0.90% | | | | 0.90% | | | | 0.90% | | | | 0.88% | | | | 0.84% | | | | 0.75% | |
| | | | | | |
Net investment income (loss)c | | | (0.17)% | | | | 0.58% | | | | 0.85% | | | | 1.00% | | | | 0.85% | | | | 1.09% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $103,362 | | | | $112,272 | | | | $147,426 | | | | $182,211 | | | | $192,361 | | | | $169,873 | |
| | | | | | |
Portfolio turnover rate | | | 10.72% | | | | 30.19% | | | | 20.40% | | | | 17.55% | | | | 30.45% | | | | 31.36% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.64% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 33 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Growth Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class R6 | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $17.48 | | | | $17.06 | | | | $18.61 | | | | $18.44 | | | | $16.88 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.04 | | | | 0.22 | | | | 0.32 | | | | 0.15 | | | | 0.62 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 1.79 | | | | 0.74 | | | | (0.51 | ) | | | 0.83 | | | | 1.68 | |
| | | | |
| | | | | |
Total from investment operations | | | 1.83 | | | | 0.96 | | | | (0.19 | ) | | | 0.98 | | | | 2.30 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from
Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.21 | ) | | | (0.28 | ) | | | (0.36 | ) | | | (0.30 | ) |
| | | | | |
Net realized gains | | | (0.44 | ) | | | (0.33 | ) | | | (1.08 | ) | | | (0.45 | ) | | | (0.44 | ) |
| | | | |
| | | | | |
Total distributions | | | (0.53 | ) | | | (0.54 | ) | | | (1.36 | ) | | | (0.81 | ) | | | (0.74 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $18.78 | | | | $17.48 | | | | $17.06 | | | | $18.61 | | | | $18.44 | |
| | | | |
| | | | | |
Total returne | | | 10.47% | | | | 5.77% | | | | (1.27)% | | | | 5.38% | | | | 13.88% | |
| | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesg | | | 0.29% | | | | 0.30% | | | | 0.29% | | | | 0.28% | | | | 0.95% | |
| | | | | |
Expenses net of waiver and payments by affiliatesg | | | 0.26% | | | | 0.26% | | | | 0.26% | | | | 0.23% | | | | 0.22% | |
| | | | | |
Net investment incomed | | | 0.47% | | | | 1.22% | | | | 1.49% | | | | 1.65% | | | | 1.47% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $2,782 | | | | $2,822 | | | | $2,549 | | | | $1,755 | | | | $42 | |
| | | | | |
Portfolio turnover rate | | | 10.72% | | | | 30.19% | | | | 20.40% | | | | 17.55% | | | | 30.45% | |
aFor the period May 1, 2013 (effective date) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.64% for the period ended June 30, 2017.
| | | | |
| | | |
| 34 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Growth Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Advisor Class | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $17.49 | | | | $17.06 | | | | $18.62 | | | | $18.45 | | | | $15.85 | | | | $14.56 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.03 | | | | 0.18 | | | | 0.25 | | | | 0.27 | | | | 0.24 | | | | 0.25 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.79 | | | | 0.76 | | | | (0.47 | ) | | | 0.68 | | | | 3.09 | | | | 1.32 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.82 | | | | 0.94 | | | | (0.22 | ) | | | 0.95 | | | | 3.33 | | | | 1.57 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.18 | ) | | | (0.26 | ) | | | (0.33 | ) | | | (0.29 | ) | | | (0.28 | ) |
| | | | | | |
Net realized gains | | | (0.44 | ) | | | (0.33 | ) | | | (1.08 | ) | | | (0.45 | ) | | | (0.44 | ) | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.53 | ) | | | (0.51 | ) | | | (1.34 | ) | | | (0.78 | ) | | | (0.73 | ) | | | (0.28 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $18.78 | | | | $17.49 | | | | $17.06 | | | | $18.62 | | | | $18.45 | | | | $15.85 | |
| | | | |
| | | | | | |
Total returnd | | | 10.40% | | | | 5.60% | | | | (1.41 | )% | | | 5.23% | | | | 21.26% | | | | 10.84% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 0.43% | | | | 0.44% | | | | 0.42% | | | | 0.43% | | | | 0.40% | | | | 0.30% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 0.40% | | | | 0.40% | | | | 0.40% | | | | 0.38% | | | | 0.34% | | | | 0.25% | |
| | | | | | |
Net investment incomec | | | 0.33% | | | | 1.08% | | | | 1.35% | | | | 1.50% | | | | 1.35% | | | | 1.59% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $43,070 | | | | $39,211 | | | | $49,634 | | | | $52,250 | | | | $74,808 | | | | $55,810 | |
| | | | | | |
Portfolio turnover rate | | | 10.72% | | | | 30.19% | | | | 20.40% | | | | 17.55% | | | | 30.45% | | | | 31.36% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.64% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 35 | |
FRANKLIN FUND ALLOCATOR SERIES
Statement of Investments, June 30, 2017 (unaudited)
| | | | | | | | | | |
| Franklin Growth Allocation Fund | |
| | | | | Shares | | | Value | |
| | | | | | | | | | |
| | Investments in Underlying Funds and Exchange Traded Funds 100.2% | |
| | Alternative Strategies 6.9% | | | | | | | | |
| a | | Franklin K2 Alternative Strategies Fund, Class R6 | | | 5,332,825 | | | $ | 59,780,968 | |
| a,b | | Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 4,706,977 | | | | 29,230,327 | |
| | | | | | | | | | |
| | | | | | | | | 89,011,295 | |
| | | | | | | | | | |
| | Domestic Equity 52.7% | | | | | | | | |
| | Financial Select Sector SPDR ETF | | | 2,035,300 | | | | 50,210,851 | |
| a,b | | Franklin DynaTech Fund, Class R6 | | | 2,384,439 | | | | 144,520,840 | |
| a | | Franklin Growth Fund, Class R6 | | | 2,569,080 | | | | 224,100,806 | |
| a | | Franklin LibertyQ U.S. Equity ETF | | | 1,253,700 | | | | 32,320,386 | |
| a | | Franklin Rising Dividends Fund, Class R6 | | | 2,121,431 | | | | 119,669,903 | |
| a,b | | Franklin Small Cap Growth Fund, Class R6 | | | 733,480 | | | | 15,711,143 | |
| a | | Franklin Utilities Fund, Class R6 | | | 2,731,729 | | | | 51,738,957 | |
| | iShares S&P 500 Value ETF | | | 368,757 | | | | 38,704,735 | |
| | | | | | | | | | |
| | | | | | | | | 676,977,621 | |
| | | | | | | | | | |
| | Domestic Fixed Income 9.2% | | | | | | | | |
| a | | Franklin Floating Rate Daily Access Fund, Class R6 | | | 931,451 | | | | 8,252,656 | |
| a | | Franklin Low Duration Total Return Fund, Class R6 | | | 4,994,059 | | | | 49,441,181 | |
| a | | Franklin Strategic Income Fund, Class R6 | | | 2,559,739 | | | | 25,213,434 | |
| a | | Franklin U.S. Government Securities Fund, Class R6 | | | 4,729,527 | | | | 29,086,592 | |
| | iShares iBoxx $ Investment Grade Corporate Bond ETF | | | 48,300 | | | | 5,820,633 | |
| | | | | | | | | | |
| | | | | | | | | 117,814,496 | |
| | | | | | | | | | |
| | Foreign Equity 29.4% | | | | | | | | |
| a | | Franklin International Small Cap Growth Fund, Class R6 | | | 5,408,537 | | | | 108,008,493 | |
| a | | Franklin LibertyQ Emerging Markets ETF | | | 2,650,800 | | | | 79,577,016 | |
| a | | Franklin Mutual European Fund, Class R6 | | | 4,988,766 | | | | 102,668,801 | |
| a | | Templeton Foreign Fund, Class R6 | | | 11,446,133 | | | | 87,562,919 | |
| | | | | | | | | | |
| | | | | | | | | 377,817,229 | |
| | | | | | | | | | |
| | Foreign Fixed Income 2.0% | | | | | | | | |
| a | | Templeton Global Total Return Fund, Class R6 | | | 2,119,017 | | | | 26,085,100 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds before Short Term Investments (Cost $973,164,178) | | | | | | | 1,287,705,741 | |
| | | | | | | | | | |
| | | |
| | Short Term Investments (Cost $2,514,033) 0.2% | | | | | | | | |
| | Money Market Funds 0.2% | | | | | | | | |
| a,c | | Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 2,514,033 | | | | 2,514,033 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds (Cost $975,678,211) 100.4% | | | | | | | 1,290,219,774 | |
| | Other Assets, less Liabilities (0.4)% | | | | | | | (4,631,746 | ) |
| | | | | | | | | | |
| | Net Assets 100.0% | | | | | | $ | 1,285,588,028 | |
| | | | | | | | | | |
See Abbreviations on page 52.
aSee Note 3(f) regarding investments in FT Underlying Funds.
bNon-income producing.
cThe rate shown is the annualized seven-day yield at period end.
| | | | |
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| 36 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Financial Statements
Statements of Assets and Liabilities
June 30, 2017 (unaudited)
| | | | | | | | | | | | |
| | | Franklin
Conservative
Allocation Fund | | | Franklin
Moderate
Allocation Fund | | | Franklin
Growth
Allocation Fund | |
Assets: | | | | | | | | | | | | |
Investments in securities: | | | | | | | | | | | | |
Cost - Controlled affiliates (Note 3f) | | $ | 36,031,317 | | | $ | 190,977,694 | | | $ | 32,317,252 | |
Cost - Non-controlled affiliates (Note 3f) | | | 1,103,396,457 | | | | 1,444,372,761 | | | | 855,363,210 | |
Cost - Unaffiliated Exchange traded funds | | | 76,231,188 | | | | 126,376,007 | | | | 87,997,749 | |
| | | | |
Total cost of investments | | $ | 1,215,658,962 | | | $ | 1,761,726,462 | | | $ | 975,678,211 | |
| | | | |
Value - Controlled affiliates (Note 3f) | | $ | 31,800,220 | | | $ | 189,058,791 | | | $ | 32,320,386 | |
Value - Non-controlled affiliates (Note 3f) | | | 1,286,088,729 | | | | 1,846,700,464 | | | | 1,163,163,169 | |
Value - Unaffiliated Exchange traded funds | | | 79,865,883 | | | | 134,320,930 | | | | 94,736,219 | |
| | | | |
Total value of investments | | | 1,397,754,832 | | | | 2,170,080,185 | | | | 1,290,219,774 | |
Receivables: | | | | | | | | | | | | |
Capital shares sold | | | 1,212,124 | | | | 1,364,027 | | | | 961,232 | |
Other assets | | | 928 | | | | 1,434 | | | | 841 | |
| | | | |
Total assets | | | 1,398,967,884 | | | | 2,171,445,646 | | | | 1,291,181,847 | |
| | | | |
Liabilities: | | | | | | | | | | | | |
Payables: | | | | | | | | | | | | |
Capital shares redeemed | | | 3,751,525 | | | | 7,535,040 | | | | 3,977,505 | |
Asset allocation fees | | | 288,321 | | | | 447,960 | | | | 230,247 | |
Distribution fees | | | 1,192,965 | | | | 1,692,987 | | | | 960,604 | |
Transfer agent fees | | | 268,443 | | | | 378,456 | | | | 328,502 | |
Trustees’ fees and expenses | | | 643 | | | | 857 | | | | 375 | |
Accrued expenses and other liabilities | | | 76,992 | | | | 136,519 | | | | 96,586 | |
| | | | |
Total liabilities | | | 5,578,889 | | | | 10,191,819 | | | | 5,593,819 | |
| | | | |
Net assets, at value | | $ | 1,393,388,995 | | | $ | 2,161,253,827 | | | $ | 1,285,588,028 | |
| | | | |
Net assets consist of: | | | | | | | | | | | | |
Paid-in capital | | $ | 1,225,520,682 | | | $ | 1,710,119,053 | | | $ | 939,689,978 | |
Undistributed net investment income | | | 1,148,512 | | | | 3,073,927 | | | | — | |
Distributions in excess of net investment income | | | — | | | | — | | | | (752,157 | ) |
Net unrealized appreciation (depreciation) | | | 182,095,870 | | | | 408,353,723 | | | | 314,541,563 | |
Accumulated net realized gain (loss) | | | (15,376,069 | ) | | | 39,707,124 | | | | 32,108,644 | |
| | | | |
Net assets, at value | | $ | 1,393,388,995 | | | $ | 2,161,253,827 | | | $ | 1,285,588,028 | |
| | | | |
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 37 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL STATEMENTS
Statements of Assets and Liabilities (continued)
June 30, 2017 (unaudited)
| | | | | | | | | | | | |
| | | Franklin
Conservative
Allocation Fund | | | Franklin
Moderate
Allocation Fund | | | Franklin
Growth
Allocation Fund | |
| | | |
| Class A: | | | | | | | | | | | | |
Net assets, at value | | $ | 790,696,879 | | | $ | 1,387,917,452 | | | $ | 831,800,244 | |
| | | | |
Shares outstanding | | | 54,672,904 | | | | 87,617,490 | | | | 44,512,586 | |
| | | | |
Net asset value per sharea | | | $14.46 | | | | $15.84 | | | | $18.69 | |
| | | | |
Maximum offering price per share (net asset value per share ÷ 94.25%) | | | $15.34 | | | | $16.81 | | | | $19.83 | |
| | | | |
| | | |
| Class C: | | | | | | | | | | | | |
Net assets, at value | | $ | 440,472,161 | | | $ | 575,477,468 | | | $ | 304,574,104 | |
| | | | |
Shares outstanding | | | 31,062,599 | | | | 37,456,977 | | | | 16,795,805 | |
| | | | |
Net asset value and maximum offering price per sharea | | | $14.18 | | | | $15.36 | | | | $18.13 | |
| | | | |
| | | |
| Class R: | | | | | | | | | | | | |
Net assets, at value | | $ | 123,960,628 | | | $ | 143,370,269 | | | $ | 103,361,904 | |
| | | | |
Shares outstanding | | | 8,605,976 | | | | 9,089,418 | | | | 5,607,685 | |
| | | | |
Net asset value and maximum offering price per share | | | $14.40 | | | | $15.77 | | | | $18.43 | |
| | | | |
| | | |
| Class R6: | | | | | | | | | | | | |
Net assets, at value | | $ | 2,364,133 | | | $ | 4,370,845 | | | $ | 2,781,671 | |
| | | | |
Shares outstanding | | | 163,623 | | | | 275,484 | | | | 148,138 | |
| | | | |
Net asset value and maximum offering price per share | | | $14.45 | | | | $15.87 | | | | $18.78 | |
| | | | |
| | | |
| Advisor Class: | | | | | | | | | | | | |
Net assets, at value | | $ | 35,895,194 | | | $ | 50,117,793 | | | $ | 43,070,105 | |
| | | | |
Shares outstanding | | | 2,481,574 | | | | 3,157,152 | | | | 2,293,567 | |
| | | | |
Net asset value and maximum offering price per share | | | $14.46 | | | | $15.87 | | | | $18.78 | |
| | | | |
| | | | |
| | | |
| 38 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL STATEMENTS
Statements of Operations
for the six months ended June 30, 2017 (unaudited)
| | | | | | | | | | | | |
| | | Franklin
Conservative
Allocation Fund | | | Franklin
Moderate
Allocation Fund | | | Franklin
Growth
Allocation Fund | |
Investment income: | | | | | | | | | | | | |
Dividends: | | | | | | | | | | | | |
Controlled affiliates (Note 3f) | | $ | — | | | $ | 942,977 | | | $ | 8,521 | |
Non-controlled affiliates (Note 3f) | | | 10,088,516 | | | | 10,106,809 | | | | 3,772,500 | |
Unaffililated Exchange traded funds | | | 918,105 | | | | 1,382,857 | | | | 902,011 | |
| | | | |
Total investment income | | | 11,006,621 | | | | 12,432,643 | | | | 4,683,032 | |
| | | | |
Expenses: | | | | | | | | | | | | |
Asset allocation fees (Note 3a) | | | 1,762,591 | | | | 2,735,018 | | | | 1,614,070 | |
Distribution fees: (Note 3c) | | | | | | | | | | | | |
Class A | | | 996,238 | | | | 1,749,649 | | | | 1,033,985 | |
Class C | | | 2,267,756 | | | | 2,926,594 | | | | 1,541,300 | |
Class R | | | 311,345 | | | | 381,397 | | | | 275,322 | |
Transfer agent fees: (Note 3e) | | | | | | | | | | | | |
Class A | | | 432,168 | | | | 862,728 | | | | 639,699 | |
Class C | | | 246,695 | | | | 361,174 | | | | 238,727 | |
Class R | | | 67,629 | | | | 94,175 | | | | 85,363 | |
Class R6 | | | 194 | | | | 265 | | | | 215 | |
Advisor Class | | | 16,526 | | | | 27,100 | | | | 32,207 | |
Custodian fees (Note 4) | | | 525 | | | | 706 | | | | 425 | |
Reports to shareholders | | | 56,122 | | | | 96,311 | | | | 74,789 | |
Registration and filing fees | | | 63,479 | | | | 77,951 | | | | 57,382 | |
Professional fees | | | 19,538 | | | | 23,124 | | | | 18,853 | |
Trustees’ fees and expenses | | | 6,052 | | | | 9,220 | | | | 5,258 | |
Other | | | 13,533 | | | | 17,503 | | | | 13,084 | |
| | | | |
Total expenses | | | 6,260,391 | | | | 9,362,915 | | | | 5,630,679 | |
Expenses waived/paid by affiliates (Note 3f and 3g) | | | (7,076 | ) | | | (11,099 | ) | | | (201,528 | ) |
| | | | |
Net expenses | | | 6,253,315 | | | | 9,351,816 | | | | 5,429,151 | |
| | | | |
Net investment income (loss) | | | 4,753,306 | | | | 3,080,827 | | | | (746,119 | ) |
| | | | |
Realized and unrealized gains (losses): | | | | | | | | | | | | |
Net realized gain (loss) from: | | | | | | | | | | | | |
Sale of investments: | | | | | | | | | | | | |
Controlled affiliates (Note 3f) | | | (294,416 | ) | | | 3,662 | | | | 2,332 | |
Non-controlled affiliates (Note 3f) | | | 16,199,145 | | | | 46,602,410 | | | | 34,969,744 | |
Unaffiliated Exchange traded funds | | | 2,012,843 | | | | 1,999,031 | | | | 779,434 | |
| | | | |
Net realized gain (loss) | | | 17,917,572 | | | | 48,605,103 | | | | 35,751,510 | |
| | | | |
Net change in unrealized appreciation (depreciation) on investments | | | 56,714,283 | | | | 116,724,804 | | | | 90,782,411 | |
| | | | |
Net realized and unrealized gain (loss) | | | 74,631,855 | | | | 165,329,907 | | | | 126,533,921 | |
| | | | |
Net increase (decrease) in net assets resulting from operations | | $ | 79,385,161 | | | $ | 168,410,734 | | | $ | 125,787,802 | |
| | | | |
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 39 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
| | | | | | | | | | | | | | | | |
| | | Franklin Conservative Allocation Fund | | | Franklin Moderate Allocation Fund | |
| | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended
December 31, 2016 | | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended
December 31, 2016 | |
Increase (decrease) in net assets: | | | | | | | | | | | | | | | | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) | | $ | 4,753,306 | | | $ | 11,895,862 | | | $ | 3,080,827 | | | $ | 17,042,235 | |
Net realized gain (loss) | | | 17,917,572 | | | | (26,521,247 | ) | | | 48,605,103 | | | | 28,421,824 | |
Net change in unrealized appreciation (depreciation) | | | 56,714,283 | | | | 77,528,235 | | | | 116,724,804 | | | | 62,881,574 | |
| | | | |
Net increase (decrease) in net assets resulting from operations . | | | 79,385,161 | | | | 62,902,850 | | | | 168,410,734 | | | | 108,345,633 | |
| | | | |
Distributions to shareholders from: | | | | | | | | | | | | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds: | | | | | | | | | | | | | | | | |
Class A | | | (4,486,048 | ) | | | (9,117,348 | ) | | | (7,001,783 | ) | | | (11,651,361 | ) |
Class C | | | (1,010,271 | ) | | | (1,751,300 | ) | | | (3,024,133 | ) | | | (334,512 | ) |
Class R | | | (566,412 | ) | | | (1,067,714 | ) | | | (769,155 | ) | | | (838,073 | ) |
Class R6 | | | (16,773 | ) | | | (33,339 | ) | | | (20,824 | ) | | | (60,719 | ) |
Advisor Class | | | (237,754 | ) | | | (683,806 | ) | | | (215,422 | ) | | | (419,576 | ) |
Net realized gains: | | | | | | | | | | | | | | | | |
Class A | | | — | | | | (6,125,410 | ) | | | (11,997,354 | ) | | | (21,972,875 | ) |
Class C | | | — | | | | (3,686,002 | ) | | | (5,123,844 | ) | | | (9,651,391 | ) |
Class R | | | — | | | | (920,983 | ) | | | (1,267,170 | ) | | | (2,588,815 | ) |
Class R6 | | | — | | | | (16,730 | ) | | | (37,615 | ) | | | (85,228 | ) |
Advisor Class | | | — | | | | (598,184 | ) | | | (442,156 | ) | | | (742,391 | ) |
| | | | |
Total distributions to shareholders | | | (6,317,258 | ) | | | (24,000,816 | ) | | | (29,899,456 | ) | | | (48,344,941 | ) |
| | | | |
Capital share transactions: (Note 2) | | | | | | | | | | | | | | | | |
Class A | | | (59,724,002 | ) | | | (117,603,198 | ) | | | (118,899,641 | ) | | | (216,989,710 | ) |
Class C | | | (53,776,855 | ) | | | (78,239,119 | ) | | | (55,913,193 | ) | | | (112,586,337 | ) |
Class R | | | (6,477,052 | ) | | | (18,669,848 | ) | | | (24,589,871 | ) | | | (48,961,723 | ) |
Class R6 | | | 50,449 | | | | (140,699 | ) | | | (1,023,193 | ) | | | 200,603 | |
Advisor Class | | | 6,833,145 | | | | (57,027,314 | ) | | | 8,375,691 | | | | (15,232,178 | ) |
| | | | |
Total capital share transactions | | | (113,094,315 | ) | | | (271,680,178 | ) | | | (192,050,207 | ) | | | (393,569,345 | ) |
| | | | |
Net increase (decrease) in net assets | | | (40,026,412 | ) | | | (232,778,144 | ) | | | (53,538,929 | ) | | | (333,568,653 | ) |
Net assets: | | | | | | | | | | | | | | | | |
Beginning of period | | | 1,433,415,407 | | | | 1,666,193,551 | | | | 2,214,792,756 | | | | 2,548,361,409 | |
| | | | |
End of period | | $ | 1,393,388,995 | | | $ | 1,433,415,407 | | | $ | 2,161,253,827 | | | $ | 2,214,792,756 | |
| | | | |
Undistributed net investment income included in net assets: | | | | | | | | | | | | | | | | |
End of period | | $ | 1,148,512 | | | $ | 2,712,464 | | | $ | 3,073,927 | | | $ | 11,024,417 | |
| | | | |
| | | | |
| | | |
| 40 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
| | | | | | | | |
| | | Franklin Growth
Allocation Fund | |
| | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended
December 31, 2016 | |
Increase (decrease) in net assets: | | | | | | | | |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (746,119 | ) | | $ | 8,745,660 | |
Net realized gain (loss) | | | 35,751,510 | | | | 39,370,486 | |
Net change in unrealized appreciation (depreciation) | | | 90,782,411 | | | | 20,368,376 | |
| | | | |
Net increase (decrease) in net assets resulting from operations | | | 125,787,802 | | | | 68,484,522 | |
| | | | |
Distributions to shareholders from: | | | | | | | | |
Net investment income: | | | | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds: | | | | | | | | |
Class A | | | (4,161,034 | ) | | | (6,622,325 | ) |
Class C | | | (1,603,341 | ) | | | (199,946 | ) |
Class R | | | (575,865 | ) | | | (583,535 | ) |
Class R6 | | | (13,478 | ) | | | (33,831 | ) |
Advisor Class | | | (211,945 | ) | | | (409,994 | ) |
Net realized gains: | | | | | | | | |
Class A | | | (19,000,176 | ) | | | (16,777,167 | ) |
Class C | | | (7,156,361 | ) | | | (6,455,785 | ) |
Class R | | | (2,439,955 | ) | | | (2,416,571 | ) |
Class R6 | | | (63,008 | ) | | | (56,473 | ) |
Advisor Class | | | (976,644 | ) | | | (988,239 | ) |
| | | | |
Total distributions to shareholders | | | (36,201,807 | ) | | | (34,543,866 | ) |
| | | | |
Capital share transactions: (Note 2) | | | | | | | | |
Class A | | | (49,189,144 | ) | | | (87,336,666 | ) |
Class C | | | (24,704,669 | ) | | | (35,825,451 | ) |
Class R | | | (16,686,675 | ) | | | (37,642,928 | ) |
Class R6 | | | (242,956 | ) | | | 185,119 | |
Advisor Class | | | 950,740 | | | | (11,707,981 | ) |
| | | | |
Total capital share transactions | | | (89,872,704 | ) | | | (172,327,907 | ) |
| | | | |
Net increase (decrease) in net assets | | | (286,709 | ) | | | (138,387,251 | ) |
Net assets: | | | | | | | | |
Beginning of period | | | 1,285,874,737 | | | | 1,424,261,988 | |
| | | | |
End of period | | $ | 1,285,588,028 | | | $ | 1,285,874,737 | |
| | | | |
Undistributed net investment income included in net assets: | | | | | | | | |
End of period | | $ | — | | | $ | 6,559,625 | |
| | | | |
Distributions in excess of net investment income included in net assets: | | | | | | | | |
End of period | | $ | (752,157 | ) | | $ | — | |
| | | | |
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 41 | |
FRANKLIN FUND ALLOCATOR SERIES
Notes to Financial Statements (unaudited)
1. Organization and Significant Accounting Policies
Franklin Fund Allocator Series (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of twenty-four separate funds, three of which are included in this report (Funds) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Funds invest in mutual funds (Underlying Funds) and exchange traded funds (ETFs), including affiliated funds managed by Franklin Templeton (FT Underlying Funds). The Funds offer five classes of shares: Class A, Class C, Class R, Class R6, and Advisor Class. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees primarily due to differing arrangements for distribution and transfer agent fees.
The accounting policies of the Underlying Funds are outlined in their respective shareholder reports. A copy of the Underlying Funds’ shareholder reports, in which each fund invests, is available on the U.S. Securities and Exchange Commission (SEC) website at sec.gov or at the SEC’s Public Reference Room in Washington, D.C. The Underlying Funds’ shareholder reports are not covered by this report.
The following summarizes the Funds’ significant accounting policies.
a. Financial Instrument Valuation
The Funds’ investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Funds calculate the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Funds’ administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Funds to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.
Investments in the Underlying Funds are valued at their closing NAV each trading day. ETFs listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively.
b. Income Taxes
It is each Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. Each Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.
Each Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of June 30, 2017, each Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on each tax jurisdiction’s statute of limitation.
c. Security Transactions, Investment Income, Expenses and Distributions
Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income and realized gain distributions by Underlying Funds and ETFs are recorded on the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.
Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the Fund that incurred the expense.
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FRANKLIN FUND ALLOCATOR SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
The Funds indirectly bear their proportionate share of expenses from the Underlying Funds and ETFs. Since the Underlying Funds and ETFs have varied expense levels and the Funds may own different proportions of the Underlying Funds and ETFs at different times, the amount of expenses incurred indirectly by the Funds will vary.
Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.
d. Accounting Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
e. Guarantees and Indemnifications
Under the Trust’s organizational documents, its officers and trustees indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Funds, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.
2. Shares of Beneficial Interest
At June 30, 2017, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | Franklin Conservative
Allocation Fund | | | | | | Franklin Moderate
Allocation Fund | |
| | | Shares | | | Amount | | | | | | Shares | | | Amount | |
| | | | | |
| Class A Shares: | | | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 3,964,732 | | | $ | 56,522,766 | | | | | | | | 4,900,658 | | | $ | 76,285,007 | |
Shares issued in reinvestment of distributions | | | 303,241 | | | | 4,369,679 | | | | | | | | 1,182,580 | | | | 18,646,573 | |
Shares redeemed | | | (8,481,632 | ) | | | (120,616,447 | ) | | | | | | | (13,763,163 | ) | | | (213,831,221 | ) |
| | | | |
Net increase (decrease) | | | (4,213,659 | ) | | $ | (59,724,002 | ) | | | | | | | (7,679,925 | ) | | $ | (118,899,641 | ) |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 9,876,237 | | | $ | 132,182,107 | | | | | | | | 11,038,805 | | | $ | 159,601,771 | |
Shares issued in reinvestment of distributions | | | 1,112,500 | | | | 14,914,678 | | | | | | | | 2,296,983 | | | | 33,079,385 | |
Shares redeemed | | | (19,663,320 | ) | | | (264,699,983 | ) | | | | | | | (28,101,565 | ) | | | (409,670,866 | ) |
| | | | |
Net increase (decrease) | | | (8,674,583 | ) | | $ | (117,603,198 | ) | | | | | | | (14,765,777 | ) | | $ | (216,989,710 | ) |
| | | | |
| Class C Shares: | | | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 1,441,663 | | | $ | 20,068,591 | | | | | | | | 2,323,430 | | | $ | 35,128,907 | |
Shares issued in reinvestment of distributions | | | 69,478 | | | | 970,309 | | | | | | | | 520,254 | | | | 7,961,292 | |
Shares redeemed | | | (5,371,878 | ) | | | (74,815,755 | ) | | | | | | | (6,551,174 | ) | | | (99,003,392 | ) |
| | | | |
Net increase (decrease) | | | (3,860,737 | ) | | $ | (53,776,855 | ) | | | | | | | (3,707,490 | ) | | $ | (55,913,193 | ) |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 4,863,793 | | | $ | 63,561,659 | | | | | | | | 4,660,303 | | | $ | 65,455,983 | |
Shares issued in reinvestment of distributions | | | 398,830 | | | | 5,210,489 | | | | | | | | 702,978 | | | | 9,675,738 | |
Shares redeemed | | | (11,144,482 | ) | | | (147,011,267 | ) | | | | | | | (13,286,035 | ) | | | (187,718,058 | ) |
| | | | |
Net increase (decrease) | | | (5,881,859 | ) | | $ | (78,239,119 | ) | | | | | | | (7,922,754 | ) | | $ | (112,586,337 | ) |
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FRANKLIN FUND ALLOCATOR SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. Shares of Beneficial Interest (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Franklin Conservative
Allocation Fund | | | | | | Franklin Moderate
Allocation Fund | |
| | | Shares | | | Amount | | | | | | Shares | | | Amount | |
| | | | | |
| Class R Shares: | | | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 862,442 | | | $ | 12,230,314 | | | | | | | | 762,693 | | | $ | 11,831,287 | |
Shares issued in reinvestment of distributions | | | 38,183 | | | | 547,234 | | | | | | | | 127,471 | | | | 2,001,101 | |
Shares redeemed | | | (1,356,665 | ) | | | (19,254,600 | ) | | | | | | | (2,474,710 | ) | | | (38,422,259 | ) |
| | | | |
Net increase (decrease) | | | (456,040 | ) | | $ | (6,477,052 | ) | | | | | | | (1,584,546 | ) | | $ | (24,589,871 | ) |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 1,289,646 | | | $ | 17,236,221 | | | | | | | | 1,491,622 | | | $ | 21,589,915 | |
Shares issued in reinvestment of distributions | | | 144,387 | | | | 1,924,897 | | | | | | | | 235,070 | | | | 3,355,220 | |
Shares redeemed | | | (2,826,823 | ) | | | (37,830,966 | ) | | | | | | | (5,099,856 | ) | | | (73,906,858 | ) |
| | | | |
Net increase (decrease) | | | (1,392,790 | ) | | $ | (18,669,848 | ) | | | | | | | (3,373,164 | ) | | $ | (48,961,723 | ) |
| | | | |
| Class R6 Shares: | | | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 29,396 | | | $ | 418,012 | | | | | | | | 12,290 | | | $ | 191,547 | |
Shares issued in reinvestment of distributions | | | 1,163 | | | | 16,773 | | | | | | | | 3,700 | | | | 58,439 | |
Shares redeemed | | | (27,046 | ) | | | (384,336 | ) | | | | | | | (84,053 | ) | | | (1,273,179 | ) |
| | | | |
Net increase (decrease) | | | 3,513 | | | $ | 50,449 | | | | | | | | (68,063 | ) | | $ | (1,023,193 | ) |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 57,015 | | | $ | 760,599 | | | | | | | | 144,017 | | | $ | 2,100,685 | |
Shares issued in reinvestment of distributions | | | 3,733 | | | | 50,069 | | | | | | | | 10,086 | | | | 145,947 | |
Shares redeemed | | | (71,025 | ) | | | (951,367 | ) | | | | | | | (140,342 | ) | | | (2,046,029 | ) |
| | | | |
Net increase (decrease) | | | (10,277 | ) | | $ | (140,699 | ) | | | | | | | 13,761 | | | $ | 200,603 | |
| | | | |
| Advisor Class Shares: | | | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 845,894 | | | $ | 12,116,599 | | | | | | | | 1,147,307 | | | $ | 17,960,617 | |
Shares issued in reinvestment of distributions | | | 13,999 | | | | 202,294 | | | | | | | | 37,830 | | | | 598,094 | |
Shares redeemed | | | (385,266 | ) | | | (5,485,748 | ) | | | | | | | (652,992 | ) | | | (10,183,020 | ) |
| | | | |
Net increase (decrease) | | | 474,627 | | | $ | 6,833,145 | | | | | | | | 532,145 | | | $ | 8,375,691 | |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 1,191,790 | | | $ | 16,036,547 | | | | | | | | 1,189,361 | | | $ | 17,404,912 | |
Shares issued in reinvestment of distributions | | | 92,307 | | | | 1,228,277 | | | | | | | | 74,978 | | | | 1,082,144 | |
Shares redeemed | | | (5,417,398 | ) | | | (74,292,138 | ) | | | | | | | (2,292,721 | ) | | | (33,719,234 | ) |
| | | | |
Net increase (decrease) | | | (4,133,301 | ) | | $ | (57,027,314 | ) | | | | | | | (1,028,382 | ) | | $ | (15,232,178 | ) |
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FRANKLIN FUND ALLOCATOR SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
| | | | | | | | |
| | | Franklin Growth
Allocation Fund | |
| | | Shares | | | Amount | |
| | |
| Class A Shares: | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | |
Shares sold | | | 3,158,297 | | | $ | 58,345,813 | |
Shares issued in reinvestment of distributions | | | 1,219,258 | | | | 22,829,680 | |
Shares redeemed | | | (7,078,111 | ) | | | (130,364,637 | ) |
| | | | |
Net increase (decrease) | | | (2,700,556 | ) | | $ | (49,189,144 | ) |
| | | | |
Year ended December 31, 2016 | | | | | | | | |
Shares sold | | | 19,985,532 | | | $ | 338,147,125 | |
Shares issued in reinvestment of distributions | | | 1,380,599 | | | | 23,061,353 | |
Shares redeemed | | | (26,369,114 | ) | | | (448,545,144 | ) |
| | | | |
Net increase (decrease) | | | (5,002,983 | ) | | $ | (87,336,666 | ) |
| | | | |
| Class C Shares: | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | |
Shares sold | | | 1,440,414 | | | $ | 25,835,499 | |
Shares issued in reinvestment of distributions | | | 475,249 | | | | 8,637,558 | |
Shares redeemed | | | (3,292,129 | ) | | | (59,177,726 | ) |
| | | | |
Net increase (decrease) | | | (1,376,466 | ) | | $ | (24,704,669 | ) |
| | | | |
Year ended December 31, 2016 | | | | | | | | |
Shares sold | | | 2,640,421 | | | $ | 43,293,123 | |
Shares issued in reinvestment of distributions | | | 405,959 | | | | 6,488,468 | |
Shares redeemed | | | (5,160,971 | ) | | | (85,607,042 | ) |
| | | | |
Net increase (decrease) | | | (2,114,591 | ) | | $ | (35,825,451 | ) |
| | | | |
| Class R Shares: | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | |
Shares sold | | | 300,530 | | | $ | 5,482,090 | |
Shares issued in reinvestment of distributions | | | 160,415 | | | | 2,962,241 | |
Shares redeemed | | | (1,373,801 | ) | | | (25,131,006 | ) |
| | | | |
Net increase (decrease) | | | (912,856 | ) | | $ | (16,686,675 | ) |
| | | | |
Year ended December 31, 2016 | | | | | | | | |
Shares sold | | | 811,617 | | | $ | 13,599,811 | |
Shares issued in reinvestment of distributions | | | 178,979 | | | | 2,934,501 | |
Shares redeemed | | | (3,244,832 | ) | | | (54,177,240 | ) |
| | | | |
Net increase (decrease) | | | (2,254,236 | ) | | $ | (37,642,928 | ) |
| | | | |
| | |
| Class R6 Shares: | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | |
Shares sold | | | 10,263 | | | $ | 190,199 | |
Shares issued in reinvestment of distributions | | | 4,066 | | | | 76,485 | |
Shares redeemed | | | (27,676 | ) | | | (509,640 | ) |
| | | | |
Net increase (decrease) | | | (13,347 | ) | | $ | (242,956 | ) |
| | | | |
Year ended December 31, 2016 | | | | | | | | |
Shares sold | | | 105,302 | | | $ | 1,799,872 | |
Shares issued in reinvestment of distributions | | | 5,354 | | | | 90,304 | |
Shares redeemed | | | (98,611 | ) | | | (1,705,057 | ) |
| | | | |
Net increase (decrease) | | | 12,045 | | | $ | 185,119 | |
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FRANKLIN FUND ALLOCATOR SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. Shares of Beneficial Interest (continued)
| | | | | | | | |
| | | Franklin Growth
Allocation Fund | |
| | | Shares | | | Amount | |
| | |
| Advisor Class Shares: | | | | | | | | |
| Six Months ended June 30, 2017 | | | | | | | | |
| Shares sold | | | 453,035 | | | $ | 8,373,276 | |
| Shares issued in reinvestment of distributions | | | 55,687 | | | | 1,047,600 | |
| Shares redeemed | | | (457,141 | ) | | | (8,470,136 | ) |
| | | | |
| Net increase (decrease) | | | 51,581 | | | $ | 950,740 | |
| | | | |
| Year ended December 31, 2016 | | | | | | | | |
| Shares sold | | | 941,928 | | | $ | 16,235,915 | |
| Shares issued in reinvestment of distributions | | | 77,488 | | | | 1,299,870 | |
| Shares redeemed | | | (1,686,137 | ) | | | (29,243,766 | ) |
| | | | |
| Net increase (decrease) | | | (666,721 | ) | | $ | (11,707,981 | ) |
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3. Transactions with Affiliates
Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Funds are also officers and/or directors/trustees of certain of the FT Underlying Funds and of the following subsidiaries:
| | |
| Subsidiary | | Affiliation |
Franklin Advisers, Inc. (Advisers) | | Investment manager |
Franklin Templeton Services, LLC (FT Services) | | Administrative manager |
Franklin Templeton Distributors, Inc. (Distributors) | | Principal underwriter |
Franklin Templeton Investor Services, LLC (Investor Services) | | Transfer agent |
a. Asset Allocation Fees
The Funds pay an asset allocation fee to Advisers of 0.25% per year of the average daily net assets of each of the Funds for investment advisory services, consisting principally of determining the allocation of assets of the Funds among the Underlying Funds and ETFs.
b. Administrative Fees
Under an agreement with Advisers, FT Services provides administrative services to the Funds and is not paid by the Funds for the services.
c. Distribution Fees
The Board has adopted distribution plans for each share class, with the exception of Class R6 and Advisor Class shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Funds’ Class A reimbursement distribution plans, the Funds reimburse Distributors for costs incurred in connection with the servicing, sale and distribution of each Fund’s shares up to the maximum annual plan rate. Under the Class A reimbursement distribution plans, costs exceeding the maximum for the current plan year cannot be reimbursed in subsequent periods. In addition, under the Funds’ Class C and R compensation distribution plans, the Funds pay Distributors for
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FRANKLIN FUND ALLOCATOR SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
costs incurred in connection with the servicing, sale and distribution of each Fund’s shares up to the maximum annual plan rate for each class. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31 for each Fund.
The maximum annual plan rates, based on the average daily net assets, for each class, are as follows:
| | | | |
Class A | | | 0.25% | |
Class C | | | 1.00% | |
Class R | | | 0.50% | |
d. Sales Charges/Underwriting Agreements
Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Funds. These charges are deducted from the proceeds of sales of fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Funds of the following commission transactions related to the sales and redemptions of the Funds’ shares for the period:
| | | | | | | | | | | | |
| | | Franklin
Conservative
Allocation Fund | | | Franklin
Moderate
Allocation Fund | | | Franklin
Growth
Allocation Fund | |
Sales charges retained net of commissions paid to unaffiliated brokers/dealers | | $ | 126,198 | | | $ | 214,732 | | | $ | 194,908 | |
CDSC retained | | $ | 20,580 | | | $ | 25,615 | | | $ | 27,031 | |
e. Transfer Agent Fees
Each class of shares, except for Class R6, pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations and reimburses Investor Services for out of pocket expenses incurred, including shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.
For the period ended June 30, 2017, the Funds paid transfer agent fees as noted in the Statements of Operations of which the following amounts were retained by Investor Services:
| | | | | | | | | | | | |
| | | Franklin
Conservative
Allocation Fund | | | Franklin
Moderate
Allocation Fund | | | Franklin
Growth
Allocation Fund | |
Transfer agent fees | | $ | 299,402 | | | $ | 533,622 | | | $ | 450,563 | |
f. Investments in FT Underlying Funds
The Funds invest in FT Underlying Funds which are managed by Advisers (or by an affiliate of Advisers). The Funds do not invest in FT Underlying Funds for the purpose of exercising a controlling influence over the management or policies. Asset allocation fees paid by the Funds are waived on assets invested in Institutional Fiduciary Trust Money Market Portfolio (Sweep Money Fund), as noted in the Statements of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund. Prior to January 1, 2014, the waiver was accounted for as a reduction to asset allocation fees.
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FRANKLIN FUND ALLOCATOR SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. Transactions with Affiliates (continued)
f. Investments in FT Underlying Funds (continued)
Investments in FT Underlying Funds for the period ended June 30, 2017, were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FT Underlying Funds | | Number of
Shares Held
at Beginning
of Period | | | Gross
Additions | | | Gross
Reductions | | | Number of
Shares
Held at End
of Period | | | Value
at End
of Period | | | Investment
Income | | | Realized
Gain (Loss) | | | % of
FT Underlying
Fund Shares
Outstanding
Held at End
of Period | |
| Franklin Conservative Allocation Fund | | | | | | | | | | | | | | | | | |
| Controlled Affiliates | | | | | | | | | | | | | | | | | |
Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 5,230,884 | | | | — | | | | (110,076 | ) | | | 5,120,808 | | | $ | 31,800,220 | | | $ | — | | | $ | (294,416 | ) | | | 25.0% | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| Non-Controlled Affiliates | | | | | | | | | | | | | | | | | |
Franklin DynaTech Fund, Class R6 | | | 1,322,480 | | | | 218,662 | | | | (153,838 | ) | | | 1,387,304 | | | $ | 84,084,463 | | | $ | — | | | $ | 562,630 | | | | 2.2% | |
Franklin Floating Rate Daily Access Fund, Class R6 | | | — | | | | 4,910,066 | | | | (146,771 | ) | | | 4,763,295 | | | | 42,202,797 | | | | 451,240 | | | | (2,967 | ) | | | 1.1% | |
Franklin Growth Fund, Class R6 | | | 1,878,039 | | | | 10,733 | | | | (433,769 | ) | | | 1,455,003 | | | | 126,919,911 | | | | — | | | | 12,415,680 | | | | 0.9% | |
Franklin International Small Cap Growth Fund, Class R6 | | | 2,996,940 | | | | 17,366 | | | | (315,691 | ) | | | 2,698,615 | | | | 53,891,340 | | | | — | | | | 227,824 | | | | 3.9% | |
Franklin K2 Alternative Strategies Fund, Class R6 | | | 5,855,419 | | | | — | | | | (123,439 | ) | | | 5,731,980 | | | | 64,255,495 | | | | — | | | | 1,655 | | | | 5.8% | |
Franklin LibertyQ Emerging Markets ETF | | | 1,238,500 | | | | 314,100 | | | | (159,600 | ) | | | 1,393,000 | | | | 41,817,860 | | | | 405,767 | | | | 207,131 | | | | 12.9% | |
Franklin LibertyQ U.S. Equity ETF | | | — | | | | 728,900 | | | | (16,800 | ) | | | 712,100 | | | | 18,357,938 | | | | 4,855 | | | | 1,867 | | | | 16.0% | |
Franklin Low Duration Total Return Fund, Class R6 | | | 21,122,177 | | | | 4,300,041 | | | | (1,605,059 | ) | | | 23,817,159 | | | | 235,789,874 | | | | 2,178,292 | | | | (469,265 | ) | | | 9.0% | |
Franklin Mutual European Fund, Class R6 | | | 2,492,970 | | | | 484,725 | | | | (280,272 | ) | | | 2,697,423 | | | | 55,512,955 | | | | — | | | | (90,997 | ) | | | 2.1% | |
Franklin Rising Dividends Fund, Class R6 | | | 1,745,373 | | | | 14,815 | | | | (581,000 | ) | | | 1,179,188 | | | | 66,518,016 | | | | 255,795 | | | | 10,184,441 | | | | 0.4% | |
Franklin Small Cap Growth Fund, Class R6 | | | 451,035 | | | | 2,703 | | | | (47,392 | ) | | | 406,346 | | | | 8,703,922 | | | | — | | | | 61,649 | | | | 0.3% | |
Franklin Strategic Income Fund, Class R6 | | | 18,464,604 | | | | 203,818 | | | | (5,646,091 | ) | | | 13,022,331 | | | | 128,269,955 | | | | 1,534,387 | | | | (3,622,705 | ) | | | 1.9% | |
Franklin U.S. Government Securities Fund, Class R6 | | | 33,205,449 | | | | 519,436 | | | | (9,660,592 | ) | | | 24,064,293 | | | | 147,995,404 | | | | 2,673,182 | | | | (2,904,417 | ) | | | 2.5% | |
Franklin Utilities Fund, Class R6 | | | 1,622,554 | | | | 30,324 | | | | (172,032 | ) | | | 1,480,846 | | | | 28,047,224 | | | | 396,915 | | | | 742,816 | | | | 0.4% | |
Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 6,351,087 | | | | 112,768,116 | | | | (116,585,982 | ) | | | 2,533,221 | | | | 2,533,221 | | | | 8,575 | | | | — | | | | — | a |
Templeton Foreign Fund, Class R6 | | | 6,554,098 | | | | 38,308 | | | | (690,402 | ) | | | 5,902,004 | | | | 45,150,333 | | | | — | | | | 593,784 | | | | 0.6% | |
Templeton Frontier Markets Fund, Class R6 | | | 769,014 | | | | — | | | | (769,014 | ) | | | — | | | | — | b | | | — | | | | (1,343,170 | ) | | | — | |
Templeton Global Total Return Fund, Class R6 | | | 7,785,702 | | | | 3,992,979 | | | | (727,664 | ) | | | 11,051,017 | | | | 136,038,021 | | | | 2,179,508 | | | | (366,811 | ) | | | 2.4% | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Non-Controlled Affiliates | | | $ | 1,286,088,729 | | | $ | 10,088,516 | | | $ | 16,199,145 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | $ | 1,317,888,949 | | | $ | 10,088,516 | | | $ | 15,904,729 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| Franklin Moderate Allocation Fund | |
| Controlled Affiliates | |
Franklin LibertyQ Emerging Markets ETF | | | 2,781,600 | | | | 797,900 | | | | (373,800 | ) | | | 3,205,700 | | | $ | 96,235,114 | | | $ | 931,575 | | | $ | 470,583 | | | | 29.7% | |
Franklin LibertyQ U.S. Equity ETF | | | — | | | | 1,718,000 | | | | (41,600 | ) | | | 1,676,400 | | | | 43,217,592 | | | | 11,402 | | | | 5,559 | | | | 37.7% | |
Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 8,105,013 | | | | — | | | | (116,916 | ) | | | 7,988,097 | | | | 49,606,085 | | | | — | | | | (472,480 | ) | | | 39.1% | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Controlled Affiliates | | | $ | 189,058,791 | | | $ | 942,977 | | | $ | 3,662 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| Non-Controlled Affiliates | |
Franklin DynaTech Fund, Class R6 | | | 2,850,304 | | | | 488,127 | | | | (345,395 | ) | | | 2,993,036 | | | $ | 181,407,912 | | | $ | — | | | $ | 1,145,662 | | | | 4.7% | |
Franklin Floating Rate Daily Access Fund, Class R6 | | | — | | | | 4,544,443 | | | | (100,531 | ) | | | 4,443,912 | | | | 39,373,056 | | | | 420,053 | | | | (2,011 | ) | | | 1.0% | |
Franklin Growth Fund, Class R6 | | | 4,467,176 | | | | 6,726 | | | | (1,042,308 | ) | | | 3,431,594 | | | | 299,337,918 | | | | — | | | | 29,474,768 | | | | 2.2% | |
| | | | |
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FRANKLIN FUND ALLOCATOR SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FT Underlying Funds | | Number
of Shares
Held at
Beginning
of Period | | | Gross
Additions | | | Gross
Reductions | | | Number of
Shares Held
at End
of Period | | | Value
at End
of Period | | | Investment
Income | | | Realized
Gain (Loss) | | | % of
FT Underlying
Fund Shares
Outstanding
Held at End
of Period | |
| Franklin Moderate Allocation Fund (continued) | |
| Non-Controlled Affiliates (continued) | |
Franklin International Small Cap Growth Fund, Class R6 | | | 7,274,151 | | | | 11,115 | | | | (785,293 | ) | | | 6,499,973 | | | $ | 129,804,469 | | | $ | — | | | $ | 528,908 | | | | 9.3% | |
Franklin K2 Alternative Strategies Fund, Class R6 | | | 9,060,708 | | | | — | | | | (131,611 | ) | | | 8,929,097 | | | | 100,095,173 | | | | — | | | | (4,637 | ) | | | 9.0% | |
Franklin Low Duration Total Return Fund, Class R6 | | | 21,415,937 | | | | 3,522,575 | | | | (1,794,795 | ) | | | 23,143,717 | | | | 229,122,802 | | | | 2,156,451 | | | | (526,035 | ) | | | 8.7% | |
Franklin Mutual European Fund, Class R6 | | | 5,897,464 | | | | 1,081,632 | | | | (668,720 | ) | | | 6,310,376 | | | | 129,867,538 | | | | — | | | | (393,208 | ) | | | 4.9% | |
Franklin Rising Dividends Fund, Class R6 | | | 4,023,486 | | | | 16,881 | | | | (1,334,901 | ) | | | 2,705,466 | | | | 152,615,315 | | | | 585,797 | | | | 22,870,443 | | | | 0.8% | |
Franklin Small Cap Growth Fund, Class R6 | | | 1,113,321 | | | | 1,822 | | | | (120,001 | ) | | | 995,142 | | | | 21,315,948 | | | | — | | | | 158,508 | | | | 0.8% | |
Franklin Strategic Income Fund, Class R6 | | | 17,639,031 | | | | 147,646 | | | | (5,480,288 | ) | | | 12,306,389 | | | | 121,217,932 | | | | 1,448,753 | | | | (3,528,211 | ) | | | 1.8% | |
Franklin U.S. Government Securities Fund, Class R6 | | | 31,405,709 | | | | 404,103 | | | | (9,298,112 | ) | | | 22,511,700 | | | | 138,446,956 | | | | 2,501,066 | | | | (2,413,516 | ) | | | 2.4% | |
Franklin Utilities Fund, Class R6 | | | 3,933,350 | | | | 56,416 | | | | (427,701 | ) | | | 3,562,065 | | | | 67,465,523 | | | | 959,978 | | | | 2,074,402 | | | | 1.1% | |
Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 10,056,485 | | | | 221,073,934 | | | | (226,206,470 | ) | | | 4,923,949 | | | | 4,923,949 | | | | 13,219 | | | | — | | | | —a | |
Templeton Foreign Fund, Class R6 | | | 15,425,155 | | | | 23,775 | | | | (1,667,007 | ) | | | 13,781,923 | | | | 105,431,710 | | | | — | | | | 1,319,128 | | | | 1.4% | |
Templeton Frontier Markets Fund, Class R6 | | | 2,032,287 | | | | — | | | | (2,032,287 | ) | | | — | | | | — | b | | | — | | | | (4,132,104 | ) | | | — | |
Templeton Global Total Return Fund, Class R6 | | | 7,326,265 | | | | 3,662,233 | | | | (730,637 | ) | | | 10,257,861 | | | | 126,274,263 | | | | 2,021,492 | | | | 30,313 | | | | 2.2% | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Non-Controlled Affiliates | | | $ | 1,846,700,464 | | | $ | 10,106,809 | | | $ | 46,602,410 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | $ | 2,035,759,255 | | | $ | 11,049,786 | | | $ | 46,606,072 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Franklin Growth Allocation Fund | | | | | | | | | | | | | | | | | | | | | | | | | |
| Controlled Affiliates | | | | | | | | | | | | | | | | | | | | | | | | | |
Franklin LibertyQ U.S. Equity ETF | | | — | | | | 1,276,500 | | | | (22,800 | ) | | | 1,253,700 | | | $ | 32,320,386 | | | $ | 8,521 | | | $ | 2,332 | | | | 28.2% | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Non-Controlled Affiliates | | | | | | | | | | | | | | | | | | | | | | | | | |
Franklin DynaTech Fund, Class R6 | | | 2,234,676 | | | | 376,764 | | | | (227,001 | ) | | | 2,384,439 | | | $ | 144,520,840 | | | $ | — | | | $ | 690,573 | | | | 3.7% | |
Franklin Floating Rate Daily Access Fund, Class R6 | | | — | | | | 955,868 | | | | (24,417 | ) | | | 931,451 | | | | 8,252,656 | | | | 88,204 | | | | (489 | ) | | | 0.2% | |
Franklin Growth Fund, Class R6 | | | 3,289,099 | | | | — | | | | (720,019 | ) | | | 2,569,080 | | | | 224,100,806 | | | | — | | | | 20,145,127 | | | | 1.7% | |
Franklin International Small Cap Growth Fund, Class R6 | | | 5,945,325 | | | | — | | | | (536,788 | ) | | | 5,408,537 | | | | 108,008,493 | | | | — | | | | 257,401 | | | | 7.8% | |
Franklin K2 Alternative Strategies Fund, Class R6 | | | 5,290,255 | | | | 88,887 | | | | (46,317 | ) | | | 5,332,825 | | | | 59,780,968 | | | | — | | | | 2,031 | | | | 5.4% | |
Franklin LibertyQ Emerging Markets ETF | | | 2,181,500 | | | | 722,800 | | | | (253,500 | ) | | | 2,650,800 | | | | 79,577,016 | | | | 769,823 | | | | 312,138 | | | | 24.5% | |
Franklin Low Duration Total Return Fund, Class R6 | | | 4,800,161 | | | | 845,280 | | | | (651,382 | ) | | | 4,994,059 | | | | 49,441,181 | | | | 465,134 | | | | (192,375 | ) | | | 1.9% | |
Franklin Mutual European Fund, Class R6 | | | 4,585,247 | | | | 839,670 | | | | (436,151 | ) | | | 4,988,766 | | | | 102,668,801 | | | | — | | | | (310,275 | ) | | | 3.9% | |
Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 4,669,018 | | | | 78,675 | | | | (40,716 | ) | | | 4,706,977 | | | | 29,230,327 | | | | — | | | | (172,026 | ) | | | 23.0% | |
Franklin Rising Dividends Fund, Class R6 | | | 3,098,631 | | | | 8,337 | | | | (985,537 | ) | | | 2,121,431 | | | | 119,669,903 | | | | 455,539 | | | | 16,607,766 | | | | 0.7% | |
Franklin Small Cap Growth Fund, Class R6 | | | 805,297 | | | | — | | | | (71,817 | ) | | | 733,480 | | | | 15,711,143 | | | | — | | | | 95,523 | | | | 0.6% | |
Franklin Strategic Income Fund, Class R6 | | | 3,881,188 | | | | 30,989 | | | | (1,352,438 | ) | | | 2,559,739 | | | | 25,213,434 | | | | 304,044 | | | | (275,014 | ) | | | 0.4% | |
Franklin U.S. Government Securities Fund, Class R6 | | | 6,947,140 | | | | 85,784 | | | | (2,303,397 | ) | | | 4,729,527 | | | | 29,086,592 | | | | 530,944 | | | | (396,119 | ) | | | 0.5% | |
Franklin Utilities Fund, Class R6 | | | 2,962,629 | | | | 38,315 | | | | (269,215 | ) | | | 2,731,729 | | | | 51,738,957 | | | | 729,787 | | | | 1,153,520 | | | | 0.8% | |
Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 6,060,504 | | | | 148,701,202 | | | | (152,247,673 | ) | | | 2,514,033 | | | | 2,514,033 | | | | 8,547 | | | | — | | | | — | a |
Templeton Foreign Fund, Class R6 | | | 12,583,040 | | | | — | | | | (1,136,907 | ) | | | 11,446,133 | | | | 87,562,919 | | | | — | | | | 707,683 | | | | 1.2% | |
Templeton Frontier Markets Fund, Class R6 | | | 1,841,002 | | | | — | | | | (1,841,002 | ) | | | — | | | | — | b | | | — | | | | (3,753,977 | ) | | | — | |
| | | | | | |
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| franklintempleton.com | | Semiannual Report | | | 49 | |
FRANKLIN FUND ALLOCATOR SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. Transactions with Affiliates (continued)
f. Investments in FT Underlying Funds (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FT Underlying Funds | | Number of
Shares Held
at Beginning
of Period | | | Gross
Additions | | | Gross
Reductions | | | Number of
Shares
Held at End
of Period | | | Value
at End
of Period | | | Investment
Income | | | Realized
Gain (Loss) | | | % of
FT Underlying
Fund Shares
Outstanding
Held at End
of Period | |
| Franklin Growth Allocation Fund (continued) | |
| Non-Controlled Affiliates (continued) | |
Templeton Global Total Return Fund, Class R6 | | | 1,604,547 | | | | 758,542 | | | | (244,072 | ) | | | 2,119,017 | | | $ | 26,085,100 | | | $ | 420,478 | | | $ | 98,257 | | | | 0.5% | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Non-Controlled Affiliates | | | | | | | $ | 1,163,163,169 | | | $ | 3,772,500 | | | $ | 34,969,744 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | $ | 1,195,483,555 | | | $ | 3,781,021 | | | $ | 34,972,076 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
aRounds to less than 0.1%
bAs of June 30, 2017, no longer held by the fund.
g. Waiver and Expense Reimbursements
Advisers and Investor Services have contractually agreed in advance to waive or limit their respective fees and to assume as their own expense certain expenses otherwise payable by the Funds so that the expenses (excluding distribution fees, and acquired fund fees and expenses) for each class of the Funds do not exceed the following based on the average net assets of each class (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until April 30, 2018. Total expenses waived or paid are not subject to recapture subsequent to the Funds’ fiscal year end.
| | | | | | | | | | | | |
| | | Franklin
Conservative
Fund | | | Franklin
Moderate
Allocation Fund | | | Franklin
Growth
Allocation Fund | |
Class A, Class C, Class R & Advisor Class | | | 0.40% | | | | 0.40% | | | | 0.40% | |
Class R6 | | | 0.28% | | | | 0.28% | | | | 0.25% | |
4. Expense Offset Arrangement
The Funds have entered into an arrangement with their custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Funds’ custodian expenses. During the period ended June 30, 2017, there were no credits earned.
5. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains, if any. At December 31, 2016, the capital loss carryforwards were as follows:
| | | | |
| | | Franklin
Conservative
Allocation Fund | |
Capital loss carryforwards: | | | | |
Short term | | | 5,477,789 | |
Long term | | | 18,100,827 | |
| | | | |
Total capital loss carryforwards | | | 23,578,616 | |
| | | | |
| | | | |
| | | |
| 50 | | Semiannual Report | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
At June 30, 2017, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
| | | | | | | | | | | | |
| | | Franklin
Conservative
Allocation Fund | | | Franklin
Moderate
Allocation Fund | | | Franklin
Growth
Allocation Fund | |
Cost of investments | | | $1,225,373,993 | | | | $1,770,787,678 | | | | $979,398,259 | |
| | | | |
Unrealized appreciation | | | $196,487,729 | | | | $428,633,247 | | | | $321,775,287 | |
Unrealized depreciation | | | (24,106,890 | ) | | | (29,340,740 | ) | | | (10,953,772 | ) |
| | | | |
Net unrealized appreciation (depreciation) | | | $172,380,839 | | | | $399,292,507 | | | | $310,821,515 | |
| | | | |
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of short term capital gains distributions from Underlying Funds and ETFs and wash sales.
6. Investment Transactions
Purchases and sales of Underlying Funds and ETFs (excluding short term securities) for the period ended June 30, 2017, were as follows:
| | | | | | | | | | | | |
| | | Franklin
Conservative
Allocation Fund | | | Franklin
Moderate
Allocation Fund | | | Franklin
Growth
Allocation Fund | |
Purchases | | | $195,526,434 | | | | $259,790,069 | | | | $138,499,530 | |
Sales | | | $315,889,003 | | | | $481,750,756 | | | | $264,839,170 | |
7. Credit Facility
The Funds, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matures on February 9, 2018. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.
Under the terms of the Global Credit Facility, the Funds shall, in addition to interest charged on any borrowings made by the Funds and other costs incurred by the Funds, pay their share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon their relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statements of Operations. During the period ended June 30, 2017, the Funds did not use the Global Credit Facility.
8. Fair Value Measurements
The Funds follow a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Funds’ own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds’ financial instruments and are summarized in the following fair value hierarchy:
| | • | | Level 1 – quoted prices in active markets for identical financial instruments |
| | • | | Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.) |
| | | | | | |
| | | |
| franklintempleton.com | | Semiannual Report | | | 51 | |
FRANKLIN FUND ALLOCATOR SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
8. Fair Value Measurements (continued)
| | • | | Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of financial instruments) |
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
For movements between the levels within the fair value hierarchy, the Funds have adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.
At June 30, 2017, all of the Funds’ investments in financial instruments carried at fair value were valued using Level 1 inputs. For detailed categories, see the accompanying Statements of Investments
9. Investment Company Reporting Modernization
In October 2016, the U.S. Securities and Exchange Commission adopted new rules and amended existing rules (together, final rules) intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosures about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017. Management has reviewed the requirements and believes the adoption of the amendments to Regulation S-X will not have a material impact on the Funds’ financial statements and related disclosures.
10. Subsequent Events
The Funds have evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.
Abbreviations
| | | | | | | | | | |
| Selected Portfolio | | | | | | | | |
| ETF | | Exchange Traded Fund | | | | | | | | |
| SPDR | | S&P Depositary Receipt | | | | | | | | |
| | | | |
| | | |
| 52 | | Semiannual Report | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Shareholder Information
Board Approval of Investment Management Agreements
FRANKLIN FUND ALLOCATOR SERIES
Franklin Moderate Allocation Fund
Franklin Conservative Allocation Fund
Franklin Growth Allocation Fund
(each a Fund)
At an in-person meeting held on February 28, 2017 (Meeting), the Board of Trustees (Board) of Franklin Fund Allocator Series, including a majority of the trustees who are not “interested persons” as defined in the Investment Company Act of 1940 (Independent Trustees), reviewed and approved the continuance of the investment management agreement between Franklin Advisers, Inc. (Manager) and each Fund (each a Management Agreement) for an additional one-year period. The Independent Trustees received advice from and met separately with Independent Trustee counsel in considering whether to approve the continuation of each Management Agreement. Although the Management Agreements for the Funds were considered at the same Board meeting, the Board considered the information provided to it about the Funds together and with respect to each Fund separately as the Board deemed appropriate.
In considering the continuation of each Management Agreement, the Board reviewed and considered information provided by the Manager at the Meeting and throughout the year at meetings of the Board and its committees. The Board also reviewed and considered information provided in response to a detailed set of requests for information submitted to the Manager by Independent Trustee counsel on behalf of the Independent Trustees in connection with the annual contract renewal process. In addition, prior to the Meeting, the Independent Trustees held a telephonic contract renewal meeting at which the Independent Trustees conferred amongst themselves and Independent Trustee counsel about contract renewal matters. The Board reviewed and considered all of the factors it deemed relevant in approving the continuance of each Management Agreement, including, but not limited to: (i) the nature, extent, and quality of the services provided by the Manager; (ii) the investment performance of each Fund; (iii) the costs of the services provided and profits realized by the Manager and its affiliates from the relationship with each Fund; (iv) the extent to which economies of scale are realized as each Fund grows; and (v) whether fee levels reflect these economies of scale for the benefit of Fund investors.
In approving the continuance of each Management Agreement, the Board, including a majority of the Independent Trustees, determined that the existing management fees are fair and reasonable and that the continuance of such Management Agreement is in the interests of the applicable Fund and its shareholders. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s determination.
Nature, Extent and Quality of Services
The Board reviewed and considered information regarding the nature, extent and quality of investment management services provided by the Manager and its affiliates to the Funds and their shareholders. This information included, among other things, the qualifications, background and experience of the senior management and investment personnel of the Manager; the structure of investment personnel compensation; oversight of third-party service providers; investment performance reports and related financial information for each Fund; reports on expenses, shareholder services, marketing support payments made to financial intermediaries and third party servicing arrangements; legal and compliance matters; risk controls; pricing and other services provided by the Manager and its affiliates; and management fees charged by the Manager and its affiliates to U.S. funds and other accounts, including management’s explanation of differences among accounts where relevant. The Board noted management’s continual efforts and expenditures in establishing effective business continuity plans and developing strategies to address areas of heightened concern in the mutual fund industry, such as cybersecurity, derivatives and liquidity risk management.
The Board also reviewed and considered the benefits provided to Fund shareholders of investing in a fund that is part of the Franklin Templeton family of funds. The Board noted the financial position of Franklin Resources, Inc. (FRI), the Manager’s parent, and its commitment to the mutual fund business as evidenced by its continued introduction of new funds, reassessment of the fund offerings in response to the market environment and project initiatives and capital investments relating to the services provided to the Funds by the Franklin Templeton Investments (FTI) organization.
Following consideration of such information, the Board was satisfied with the nature, extent and quality of services provided by the Manager and its affiliates to the Funds and their shareholders.
Fund Performance
The Board reviewed and considered the performance results of
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SHAREHOLDER INFORMATION
each Fund over various time periods ended December 31, 2016. The Board considered the performance returns for each Fund in comparison to the performance returns of mutual funds deemed comparable to the Fund included in a universe (Performance Universe) selected by Broadridge Financial Solutions, Inc. (Broadridge), an independent provider of investment company data. The Board received a description of the methodology used by Broadridge to select the mutual funds included in a Performance Universe. The Board also reviewed and considered Fund performance reports provided and discussions that occurred with portfolio managers at Board meetings throughout the year. A summary of each Fund’s performance results is below.
The Performance Universe for the Franklin Moderate Allocation Fund included the Fund and all retail and institutional mixed-asset target allocation moderate funds. The Performance Universe for the Franklin Conservative Allocation Fund included the Fund and all retail and institutional mixed-asset target allocation conservative funds. The Performance Universe for the Franklin Growth Allocation Fund included the Fund and all retail and institutional mixed-asset target allocation growth funds. The Board noted that the Funds’ annualized total returns for the one-, three- and five-year periods were below the medians of their respective Performance Universes, but for the 10-year period were above the medians of their respective Performance Universes. The Board concluded that the Funds’ performance was acceptable. In doing so, the Board noted management’s explanation that the Funds’ underperformance has had less to do with broad asset allocation positioning and more to do with underlying fund performance within particular asset classes. Management explained that broad asset allocation has had a largely neutral impact on performance, while underlying fund performance has been a persistent negative contributor. The Board also noted that the annualized total returns for the Funds in each of the one-, three- and five-year periods ranged from 1.79% to 7.77%.
Comparative Fees and Expenses
The Board reviewed and considered information regarding each Fund’s actual total expense ratio and its various components, including, as applicable, management fees; transfer agent expenses; underlying fund expenses; Rule 12b-1 and non-Rule 12b-1 service fees; and other non-management fees. The Board also noted that at its February meeting each year, it receives an annual report on all marketing support payments made by FTI to financial intermediaries. The Board considered the actual total expense ratio and, separately, the contractual management fee rate, without the effect of fee waivers, if any
(Management Rate) of each Fund in comparison to the median ratio and median Management Rate, respectively, of other mutual funds deemed comparable to and with a similar expense structure as the Fund selected by Broadridge (Expense Group). Broadridge fee and expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios and Management Rates generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Broadridge to be an appropriate measure of comparative fees and expenses. The Broadridge Management Rate includes administrative charges, and the actual total expense ratio, for comparative consistency, was shown for Class A shares for funds with multiple classes of shares. The Board received a description of the methodology used by Broadridge to select the mutual funds included in an Expense Group.
Franklin Moderate Allocation Fund - The Expense Group for the Fund included the Fund and eight other mixed-asset target allocation moderate funds. The Board noted that the Management Rate for the Fund was equal to the median of its Expense Group, but its actual total expense ratio was above the median of its Expense Group. The Board concluded that the Management Rate charged to the Fund is fair and reasonable. In doing so, the Board noted that management has contractually capped the Fund’s total operating expenses, but further noted that the Fund was operating at such cap. The Board also noted that the Management Rate paid by the Fund is solely for asset allocation services as the Fund invests substantially all of its assets in underlying funds.
Franklin Conservative Allocation Fund and Franklin Growth Allocation Fund - The Expense Group for the Franklin Conservative Allocation Fund included the Fund and nine other mixed-asset target allocation conservative funds. The Expense Group for the Franklin Growth Allocation Fund included the Fund and ten other mixed-asset target allocation growth funds. The Board noted that the Management Rates for the Franklin Conservative Allocation Fund and Franklin Growth Allocation Fund were 0.3 and 12 basis points, respectively, above the medians of their respective Expense Groups. The Board also noted that the actual total expense ratios for the Franklin Conservative Allocation Fund and Franklin Growth Allocation Fund were 9.7 and 9.9 basis points, respectively, above the medians of their respective Expense Groups. The Board concluded that the Management Rates charged to these Funds
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SHAREHOLDER INFORMATION
are fair and reasonable. In doing so, the Board noted that management has contractually capped each Fund’s total operating expenses, but further noted that certain classes of the Franklin Conservative Allocation Fund were operating at such cap. The Board also noted that the Management Rate paid by each Fund is solely for asset allocation services as the Fund invests substantially all of its assets in underlying funds.
Profitability
The Board reviewed and considered information regarding the profits realized by the Manager and its affiliates in connection with the operation of each Fund. In this respect, the Board considered the Fund profitability analysis provided by the Manager that addresses the overall profitability of FTI’s U.S. fund business, as well as its profits in providing investment management and other services to each of the individual funds during the 12-month period ended September 30, 2016, being the most recent fiscal year-end for FRI. The Board noted that although management continually makes refinements to its methodologies used in calculating profitability in response to organizational and product-related changes, the overall methodology has remained consistent with that used in the Funds’ profitability report presentations from prior years. Additionally, the Funds’ independent registered public accounting firm has been engaged by the Manager to periodically review the reasonableness of the allocation methodologies to be used solely by the Funds’ Board with respect to the profitability analysis.
The Board noted management’s belief that costs incurred in establishing the infrastructure necessary for the type of mutual fund operations conducted by the Manager and its affiliates may not be fully reflected in the expenses allocated to each Fund in determining its profitability, as well as the fact that the level of profits, to a certain extent, reflected operational cost savings and efficiencies initiated by management. The Board also noted management’s expenditures in improving shareholder services provided to the Funds, as well as the need to implement systems and meet additional regulatory and compliance requirements resulting from recent SEC and other regulatory requirements.
The Board also considered the extent to which the Manager and its affiliates might derive ancillary benefits from fund operations, including revenues generated from transfer agent services, potential benefits resulting from personnel and systems enhancements necessitated by fund growth, as well as increased leverage with service providers and counterparties. Based upon its consideration of all these factors, the Board
concluded that the level of profits realized by the Manager and its affiliates from providing services to each Fund was not excessive in view of the nature, quality and extent of services provided to each Fund.
Economies of Scale
The Board reviewed and considered the extent to which the Manager may realize economies of scale, if any, as each Fund grows larger and whether the Fund’s management fee structure reflects any economies of scale for the benefit of shareholders. The Board considered the Manager’s view that any analyses of potential economies of scale in managing a particular fund are inherently limited in light of the joint and common costs and investments the Manager incurs across the Franklin Templeton family of funds as a whole. The Board noted that, due to the use of the Management Rate for allocation services, the Funds would not likely experience economies of scale.
Conclusion
Based on its review, consideration and evaluation of all factors it believed relevant, including the above-described factors and conclusions, the Board unanimously approved the continuation of each Management Agreement for an additional one-year period.
Proxy Voting Policies and Procedures
The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.
Quarterly Statement of Investments
The Trust files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the
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SHAREHOLDER INFORMATION
Public Reference Room may be obtained by calling (800) SEC-0330.
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Semiannual Report and Shareholder Letter
Franklin Fund Allocator Series
Investment Manager
Franklin Advisers, Inc.
Distributor
Franklin Templeton Distributors, Inc.
(800) DIAL BEN® / 342-5236
franklintempleton.com
Shareholder Services
(800) 632-2301
Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.
To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.
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| © 2017 Franklin Templeton Investments. All rights reserved. | | FAS S 08/17 |
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| | Semiannual Report and Shareholder Letter June 30, 2017 |
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Franklin Fund Allocator Series |
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Franklin Corefolio Allocation Fund
Franklin Founding Funds Allocation Fund
Sign up for electronic delivery at franklintempleton.com/edelivery
Franklin Templeton Investments
Gain From Our Perspective®
At Franklin Templeton Investments, we’re dedicated to one goal: delivering exceptional asset management for our clients. By bringing together multiple, world-class investment teams in a single firm, we’re able to offer specialized expertise across styles and asset classes, all supported by the strength and resources of one of the world’s largest asset managers. This has helped us to become a trusted partner to individual and institutional investors across the globe.
Dear Shareholder:
The six months ended June 30, 2017, benefited from mostly upbeat economic data, improved U.S. corporate earnings and generally supportive monetary policies. The U.S. job market continued to improve as the unemployment rate declined.
In March, the U.S. Federal Reserve (Fed) raised its target range 0.25% for the second time in three months to 0.75%–1.00%. The Fed once again raised its target range a quarter point to 1.00%–1.25% at its June meeting. Despite low inflation, the Fed made its most recent decision amid signs of a strengthening labor market and moderately rising economic activity.
In this environment, U.S. stocks, as measured by the Standard & Poor’s® 500 Index, ended the period with a +9.34% total return.1 Stocks in global developed markets, as measured by the MSCI World Index, returned +11.02%.1 Investment-grade bonds, as measured by the Bloomberg Barclays U.S. Aggregate Bond Index, posted a +2.27% 6-month total return.1
We are committed to our long-term perspective and disciplined investment approach as we conduct a diligent, fundamental analysis of securities with a regular emphasis on investment risk management.
We believe active, professional investment management serves investors well. We also recognize the important role of financial advisors in today’s markets and encourage investors to continue to seek their advice. Amid changing markets and economic conditions, we are confident investors with a
well-diversified portfolio and a patient, long-term outlook should be well positioned for the years ahead.
In addition, Franklin Fund Allocator Series’ semiannual report includes more detail about prevailing conditions and a discussion about investment decisions during the period. Please remember all securities markets fluctuate, as do mutual fund share prices.
We thank you for investing with Franklin Templeton, welcome your questions and comments, and look forward to serving your future investment needs.
Sincerely,
Rupert H. Johnson, Jr.
Chairman
Franklin Fund Allocator Series
This letter reflects our analysis and opinions as of June 30, 2017, unless otherwise indicated. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.
1. Source: Morningstar.
See www.franklintempletondatasources.com for additional data provider information.
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| Not FDIC Insured | | | | | May Lose Value | | | | | No Bank Guarantee |
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Contents
Semiannual Report
Visit franklintempleton.com for fund updates, to access your account, or to find helpful financial planning tools.
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Semiannual Report
Economic and Market Overview
The global economy generally expanded during the period under review. In this environment, global developed and emerging market stocks rose, as measured by the MSCI All Country World Index. Global markets were aided by improved industrial commodity prices at certain points during the period, generally upbeat economic data across regions, investor optimism about pro-growth and pro-business policies in the U.S, hopes of tax reforms under the Trump administration, Emmanuel Macron’s election as France’s president and encouraging corporate earnings reports.
However, investors expressed concerns about the timing and economic effects of the U.K.’s exit from the European Union (also known as “Brexit”) and the U.S. executive order banning entry from some Muslim-majority countries. Other headwinds included the health of European banks, concerns about political uncertainty in the U.S. and European Union, geopolitical tensions in certain regions, worries about global oversupply in oil production despite a pact to extend cuts, and hawkish comments from key central bankers around the world toward period-end.
U.S. economic growth decelerated in 2017’s first quarter, largely due to slower growth in consumer spending and declines in private inventory investment and government spending. However, growth accelerated in the second quarter due to increases consumer spending, business investment and federal government spending. The unemployment rate decreased from 4.7% in December 2016 to 4.4% at period-end.1 Annual inflation, as measured by the Consumer Price Index, decreased from 2.1% to 1.6% during the period. After increasing its benchmark interest rate in March, the U.S. Federal Reserve (Fed), at its June meeting, made the widely anticipated increase to its target range for the federal funds rate from 0.75%–1.00% to 1.00%–1.25%, amid signs of a growing U.S. economy, a strengthening labor market and an improvement in business spending.
In Europe, the U.K.’s economy grew at a slower rate in 2017’s first quarter over the previous quarter, largely due to slower growth in household spending. The eurozone’s growth increased in the first quarter over the previous quarter. The bloc’s annual inflation rate fluctuated during the reporting period and ended slightly higher from where it began. During the period, the European Central Bank kept its key policy rates unchanged.
In Asia, Japan’s quarterly gross domestic product (GDP) remained unchanged in 2017’s first quarter compared to 2016’s fourth quarter. In April 2017, the Bank of Japan (BOJ) slightly increased its GDP forecasts for the 2017–2018 fiscal year. However, the BOJ lowered its inflation forecast.
In emerging markets, Brazil’s quarterly GDP grew for the first time in two years, as its first-quarter 2017 GDP grew compared to the previous quarter. The country’s central bank cut its benchmark interest rate four times between January and June 2017 to spur economic growth. Russia’s GDP grew in 2017’s first quarter compared to the prior-year period. The Bank of Russia reduced its key interest rate in March, April and June 2017 to try to revive its economy. China’s economy grew faster in the first half of 2017 compared to the first half of 2016, driven by solid growth in industrial production, services, fixed-asset investment, retail sales, and imports and exports. The People’s Bank of China left its benchmark interest rate unchanged during the period. Overall, emerging market stocks, as measured by the MSCI Emerging Markets Index, rose during the period.
The foregoing information reflects our analysis and opinions as of June 30, 2017. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.
1. Source: Bureau of Labor Statistics.
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Franklin Corefolio Allocation Fund
This semiannual report for Franklin Corefolio Allocation Fund covers the period ended June 30, 2017.
Your Fund’s Goal and Main Investments
The Fund seeks capital appreciation through investments in a combination of Franklin Growth Fund, Franklin Growth Opportunities Fund, Franklin Mutual Shares Fund and Templeton Growth Fund.
Asset Allocation*
Based on Total Net Assets as of 6/30/17
*The asset allocation is based on the Statement of Investments (SOI), which classifies each underlying fund into a broad asset class.
Performance Overview
The Fund’s Class A shares had a +11.30% cumulative total return for the six months under review. In comparison, the Fund’s benchmarks, the Standard & Poor’s 500 Index (S&P 500®), which is a broad measure of U.S. stock performance, generated a +9.34% cumulative total return, and the MSCI World Index, which tracks equity performance in global developed markets, had a +11.02% total return.1 You can find the Fund’s long-term performance data in the Performance Summary beginning on page 6.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
Investment Strategy
The Fund invests its assets allocated approximately 25% each in Franklin Growth Fund, Franklin Growth Opportunities Fund, Franklin Mutual Shares Fund and Templeton Growth Fund. These underlying funds, in turn, invest primarily in U.S. and foreign equity securities and, to a lesser extent, fixed income and money market securities. As market conditions affect the underlying funds, we rebalance the Fund’s allocations to maintain the predetermined weightings in each underlying fund whenever the actual allocations exceed plus or minus 3% of the fixed allocation percentages.
Portfolio Review
The Fund’s performance can be attributed largely to maintaining a relatively static allocation among domestic and foreign equities, fixed income securities, and short-term investments and other net assets, and to the actual performance of the selected underlying funds.
During the period under review, Franklin Growth Fund – Class R6 and Franklin Growth Opportunities Fund – Class R6 outperformed the S&P 500, while Franklin Mutual Shares Fund – Class R6 underperformed the index. Templeton Growth Fund – Class R6 underperformed the MSCI World Index.
1. Source: Morningstar.
The indexes are unmanaged and include reinvested distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s SOI, which begins on page 18.
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FRANKLIN COREFOLIO ALLOCATION FUND
Thank you for your continued participation in Franklin Corefolio Allocation Fund. We look forward to serving your future investment needs.
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| | T. Anthony Coffey, CFA Vice President of Franklin Advisers, Inc. |
The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
CFA® is a trademark owned by CFA Institute.
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FRANKLIN COREFOLIO ALLOCATION FUND
Performance Summary as of June 30, 2017
The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 6/30/17
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
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| Share Class | | Cumulative Total Return1 | | | Average Annual Total Return2 |
A | | | | | | |
6-Month | | | +11.30% | | | +4.91% |
1-Year | | | +20.69% | | | +13.74% |
5-Year | | | +77.69% | | | +10.87% |
10-Year | | | +66.20% | | | +4.59% |
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Advisor | | | | | | |
6-Month | | | +11.47% | | | +11.47% |
1-Year | | | +20.94% | | | +20.94% |
5-Year | | | +80.06% | | | +12.48% |
10-Year | | | +70.96% | | | +5.51% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
See page 7 for Performance Summary footnotes.
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FRANKLIN COREFOLIO ALLOCATION FUND
PERFORMANCE SUMMARY
Distributions (1/1/17–6/30/17)
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| Share Class | | Net Investment
Income | | | Long-Term
Capital Gain | | | Total | |
A | | | $0.0126 | | | | $0.3487 | | | | $0.3613 | |
C | | | $0.0126 | | | | $0.3487 | | | | $0.3613 | |
R | | | $0.0126 | | | | $0.3487 | | | | $0.3613 | |
Advisor | | | $0.0126 | | | | $0.3487 | | | | $0.3613 | |
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| Total Annual Operating Expenses3 | |
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| Share Class | | | |
A | | | 1.04% | |
Advisor | | | 0.79% | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
All investments involve risks, including possible loss of principal. Because the Fund invests in underlying funds that may engage in a variety of investment strategies involving certain risks, the Fund may be subject to those same risks. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general conditions. Foreign investing carries additional risks such as currency and market volatility, and political or social instability; risks that are heightened in developing countries. Smaller or relatively new or unseasoned companies can be particularly sensitive to changing economic conditions, and their prospects for growth are less certain than those of larger, more established companies. Value securities may not increase in price as anticipated or may decline further in value. The Fund includes investments in specialized industry sectors such as the technology sector, which has been among the most volatile in the market. The Fund’s prospectus also includes a description of the main investment risks.
1. Cumulative total return represents the change in value of an investment over the periods indicated.
2. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Figures are as stated in the Fund’s current prospectus, including the effect of acquired fund fees and expenses, and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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FRANKLIN COREFOLIO ALLOCATION FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
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| | | | | Actual
(actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
Share Class | | Beginning
Account
Value 1/1/17 | | Ending
Account
Value 6/30/171 | | Expenses Paid During
Period 1/1/17–6/30/171 | | Ending
Account
Value 6/30/17 | | Expenses Paid During
Period 1/1/17–6/30/171 | | Annualized
Expense
Ratio |
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A | | $1,000 | | $1,113.00 | | $2.25 | | $1,022.66 | | $2.16 | | 0.43% |
C | | $1,000 | | $1,109.10 | | $6.17 | | $1,018.94 | | $5.91 | | 1.18% |
R | | $1,000 | | $1,111.90 | | $3.56 | | $1,021.42 | | $3.41 | | 0.68% |
Advisor | | $1,000 | | $1,114.70 | | $0.94 | | $1,023.90 | | $0.90 | | 0.18% |
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.
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Franklin Founding Funds Allocation Fund
This semiannual report for Franklin Founding Funds Allocation Fund covers the period ended June 30, 2017.
Your Fund’s Goal and Main Investments
The Fund’s principal investment goal is capital appreciation, with a secondary goal of income. The Fund invests in an equally weighted combination of Franklin Income Fund, Franklin Mutual Shares Fund and Templeton Growth Fund.
Asset Allocation*
Based on Total Net Assets as of 6/30/17
*The asset allocation is based on the Statement of Investments (SOI), which classifies each underlying fund into a broad asset class.
Performance Overview
The Fund’s Class A shares had a +6.53% cumulative total return for the six months under review. In comparison, the Fund’s benchmarks, the Standard & Poor’s 500 Index (S&P 500), which is a broad measure of U.S. stock performance, generated a +9.34% total return and the MSCI World Index, which tracks equity performance in global developed markets, had a +11.02% total return.1 You can find the Fund’s long-term performance data in the Performance Summary beginning on page 11.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
Investment Strategy
The Fund invests its assets in an equally weighted combination of Franklin Income Fund, Franklin Mutual Shares Fund and Templeton Growth Fund. These underlying funds, in turn, invest primarily in U.S. and foreign equity securities and, to a lesser extent, fixed income and money market securities. As market conditions affect the underlying funds, we rebalance the Fund’s allocations to maintain the predetermined equal weightings of approximately 33 1⁄3% of total net assets in each underlying fund whenever the actual allocations exceed plus or minus 3% of the fixed allocation percentages.
Portfolio Review
The Fund’s performance can be attributed largely to maintaining a relatively static allocation among domestic and foreign equities, fixed income securities, and short-term investments and other net assets, and to the actual performance of the selected underlying funds.
During the period under review, Franklin Income Fund – Class R6 and Franklin Mutual Shares Fund – Class R6 underperformed the S&P 500. Templeton Growth Fund – Class R6 underperformed the MSCI World Index.
1. Source: Morningstar.
The indexes are unmanaged and include reinvested distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s SOI, which begins on page 23.
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| franklintempleton.com | | Semiannual Report | | | 9 | |
FRANKLIN FOUNDING FUNDS ALLOCATION FUND
Thank you for your continued participation in Franklin Founding Funds Allocation Fund. We look forward to serving your future investment needs.
| | |
| |
|
| | T. Anthony Coffey, CFA Vice President of Franklin Advisers, Inc. |
The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
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| 10 | | Semiannual Report | | franklintempleton.com |
FRANKLIN FOUNDING FUNDS ALLOCATION FUND
Performance Summary as of June 30, 2017
The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 6/30/17
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | | | | | |
| Share Class | | Cumulative
Total Return | | | Average Annual
Total Return | |
A | | | | | | | | |
6-Month | | | +6.53% | | | | +0.42% | |
1-Year | | | +17.81% | | | | +11.05% | |
5-Year | | | +59.33% | | | | +8.47% | |
10-Year | | | +43.74% | | | | +3.08% | |
| | |
| Advisor | | | | | | | | |
6-Month | | | +6.70% | | | | +6.70% | |
1-Year | | | +18.09% | | | | +18.09% | |
5-Year | | | +61.36% | | | | +10.04% | |
10-Year | | | +47.45% | | | | +3.96% | |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
See page 12 for Performance Summary footnotes.
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franklintempleton.com | | Semiannual Report | | | 11 | |
FRANKLIN FOUNDING FUNDS ALLOCATION FUND
PERFORMANCE SUMMARY
Distributions (1/1/17–6/30/17)
| | | | |
| Share Class | | Net Investment
Income | |
A | | | $0.2606 | |
C | | | $0.2090 | |
R | | | $0.2354 | |
Advisor | | | $0.2775 | |
|
Total Annual Operating Expenses3 | |
| Share Class | | | |
A | | | 1.00% | |
Advisor | | | 0.75% | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
All investments involve risks, including possible loss of principal. Because the Fund invests in underlying funds that may engage in a variety of investment strategies involving certain risks, the Fund is subject to these same risks. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bonds are affected by changes in interest rates and the creditworthiness of their issuers. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds adjust to a rise in interest rates, the Fund’s share price may decline. Higher yielding, lower rated corporate bonds entail a greater degree of credit risk compared to investment-grade securities. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks that are heightened in developing countries. Value securities may not increase in price as anticipated or may decline further in value. The Fund’s prospectus also includes a description of the main investment risks.
1. Cumulative total return represents the change in value of an investment over the periods indicated.
2. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Figures are as stated in the Fund’s current prospectus, including the effect of acquired fund fees and expenses, and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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12 | | Semiannual Report | | franklintempleton.com |
FRANKLIN FOUNDING FUNDS ALLOCATION FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual
(actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
Share Class | | Beginning
Account
Value 1/1/17 | | Ending
Account
Value 6/30/171 | | Expenses
Paid During
Period
1/1/17–6/30/171 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171 | | Annualized
Expense
Ratio |
| | | | | | |
A | | $1,000 | | $1,065.30 | | $2.15 | | $1,022.71 | | $2.11 | | 0.42% |
C | | $1,000 | | $1,060.90 | | $5.98 | | $1,018.99 | | $5.86 | | 1.17% |
R | | $1,000 | | $1,064.10 | | $3.43 | | $1,021.47 | | $3.36 | | 0.67% |
Advisor | | $1,000 | | $1,067.00 | | $0.87 | | $1,023.95 | | $0.85 | | 0.17% |
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.
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franklintempleton.com | | Semiannual Report | | | 13 | |
FRANKLIN FUND ALLOCATOR SERIES
Financial Highlights
Franklin Corefolio Allocation Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| |
Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| Per share operating performance | | | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $17.06 | | | | $16.80 | | | | $18.00 | | | | $17.61 | | | | $13.57 | | | | $11.93 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income (loss)b,c | | | (0.04 | ) | | | 0.14 | | | | 0.14 | | | | 0.23 | | | | 0.11 | | | | 0.11 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.97 | | | | 1.07 | | | | (0.32 | ) | | | 0.91 | | | | 4.09 | | | | 1.65 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.93 | | | | 1.21 | | | | (0.18 | ) | | | 1.14 | | | | 4.20 | | | | 1.76 | |
| | | | |
| | | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds | | | (0.01 | ) | | | (0.17 | ) | | | (0.16 | ) | | | (0.29 | ) | | | (0.16 | ) | | | (0.12) | |
| | | | | | |
Net realized gains | | | (0.35 | ) | | | (0.78 | ) | | | (0.86 | ) | | | (0.46 | ) | | | — | | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.36 | ) | | | (0.95 | ) | | | (1.02 | ) | | | (0.75 | ) | | | (0.16 | ) | | | (0.12) | |
| | | | |
| | | | | | |
Net asset value, end of period | | | $18.63 | | | | $17.06 | | | | $16.80 | | | | $18.00 | | | | $17.61 | | | | $13.57 | |
| | | | |
| | | | | | |
Total returnd | | | 11.30% | | | | 7.64% | | | | (1.20)% | | | | 6.48% | | | | 31.01% | | | | 14.80% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expensesf | | | 0.43% | g | | | 0.45% | g | | | 0.47% | g | | | 0.48% | g | | | 0.44% | | | | 0.36% | |
| | | | | | |
Net investment income (loss)c | | | (0.43)% | | | | 0.83% | | | | 0.80% | | | | 1.27% | | | | 0.68% | | | | 0.86% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $550,178 | | | | $507,530 | | | | $523,540 | | | | $558,862 | | | | $558,124 | | | | $449,252 | |
| | | | | | |
Portfolio turnover rate | | | 0.15% | | | | 0.40% | | | | 0.53% | | | | 5.77% | | | | 5.90% | | | | 2.14% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds in which the Fund invests.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds was 0.58% for the period ended June 30, 2017.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
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14 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL STATEMENTS
Franklin Corefolio Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| |
| Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| Per share operating performance | | | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $16.85 | | | | $16.61 | | | | $17.81 | | | | $17.44 | | | | $13.45 | | | | $11.82 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income (loss)b,c | | | (0.11 | ) | | | 0.01 | | | | 0.02 | | | | 0.10 | | | | (— | )d | | | 0.02 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.95 | | | | 1.05 | | | | (0.33 | ) | | | 0.89 | | | | 4.04 | | | | 1.64 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.84 | | | | 1.06 | | | | (0.31 | ) | | | 0.99 | | | | 4.04 | | | | 1.66 | |
| | | | |
| | | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds | | | (0.01 | ) | | | (0.04 | ) | | | (0.03 | ) | | | (0.16 | ) | | | (0.05 | ) | | | (0.03) | |
| | | | | | |
Net realized gains | | | (0.35 | ) | | | (0.78 | ) | | | (0.86 | ) | | | (0.46 | ) | | | — | | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.36 | ) | | | (0.82 | ) | | | (0.89 | ) | | | (0.62 | ) | | | (0.05 | ) | | | (0.03) | |
| | | | |
| | | | | | |
Net asset value, end of period | | | $18.33 | | | | $16.85 | | | | $16.61 | | | | $17.81 | | | | $17.44 | | | | $13.45 | |
| | | | |
| | | | | | |
Total returne | | | 10.91% | | | | 6.82% | | | | (1.92)% | | | | 5.69% | | | | 30.09% | | | | 14.04% | |
| | | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expensesg | | | 1.18% | h | | | 1.20% | h | | | 1.19% | h | | | 1.19% | h | | | 1.15% | | | | 1.07% | |
| | | | | | |
Net investment income (loss)c | | | (1.18)% | | | | 0.08% | | | | 0.08% | | | | 0.56% | | | | (0.03)% | | | | 0.15% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $167,639 | | | | $160,729 | | | | $172,116 | | | | $176,680 | | | | $176,332 | | | | $142,879 | |
| | | | | | |
Portfolio turnover rate | | | 0.15% | | | | 0.40% | | | | 0.53% | | | | 5.77% | | | | 5.90% | | | | 2.14% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds in which the Fund invests.
dAmount rounds to less than $0.01 per share.
eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds was 0.58% for the period ended June 30, 2017.
hBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | | | |
franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 15 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Corefolio Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended June 30, 2017 (unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| |
| Class R | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $17.06 | | | | $16.81 | | | | $18.01 | | | | $17.60 | | | | $13.56 | | | | $11.93 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income (loss)b,c | | | (0.06 | ) | | | 0.10 | | | | 0.10 | | | | 0.16 | | | | 0.06 | | | | 0.09 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.97 | | | | 1.06 | | | | (0.32 | ) | | | 0.95 | | | | 4.11 | | | | 1.64 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.91 | | | | 1.16 | | | | (0.22 | ) | | | 1.11 | | | | 4.17 | | | | 1.73 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains
received from Underlying Funds | | | (0.01 | ) | | | (0.13 | ) | | | (0.12 | ) | | | (0.24 | ) | | | (0.13 | ) | | | (0.10) | |
| | | | | | |
Net realized gains | | | (0.35 | ) | | | (0.78 | ) | | | (0.86 | ) | | | (0.46 | ) | | | — | | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.36 | ) | | | (0.91 | ) | | | (0.98 | ) | | | (0.70 | ) | | | (0.13 | ) | | | (0.10) | |
| | | | |
| | | | | | |
Net asset value, end of period | | | $18.61 | | | | $17.06 | | | | $16.81 | | | | $18.01 | | | | $17.60 | | | | $13.56 | |
| | | | |
| | | | | | |
Total returnd | | | 11.19% | | | | 7.33% | | | | (1.43)% | | | | 6.30% | | | | 30.76% | | | | 14.49% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expensesf | | | 0.68%g | | | | 0.70%g | | | | 0.69%g | | | | 0.69%g | | | | 0.65% | | | | 0.57% | |
| | | | | | |
Net investment income (loss)c | | | (0.68)% | | | | 0.58% | | | | 0.58% | | | | 1.06% | | | | 0.47% | | | | 0.65% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $1,574 | | | | $1,461 | | | | $1,423 | | | | $1,545 | | | | $1,903 | | | | $1,856 | |
| | | | | | |
Portfolio turnover rate | | | 0.15% | | | | 0.40% | | | | 0.53% | | | | 5.77% | | | | 5.90% | | | | 2.14% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds in which the Fund invests.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds was 0.58% for the period ended June 30, 2017.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | |
16 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Corefolio Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 (unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| |
Advisor Class | | | | | | | | | | | | | | | | | | | | | | | | |
| Per share operating performance | | | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $17.08 | | | | $16.82 | | | | $18.03 | | | | $17.64 | | | | $13.59 | | | | $11.95 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income (loss)b,c | | | (0.02 | ) | | | 0.21 | | | | 0.21 | | | | 0.32 | | | | 0.18 | | | | 0.18 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.98 | | | | 1.04 | | | | (0.35 | ) | | | 0.88 | | | | 4.08 | | | | 1.62 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.96 | | | | 1.25 | | | | (0.14 | ) | | | 1.20 | | | | 4.26 | | | | 1.80 | |
| | | | |
| | | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds | | | (0.01 | ) | | | (0.21 | ) | | | (0.21 | ) | | | (0.35) | | | | (0.21) | | | | (0.16) | |
| | | | | | |
Net realized gains | | | (0.35 | ) | | | (0.78 | ) | | | (0.86 | ) | | | (0.46) | | | | — | | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.36 | ) | | | (0.99 | ) | | | (1.07 | ) | | | (0.81) | | | | (0.21) | | | | (0.16) | |
| | | | |
| | | | | | |
Net asset value, end of period | | | $18.68 | | | | $17.08 | | | | $16.82 | | | | $18.03 | | | | $17.64 | | | | $13.59 | |
| | | | |
| | | | | | |
Total returnd | | | 11.47% | | | | 7.90% | | | | (0.96)% | | | | 6.79% | | | | 31.38% | | | | 15.11% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expensesf | | | 0.18% | g | | | 0.20% | g | | | 0.19% | g | | | 0.19% | g | | | 0.15% | | | | 0.07% | |
| | | | | | |
Net investment income (loss)c | | | (0.18)% | | | | 1.08% | | | | 1.08% | | | | 1.56% | | | | 0.97% | | | | 1.15% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $27,763 | | | | $22,721 | | | | $19,396 | | | | $18,918 | | | | $15,495 | | | | $10,245 | |
| | | | | | |
Portfolio turnover rate | | | 0.15% | | | | 0.40% | | | | 0.53% | | | | 5.77% | | | | 5.90% | | | | 2.14% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds in which the Fund invests.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds was 0.58% for the period ended June 30, 2017.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 17 | |
FRANKLIN FUND ALLOCATOR SERIES
Statement of Investments, June 30, 2017 (unaudited)
Franklin Corefolio Allocation Fund
| | | | | | | | | | |
| | | | | Shares | | | Value | |
| |
| | Investments in Underlying Funds 100.1% | | | | | | | | |
| | Domestic Equity 74.8% | | | | | | | | |
| a | | Franklin Growth Fund, Class R6 | | | 2,151,988 | | | $ | 187,717,932 | |
| a,b | | Franklin Growth Opportunities Fund, Class R6 | | | 4,884,268 | | | | 186,285,988 | |
| a | | Franklin Mutual Shares Fund, Class R6 | | | 6,209,699 | | | | 184,862,733 | |
| | | | | | | | | | |
| | | | | | | | | 558,866,653 | |
| | | | | | | | | | |
| | Foreign Equity 25.3% | | | | | | | | |
| a | | Templeton Growth Fund Inc., Class R6 | | | 7,248,368 | | | | 188,964,953 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds
before Short Term Investments (Cost $509,098,381) | | | | | | | 747,831,606 | |
| | | | | | | | | | |
| | | |
| | Short Term Investments (Cost $6,727) 0.0%† | | | | | | | | |
| | Money Market Funds 0.0%† | | | | | | | | |
| a,c | | Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 6,727 | | | | 6,727 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds (Cost $509,105,108) 100.1% | | | | | | | 747,838,333 | |
| | Other Assets, less Liabilities (0.1)% | | | | | | | (684,062 | ) |
| | | | | | | | | | |
| | Net Assets 100.0% | | | | | | $ | 747,154,271 | |
| | | | | | | | | | |
†Rounds to less than 0.1% of net assets.
aSee Note 3(e) regarding investments in Underlying Funds.
bNon-income producing.
cThe rate shown is the annualized seven-day yield at period end.
| | | | |
| 18 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Financial Highlights
Franklin Founding Funds Allocation Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 (unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| |
Class A | | | | | | | | | | | | | | | | | | | | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $13.47 | | | | $12.14 | | | | $13.31 | | | | $13.37 | | | | $11.14 | | | | $9.88 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.10 | | | | 0.36 | | | | 0.35 | | | | 0.46 | | | | 0.32 | | | | 0.35 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.78 | | | | 1.26 | | | | (1.16 | ) | | | (0.06 | ) | | | 2.29 | | | | 1.28 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.88 | | | | 1.62 | | | | (0.81 | ) | | | 0.40 | | | | 2.61 | | | | 1.63 | |
| | | | |
| | | | | | |
Less distributions from net investment income | | | (0.26 | ) | | | (0.29 | ) | | | (0.36 | ) | | | (0.46 | ) | | | (0.38 | ) | | | (0.37) | |
| | | | |
| | | | | | |
Net asset value, end of period | | | $14.09 | | | | $13.47 | | | | $12.14 | | | | $13.31 | | | | $13.37 | | | | $11.14 | |
| | | | |
| | | | | | |
Total returnd | | | 6.53% | | | | 13.52% | | | | (6.18)% | | | | 2.92% | | | | 23.64% | | | | 16.76% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expensesf | | | 0.42% | g | | | 0.42% | g | | | 0.41% | g | | | 0.41% | g | | | 0.39% | | | | 0.33% | |
| | | | | | |
Net investment incomec | | | 1.36% | | | | 2.87% | | | | 2.65% | | | | 3.35% | | | | 2.63% | | | | 3.24% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $3,344,589 | | | | $3,310,397 | | | | $3,346,192 | | | | $3,958,706 | | | | $4,170,045 | | | | $3,766,640 | |
| | | | | | |
Portfolio turnover rate | | | 0.45% | | | | 0.06% | | | | —% | | | | 3.79% | | | | 3.04% | | | | 3.59% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds in which the Fund invests.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds was 0.59% for the period ended June 30, 2017.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 19 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Founding Funds Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | | | | | | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| |
Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $13.27 | | | | $11.96 | | | | $13.11 | | | | $13.18 | | | | $10.99 | | | | $9.75 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.04 | | | | 0.26 | | | | 0.25 | | | | 0.35 | | | | 0.23 | | | | 0.26 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.77 | | | | 1.25 | | | | (1.14 | ) | | | (0.07 | ) | | | 2.25 | | | | 1.27 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.81 | | | | 1.51 | | | | (0.89 | ) | | | 0.28 | | | | 2.48 | | | | 1.53 | |
| | | | |
| | | | | | |
Less distributions from net investment income | | | (0.21 | ) | | | (0.20 | ) | | | (0.26 | ) | | | (0.35 | ) | | | (0.29 | ) | | | (0.29) | |
| | | | |
| | | | | | |
Net asset value, end of period | | | $13.87 | | | | $13.27 | | | | $11.96 | | | | $13.11 | | | | $13.18 | | | | $10.99 | |
| | | | |
| | | | | | |
Total returnd | | | 6.09% | | | | 12.71% | | | | (6.85)% | | | | 2.12% | | | | 22.69% | | | | 15.87% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expensesf | | | 1.17% | g | | | 1.17% | g | | | 1.16% | g | | | 1.16% | g | | | 1.14% | | | | 1.08% | |
| | | | | | |
Net investment incomec | | | 0.61% | | | | 2.12% | | | | 1.90% | | | | 2.60% | | | | 1.88% | | | | 2.49% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $1,316,467 | | | | $1,402,623 | | | | $1,458,281 | | | | $1,745,766 | | | | $1,829,111 | | | | $1,657,087 | |
| | | | | | |
Portfolio turnover rate | | | 0.45% | | | | 0.06% | | | | —% | | | | 3.79% | | | | 3.04% | | | | 3.59% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds in which the Fund invests.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
f Does not include expenses of the Underlying Funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds was 0.59% for the period ended June 30, 2017.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | |
20 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Founding Funds Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 (unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| |
Class R | | | | | | | | | | | | | | | | | | | | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $13.49 | | | | $12.16 | | | | $13.33 | | | | $13.39 | | | | $11.16 | | | | $9.89 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.08 | | | | 0.33 | | | | 0.32 | | | | 0.44 | | | | 0.29 | | | | 0.31 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.79 | | | | 1.26 | | | | (1.16) | | | | (0.08) | | | | 2.29 | | | | 1.30 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.87 | | | | 1.59 | | | | (0.84) | | | | 0.36 | | | | 2.58 | | | | 1.61 | |
| | | | |
| | | | | | |
Less distributions from net investment income | | | (0.24) | | | | (0.26) | | | | (0.33) | | | | (0.42) | | | | (0.35) | | | | (0.34) | |
| | | | |
| | | | | | |
Net asset value, end of period | | | $14.12 | | | | $13.49 | | | | $12.16 | | | | $13.33 | | | | $13.39 | | | | $11.16 | |
| | | | |
| | | | | | |
Total returnd | | | 6.41% | | | | 13.22% | | | | (6.40)% | | | | 2.68% | | | | 23.28% | | | | 16.52% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expensesf | | | 0.67%g | | | | 0.67%g | | | | 0.66%g | | | | 0.66%g | | | | 0.64% | | | | 0.58% | |
| | | | | | |
Net investment incomec | | | 1.11% | | | | 2.62% | | | | 2.40% | | | | 3.10% | | | | 2.38% | | | | 2.99% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $8,449 | | | | $10,776 | | | | $10,724 | | | | $11,619 | | | | $10,597 | | | | $10,058 | |
| | | | | | |
Portfolio turnover rate | | | 0.45% | | | | 0.06% | | | | —% | | | | 3.79% | | | | 3.04% | | | | 3.59% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds in which the Fund invests.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds was 0.59% for the period ended June 30, 2017.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | | | |
franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 21 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin Founding Funds Allocation Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 (unaudited) | | | Year Ended December 31, | |
| | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| |
| Advisor Class | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $13.54 | | | | $12.20 | | | | $13.38 | | | | $13.44 | | | | $11.20 | | | | $9.93 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.11 | | | | 0.40 | | | | 0.39 | | | | 0.53 | | | | 0.39 | | | | 0.38 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.80 | | | | 1.26 | | | | (1.18) | | | | (0.10) | | | | 2.26 | | | | 1.29 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.91 | | | | 1.66 | | | | (0.79) | | | | 0.43 | | | | 2.65 | | | | 1.67 | |
| | | | |
| | | | | | |
Less distributions from net investment income | | | (0.28) | | | | (0.32) | | | | (0.39) | | | | (0.49) | | | | (0.41) | | | | (0.40) | |
| | | | |
| | | | | | |
Net asset value, end of period | | | $14.17 | | | | $13.54 | | | | $12.20 | | | | $13.38 | | | | $13.44 | | | | $11.20 | |
| | | | |
| | | | | | |
Total returnd | | | 6.70% | | | | 13.82% | | | | (5.98)% | | | | 3.17% | | | | 23.93% | | | | 17.08% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expensesf | | | 0.17%g | | | | 0.17%g | | | | 0.16%g | | | | 0.16%g | | | | 0.14% | | | | 0.08% | |
| | | | | | |
Net investment incomec | | | 1.61% | | | | 3.12% | | | | 2.90% | | | | 3.60% | | | | 2.88% | | | | 3.49% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $163,367 | | | | $131,368 | | | | $123,966 | | | | $141,932 | | | | $114,369 | | | | $71,487 | |
| | | | | | |
Portfolio turnover rate | | | 0.45% | | | | 0.06% | | | | —% | | | | 3.79% | | | | 3.04% | | | | 3.59% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds in which the Fund invests.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds was 0.59% for the period ended June 30, 2017.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | |
| 22 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Statement of Investments, June 30, 2017 (unaudited)
| | | | | | | | | | |
| Franklin Founding Funds Allocation Fund | |
| | | | | Shares | | | Value | |
| |
| | | Investments in Underlying Funds 100.2% | | | | | | |
| | | Domestic Equity 33.4% | | | | | | |
| a | | Franklin Mutual Shares Fund, Class R6 | | | 54,132,151 | | | $ | 1,611,514,141 | |
| | | | | | | | | | |
| | | Domestic Hybrid 33.3% | | | | | | |
| a | | Franklin Income Fund, Class R6 | | | 693,900,955 | | | | 1,609,850,214 | |
| | | | | | | | | | |
| | | Foreign Equity 33.5% | | | | | | |
| a | | Templeton Growth Fund Inc., Class R6 | | | 62,105,086 | | | | 1,619,079,587 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds
before Short Term Investments (Cost $4,454,281,892) | | | | | | | 4,840,443,942 | |
| | | | | | | | | | |
| | | |
| | Short Term Investments (Cost $52,147) 0.0%† | | | | | | | | |
| | | Money Market Funds 0.0%† | | | | | | |
| a,b | | Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 52,147 | | | | 52,147 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds (Cost $4,454,334,039) 100.2% | | | | | | | 4,840,496,089 | |
| | Other Assets, less Liabilities (0.2)% | | | | | | | (7,622,939 | ) |
| | | | | | | | | | |
| | Net Assets 100.0% | | | | | | $ | 4,832,873,150 | |
| | | | | | | | | | |
†Rounds to less than 0.1% of net assets.
aSee Note 3(e) regarding investments in Underlying Funds.
bThe rate shown is the annualized seven-day yield at period end.
| | | | | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 23 | |
FRANKLIN FUND ALLOCATOR SERIES
Financial Statements
Statements of Assets and Liabilities
June 30, 2017 (unaudited)
| | | | | | | | |
| | | Franklin
Corefolio
Allocation Fund | | | Franklin Founding Funds
Allocation Fund | |
Assets: | | | | | | | | |
Investments in securities: | | | | | | | | |
Cost - Non-controlled affiliates (Note 3e) | | | $509,105,108 | | | | $4,454,334,039 | |
| | | | |
Value - Non-controlled affiliates (Note 3e) | | | $747,838,333 | | | | $4,840,496,089 | |
Receivables: | | | | | | | | |
Capital shares sold | | | 446,518 | | | | 5,589,896 | |
Other assets | | | 16,029 | | | | 23,177 | |
| | | | |
Total assets | | | 748,300,880 | | | | 4,846,109,162 | |
| | | | |
Liabilities: | | | | | | | | |
Payables: | | | | | | | | |
Capital shares redeemed | | | 438,936 | | | | 8,304,600 | |
Administrative fees | | | 18,502 | | | | 119,773 | |
Distribution fees | | | 514,895 | | | | 3,675,008 | |
Transfer agent fees | | | 120,626 | | | | 857,215 | |
Accrued expenses and other liabilities. | | | 53,650 | | | | 279,416 | |
| | | | |
Total liabilities | | | 1,146,609 | | | | 13,236,012 | |
| | | | |
Net assets, at value | | | $747,154,271 | | | | $4,832,873,150 | |
| | | | |
Net assets consist of: | | | | | | | | |
Paid-in capital | | | $511,731,584 | | | | $6,048,292,170 | |
Distributions in excess of net investment income | | | (2,141,158 | ) | | | (1,223,013 | ) |
Net unrealized appreciation (depreciation) | | | 238,733,225 | | | | 386,162,050 | |
Accumulated net realized gain (loss) | | | (1,169,380 | ) | | | (1,600,358,057 | ) |
| | | | |
Net assets, at value | | | $747,154,271 | | | | $4,832,873,150 | |
| | | | |
| | |
| Class A: | | | | | | | | |
Net assets, at value | | | $550,177,785 | | | | $3,344,589,411 | |
| | | | |
Shares outstanding | | | 29,532,049 | | | | 237,449,146 | |
| | | | |
Net asset value per sharea | | | $18.63 | | | | $14.09 | |
| | | | |
Maximum offering price per share (net asset value per share ÷ 94.25%) | | | $19.77 | | | | $14.95 | |
| | | | |
| | |
| Class C: | | | | | | | | |
Net assets, at value | | | $167,639,266 | | | | $1,316,467,464 | |
| | | | |
Shares outstanding | | | 9,144,744 | | | | 94,902,400 | |
| | | | |
Net asset value and maximum offering price per sharea | | | $18.33 | | | | $13.87 | |
| | | | |
| | |
| Class R: | | | | | | | | |
Net assets, at value | | | $ 1,573,895 | | | | $ 8,448,886 | |
| | | | |
Shares outstanding | | | 84,565 | | | | 598,551 | |
| | | | |
Net asset value and maximum offering price per share | | | $18.61 | | | | $14.12 | |
| | | | |
| | |
| Advisor Class: | | | | | | | | |
Net assets, at value | | | $ 27,763,325 | | | | $ 163,367,389 | |
| | | | |
Shares outstanding | | | 1,485,971 | | | | 11,531,703 | |
| | | | |
Net asset value and maximum offering price per share | | | $18.68 | | | | $14.17 | |
| | | | |
aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.
| | | | |
| 24 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL STATEMENTS
Statements of Operations
for the six months ended June 30, 2017 (unaudited)
| | | | | | | | |
| | | Franklin
Corefolio
Allocation Fund | | | Franklin
Founding Funds
Allocation Fund | |
Investment income: | | | | | | | | |
Dividends from non-controlled affiliates (Note 3e) | | | $ 1,193 | | | | $ 43,102,114 | |
| | | | |
| | |
Expenses: | | | | | | | | |
Administrative fees (Note 3a) | | | 108,782 | | | | 727,263 | |
Distribution fees: (Note 3b) | | | | | | | | |
Class A | | | 664,458 | | | | 4,142,348 | |
Class C | | | 831,854 | | | | 6,877,122 | |
Class R | | | 3,734 | | | | 25,131 | |
Transfer agent fees: (Note 3d) | | | | | | | | |
Class A | | | 315,366 | | | | 1,940,496 | |
Class C | | | 98,741 | | | | 806,882 | |
Class R | | | 887 | | | | 5,890 | |
Advisor Class | | | 15,289 | | | | 85,693 | |
Reports to shareholders | | | 32,138 | | | | 233,504 | |
Registration and filing fees | | | 37,869 | | | | 70,990 | |
Professional fees | | | 18,288 | | | | 31,364 | |
Trustees’ fees and expenses | | | 2,633 | | | | 18,304 | |
Other | | | 11,177 | | | | 26,012 | |
| | | | |
Total expenses | | | 2,141,216 | | | | 14,990,999 | |
Expenses waived/paid by affiliates (Note 3e) | | | (116 | ) | | | (2,336 | ) |
| | | | |
Net expenses | | | 2,141,100 | | | | 14,988,663 | |
| | | | |
Net investment income (loss) | | | (2,139,907 | ) | | | 28,113,451 | |
| | | | |
| | |
Realized and unrealized gains (losses): | | | | | | | | |
Net realized gain (loss) from: | | | | | | | | |
Sale of investments: | | | | | | | | |
Non-controlled affiliates (Note 3e) | | | 2,281,910 | | | | 34,586,522 | |
Net change in unrealized appreciation (depreciation) on investments | | | 76,914,724 | | | | 241,323,127 | |
| | | | |
Net realized and unrealized gain (loss) | | | 79,196,634 | | | | 275,909,649 | |
| | | | |
Net increase (decrease) in net assets resulting from operations | | | $77,056,727 | | | | $304,023,100 | |
| | | | |
| | | | | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 25 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
| | | | | | | | | | | | | | | | |
| | | Franklin Corefolio Allocation Fund | | | Franklin Founding Funds Allocation Fund | |
| | | | |
| | | Six Months Ended
June 30, 2017
(unaudited) | | | Year Ended
December 31, 2016 | | | Six Months
Ended
June 30, 2017
(unaudited) | | | Year Ended
December 31, 2016 | |
Increase (decrease) in net assets: | | | | | | | | | | | | | | | | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) | | | $ (2,139,907 | ) | | | $ 4,464,050 | | | | $ 28,113,451 | | | | $ 126,567,176 | |
Net realized gain (loss) | | | 2,281,910 | | | | 23,319,424 | | | | 34,586,522 | | | | 95,973,585 | |
Net change in unrealized appreciation (depreciation) | | | 76,914,724 | | | | 20,074,183 | | | | 241,323,127 | | | | 368,692,349 | |
| | | | |
Net increase (decrease) in net assets resulting from operations | | | 77,056,727 | | | | 47,857,657 | | | | 304,023,100 | | | | 591,233,110 | |
| | | | |
Distributions to shareholders from: | | | | | | | | | | | | | | | | |
Net investment income and short term gains received from Underlying Funds: | | | | | | | | | | | | | | | | |
Class A | | | (365,569 | ) | | | (4,860,981 | ) | | | (60,958,279 | ) | | | (73,164,442 | ) |
Class C | | | (113,643 | ) | | | (353,650 | ) | | | (19,588,774 | ) | | | (21,414,705 | ) |
Class R | | | (1,045 | ) | | | (10,552 | ) | | | (138,550 | ) | | | (214,299 | ) |
Advisor Class | | | (18,328 | ) | | | (273,325 | ) | | | (3,122,135 | ) | | | (3,114,421 | ) |
Net realized gains: | | | | | | | | | | | | | | | | |
Class A | | | (10,117,532 | ) | | | (23,135,786 | ) | | | — | | | | — | |
Class C | | | (3,134,339 | ) | | | (7,634,487 | ) | | | — | | | | — | |
Class R | | | (28,926 | ) | | | (68,108 | ) | | | — | | | | — | |
Advisor Class | | | (507,228 | ) | | | (918,626 | ) | | | — | | | | — | |
| | | | |
Total distributions to shareholders | | | (14,286,610 | ) | | | (37,255,515 | ) | | | (83,807,738 | ) | | | (97,907,867 | ) |
| | | | |
Capital share transactions: (Note 2) | | | | | | | | | | | | | | | | |
Class A | | | (3,750,721 | ) | | | (23,919,590 | ) | | | (115,633,586 | ) | | | (372,282,081 | ) |
Class C | | | (7,125,736 | ) | | | (13,720,355 | ) | | | (149,933,959 | ) | | | (198,606,550 | ) |
Class R | | | (16,185 | ) | | | 10,564 | | | | (2,834,508 | ) | | | (1,069,039 | ) |
Advisor Class | | | 2,836,330 | | | | 2,992,796 | | | | 25,896,250 | | | | (5,366,638 | ) |
| | | | |
Total capital share transactions | | | (8,056,312 | ) | | | (34,636,585 | ) | | | (242,505,803 | ) | | | (577,324,308 | ) |
| | | | |
Net increase (decrease) in net | | | | | | | | | | | | | | | | |
assets | | | 54,713,805 | | | | (24,034,443 | ) | | | (22,290,441 | ) | | | (83,999,065 | ) |
Net assets: | | | | | | | | | | | | | | | | |
Beginning of period | | | 692,440,466 | | | | 716,474,909 | | | | 4,855,163,591 | | | | 4,939,162,656 | |
| | | | |
End of period | | | $747,154,271 | | | | $692,440,466 | | | | $4,832,873,150 | | | | $4,855,163,591 | |
| | | | |
Undistributed net investment income included in net assets: | | | | | | | | | | | | | | | | |
End of period | | | $ — | | | | $ 497,334 | | | | $ — | | | | $ 54,471,274 | |
| | | | |
Distributions in excess of net investment income included in net assets: | | | | | | | | | | | | | | | | |
End of period | | | $ (2,141,158 | ) | | | $ — | | | | $ (1,223,013 | ) | | | $ — | |
| | | | |
| | | | |
26 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Notes to Financial Statements (unaudited)
1. Organization and Significant Accounting Policies
Franklin Fund Allocator Series (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of twenty-four separate funds, two of which are included in this report (Funds) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Funds invest in affiliated mutual funds managed by Franklin Templeton (Underlying Funds). The Funds offer four classes of shares: Class A, Class C, Class R, and Advisor Class. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees primarily due to differing arrangements for distribution and transfer agent fees. Effective August 1, 2017, the Funds began offering a new class of shares, Class R6.
The accounting policies of the Underlying Funds are outlined in their respective shareholder reports. A copy of the Underlying Funds’ shareholder reports, in which each fund invests, is available on the U.S. Securities and Exchange Commission (SEC) website at sec.gov or at the SEC’s Public Reference Room in Washington, D.C. The Underlying Funds’ shareholder reports are not covered by this report.
The following summarizes the Funds’ significant accounting policies.
a. Financial Instrument Valuation
The Funds’ investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Funds calculate the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Funds’ administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Funds’ valuation policies and procedures, which are approved annually by the Board. Investments in the Underlying Funds are valued at their closing NAV each trading day.
b. Income Taxes
It is each Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. Each Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.
Each Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of June 30, 2017, each Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on each tax jurisdiction’s statute of limitation.
c. Security Transactions, Investment Income, Expenses and Distributions
Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income and realized gain distributions by Underlying Funds are recorded on the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.
Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the Fund that incurred the expense.
The Funds indirectly bear their proportionate share of expenses from the Underlying Funds. Since the Underlying Funds have varied expense levels and the Funds may own different proportions of the Underlying Funds at different times, the amount of expenses incurred indirectly by the Funds will vary.
| | | | | | |
franklintempleton.com | | Semiannual Report | | | 27 | |
FRANKLIN FUND ALLOCATOR SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. Organization and Significant Accounting Policies (continued)
c. Security Transactions, Investment Income, Expenses and Distributions (continued)
Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.
d. Accounting Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
e. Guarantees and Indemnifications
Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Funds, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.
2. Shares of Beneficial Interest
At June 30, 2017, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | Franklin Corefolio
Allocation Fund | | | | | | Franklin Founding Funds
Allocation Fund | |
| | | Shares | | | Amount | | | | | | Shares | | | Amount | |
Class A Shares: | | | | | | | | | | | | | | | | | | | | |
| Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 1,517,304 | | | $ | 27,742,808 | | | | | | | | 9,829,603 | | | $ | 138,937,906 | |
| Shares issued in reinvestment of distributions | | | 545,010 | | | | 10,229,837 | | | | | | | | 4,101,007 | | | | 57,906,168 | |
| Shares redeemed | | | (2,288,220 | ) | | | (41,723,366 | ) | | | | | | | (22,295,014 | ) | | | (312,477,660) | |
| | | | |
| Net increase (decrease) | | | (225,906 | ) | | $ | (3,750,721 | ) | | | | | | | (8,364,404 | ) | | $ | (115,633,586) | |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 2,026,622 | | | $ | 33,409,181 | | | | | | | | 11,424,321 | | | $ | 142,666,866 | |
| Shares issued in reinvestment of distributions | | | 1,710,558 | | | | 27,406,298 | | | | | | | | 5,568,616 | | | | 70,554,700 | |
| Shares redeemed | | | (5,142,894 | ) | | | (84,735,069 | ) | | | | | | | (46,872,408 | ) | | | (585,503,647) | |
| | | | |
| Net increase (decrease) | | | (1,405,714 | ) | | $ | (23,919,590 | ) | | | | | | | (29,879,471 | ) | | $ | (372,282,081) | |
| | | | |
| | | | | |
| Class C Shares: | | | | | | | | | | | | | | | | | | | | |
| Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 522,669 | | | $ | 9,416,282 | | | | | | | | 2,932,039 | | | $ | 40,416,723 | |
| Shares issued in reinvestment of distributions | | | 172,421 | | | | 3,184,615 | | | | | | | | 1,374,258 | | | | 19,115,928 | |
| Shares redeemed | | | (1,089,120 | ) | | | (19,726,633 | ) | | | | | | | (15,126,222 | ) | | | (209,466,610) | |
| | | | |
| Net increase (decrease) | | | (394,030 | ) | | $ | (7,125,736 | ) | | | | | | | (10,819,925 | ) | | $ | (149,933,959) | |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 838,806 | | | $ | 13,585,869 | | | | | | | | 5,306,931 | | | $ | 65,224,907 | |
| Shares issued in reinvestment of distributions | | | 492,310 | | | | 7,691,548 | | | | | | | | 1,597,787 | | | | 19,904,491 | |
| Shares redeemed | | | (2,153,618 | ) | | | (34,997,772 | ) | | | | | | | (23,112,939 | ) | | | (283,735,948) | |
| | | | |
| Net increase (decrease) | | | (822,502 | ) | | $ | (13,720,355 | ) | | | | | | | (16,208,221 | ) | | $ | (198,606,550) | |
| | | | |
| | | | |
| 28 | | Semiannual Report | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
| | | | | | | | | | | | | | | | | | | | |
| | | Franklin Corefolio
Allocation Fund | | | | | | Franklin Founding Funds
Allocation Fund | |
| | | Shares | | | Amount | | | | | | Shares | | | Amount | |
Class R Shares: | | | | | | | | | | | | | | | | | | | | |
| Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 4,430 | | | $ | 81,091 | | | | | | | | 49,621 | | | $ | 694,169 | |
| Shares issued in reinvestment of distributions | | | 1,598 | | | | 29,971 | | | | | | | | 9,428 | | | | 133,416 | |
| Shares redeemed | | | (7,124 | ) | | | (127,247 | ) | | | | | | | (259,386 | ) | | | (3,662,093) | |
| | | | |
| Net increase (decrease) | | | (1,096 | ) | | $ | (16,185 | ) | | | | | | | (200,337 | ) | | $ | (2,834,508) | |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 10,968 | | | $ | 181,668 | | | | | | | | 167,403 | | | $ | 2,071,803 | |
| Shares issued in reinvestment of distributions | | | 4,929 | | | | 78,660 | | | | | | | | 16,509 | | | | 208,973 | |
| Shares redeemed | | | (14,885 | ) | | | (249,764 | ) | | | | | | | (267,033 | ) | | | (3,349,815) | |
| | | | |
| Net increase (decrease) | | | 1,012 | | | $ | 10,564 | | | | | | | | (83,121 | ) | | $ | (1,069,039) | |
| | | | |
| | | | | |
| Advisor Class Shares: | | | | | | | | | | | | | | | | | | | | |
| Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 302,401 | | | $ | 5,561,840 | | | | | | | | 3,155,245 | | | $ | 44,574,741 | |
| Shares issued in reinvestment of distributions | | | 22,482 | | | | 423,101 | | | | | | | | 195,741 | | | | 2,779,521 | |
| Shares redeemed | | | (169,002 | ) | | | (3,148,611 | ) | | | | | | | (1,519,703 | ) | | | (21,458,012) | |
| | | | |
| Net increase (decrease) | | | 155,881 | | | $ | 2,836,330 | | | | | | | | 1,831,283 | | | $ | 25,896,250 | |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 321,791 | | | $ | 5,439,280 | | | | | | | | 2,448,383 | | | $ | 30,854,553 | |
| Shares issued in reinvestment of distributions | | | 58,899 | | | | 951,211 | | | | | | | | 223,369 | | | | 2,852,608 | |
| Shares redeemed | | | (203,470 | ) | | | (3,397,695 | ) | | | | | | | (3,128,645 | ) | | | (39,073,799) | |
| | | | |
| Net increase (decrease) | | | 177,220 | | | $ | 2,992,796 | | | | | | | | (456,893 | ) | | $ | (5,366,638) | |
| | | | |
3. Transactions with Affiliates
Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Funds are also officers, and/or directors/trustees of certain of the Underlying Funds and of the following subsidiaries:
| | |
| Subsidiary | | Affiliation |
Franklin Templeton Services, LLC (FT Services) | | Administrative manager |
Franklin Templeton Distributors, Inc. (Distributors) | | Principal underwriter |
Franklin Templeton Investor Services, LLC (Investor Services) | | Transfer agent |
a. Administrative Fees
The Funds pay an administrative fee to FT Services of 0.03% per year of the average daily net assets of each of the Funds for administrative services including monitoring and rebalancing the percentage of each Fund’s investment in the Underlying Funds.
b. Distribution Fees
The Board has adopted distribution plans for each share class with the exception of Advisor Class shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Funds’ Class A reimbursement distribution plans, the Funds reimburse Distributors for costs incurred in connection with the servicing, sale and distribution of each Fund’s shares up to the maximum annual plan rate for each class. Under the Class A reimbursement distribution plans, costs exceeding the maximum for the current plan year cannot be reimbursed in subsequent periods. In addition, under the Funds’ Class C and R compensation distribution plans, the Funds pay Distributors for
| | | | | | |
franklintempleton.com | | Semiannual Report | | | 29 | |
FRANKLIN FUND ALLOCATOR SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. Transactions with Affiliates (continued)
b. Distribution Fees (continued)
costs incurred in connection with the servicing, sale and distribution of each Fund’s shares up to the maximum annual plan rate for each class. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31 for each Fund.
The maximum annual plan rates, based on the average daily net assets, for each class, are as follows:
| | | | |
Class A | | | 0.35 | % |
Class C | | | 1.00 | % |
Class R | | | 0.50 | % |
The Board has set the current rate at 0.25% per year for Class A shares until further notice and approval by the Board.
c. Sales Charges/Underwriting Agreements
Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Funds. These charges are deducted from the proceeds of sales of fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Funds of the following commission transactions related to the sales and redemptions of the Funds’ shares for the period:
| | | | | | | | |
| | | Franklin
Corefolio
Allocation Fund | | | Franklin
Founding Funds
Allocation Fund | |
Sales charges retained net of commissions paid to unaffiliated brokers/dealers | | | $75,613 | | | | $269,330 | |
| | |
CDSC retained. | | | $ 3,496 | | | | $ 21,903 | |
d. Transfer Agent Fees
Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations and reimburses Investor Services for out of pocket expenses incurred, including shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets.
For the period ended June 30, 2017, the Funds paid transfer agent fees as noted in the Statements of Operations of which the following amounts were retained by Investor Services:
| | | | | | | | |
| | | Franklin
Corefolio
Allocation Fund | | | Franklin
Founding Funds
Allocation Fund | |
Transfer agent fees | | | $279,056 | | | | $1,284,582 | |
e. Investments in Underlying Funds
The Funds invest in Underlying Funds which are managed by Franklin Advisers, Inc. (Advisers), an affiliate of FT Services or an affiliate of Advisers. The Funds do not invest in Underlying Funds for the purpose of exercising a controlling influence over the management or policies. Administrative fees paid by the Funds are waived on assets invested in Institutional Fiduciary Trust Money Market Portfolio (Sweep Money Fund), as noted in the Statements of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund. Prior to January 1, 2014, the waiver was accounted for as a reduction to administrative fees.
| | | | |
| | | |
| 30 | | Semiannual Report | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Investments in Underlying Funds for the period ended June 30, 2017, were as follows:
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| Underlying Funds | | Number of Shares Held at Beginning of Period | | | Gross Additions | | | Gross Reductions | | | Number of
Shares Held at End of Period | | | Value at End of Period | | | Investment Income | | | Realized Gain (Loss) | | | % of Underlying Fund Shares
Outstanding Held at End of Period | |
| |
Franklin Corefolio Allocation Fund | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-Controlled Affiliates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Franklin Growth Fund, Class R6 | | | 2,263,209 | | | | — | | | | (111,221 | ) | | | 2,151,988 | | | $ | 187,717,932 | | | $ | — | | | $ | 1,600,693 | | | | 1.4 | % |
Franklin Growth Opportunities Fund, Class R6 | | | 5,120,061 | | | | — | | | | (235,793 | ) | | | 4,884,268 | | | | 186,285,988 | | | | — | | | | 366,533 | | | | 4.9 | % |
Franklin Mutual Shares Fund, Class R6 | | | 6,230,761 | | | | 37,827 | | | | (58,889 | ) | | | 6,209,699 | | | | 184,862,733 | | | | — | | | | 13,878 | | | | 1.2 | % |
Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 329,163 | | | | 18,178,470 | | | | (18,500,906 | ) | | | 6,727 | | | | 6,727 | | | | 1,193 | | | | — | | | | —a | |
Templeton Growth Fund Inc., Class R6 | | | 7,490,909 | | | | — | | | | (242,541 | ) | | | 7,248,368 | | | | 188,964,953 | | |
| —
|
| | | 300,806 | | | | 1.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | $ | 747,838,333 | | | $ | 1,193 | | | $ | 2,281,910 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Franklin Founding Funds Allocation Fund | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-Controlled Affiliates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Franklin Income Fund, Class R6 | | | 702,953,600 | | | | 23,282,475 | | | | (32,335,120 | ) | | | 693,900,955 | | | $ | 1,609,850,214 | | | $ | 43,086,341 | | | $ | (443,786) | | | | 2.0 | % |
Franklin Mutual Shares Fund, Class R6 | | | 56,858,363 | | | | — | | | | (2,726,212 | ) | | | 54,132,151 | | | | 1,611,514,141 | | | | — | | | | 16,930,317 | | | | 10.2 | % |
Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 45,364,019 | | | | 154,111,288 | | | | (199,423,160 | ) | | | 52,147 | | | | 52,147 | | | | 15,773 | | | | — | | | | —a | |
Templeton Growth Fund Inc., Class R6 | | | 68,244,005 | | | | 452,561 | | | | (6,591,480 | ) | | | 62,105,086 | | | | 1,619,079,587 | | | | — | | | | 18,099,991 | | | | 11.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | $ | 4,840,496,089 | | | $ | 43,102,114 | | | $ | 34,586,522 | | | | | |
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aRounds to less than 0.1%
4. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.
At December 31, 2016, the capital loss carryforwards were as follows:
| | | | |
| | | Franklin Founding Funds Allocation Fund | |
Capital loss carryforwards subject to expiration: | | | | |
2017 | | | $1,091,470,427 | |
2018 | | | 465,945,460 | |
Capital loss carryforwards not subject to expiration: | | | | |
Short Term | | | 1,107,590 | |
Long term | | | 48,368,501 | |
| | | | |
Total capital loss carryforwards | | | $1,606,891,978 | |
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FRANKLIN FUND ALLOCATOR SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
4. Income Taxes (continued)
At June 30, 2017, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
| | | | | | | | |
| | | Franklin
Corefolio
Allocation Fund | | | Franklin
Founding Funds
Allocation Fund | |
| |
Cost of investments | | | $512,750,098 | | | | $4,482,386,641 | |
| | | | |
| | |
Unrealized appreciation | | | $238,733,225 | | | | $ 446,248,873 | |
Unrealized depreciation | | | (3,644,990 | ) | | | (88,139,425 | ) |
| | | | |
Net unrealized appreciation (depreciation) | | | $235,088,235 | | | | $ 358,109,448 | |
| | | | |
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of short term capital gains from Underlying Funds and wash sales.
5. Investment Transactions
Purchases and sales of Underlying Funds (excluding short term securities) for the period ended June 30, 2017, were as follows:
| | | | | | | | |
| | | Franklin
Corefolio
Allocation Fund | | | Franklin
Founding Funds
Allocation Fund | |
| | | | |
Purchases | | | $ 1,100,000 | | | | $ 22,000,000 | |
Sales | | | $25,715,930 | | | | $320,071,657 | |
6. Credit Facility
The Funds, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matures on February 9, 2018. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.
Under the terms of the Global Credit Facility, the Funds shall, in addition to interest charged on any borrowings made by the Funds and other costs incurred by the Funds, pay their share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon their relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statements of Operations. During the period ended June 30, 2017, the Funds did not use the Global Credit Facility.
7. Fair Value Measurements
The Funds follow a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Funds’ own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds’ financial instruments and are summarized in the following fair value hierarchy:
| | • | | Level 1 – quoted prices in active markets for identical financial instruments |
| | • | | Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.) |
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FRANKLIN FUND ALLOCATOR SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
| | • | | Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of financial instruments) |
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
For movements between the levels within the fair value hierarchy, the Funds have adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.
At June 30, 2017, all of the Funds’ investments in financial instruments carried at fair value were valued using Level 1 inputs. For detailed categories, see the accompanying Statements of Investments.
8. Investment Company Reporting Modernization
In October 2016, the U.S. Securities and Exchange Commission adopted new rules and amended existing rules (together, final rules) intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosures about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017. Management has reviewed the requirements and believes the adoption of the amendments to Regulation S-X will not have a material impact on the Funds’ financial statements and related disclosures.
9. Subsequent Events
The Funds have evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure other than those already disclosed in the financial statements.
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FRANKLIN FUND ALLOCATOR SERIES
Shareholder Information
Proxy Voting Policies and Procedures
The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.
Quarterly Statement of Investments
The Trust files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.
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Semiannual Report and Shareholder Letter
Franklin Fund Allocator Series
Fund Administrator
Franklin Templeton Services, LLC
Distributor
Franklin Templeton Distributors, Inc.
(800) DIAL BEN® / 342-5236
franklintempleton.com
Shareholder Services
(800) 632-2301
Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.
To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.
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| © 2017 Franklin Templeton Investments. All rights reserved. | | FAS2 S 08/17 |
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| | | Semiannual Report and Shareholder Letter June 30, 2017 |
Franklin Fund Allocator Series
Franklin LifeSmart™
Retirement Income Fund
2020 Retirement Target Fund
2025 Retirement Target Fund
2030 Retirement Target Fund
2035 Retirement Target Fund
2040 Retirement Target Fund
2045 Retirement Target Fund
2050 Retirement Target Fund
2055 Retirement Target Fund
Sign up for electronic delivery at franklintempleton.com/edelivery
Franklin Templeton Investments
Gain From Our Perspective®
At Franklin Templeton Investments, we’re dedicated to one goal: delivering exceptional asset management for our clients. By bringing together multiple, world-class investment teams in a single firm, we’re able to offer specialized expertise across styles and asset classes, all supported by the strength and resources of one of the world’s largest asset managers. This has helped us to become a trusted partner to individual and institutional investors across the globe.
Dear Shareholder:
The six months ended June 30, 2017, benefited from mostly upbeat economic data, improved U.S. corporate earnings and generally supportive monetary policies. The U.S. job market continued to improve as the unemployment rate declined.
In March, the U.S. Federal Reserve (Fed) raised its target range 0.25% for the second time in three months to 0.75%–1.00%. The Fed once again raised its target range a quarter point to 1.00%–1.25% at its June meeting. Despite low inflation, the Fed made its most recent decision amid signs of a strengthening labor market and moderately rising economic activity.
In this environment, U.S. stocks, as measured by the Standard & Poor’s® 500 Index, ended the period with a +9.34% total return.1 Stocks in global developed and emerging markets, as measured by the MSCI All Country World Index, ended the period with a +11.82% total return.1 Global fixed income bonds, as measured by the Bloomberg Barclays Multiverse Index, posted a +4.58% six-month total return.1 Short-term investments, as measured by the Citigroup 3-Month Treasury Bill Index, returned +0.30%.2
We are committed to our long-term perspective and disciplined investment approach as we conduct diligent, fundamental analysis of securities with a continual emphasis on investment risk management.
We believe active, professional investment management serves investors well. We also recognize the important role of financial advisors in today’s markets and encourage investors
to continue to seek their advice. Amid changing markets and economic conditions, we are confident investors with a well-diversified portfolio and a patient, long-term outlook will be well positioned for the years ahead.
In addition, Franklin Fund Allocator Series’ semiannual report includes more detail about prevailing conditions and a discussion about investment decisions during the period. Please remember all securities markets fluctuate, as do mutual fund share prices.
We thank you for investing with Franklin Templeton, welcome your questions and comments, and look forward to serving your investment needs in the years ahead.
Sincerely,
Rupert H. Johnson, Jr.
Chairman
Franklin Fund Allocator Series
This letter reflects our analysis and opinions as of June 30, 2017, unless otherwise indicated. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.
1. Source: Morningstar.
2. Source: FactSet.
See www.franklintempletondatasources.com for additional data provider information.
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| Not FDIC Insured | | | | | May Lose Value | | | | | No Bank Guarantee |
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Contents
Semiannual Report
Visit franklintempleton.com for fund updates, to access your account, or to find helpful financial planning tools.
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Semiannual Report
Economic and Market Overview
The global economy generally expanded during the period under review. In this environment, global developed and emerging market stocks rose, as measured by the MSCI All Country World Index. Global markets were aided by improved industrial commodity prices at certain points during the period, generally upbeat economic data across regions, investor optimism about pro-growth and pro-business policies in the U.S., hopes of tax reforms under the Trump administration, Emmanuel Macron’s election as France’s president and encouraging corporate earnings reports.
However, investors expressed concerns about the timing and economic effects of the U.K.’s exit from the European Union (also known as “Brexit”) and the U.S. executive order banning entry from some Muslim-majority countries. Other headwinds included the health of European banks, concerns about political uncertainty in the U.S. and European Union, geopolitical tensions in certain regions, worries about global oversupply in oil production despite a pact to extend cuts, and hawkish comments from key central bankers around the world toward period-end.
U.S. economic growth decelerated in 2017’s first quarter, largely due to slower growth in consumer spending and declines in private inventory investment and government spending. However, growth accelerated in the second quarter due to increases in consumer spending, business investment and federal government spending. The unemployment rate decreased from 4.7% in December 2016 to 4.4% at period-end.1 Annual inflation, as measured by the Consumer Price Index, decreased from 2.1% to 1.6% during the period. After increasing its benchmark interest rate in March, the U.S. Federal Reserve (Fed), at its June meeting, made the widely anticipated increase to its target range for the federal funds rate from 0.75%–1.00% to 1.00%–1.25%, amid signs of a growing U.S. economy, a strengthening labor market and an improvement in business spending.
In Europe, the U.K.’s economy grew at a slower rate in 2017’s first quarter over the previous quarter, largely due to slower growth in household spending. The eurozone’s growth increased in the first quarter over the previous quarter. The bloc’s annual inflation rate fluctuated during the reporting period and ended slightly higher from where it began. During the period, the European Central Bank kept its key policy rates unchanged.
In Asia, Japan’s quarterly gross domestic product (GDP) remained unchanged in 2017’s first quarter compared to 2016’s fourth quarter. In April 2017, the Bank of Japan (BOJ) slightly increased its GDP forecasts for the 2017–2018 fiscal year. However, the BOJ lowered its inflation forecast.
In emerging markets, Brazil’s quarterly GDP grew for the first time in two years, as its first-quarter 2017 GDP grew compared to the previous quarter. The country’s central bank cut its benchmark interest rate four times between January and June 2017 to spur economic growth. Russia’s GDP grew in 2017’s first quarter compared to the prior-year period. The Bank of Russia reduced its key interest rate in March, April and June 2017 to try to revive its economy. China’s economy grew faster in the first half of 2017 compared to the first half of 2016, driven by solid growth in industrial production, services, fixed-asset investment, retail sales, and imports and exports. The People’s Bank of China left its benchmark interest rate unchanged during the period. Overall, emerging market stocks, as measured by the MSCI Emerging Markets Index, rose during the period.
The foregoing information reflects our analysis and opinions as of June 30, 2017. The information is not a complete analysis of every aspect of any market, country, industry, security or fund.
Statements of fact are from sources considered reliable.
1. Source: Bureau of Labor Statistics.
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Franklin LifeSmart Retirement Income Fund
This semiannual report for Franklin LifeSmart Retirement Income Fund covers the period ended June 30, 2017.
Your Fund’s Goal and Main Investments
The Fund seeks to make monthly distributions, while preserving the investors’ capital over the long term. The Fund employs an asset allocation strategy, combined with an income generation strategy, designed for investors in retirement. Under normal market conditions, the Fund allocates its assets among the broad asset classes of equity, fixed income and alternative (non-traditional) investments by investing primarily in a distinctly weighted combination of underlying funds, predominantly other Franklin Templeton mutual funds and exchange-traded funds (ETFs), based on each underlying fund’s predominant asset class and strategy.
Asset Allocation*
Based on Total Net Assets as of 6/30/17
*The asset allocation is based on the Statement of Investments (SOI), which classifies each underlying fund and other fund investments into a broad asset class based on its predominant investments under normal market conditions.
Performance Overview
The Fund’s Class A shares delivered a +2.90% cumulative total return for the six months ended June 30, 2017. In comparison, the Fund’s equity benchmark, the MSCI All Country World Index (ACWI), which measures equity market performance in global developed and emerging markets, generated a +11.82% total return.1 The Fund’s fixed income benchmark, the
Bloomberg Barclays Multiverse Index, a broad-based measure of the global fixed income bond market, delivered a +4.58% total return.1 The Citigroup 3-Month Treasury Bill Index, a proxy for short-term investments and other net assets, returned +0.30%.2 You can find the Fund’s long-term performance data in the Performance Summary beginning on page 6.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
Investment Strategy
When selecting equity funds, we consider the foreign and domestic exposure, market capitalization ranges, and investment style (growth vs. value) of the underlying funds and other fund investments (collectively, “fund investments”). When selecting fixed income funds, we focus primarily on maximizing income appropriate to the Fund’s specific risk profile. In evaluating the risk level of the fund investments, including alternative investment funds, we analyze such factors as: (a) relative and absolute performance, including correlations with other fund investments as well as corresponding benchmarks, and (b) their volatility (the variability of returns from one period to the next).
In order to generate additional income for the Fund, we employ an income generation strategy. Under this strategy, we regularly engage in: (1) a direct covered call strategy by writing covered call options on equity indexes, equity ETFs and equity index futures; and (2) an indirect covered call strategy through the use of equity index-linked notes, which are notes that synthetically combine the return of the ownership of an equity index and a covered call on that index and produce coupon payments to the Fund. In addition, we may engage in equity index futures and purchase exchange-traded and OTC put options on equity indexes, equity ETFs and equity index futures for hedging purposes to tactically adjust the Fund’s exposure to certain asset classes and for efficient portfolio management purposes. The derivatives in which we invest for the Fund’s income generation strategy are allocated to the
1. Source: Morningstar.
2. Source: FactSet.
The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s SOI, which begins on page 55.
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FRANKLIN LIFESMART RETIREMENT INCOME FUND
| | | | |
| Fund Holdings | | | |
| 6/30/17 | | | |
| | | % of Total
Net Assets | |
Franklin Floating Rate Daily Access Fund – Class R6 | | | 23.7% | |
Franklin U.S. Government Securities Fund – Class R6 | | | 21.5% | |
Franklin Income Fund – Class R6 | | | 17.3% | |
iShares iBoxx High Yield Corporate Bond ETF | | | 9.7% | |
Franklin Strategic Income Fund – Class R6 | | | 9.4% | |
iShares U.S. Preferred Stock ETF | | | 8.9% | |
Morgan Stanley Indexed-Linked Note | | | 5.1% | |
Templeton Global Total Return Fund – Class R6 | | | 4.3% | |
Fund’s equity asset class for purposes of the Fund’s asset allocations.
Manager’s Discussion
The Fund’s performance can be attributed largely to its allocation among equities and fixed income securities and to the actual performance of the fund investments.
At period-end, our largest domestic fixed income fund holding, Franklin Floating Rate Daily Access Fund – Class R6, and our foreign fixed income fund holding, Templeton Global Total Return Fund – Class R6, underperformed the Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index. Our domestic equity fund holding, iShares U.S. Preferred Stock ETF, underperformed the Fund’s equity benchmark, the MSCI ACWI. Our domestic hybrid fund holding, Franklin Income Fund – Class R6, underperformed the MSCI ACWI and the Bloomberg Barclays Multiverse Index. The index-linked note increased the level of income the fund was able to generate.
CFA® is a trademark owned by CFA Institute.
Thank you for your continued participation in Franklin LifeSmart Retirement Income Fund. We look forward to serving your future investment needs.
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| |
T. Anthony Coffey, CFA |
| | |
| |
Thomas A. Nelson, CFA |
| | James D. Macey, CFA |
| | Portfolio Managers |
The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
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FRANKLIN LIFESMART RETIREMENT INCOME FUND
Performance Summary as of June 30, 2017
The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses.
Performance as of 6/30/171
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
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| Share Class | | Cumulative
Total Return2 | | | Average Annual
Total Return3 | |
| | |
| A | | | | | | | | |
6-Month | | | +2.90% | | | | -3.03% | |
1-Year | | | +6.38% | | | | +0.26% | |
5-Year | | | +29.10% | | | | +4.01% | |
10-Year | | | +45.49% | | | | +3.21% | |
| | |
| Advisor | | | | | | | | |
6-Month | | | +3.12% | | | | +3.12% | |
1-Year | | | +6.72% | | | | +6.72% | |
5-Year | | | +30.98% | | | | +5.55% | |
10-Year | | | +49.84% | | | | +4.13% | |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
See page 8 for Performance Summary footnotes.
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FRANKLIN LIFESMART RETIREMENT INCOME FUND
PERFORMANCE SUMMARY
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| Net Asset Value | | | | | | | | | |
| | | |
| Share Class (Symbol) | | 6/30/17 | | | 12/31/16 | | | Change | |
A (FTRAX) | | | $11.06 | | | | $10.96 | | | | +$0.10 | |
C (FRTCX) | | | $10.93 | | | | $10.83 | | | | +$0.10 | |
R (FBRLX) | | | $11.02 | | | | $10.92 | | | | +$0.10 | |
R6 (FLMTX) | | | $11.12 | | | | $11.01 | | | | +$0.11 | |
Advisor (FLRDX) | | | $11.11 | | | | $11.00 | | | | +$0.11 | |
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| Distributions4 (1/1/17–6/30/17) | | | |
| Share Class | | Net Investment
Income | |
A | | | $0.2166 | |
C | | | $0.1734 | |
R | | | $0.2016 | |
R6 | | | $0.2340 | |
Advisor | | | $0.2310 | |
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| Total Annual Operating Expenses5 | | | | | |
| | |
| Share Class | | With Waiver | | | Without Waiver |
A | | | 0.85% | | | 1.45% |
Advisor | | | 0.60% | | | 1.20% |
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FRANKLIN LIFESMART RETIREMENT INCOME FUND
PERFORMANCE SUMMARY
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
All investments involve risks, including possible loss of principal. Since the Fund invests in underlying funds, which may engage in a variety of investment strategies involving certain risks, the Fund is subject to those same risks. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks which are heightened in developing countries. Investments in equity-linked notes (ELNs) often have risks similar to their underlying securities, which could include management, market, and, as applicable, foreign securities and currency risks. In addition, ELNs are subject to certain debt securities risks, such as interest rate and credit risks, as well as counterparty and liquidity risk. Investments in derivatives involve costs and can create economic leverage, which may result in significant volatility and cause the fund to participate in losses (as well as gains) that exceed the fund’s initial investment. The Fund is not guaranteed to achieve its investment goal of preserving capital while making monthly distributions nor is there any guarantee that the Fund will provide sufficient income at or through the investor’s retirement. In addition, some of its distributions may be treated in part as a return of capital which will decrease shareholders’ cost basis in the Fund and affect the amount of any capital gain or loss that shareholders realize when selling or exchanging Fund shares. The annual payout rate may be adjusted higher or lower from year to year, and could vary substantially over time. It is possible for the Fund to suffer substantial investment losses and simultaneously experience additional asset reductions as a result of its distributions to shareholders under the managed distribution policy. Investors who hold the Fund within a tax-advantaged retirement account should consult their tax advisors to discuss tax consequences of receiving cash distributions. In addition, use of the Fund or election of the option to receive distribution payments in cash may be restricted in certain retirement plans by the terms of the governing plan documents and/or the discretion of the plan administrator. Investors are strongly advised to consult with their financial advisor for assistance before selecting the appropriate fund, based on their goals and personal situations, including time horizon, retirement income needs, risk tolerance and tax bracket. These and other risks are described more fully in the Fund’s prospectus.
1. The Fund has an expense reduction and a fee waiver associated with any investments it makes in a Franklin Templeton money fund, contractually guaranteed through 4/30/18. Fund investment results reflect the expense reduction and fee waiver; without these reductions, the results would have been lower. As of May 1, 2016, the Fund changed its name from Franklin LifeSmart 2015 Retirement Target Date Fund in connection with changes to its strategies including, among other things, the addition of an income generation strategy to support the Fund’s managed distribution policy. Prior to that, as of October 2013, the Fund’s glide path was modified, and among other changes, reflects a lower starting allocation to equity funds; such a change can impact performance.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the period indicated. Return for less than one year, if any, has not been annualized.
4. A portion or all of the distributions may be reclassified as return of capital or capital gain once final tax designations are known.
5. Figures are as stated in the Fund’s current prospectus, including the effect of acquired fund fees and expenses, and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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FRANKLIN LIFESMART RETIREMENT INCOME FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual
(actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
Share
Class | | Beginning
Account
Value 1/1/17 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Net
Annualized
Expense
Ratio2 |
| | | | | | |
A | | $1,000 | | $1,029.00 | | $1.51 | | $1,023.31 | | $1.51 | | 0.30% |
C | | $1,000 | | $1,025.30 | | $5.27 | | $1,019.59 | | $5.26 | | 1.05% |
R | | $1,000 | | $1,028.70 | | $2.77 | | $1,022.07 | | $2.76 | | 0.55% |
R6 | | $1,000 | | $1,031.40 | | $0.00 | | $1,024.79 | | $0.00 | | 0.00% |
Advisor | | $1,000 | | $1,031.20 | | $0.25 | | $1,024.55 | | $0.25 | | 0.05% |
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
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| franklintempleton.com | | Semiannual Report | | | 9 | |
Franklin LifeSmart 2020 Retirement Target Fund
This semiannual report for Franklin LifeSmart 2020 Retirement Target Fund covers the period ended June 30, 2017.
Your Fund’s Goal and Main Investments
The Fund seeks the highest level of long-term total return, which consists of capital appreciation and income, consistent with the Fund’s asset allocation. The Fund allocates among the broad asset classes of equity, fixed income and alternative (non-traditional) investments by investing primarily in a distinctly weighted combination of underlying funds, predominantly other Franklin Templeton mutual funds and exchange-traded funds (ETFs), with an increasing emphasis on income as the target date of 2020 approaches. The target date is the approximate retirement year of the investor.
Asset Allocation*
Based on Total Net Assets as of 6/30/17
*The asset allocation is based on the Statement of Investments (SOI), which classifies each underlying fund and other fund investments into a broad asset class based on its predominant investments under normal market conditions.
Performance Overview
The Fund’s Class A shares delivered a +6.26% cumulative total return for the six months ended June 30, 2017. In comparison, the Fund’s equity benchmark, the MSCI All Country World Index (ACWI), which measures equity market performance in global developed and emerging markets, generated a +11.82% total return.1 The Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index, a broad-based measure
of the global fixed income bond market, produced a +4.58% total return.1 The Citigroup 3-Month Treasury Bill Index, a proxy for short-term investments and other net assets, returned +0.30%.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 12.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
Investment Strategy
When selecting equity funds, we consider the foreign and domestic exposure, market capitalization ranges, and investment style (growth vs. value) of the underlying funds and other fund investments (collectively, “fund investments”). When selecting fixed income funds, we focus primarily on maximizing income appropriate to the Fund’s specific risk profile. In evaluating the risk level of the fund investments, including alternative investment funds, we analyze such factors as: (a) relative and absolute performance, including correlations with other fund investments as well as corresponding benchmarks, and (b) their volatility (the variability of returns from one period to the next). We attempt to invest the assets of each Fund with a target date comprising Franklin Fund Allocator Series (each a “Target Date Fund”) in the same fund investments but will vary the fund investments’ allocation percentages based upon each Fund’s risk/return level. We change the Fund’s target asset allocations over time, reducing its exposure to equity investments, and it becomes increasingly conservative until the stated target date. At the “landing point” (reached at the target date), the Fund reaches its most conservative asset allocation and thereafter, such strategic asset allocation will become fixed.
Manager’s Discussion
The Fund’s performance can be attributed largely to its allocation among equities and fixed income securities and to the actual performance of the fund investments. This allocation
1. Source: Morningstar.
2. Source: FactSet.
The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s SOI, which begins on page 61.
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FRANKLIN LIFESMART 2020 RETIREMENT TARGET FUND
| | | | |
| Top 10 Fund Holdings | |
| 6/30/17 | |
| | | % of Total
Net Assets | |
Franklin Low Duration Total Return Fund – Class R6 | | | 19.7% | |
Templeton Global Total Return Fund – Class R6 | | | 11.0% | |
Franklin Growth Fund – Class R6 | | | 10.4% | |
Franklin Rising Dividends Fund – Class R6 | | | 4.3% | |
Franklin Growth Opportunities Fund – Class R6 | | | 4.1% | |
iShares Core U.S. Aggregate Bond ETF | | | 4.0% | |
Franklin International Small Cap Growth Fund – Class R6 | | | 3.6% | |
Franklin U.S. Government Securities Fund – Class R6 | | | 3.5% | |
Franklin LibertyQ Emerging Markets ETF | | | 3.3% | |
Franklin K2 Long Short Credit Fund – Class R6 | | | 2.9% | |
shifts every year, in accordance with the target date associated with the portfolio.
At period-end, our largest domestic value fund holding, Franklin Rising Dividends Fund – Class R6, underperformed the Fund’s equity benchmark, the MSCI ACWI, while our largest domestic growth fund holding, Franklin Growth Fund – Class R6, outperformed the index. Our largest foreign equity fund holding, Franklin LibertyQ Emerging Markets ETF – Class R6, also outperformed the index. On the fixed income side, our largest domestic fixed income fund holding, Franklin Low Duration Total Return Fund – Class R6, and our foreign fixed income fund holding, Templeton Global Total Return Fund – Class R6, underperformed the Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index.
Thank you for your continued participation in Franklin LifeSmart 2020 Retirement Target Fund. We look forward to serving your future investment needs.
| | |
| |
T. Anthony Coffey, CFA |
| | |
| |
Thomas A. Nelson, CFA |
| | James D. Macey, CFA |
| | Portfolio Managers |
The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
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| franklintempleton.com | | Semiannual Report | | | 11 | |
FRANKLIN LIFESMART 2020 RETIREMENT TARGET FUND
Performance Summary as of June 30, 2017
The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 6/30/171
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | | | | | |
| Share Class | | Cumulative
Total Return2 | | | Average Annual
Total Return3 | |
| | |
| A | | | | | | | | |
6-Month | | | +6.26% | | | | +0.17% | |
1-Year | | | +9.05% | | | | +2.80% | |
3-Year | | | +7.49% | | | | +0.44% | |
Since Inception (7/1/13) | | | +24.28% | | | | +4.03% | |
| | |
| Advisor | | | | | | | | |
6-Month | | | +6.46% | | | | +6.46% | |
1-Year | | | +9.30% | | | | +9.30% | |
3-Year | | | +8.45% | | | | +2.74% | |
Since Inception (7/1/13) | | | +25.68% | | | | +5.88% | |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
See page 13 for Performance Summary footnotes.
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| 12 | | Semiannual Report | | franklintempleton.com |
FRANKLIN LIFESMART 2020 RETIREMENT TARGET FUND
PERFORMANCE SUMMARY
Distributions (1/1/17–6/30/17)
| | | | |
| Share Class | | Net Investment
Income | |
A | | | $0.0485 | |
C | | | $0.0109 | |
R | | | $0.0353 | |
R6 | | | $0.0636 | |
Advisor | | | $0.0613 | |
Total Annual Operating Expenses4
| | | | | | |
| Share Class | | With Waiver | | | Without Waiver |
A | | | 0.95% | | | 1.63% |
Advisor | | | 0.70% | | | 1.38% |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
The Fund’s investment risk changes over time as its asset allocation changes. Since the Fund invests in underlying funds, which may engage in a variety of investment strategies involving certain risks, the Fund is subject to those same risks. All investments involve risks, including possible loss of principal. Principal invested is not guaranteed at any time, including at or after the Fund’s retirement target date; nor is there any guarantee that the Fund will provide sufficient income at or through the investor’s retirement. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks which are heightened in developing countries. These risks are described more fully in the Fund’s prospectus. Investors should consult their financial advisor for help selecting the appropriate fund of funds, or fund combination, based on an evaluation of their investment objectives, retirement time horizons and risk tolerance.
1. The Fund has an expense reduction and a fee waiver associated with any investments it makes in a Franklin Templeton money fund, contractually guaranteed through 4/30/18. Fund investment results reflect the expense reduction and fee waiver; without these reductions, the results would have been lower. As of October 2013, the Fund’s glide path was modified, and among other changes, reflects a lower starting allocation to equity funds; such a change can impact performance.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Figures are as stated in the Fund’s current prospectus, including the effect of acquired fund fees and expenses, and may differ from the expense ratios disclosed in the Your Funds Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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| franklintempleton.com | | Semiannual Report | | | 13 | |
FRANKLIN LIFESMART 2020 RETIREMENT TARGET FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual
(actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
Share
Class | | Beginning
Account
Value 1/1/17 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Net
Annualized
Expense
Ratio2 |
| | | | | | |
A | | $1,000 | | $1,062.60 | | $1.53 | | $1,023.31 | | $1.51 | | 0.30% |
C | | $1,000 | | $1,058.50 | | $5.36 | | $1,019.59 | | $5.26 | | 1.05% |
R | | $1,000 | | $1,061.50 | | $2.81 | | $1,022.07 | | $2.76 | | 0.55% |
R6 | | $1,000 | | $1,064.90 | | $0.00 | | $1,024.79 | | $0.00 | | 0.00% |
Advisor | | $1,000 | | $1,064.60 | | $0.26 | | $1,024.55 | | $0.25 | | 0.05% |
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
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| 14 | | Semiannual Report | | franklintempleton.com |
Franklin LifeSmart 2025 Retirement Target Fund
This semiannual report for Franklin LifeSmart 2025 Retirement Target Fund covers the period ended June 30, 2017.
Your Fund’s Goal and Main Investments
The Fund seeks the highest level of long-term total return, which consists of capital appreciation and income, consistent with the Fund’s asset allocation. The Fund allocates among the broad asset classes of equity, fixed income and alternative (non-traditional) investments by investing primarily in a distinctly weighted combination of underlying funds, predominantly other Franklin Templeton mutual funds and exchange-traded funds (ETFs), with an increasing emphasis on income as the target date of 2025 approaches. The target date is the approximate retirement year of the investor.
Asset Allocation*
Based on Total Net Assets as of 6/30/17
*The asset allocation is based on the Statement of Investments (SOI), which classifies each underlying fund and other fund investments into a broad asset class based on its predominant investments under normal market conditions.
Performance Overview
The Fund’s Class A shares had a +7.93% cumulative total return for the six months ended June 30, 2017. In comparison, the Fund’s equity benchmark, the MSCI All Country World Index (ACWI), which measures equity market performance in global developed and emerging markets, generated a +11.82% total return.1 The Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index, a broad-based measure
of the global fixed income bond market, produced a +4.58% total return.1 The Citigroup 3-Month Treasury Bill Index, a proxy for short-term investments and other net assets, returned +0.30%.2 You can find the Fund’s long-term performance data in the Performance Summary beginning on page 17.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
Investment Strategy
When selecting equity funds, we consider the foreign and domestic exposure, market capitalization ranges, and investment style (growth vs. value) of the underlying funds and other fund investments (collectively, “fund investments”). When selecting fixed income funds, we focus primarily on maximizing income appropriate to the Fund’s specific risk profile. In evaluating the risk level of the fund investments, including alternative investment funds, we analyze such factors as: (a) relative and absolute performance, including correlations with other fund investments as well as corresponding benchmarks, and (b) their volatility (the variability of returns from one period to the next). We attempt to invest the assets of each Fund with a target date comprising Franklin Fund Allocator Series (each a “Target Date Fund”) in the same fund investments but will vary the fund investments’ allocation percentages based upon each Fund’s risk/return level. We change the Fund’s target asset allocations over time, reducing its exposure to equity investments, and it becomes increasingly conservative until the stated target date. At the “landing point” (reached at the target date), the Fund reaches its most conservative asset allocation and thereafter, such strategic asset allocation will become fixed.
Manager’s Discussion
The Fund’s performance can be attributed largely to its allocation among equities and fixed income securities and to the actual performance of the fund investments. This allocation
1. Source: Morningstar.
2. Source: FactSet.
The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s SOI, which begins on page 67.
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| franklintempleton.com | | Semiannual Report | | | 15 | |
FRANKLIN LIFESMART 2025 RETIREMENT TARGET FUND
| | | | |
| Top 10 Fund Holdings | | | |
| 6/30/17 | | | |
| | | % of Total Net Assets | |
| Franklin Growth Fund – Class R6 | | | 14.0% | |
Franklin Low Duration Total Return Fund – Class R6 | | | 12.8% | |
Templeton Global Total Return Fund – Class R6 | | | 7.0% | |
Franklin Rising Dividends Fund – Class R6 | | | 5.8% | |
Franklin Growth Opportunities Fund – Class R6 | | | 5.4% | |
Franklin LibertyQ Emerging Markets ETF | | | 4.9% | |
Franklin International Small Cap Growth Fund – Class R6 | | | 4.9% | |
Financial Select Sector SPDR ETF | | | 3.6% | |
Franklin LibertyQ U.S. Equity ETF | | | 3.5% | |
Templeton Foreign Fund – Class R6 | | | 3.4% | |
shifts every year, in accordance with the target date associated with the portfolio.
At period-end, our largest domestic value fund holding, Franklin Rising Dividends Fund – Class R6, underperformed the Fund’s equity benchmark, the MSCI ACWI, while our largest domestic growth fund holding, Franklin Growth Fund – Class R6, outperformed the index. Our largest foreign equity fund holding, Franklin LibertyQ Emerging Markets ETF, also outperformed the index. On the fixed income side, our largest domestic fixed income fund holding, Franklin Low Duration Total Return Fund – Class R6, and our foreign fixed income fund holding, Templeton Global Total Return Fund – Class R6 underperformed the Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index.
Thank you for your continued participation in Franklin LifeSmart 2025 Retirement Target Fund. We look forward to serving your future investment needs.
| | |
| |
T. Anthony Coffey, CFA |
| | |
| | 
Thomas A. Nelson, CFA |
| | James D. Macey, CFA |
| | Portfolio Managers |
The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
| | | | |
| | | |
| 16 | | Semiannual Report | | franklintempleton.com |
FRANKLIN LIFESMART 2025 RETIREMENT TARGET FUND
Performance Summary as of June 30, 2017
The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 6/30/171
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | | | | | |
| Share Class | | Cumulative Total Return2 | | | Average Annual
Total Return3 | |
| | |
| A | | | | | | | | |
6-Month | | | +7.93% | | | | +1.73% | |
1-Year | | | +11.19% | | | | +4.77% | |
5-Year | | | +45.73% | | | | +6.56% | |
10-Year | | | +52.25% | | | | +3.68% | |
| | |
| Advisor | | | | | | | | |
6-Month | | | +8.09% | | | | +8.09% | |
1-Year | | | +11.42% | | | | +11.42% | |
5-Year | | | +47.72% | | | | +8.12% | |
10-Year | | | +56.61% | | | | +4.59% | |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
See page 18 for Performance Summary footnotes.
| | | | | | |
| | | |
| franklintempleton.com | | Semiannual Report | | | 17 | |
FRANKLIN LIFESMART 2025 RETIREMENT TARGET FUND
PERFORMANCE SUMMARY
Distributions (1/1/17–6/30/17)
| | | | | | | | |
| Share Class | | | | | Net Investment
Income | |
A | | | | | | | $0.0497 | |
C | | | | | | | $0.0497 | |
R | | | | | | | $0.0497 | |
R6 | | | | | | | $0.0497 | |
Advisor | | | | | | | $0.0497 | |
| | | | | | |
| Total Annual Operating Expenses4 |
| | |
| Share Class | | With Waiver | | | Without Waiver |
A | | | 0.97% | | | 1.43% |
Advisor | | | 0.72% | | | 1.18% |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
The Fund’s investment risk changes over time as its asset allocation changes. Since the Fund invests in underlying funds, which may engage in a variety of investment strategies involving certain risks, the Fund is subject to those same risks. All investments involve risks, including possible loss of principal. Principal invested is not guaranteed at any time, including at or after the Fund’s retirement target date; nor is there any guarantee that the Fund will provide sufficient income at or through the investor’s retirement. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks which are heightened in developing countries. These risks are described more fully in the Fund’s prospectus. Investors should consult their financial advisor for help selecting the appropriate fund of funds, or fund combination, based on an evaluation of their investment objectives, retirement time horizons and risk tolerance.
1. The Fund has an expense reduction and a fee waiver associated with any investments it makes in a Franklin Templeton money fund, contractually guaranteed through 4/30/18. Fund investment results reflect the expense reduction and fee waiver; without these reductions, the results would have been lower. As of October 2013, the Fund’s glide path was modified, and among other changes, reflects a lower starting allocation to equity funds; such a change can impact performance.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Figures are as stated in the Fund’s current prospectus, including the effect of acquired fund fees and expenses, and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
| | | | |
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| 18 | | Semiannual Report | | franklintempleton.com |
FRANKLIN LIFESMART 2025 RETIREMENT TARGET FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual
(actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
Share
Class | | Beginning
Account
Value 1/1/17 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Net
Annualized
Expense
Ratio2 |
| | | | | | |
A | | $1,000 | | $1,079.30 | | $1.55 | | $1,023.31 | | $1.51 | | 0.30% |
C | | $1,000 | | $1,074.30 | | $5.40 | | $1,019.59 | | $5.26 | | 1.05% |
R | | $1,000 | | $1,077.90 | | $2.83 | | $1,022.07 | | $2.76 | | 0.55% |
R6 | | $1,000 | | $1,080.80 | | $0.00 | | $1,024.79 | | $0.00 | | 0.00% |
Advisor | | $1,000 | | $1,080.90 | | $0.26 | | $1,024.55 | | $0.25 | | 0.05% |
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
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| franklintempleton.com | | Semiannual Report | | | 19 | |
Franklin LifeSmart 2030 Retirement Target Fund
This semiannual report for Franklin LifeSmart 2030 Retirement Target Fund covers the period ended June 30, 2017.
Your Fund’s Goal and Main Investments
The Fund seeks the highest level of long-term total return, which consists of capital appreciation and income, consistent with the Fund’s asset allocation. The Fund allocates among the broad asset classes of equity, fixed income and alternative (non-traditional) investments by investing primarily in a distinctly weighted combination of underlying funds, predominantly other Franklin Templeton mutual funds and exchange-traded funds (ETFs), with an increasing emphasis on income as the target date of 2030 approaches. The target date is the approximate retirement year of the investor.
Asset Allocation*
Based on Total Net Assets as of 6/30/17
*The asset allocation is based on the Statement of Investments (SOI), which classifies each underlying fund and other fund investments into a broad asset class based on its predominant investments under normal market conditions.
Performance Overview
The Fund’s Class A shares had a +8.68% cumulative total return for the six months ended June 30, 2017. In comparison, the Fund’s equity benchmark, the MSCI All Country World Index (ACWI), which measures equity market performance in global developed and emerging markets, generated a +11.82% total return.1 The Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index, a broad-based measure
of the global fixed income bond market, produced a +4.58% total return.1 The Citigroup 3-Month Treasury Bill Index, a proxy for short-term investments and other net assets, returned +0.30%.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 22.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
Investment Strategy
When selecting equity funds, we consider the foreign and domestic exposure, market capitalization ranges, and investment style (growth vs. value) of the underlying funds and other fund investments (collectively, “fund investments”). When selecting fixed income funds, we focus primarily on maximizing income appropriate to the Fund’s specific risk profile. In evaluating the risk level of the fund investments, including alternative investment funds, we analyze such factors as: (a) relative and absolute performance, including correlations with other fund investments as well as corresponding benchmarks, and (b) their volatility (the variability of returns from one period to the next). We attempt to invest the assets of each Fund with a target date comprising Franklin Fund Allocator Series (each a “Target Date Fund”) in the same fund investments but will vary the fund investments’ allocation percentages based upon each Fund’s risk/return level. We change the Fund’s target asset allocations over time, reducing its exposure to equity investments, and it becomes increasingly conservative until the stated target date. At the “landing point” (reached at the target date), the Fund reaches its most conservative asset allocation and thereafter, such strategic asset allocation will become fixed.
Manager’s Discussion
The Fund’s performance can be attributed largely to its allocation among equities and fixed income securities and to the actual performance of the fund investments. This allocation
1. Source: Morningstar.
2. Source: FactSet.
The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s SOI, which begins on page 74.
| | | | |
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| 20 | | Semiannual Report | | franklintempleton.com |
FRANKLIN LIFESMART 2030 RETIREMENT TARGET FUND
| | | | |
| Top 10 Fund Holdings | | | |
| 6/30/17 | | | |
| | | % of Total
Net Assets | |
Franklin Growth Fund – Class R6 | | | 15.2% | |
Franklin Low Duration Total Return Fund – Class R6 | | | 9.2% | |
Franklin Rising Dividends Fund – Class R6 | | | 6.5% | |
Franklin International Small Cap Growth Fund – Class R6 | | | 6.5% | |
Franklin Growth Opportunities Fund – Class R6 | | | 5.7% | |
Franklin LibertyQ Emerging Markets ETF | | | 5.6% | |
Templeton Global Total Return Fund – Class R6 | | | 5.2% | |
Financial Select Sector SPDR ETF | | | 4.1% | |
Franklin LibertyQ U.S. Equity ETF | | | 3.7% | |
iShares S&P 500 Value ETF | | | 3.4% | |
shifts every year, in accordance with the target date associated with the portfolio.
At period-end, our largest domestic value fund holding, Franklin Rising Dividends Fund – Class R6, underperformed the Fund’s equity benchmark, the MSCI ACWI, while our largest domestic growth fund holding, Franklin Growth Fund – Class R6, outperformed the index. Our largest foreign equity fund holding, Franklin International Small Cap Growth Fund – Class R6, also outperformed the index. On the fixed income side, our largest domestic fixed income fund holding, Franklin Low Duration Total Return Fund – Class R6, and our foreign fixed income fund holding, Templeton Global Total Return Fund – Class R6 underperformed the Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index.
Thank you for your continued participation in Franklin LifeSmart 2030 Retirement Target Fund. We look forward to serving your future investment needs.
| | |
| |
T. Anthony Coffey, CFA |
| | |
| |
Thomas A. Nelson, CFA |
| | James D. Macey, CFA |
| | Portfolio Managers |
The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
| | | | | | |
| | | |
| franklintempleton.com | | Semiannual Report | | | 21 | |
FRANKLIN LIFESMART 2030 RETIREMENT TARGET FUND
Performance Summary as of June 30, 2017
The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 6/30/171
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | | | | | |
| Share Class | | Cumulative
Total Return2 | | | Average Annual
Total Return3 | |
| | |
| A | | | | | | | | |
6-Month | | | +8.68% | | | | +2.39% | |
1-Year | | | +12.29% | | | | +5.82% | |
3-Year | | | +11.33% | | | | +1.62% | |
Since Inception (7/1/13) | | | +29.82% | | | | +5.18% | |
| | |
| Advisor | | | | | | | | |
6-Month | | | +8.84% | | | | +8.84% | |
1-Year | | | +12.70% | | | | +12.70% | |
3-Year | | | +12.27% | | | | +3.93% | |
Since Inception (7/1/13) | | | +31.17% | | | | +7.02% | |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
See page 23 for Performance Summary footnotes.
| | | | |
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| 22 | | Semiannual Report | | franklintempleton.com |
FRANKLIN LIFESMART 2030 RETIREMENT TARGET FUND
PERFORMANCE SUMMARY
Distributions (1/1/17–6/30/17)
| | | | |
| Share Class | | Net Investment
Income | |
A | | | $0.0793 | |
C | | | $0.0793 | |
R | | | $0.0793 | |
R6 | | | $0.0793 | |
Advisor | | | $0.0793 | |
Total Annual Operating Expenses4
| | | | | | | | |
| Share Class | | With Waiver | | | Without Waiver | |
A | | | 0.99% | | | | 1.71% | |
Advisor | | | 0.74% | | | | 1.46% | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
The Fund’s investment risk changes over time as its asset allocation changes. Since the Fund invests in underlying funds, which may engage in a variety of investment strategies involving certain risks, the Fund is subject to those same risks. All investments involve risks, including possible loss of principal. Principal invested is not guaranteed at any time, including at or after the Fund’s retirement target date; nor is there any guarantee that the Fund will provide sufficient income at or through the investor’s retirement. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks which are heightened in developing countries. These risks are described more fully in the Fund’s prospectus. Investors should consult their financial advisor for help selecting the appropriate fund of funds, or fund combination, based on an evaluation of their investment objectives, retirement time horizons and risk tolerance.
1. The Fund has an expense reduction and a fee waiver associated with any investments it makes in a Franklin Templeton money fund, contractually guaranteed through 4/30/18. Fund investment results reflect the expense reduction and fee waiver; without these reductions, the results would have been lower. As of October 2013, the Fund’s glide path was modified, and among other changes, reflects a lower starting allocation to equity funds; such a change can impact performance.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Figures are as stated in the Fund’s current prospectus, including the effect of acquired fund fees and expenses, and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
| | | | | | |
| | | |
| franklintempleton.com | | Semiannual Report | | | 23 | |
FRANKLIN LIFESMART 2030 RETIREMENT TARGET FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual
(actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
Share
Class | | Beginning
Account
Value 1/1/17 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Net
Annualized
Expense
Ratio2 |
| | | | | | |
A | | $1,000 | | $1,086.80 | | $1.55 | | $1,023.31 | | $1.51 | | 0.30% |
C | | $1,000 | | $1,083.10 | | $5.42 | | $1,019.59 | | $5.26 | | 1.05% |
R | | $1,000 | | $1,085.10 | | $2.84 | | $1,022.07 | | $2.76 | | 0.55% |
R6 | | $1,000 | | $1,088.30 | | $0.00 | | $1,024.79 | | $0.00 | | 0.00% |
Advisor | | $1,000 | | $1,088.40 | | $0.26 | | $1,024.55 | | $0.25 | | 0.05% |
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
| | | | |
| | | |
| 24 | | Semiannual Report | | franklintempleton.com |
Franklin LifeSmart 2035 Retirement Target Fund
This semiannual report for Franklin LifeSmart 2035 Retirement Target Fund covers the period ended June 30, 2017.
Your Fund’s Goal and Main Investments
The Fund seeks the highest level of long-term total return, which consists of capital appreciation and income, consistent with the Fund’s asset allocation. The Fund allocates among the broad asset classes of equity, fixed income and alternative (non-traditional) investments by investing primarily in a distinctly weighted combination of underlying funds, predominantly other Franklin Templeton mutual funds and exchange-traded funds (ETFs), with an increasing emphasis on income as the target date of 2035 approaches. The target date is the approximate retirement year of the investor.
Asset Allocation*
Based on Total Net Assets as of 6/30/17
*The asset allocation is based on the Statement of Investments (SOI), which classifies each underlying fund and other fund investments into a broad asset class based on its predominant investments under normal market conditions.
Performance Overview
The Fund’s Class A shares had a +9.36% cumulative total return for the six months ended June 30, 2017. In comparison, the Fund’s equity benchmark, the MSCI All Country World Index (ACWI), which measures equity market performance in global developed and emerging markets, generated a +11.82% total return.1 The Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index, a broad-based measure
of the global fixed income bond market, produced a +4.58% total return.1 The Citigroup 3-Month Treasury Bill Index, a proxy for short-term investments and other net assets, returned +0.30%.2 You can find the Fund’s long-term performance data in the Performance Summary beginning on page 27.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
Investment Strategy
When selecting equity funds, we consider the foreign and domestic exposure, market capitalization ranges, and investment style (growth vs. value) of the underlying funds and other fund investments (collectively, “fund investments”). When selecting fixed income funds, we focus primarily on maximizing income appropriate to the Fund’s specific risk profile. In evaluating the risk level of the fund investments, including alternative investment funds, we analyze such factors as: (a) relative and absolute performance, including correlations with other fund investments as well as corresponding benchmarks, and (b) their volatility (the variability of returns from one period to the next). We attempt to invest the assets of each Fund with a target date comprising Franklin Fund Allocator Series (each a “Target Date Fund”) in the same fund investments but will vary the fund investments’ allocation percentages based upon each Fund’s risk/return level. We change the Fund’s target asset allocations over time, reducing its exposure to equity investments, and it becomes increasingly conservative until the stated target date. At the “landing point” (reached at the target date), the Fund reaches its most conservative asset allocation and thereafter, such strategic asset allocation will become fixed.
Manager’s Discussion
The Fund’s performance can be attributed largely to its allocation among equities and fixed income securities and to the actual performance of the fund investments. This allocation
1. Source: Morningstar.
2. Source: FactSet.
The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s SOI, which begins on page 80.
| | | | | | |
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| franklintempleton.com | | Semiannual Report | | | 25 | |
FRANKLIN LIFESMART 2035 RETIREMENT TARGET FUND
| | | | |
| Top 10 Fund Holdings | | | |
| 6/30/17 | | | |
| | | % of Total
Net Assets | |
Franklin Growth Fund – Class R6 | | | 16.2% | |
Franklin International Small Cap Growth Fund – Class R6 | | | 7.2% | |
Franklin Growth Opportunities Fund – Class R6 | | | 7.1% | |
Franklin Low Duration Total Return Fund – Class R6 | | | 7.0% | |
Franklin Rising Dividends Fund – Class R6 | | | 6.4% | |
Franklin LibertyQ Emerging Markets ETF | | | 5.5% | |
Financial Select Sector SPDR ETF | | | 4.2% | |
Templeton Foreign Fund – Class R6 | | | 4.1% | |
Franklin LibertyQ U.S. Equity ETF | | | 4.1% | |
Franklin Mutual International Fund – Class R6 | | | 4.0% | |
shifts every year, in accordance with the target date associated with the portfolio.
At period-end, our largest domestic value fund holding, Franklin Rising Dividends Fund – Class R6, underperformed the Fund’s equity benchmark, the MSCI ACWI, while our largest domestic growth fund holding, Franklin Growth Fund – Class R6, outperformed the index. Our largest foreign equity fund holding, Franklin International Small Cap Growth Fund – Class R6, also outperformed the index. On the fixed income side, our largest domestic fixed income fund holding, Franklin Low Duration Total Return Fund – Class R6, and our foreign fixed income fund holding, Templeton Global Total Return Fund underperformed the Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index.
Thank you for your continued participation in Franklin LifeSmart 2035 Retirement Target Fund. We look forward to serving your future investment needs.
| | |
| |
T. Anthony Coffey, CFA |
| | |
| |
Thomas A. Nelson, CFA |
| |
| | James D. Macey, CFA |
| |
| | Portfolio Managers |
The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
| | | | |
| | | |
| 26 | | Semiannual Report | | franklintempleton.com |
FRANKLIN LIFESMART 2035 RETIREMENT TARGET FUND
Performance Summary as of June 30, 2017
The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 6/30/171
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | | | | | |
| Share Class | | Cumulative
Total Return2 | | | Average Annual
Total Return3 | |
| | |
| A | | | | | | | | |
6-Month | | | +9.36% | | | | +3.10% | |
1-Year | | | +13.36% | | | | +6.87% | |
5-Year | | | +51.41% | | | | +7.36% | |
10-Year | | | +52.69% | | | | +3.71% | |
| | |
| Advisor | | | | | | | | |
6-Month | | | +9.54% | | | | +9.54% | |
1-Year | | | +13.69% | | | | +13.69% | |
5-Year | | | +53.68% | | | | +8.97% | |
10-Year | | | +57.34% | | | | +4.64% | |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
See page 28 for Performance Summary footnotes.
| | | | | | |
| | | |
| franklintempleton.com | | Semiannual Report | | | 27 | |
FRANKLIN LIFESMART 2035 RETIREMENT TARGET FUND
PERFORMANCE SUMMARY
| | | | |
Distributions (1/1/17–6/30/17) | |
| Share Class | | Net Investment
Income | |
A | | | $0.0870 | |
C | | | $0.0870 | |
R | | | $0.0870 | |
R6 | | | $0.0870 | |
Advisor | | | $0.0870 | |
| | | | | | | | |
Total Annual Operating Expenses4 | |
| Share Class | | With Waiver | | | Without Waiver | |
A | | | 0.99% | | | | 1.51% | |
Advisor | | | 0.74% | | | | 1.26% | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
The Fund’s investment risk changes over time as its asset allocation changes. Since the Fund invests in underlying funds, which may engage in a variety of investment strategies involving certain risks, the Fund is subject to those same risks. All investments involve risks, including possible loss of principal. Principal invested is not guaranteed at any time, including at or after the Fund’s retirement target date; nor is there any guarantee that the Fund will provide sufficient income at or through the investor’s retirement. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks which are heightened in developing countries. These risks are described more fully in the Fund’s prospectus. Investors should consult their financial advisor for help selecting the appropriate fund of funds, or fund combination, based on an evaluation of their investment objectives, retirement time horizons and risk tolerance.
1. The Fund has an expense reduction and a fee waiver associated with any investments it makes in a Franklin Templeton money fund, contractually guaranteed through 4/30/18. Fund investment results reflect the expense reduction and fee waiver; without these reductions, the results would have been lower. As of October 2013, the Fund’s glide path was modified, and among other changes, reflects a lower starting allocation to equity funds; such a change can impact performance.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Figures are as stated in the Fund’s current prospectus, including the effect of acquired fund fees and expenses, and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
| | | | |
| | | |
| 28 | | Semiannual Report | | franklintempleton.com |
FRANKLIN LIFESMART 2035 RETIREMENT TARGET FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual
(actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
Share
Class | | Beginning
Account
Value 1/1/17 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Net
Annualized
Expense
Ratio2 |
| | | | | | |
A | | $1,000 | | $1,093.60 | | $1.56 | | $1,023.31 | | $1.51 | | 0.30% |
C | | $1,000 | | $1,090.40 | | $5.39 | | $1,019.64 | | $5.21 | | 1.04% |
R | | $1,000 | | $1,092.90 | | $2.85 | | $1,022.07 | | $2.76 | | 0.55% |
R6 | | $1,000 | | $1,095.50 | | $0.00 | | $1,024.79 | | $0.00 | | 0.00% |
Advisor | | $ 1,000 | | $1,095.40 | | $0.26 | | $1,024.55 | | $0.25 | | 0.05% |
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
| | | | | | |
| | | |
| franklintempleton.com | | Semiannual Report | | | 29 | |
Franklin LifeSmart 2040 Retirement Target Fund
This semiannual report for Franklin LifeSmart 2040 Retirement Target Fund covers the period ended June 30, 2017.
Your Fund’s Goal and Main Investments
The Fund seeks the highest level of long-term total return, which consists of capital appreciation and income, consistent with the Fund’s asset allocation. The Fund allocates among the broad asset classes of equity, fixed income and alternative (non-traditional) investments by investing primarily in a distinctly weighted combination of underlying funds, predominantly other Franklin Templeton mutual funds and exchange-traded funds (ETFs), with an increasing emphasis on income as the target date of 2040 approaches. The target date is the approximate retirement year of the investor.
Asset Allocation*
Based on Total Net Assets as of 6/30/17
*The asset allocation is based on the Statement of Investments (SOI), which classifies each underlying fund and other fund investments into a broad asset class based on its predominant investments under normal market conditions.
Performance Overview
The Fund’s Class A shares had a +9.61% cumulative total return for the six months ended June 30, 2017. In comparison, the Fund’s equity benchmark, the MSCI All Country World Index (ACWI), which measures equity market performance in global developed and emerging markets, generated a +11.82% total return.1 The Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index, a broad-based measure
of the global fixed income bond market, produced a +4.58% total return.1 The Citigroup 3-Month Treasury Bill Index, a proxy for short-term investments and other net assets, returned +0.30%.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 32.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
Investment Strategy
When selecting equity funds, we consider the foreign and domestic exposure, market capitalization ranges, and investment style (growth vs. value) of the underlying funds and other fund investments (collectively, “fund investments”). When selecting fixed income funds, we focus primarily on maximizing income appropriate to the Fund’s specific risk profile. In evaluating the risk level of the fund investments, including alternative investment funds, we analyze such factors as: (a) relative and absolute performance, including correlations with other fund investments as well as corresponding benchmarks, and (b) their volatility (the variability of returns from one period to the next). We attempt to invest the assets of each Fund with a target date comprising Franklin Fund Allocator Series (each a “Target Date Fund”) in the same fund investments but will vary the fund investments’ allocation percentages based upon each Fund’s risk/return level. We change the Fund’s target asset allocations over time, reducing its exposure to equity investments, and it becomes increasingly conservative until the stated target date. At the “landing point” (reached at the target date), the Fund reaches its most conservative asset allocation and thereafter, such strategic asset allocation will become fixed.
Manager’s Discussion
The Fund’s performance can be attributed largely to its allocation among equities and fixed income securities and to the actual performance of the fund investments. This allocation
1. Source: Morningstar.
2. Source: FactSet.
The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s SOI, which begins on page 86.
| | | | |
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| 30 | | Semiannual Report | | franklintempleton.com |
FRANKLIN LIFESMART 2040 RETIREMENT TARGET FUND
| | | | |
| Top 10 Fund Holdings | | | |
| 6/30/17 | | | |
| | | % of Total
Net Assets | |
Franklin Growth Fund – Class R6 | | | 16.8% | |
Franklin Growth Opportunities Fund – Class R6 | | | 7.7% | |
Franklin International Small Cap Growth Fund – Class R6 | | | 7.6% | |
Franklin Rising Dividends Fund – Class R6 | | | 6.6% | |
Franklin Low Duration Total Return Fund – Class R6 | | | 5.9% | |
Franklin LibertyQ Emerging Markets ETF | | | 5.6% | |
Franklin LibertyQ U.S. Equity ETF | | | 4.3% | |
Financial Select Sector SPDR ETF | | | 4.3% | |
Franklin Mutual International Fund – Class R6 | | | 4.2% | |
Templeton Foreign Fund – Class R6 | | | 4.0% | |
shifts every year, in accordance with the target date associated with the portfolio.
At period-end, our largest domestic value fund holding, Franklin Rising Dividends Fund – Class R6, underperformed the Fund’s equity benchmark, the MSCI ACWI, while our largest domestic growth fund holding, Franklin Growth Fund – Class R6, outperformed the index. Our largest foreign equity fund holding, Franklin International Small Cap Growth Fund – Class R6, also outperformed the index. On the fixed income side, our largest domestic fixed income fund holding, Franklin Low Duration Total Return Fund – Class R6, and our foreign fixed income fund holding, Templeton Global Total Return Fund – Class R6, underperformed the Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index.
Thank you for your continued participation in Franklin LifeSmart 2040 Retirement Target Fund. We look forward to serving your future investment needs.
| | |
| |
T. Anthony Coffey, CFA |
| | |
| |
Thomas A. Nelson, CFA |
| |
| | James D. Macey, CFA |
| |
| | Portfolio Managers |
The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
| | | | | | |
| | | |
| franklintempleton.com | | Semiannual Report | | | 31 | |
FRANKLIN LIFESMART 2040 RETIREMENT TARGET FUND
Performance Summary as of June 30, 2017
The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 6/30/171
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | | | | | |
| Share Class | | Cumulative
Total Return2 | | | Average Annual
Total Return3 | |
| | |
| A | | | | | | | | |
6-Month | | | +9.61% | | | | +3.34% | |
1-Year | | | +13.65% | | | | +7.15% | |
3-Year | | | +12.47% | | | | +1.97% | |
Since Inception (7/1/13) | | | +31.97% | | | | +5.61% | |
| | |
| Advisor | | | | | | | | |
6-Month | | | +9.84% | | | | +9.84% | |
1-Year | | | +13.94% | | | | +13.94% | |
3-Year | | | +13.52% | | | | +4.32% | |
Since Inception (7/1/13) | | | +33.52% | | | | +7.50% | |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
See page 33 for Performance Summary footnotes.
| | | | |
| | | |
| 32 | | Semiannual Report | | franklintempleton.com |
FRANKLIN LIFESMART 2040 RETIREMENT TARGET FUND
PERFORMANCE SUMMARY
Distributions (1/1/17–6/30/17)
| | | | |
| Share Class | | Net Investment
Income | |
A | | | $0.0841 | |
C | | | $0.0841 | |
R | | | $0.0841 | |
R6 | | | $0.0841 | |
Advisor | | | $0.0841 | |
| | | | | | | | |
| Total Annual Operating Expenses4 | |
| | |
| Share Class | | With Waiver | | | Without Waiver | |
A | | | 1.00% | | | | 1.89% | |
Advisor | | | 0.75% | | | | 1.64% | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
The Fund’s investment risk changes over time as its asset allocation changes. Since the Fund invests in underlying funds, which may engage in a variety of investment strategies involving certain risks, the Fund is subject to those same risks. All investments involve risks, including possible loss of principal. Principal invested is not guaranteed at any time, including at or after the Fund’s retirement target date; nor is there any guarantee that the Fund will provide sufficient income at or through the investor’s retirement. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks which are heightened in developing countries. These risks are described more fully in the Fund’s prospectus. Investors should consult their financial advisor for help selecting the appropriate fund of funds, or fund combination, based on an evaluation of their investment objectives, retirement time horizons and risk tolerance.
1. The Fund has an expense reduction and a fee waiver associated with any investments it makes in a Franklin Templeton money fund, contractually guaranteed through 4/30/18. Fund investment results reflect the expense reduction and fee waiver; without these reductions, the results would have been lower. As of October 2013, the Fund’s glide path was modified, and among other changes, reflects a lower starting allocation to equity funds; such a change can impact performance.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Figures are as stated in the Fund’s current prospectus, including the effect of acquired fund fees and expenses, and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
| | | | | | |
| | | |
| franklintempleton.com | | Semiannual Report | | | 33 | |
FRANKLIN LIFESMART 2040 RETIREMENT TARGET FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual
(actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
Share
Class | | Beginning
Account
Value 1/1/17 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Net
Annualized
Expense
Ratio2 |
| | | | | | |
A | | $1,000 | | $1,096.10 | | $1.56 | | $1,023.31 | | $1.51 | | 0.30% |
C | | $1,000 | | $1,092.00 | | $5.45 | | $1,019.59 | | $5.26 | | 1.05% |
R | | $1,000 | | $1,095.50 | | $2.86 | | $1,022.07 | | $2.76 | | 0.55% |
R6 | | $1,000 | | $1,098.30 | | $0.00 | | $1,024.79 | | $0.00 | | 0.00% |
Advisor | | $1,000 | | $1,098.40 | | $0.26 | | $1,024.55 | | $0.25 | | 0.05% |
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
| | | | |
| | | |
| 34 | | Semiannual Report | | franklintempleton.com |
Franklin LifeSmart 2045 Retirement Target Fund
This semiannual report for Franklin LifeSmart 2045 Retirement Target Fund covers the period ended June 30, 2017.
Your Fund’s Goal and Main Investments
The Fund seeks the highest level of long-term total return, which consists of capital appreciation and income, consistent with the Fund’s asset allocation. The Fund allocates among the broad asset classes of equity, fixed income and alternative (non-traditional) investments by investing primarily in a distinctly weighted combination of underlying funds, predominantly other Franklin Templeton mutual funds and exchange-traded funds (ETFs), with an increasing emphasis on income as the target date of 2045 approaches. The target date is the approximate retirement year of the investor.
Asset Allocation*
Based on Total Net Assets as of 6/30/17
*The asset allocation is based on the Statement of Investments (SOI), which classifies each underlying fund and other fund investments into a broad asset class based on its predominant investments under normal market conditions.
Performance Overview
The Fund’s Class A shares had a +9.69% cumulative total return for the six months ended June 30, 2017. In comparison, the Fund’s equity benchmark, the MSCI All Country World Index (ACWI), which measures equity market performance in global developed and emerging markets, generated a +11.82% total return.1 The Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index, a broad-based measure
of the global fixed income bond market, produced a +4.58% total return.1 The Citigroup 3-Month Treasury Bill Index, a proxy for short-term investments and other net assets, returned +0.30%.2 You can find the Fund’s long-term performance data in the Performance Summary beginning on page 37.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
Investment Strategy
When selecting equity funds, we consider the foreign and domestic exposure, market capitalization ranges, and investment style (growth vs. value) of the underlying funds and other fund investments (collectively, “fund investments”). When selecting fixed income funds, we focus primarily on maximizing income appropriate to the Fund’s specific risk profile. In evaluating the risk level of the fund investments, including alternative investment funds, we analyze such factors as: (a) relative and absolute performance, including correlations with other fund investments as well as corresponding benchmarks, and (b) their volatility (the variability of returns from one period to the next). We attempt to invest the assets of each Fund with a target date comprising Franklin Fund Allocator Series (each a “Target Date Fund”) in the same fund investments but will vary the fund investments’ allocation percentages based upon each Fund’s risk/return level. We change the Fund’s target asset allocations over time, reducing its exposure to equity investments, and it becomes increasingly conservative until the stated target date. At the “landing point” (reached at the target date), the Fund reaches its most conservative asset allocation and thereafter, such strategic asset allocation will become fixed.
Manager’s Discussion
The Fund’s performance can be attributed largely to its allocation among equities and fixed income securities and to the actual performance of the fund investments. This allocation
1. Source: Morningstar.
2. Source: FactSet.
The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s SOI, which begins on page 92.
| | | | | | |
| | | |
| franklintempleton.com | | Semiannual Report | | | 35 | |
FRANKLIN LIFESMART 2045 RETIREMENT TARGET FUND
| | | | |
| Top 10 Fund Holdings | | | |
| 6/30/17 | | | |
| | | % of Total
Net Assets | |
Franklin Growth Fund – Class R6 | | | 16.7% | |
Franklin Growth Opportunities Fund – Class R6 | | | 7.7% | |
Franklin International Small Cap Growth Fund – Class R6 | | | 7.5% | |
Franklin Rising Dividends Fund – Class R6 | | | 6.6% | |
Franklin LibertyQ Emerging Markets ETF | | | 6.0% | |
Franklin Low Duration Total Return Fund – Class R6 | | | 5.2% | |
Templeton Foreign Fund – Class R6 | | | 5.0% | |
Franklin LibertyQ U.S. Equity ETF | | | 4.4% | |
Financial Select Sector SPDR ETF | | | 4.3% | |
Franklin Mutual International Fund – Class R6 | | | 4.2% | |
shifts every year, in accordance with the target date associated with the portfolio.
At period-end, our largest domestic value fund holding, Franklin Rising Dividends Fund – Class R6, underperformed the Fund’s equity benchmark, the MSCI ACWI, while our largest domestic growth fund holding, Franklin Growth Fund – Class R6, outperformed the index. Our largest foreign equity fund holding, Franklin International Small Cap Growth Fund – Class R6, also outperformed the index. On the fixed income side, our largest domestic fixed income fund holding, Franklin Low Duration Total Return Fund – Class R6, and our foreign fixed income fund holding, Templeton Global Total Return Fund – Class R6, underperformed the Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index.
Thank you for your continued participation in Franklin LifeSmart 2045 Retirement Target Fund. We look forward to serving your future investment needs.
| | |
| |
T. Anthony Coffey, CFA |
| | |
| |
Thomas A. Nelson, CFA |
| |
| | James D. Macey, CFA |
| |
| | Portfolio Managers |
The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
| | | | |
| | | |
| 36 | | Semiannual Report | | franklintempleton.com |
FRANKLIN LIFESMART 2045 RETIREMENT TARGET FUND
Performance Summary as of June 30, 2017
The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 6/30/171
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | | | | | |
| Share Class | | Cumulative
Total Return2 | | | Average Annual
Total Return3 | |
| | |
| A | | | | | | | | |
6-Month | | | +9.69% | | | | +3.41% | |
1-Year | | | +13.81% | | | | +7.29% | |
5-Year | | | +53.29% | | | | +7.64% | |
10-Year | | | +54.54% | | | | +3.83% | |
| | |
| Advisor | | | | | | | | |
6-Month | | | +9.87% | | | | +9.87% | |
1-Year | | | +14.22% | | | | +14.22% | |
5-Year | | | +55.50% | | | | +9.23% | |
10-Year | | | +59.04% | | | | +4.75% | |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
See page 38 for Performance Summary footnotes.
| | | | | | |
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| franklintempleton.com | | Semiannual Report | | | 37 | |
FRANKLIN LIFESMART 2045 RETIREMENT TARGET FUND
PERFORMANCE SUMMARY
Distributions (1/1/17–6/30/17)
| | | | |
| Share Class | | Net Investment
Income | |
A | | | $0.0860 | |
C | | | $0.0860 | |
R | | | $0.0860 | |
R6 | | | $0.0860 | |
Advisor | | | $0.0860 | |
| | | | | | | | |
| Total Annual Operating Expenses4 | |
| | |
| Share Class | | With Waiver | | | Without Waiver | |
A | | | 1.01% | | | | 1.68% | |
Advisor | | | 0.76% | | | | 1.43% | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
The Fund’s investment risk changes over time as its asset allocation changes. Since the Fund invests in underlying funds, which may engage in a variety of investment strategies involving certain risks, the Fund is subject to those same risks. All investments involve risks, including possible loss of principal. Principal invested is not guaranteed at any time, including at or after the Fund’s retirement target date; nor is there any guarantee that the Fund will provide sufficient income at or through the investor’s retirement. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks which are heightened in developing countries. These risks are described more fully in the Fund’s prospectus. Investors should consult their financial advisor for help selecting the appropriate fund of funds, or fund combination, based on an evaluation of their investment objectives, retirement time horizons and risk tolerance.
1. The Fund has an expense reduction and a fee waiver associated with any investments it makes in a Franklin Templeton money fund, contractually guaranteed through 4/30/18. Fund investment results reflect the expense reduction and fee waiver; without these reductions, the results would have been lower. As of October 2013, the Fund’s glide path was modified, and among other changes, reflects a lower starting allocation to equity funds; such a change can impact performance.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Figures are as stated in the Fund’s current prospectus, including the effect of acquired fund fees and expenses, and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
| | | | |
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| 38 | | Semiannual Report | | franklintempleton.com |
FRANKLIN LIFESMART 2045 RETIREMENT TARGET FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual
(actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
Share
Class | | Beginning
Account
Value 1/1/17 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Net
Annualized
Expense
Ratio2 |
| | | | | | |
A | | $1,000 | | $1,096.90 | | $1.56 | | $1,023.31 | | $1.51 | | 0.30% |
C | | $1,000 | | $1,094.10 | | $5.40 | | $1,019.64 | | $5.21 | | 1.04% |
R | | $1,000 | | $1,095.60 | | $2.86 | | $1,022.07 | | $2.76 | | 0.55% |
R6 | | $1,000 | | $1,098.70 | | $0.00 | | $1,024.79 | | $0.00 | | 0.00% |
Advisor | | $1,000 | | $1,098.70 | | $0.26 | | $1,024.55 | | $0.25 | | 0.05% |
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
| | | | | | |
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| franklintempleton.com | | Semiannual Report | | | 39 | |
Franklin LifeSmart 2050 Retirement Target Fund
This semiannual report for Franklin LifeSmart 2050 Retirement Target Fund covers the period ended June 30, 2017.
Your Fund’s Goal and Main Investments
The Fund seeks the highest level of long-term total return, which consists of capital appreciation and income, consistent with the Fund’s asset allocation. The Fund allocates among the broad asset classes of equity, fixed income and alternative (non-traditional) investments by investing primarily in a distinctly weighted combination of underlying funds, predominantly other Franklin Templeton mutual funds and exchange-traded funds (ETFs), with an increasing emphasis on income as the target date of 2050 approaches. The target date is the approximate retirement year of the investor.
Asset Allocation*
Based on Total Net Assets as of 6/30/17
*The asset allocation is based on the Statement of Investments (SOI), which classifies each underlying fund and other fund investments into a broad asset class based on its predominant investments under normal market conditions.
Performance Overview
The Fund’s Class A shares had a +9.91% cumulative total return for the six months ended June 30, 2017. In comparison, the Fund’s equity benchmark, the MSCI All Country World Index (ACWI), which measures equity market performance in global developed and emerging markets, generated a +11.82% total return.1 The Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index, a broad-based measure
of the global fixed income bond market, produced a +4.58% total return.1 The Citiigroup 3-Month Treasury Bill Index, a proxy for short-term investments and other net assets, returned +0.30%.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 42.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
Investment Strategy
When selecting equity funds, we consider the foreign and domestic exposure, market capitalization ranges, and investment style (growth vs. value) of the underlying funds and other fund investments (collectively, “fund investments”). When selecting fixed income funds, we focus primarily on maximizing income appropriate to the Fund’s specific risk profile. In evaluating the risk level of the fund investments, including alternative investment funds, we analyze such factors as: (a) relative and absolute performance, including correlations with other fund investments as well as corresponding benchmarks, and (b) their volatility (the variability of returns from one period to the next). We attempt to invest the assets of each Fund with a target date comprising Franklin Fund Allocator Series (each a “Target Date Fund”) in the same fund investments but will vary the fund investments’ allocation percentages based upon each Fund’s risk/return level. We change the Fund’s target asset allocations over time, reducing its exposure to equity investments, and it becomes increasingly conservative until the stated target date. At the “landing point” (reached at the target date), the Fund reaches its most conservative asset allocation and thereafter, such strategic asset allocation will become fixed.
Manager’s Discussion
The Fund’s performance can be attributed largely to its allocation among equities and fixed income securities and to the actual performance of the fund investments. This allocation
1. Source: Morningstar.
2. Source: FactSet.
The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s SOI, which begins on page 98.
| | | | |
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| 40 | | Semiannual Report | | franklintempleton.com |
FRANKLIN LIFESMART 2050 RETIREMENT TARGET FUND
| | | | |
| Top 10 Fund Holdings | | | |
| 6/30/17 | | | |
| | | % of Total
Net Assets | |
Franklin Growth Fund – Class R6 | | | 17.3% | |
Franklin Growth Opportunities Fund – Class R6 | | | 7.8% | |
Franklin International Small Cap Growth Fund – Class R6 | | | 7.6% | |
Franklin Rising Dividends Fund – Class R6 | | | 6.7% | |
Franklin LibertyQ Emerging Markets ETF | | | 6.3% | |
Templeton Foreign Fund – Class R6 | | | 5.1% | |
Franklin Low Duration Total Return Fund – Class R6 | | | 4.7% | |
Franklin LibertyQ U.S. Equity ETF | | | 4.6% | |
Financial Select Sector SPDR ETF | | | 4.4% | |
Franklin Mutual International Fund – Class R6 | | | 4.3% | |
shifts every year, in accordance with the target date associated with the portfolio.
At period-end, our largest domestic value fund holding, Franklin Rising Dividends Fund – Class R6, underperformed the Fund’s equity benchmark, the MSCI ACWI, while our largest domestic growth fund holding, Franklin Growth Fund – Class R6, outperformed the index. Our largest foreign equity fund holding, Franklin International Small Cap Growth Fund – Class R6, also outperformed the index. On the fixed income side, our largest domestic fixed income fund holding, Franklin Low Duration Total Return Fund – Class R6, and our foreign fixed income fund holding, Templeton Global Total Return Fund – Class R6 underperformed the Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index.
Thank you for your continued participation in Franklin LifeSmart 2050 Retirement Target Fund. We look forward to serving your future investment needs.
| | |
| |
T. Anthony Coffey, CFA |
| | |
| |
Thomas A. Nelson, CFA |
| |
| | James D. Macey, CFA |
| |
| | Portfolio Managers |
The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
| | | | | | |
| | | |
| franklintempleton.com | | Semiannual Report | | | 41 | |
FRANKLIN LIFESMART 2050 RETIREMENT TARGET FUND
Performance Summary as of June 30, 2017
The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 6/30/171
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | | | | | |
| Share Class | | Cumulative
Total Return2 | | | Average Annual
Total Return3 | |
| | |
| A | | | | | | | | |
6-Month | | | +9.91% | | | | +3.58% | |
1-Year | | | +14.05% | | | | +7.48% | |
3-Year | | | +13.47% | | | | +2.26% | |
Since Inception (7/1/13) | | | +33.53% | | | | +5.92% | |
| | |
| Advisor | | | | | | | | |
6-Month | | | +9.94% | | | | +9.94% | |
1-Year | | | +14.28% | | | | +14.28% | |
3-Year | | | +14.30% | | | | +4.56% | |
Since Inception (7/1/13) | | | +35.05% | | | | +7.81% | |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
See page 43 for Performance Summary footnotes.
| | | | |
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| 42 | | Semiannual Report | | franklintempleton.com |
FRANKLIN LIFESMART 2050 RETIREMENT TARGET FUND
PERFORMANCE SUMMARY
Distributions (1/1/17–6/30/17)
| | | | |
| Share Class | | Net Investment
Income | |
| A | | | $0.0855 | |
| C | | | $0.0855 | |
| R | | | $0.0855 | |
| R6 | | | $0.0855 | |
| Advisor | | | $0.0855 | |
| | | | | | | | |
| Total Annual Operating Expenses4 | |
| | |
| Share Class | | With Waiver | | | Without Waiver | |
| A | | | 1.00% | | | | 2.17% | |
| Advisor | | | 0.75% | | | | 1.92% | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
The Fund’s investment risk changes over time as its asset allocation changes. Since the Fund invests in underlying funds, which may engage in a variety of investment strategies involving certain risks, the Fund is subject to those same risks. All investments involve risks, including possible loss of principal. Principal invested is not guaranteed at any time, including at or after the Fund’s retirement target date; nor is there any guarantee that the Fund will provide sufficient income at or through the investor’s retirement. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks which are heightened in developing countries. These risks are described more fully in the Fund’s prospectus. Investors should consult their financial advisor for help selecting the appropriate fund of funds, or fund combination, based on an evaluation of their investment objectives, retirement time horizons and risk tolerance.
1. The Fund has an expense reduction and a fee waiver associated with any investments it makes in a Franklin Templeton money fund, contractually guaranteed through 4/30/18. Fund investment results reflect the expense reduction and fee waiver; without these reductions, the results would have been lower. As of October 2013, the Fund’s glide path was modified, and among other changes, reflects a lower starting allocation to equity funds; such a change can impact performance.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Figures are as stated in the Fund’s current prospectus, including the effect of acquired fund fees and expenses, and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
| | | | | | |
| | | |
| franklintempleton.com | | Semiannual Report | | | 43 | |
FRANKLIN LIFESMART 2050 RETIREMENT TARGET FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual
(actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
Share Class | | Beginning
Account
Value 1/1/17 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Net
Annualized
Expense
Ratio2 |
| A | | $1,000 | | $1,099.10 | | $1.56 | | $1,023.31 | | $1.51 | | 0.30% |
| C | | $1,000 | | $1,094.10 | | $5.45 | | $1,019.59 | | $5.26 | | 1.05% |
| R | | $1,000 | | $1,097.30 | | $2.86 | | $1,022.07 | | $2.76 | | 0.55% |
| R6 | | $1,000 | | $1,100.40 | | $0.00 | | $1,024.79 | | $0.00 | | 0.00% |
| Advisor | | $1,000 | | $1,099.40 | | $0.26 | | $1,024.55 | | $0.25 | | 0.05% |
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
| | | | |
| | | |
| 44 | | Semiannual Report | | franklintempleton.com |
Franklin LifeSmart 2055 Retirement Target Fund
This semiannual report for Franklin LifeSmart 2055 Retirement Target Fund covers the period ended June 30, 2017.
Your Fund’s Goal and Main Investments
The Fund seeks the highest level of long-term total return, which consists of capital appreciation and income, consistent with the Fund’s asset allocation. The Fund allocates among the broad asset classes of equity, fixed income and alternative (non-traditional) investments by investing primarily in a distinctly weighted combination of underlying funds, predominantly other Franklin Templeton mutual funds and exchange-traded funds (ETFs), with an increasing emphasis on income as the target date of 2055 approaches. The target date is the approximate retirement year of the investor.
Asset Allocation*
Based on Total Net Assets as of 6/30/17
*The asset allocation is based on the Statement of Investments (SOI), which classifies each underlying fund and other fund investments into a broad asset class based on its predominant investments under normal market conditions.
Performance Overview
The Fund’s Class A shares had a +9.82% cumulative total return for the six months ended June 30, 2017. In comparison, the Fund’s equity benchmark, the MSCI All Country World Index (ACWI), which measures equity market performance in global developed and emerging markets, generated a +11.82% total return.1 The Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index, a broad-based measure
of the global fixed income bond market, produced a +4.58% total return.1 The Citigroup 3-Month Treasury Bill Index, a proxy for short-term investments and other net assets, returned +0.30%.2 You can find the Fund’s long-term performance data in the Performance Summary beginning on page 47.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
Investment Strategy
When selecting equity funds, we consider the foreign and domestic exposure, market capitalization ranges, and investment style (growth vs. value) of the underlying funds and other fund investments (collectively, “fund investments”). When selecting fixed income funds, we focus primarily on maximizing income appropriate to the Fund’s specific risk profile. In evaluating the risk level of the fund investments, including alternative investment funds, we analyze such factors as: (a) relative and absolute performance, including correlations with other fund investments as well as corresponding benchmarks, and (b) their volatility (the variability of returns from one period to the next). We attempt to invest the assets of each Fund with a target date comprising Franklin Fund Allocator Series (each a “Target Date Fund”) in the same fund investments but will vary the fund investments’ allocation percentages based upon each Fund’s risk/return level. We change the Fund’s target asset allocations over time, reducing its exposure to equity investments, and it becomes increasingly conservative until the stated target date. At the “landing point” (reached at the target date), the Fund reaches its most conservative asset allocation and thereafter, such strategic asset allocation will become fixed.
Manager’s Discussion
The Fund’s performance can be attributed largely to its allocation among equities and fixed income securities and to the actual performance of the fund investments. This allocation
1. Source: Morningstar.
2. Source: FactSet.
The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s SOI, which begins on page 104.
| | | | | | |
| | | |
franklintempleton.com | | Semiannual Report | | | 45 | |
FRANKLIN LIFESMART 2055 RETIREMENT TARGET FUND
| | | | |
| Top 10 Fund Holdings | | | |
| 6/30/17 | | | |
| | | % of Total
Net Assets | |
Franklin Growth Fund – Class R6 | | | 17.5% | |
Franklin International Small Cap Growth Fund – Class R6 | | | 7.8% | |
Franklin Growth Opportunities Fund – Class R6 | | | 7.7% | |
Franklin Rising Dividends Fund – Class R6 | | | 6.9% | |
Franklin LibertyQ Emerging Markets ETF | | | 6.0% | |
Templeton Foreign Fund – Class R6 | | | 5.5% | |
Franklin LibertyQ U.S. Equity ETF | | | 4.6% | |
Franklin Low Duration Total Return Fund – Class R6 | | | 4.5% | |
Franklin Mutual International Fund – Class R6 | | | 4.4% | |
Financial Select Sector SPDR ETF | | | 4.3% | |
shifts every year, in accordance with the target date associated with the portfolio.
At period-end, our largest domestic value fund holding, Franklin Rising Dividends Fund – Class R6, underperformed the Fund’s equity benchmark, the MSCI ACWI, while our largest domestic growth fund holding, Franklin Growth Fund – Class R6, outperformed the index. Our largest foreign equity fund holding, Franklin International Small Cap Growth Fund – Class R6, also outperformed the index. On the fixed income side, our largest domestic fixed income fund holding, Franklin Low Duration Total Return Fund – Class R6, and our foreign fixed income fund holding, Templeton Global Total Return Fund – Class R6, underperformed the Fund’s fixed income benchmark, the Bloomberg Barclays Multiverse Index.
Thank you for your continued participation in Franklin LifeSmart 2055 Retirement Target Fund. We look forward to serving your future investment needs.
| | |
| |
T. Anthony Coffey, CFA |
| | |
| |
Thomas A. Nelson, CFA |
| | James D. Macey, CFA Portfolio Managers |
The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
| | | | |
| | | |
| 46 | | Semiannual Report | | franklintempleton.com |
FRANKLIN LIFESMART 2055 RETIREMENT TARGET FUND
Performance Summary as of June 30, 2017
The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 6/30/171
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | | | | | |
| Share Class | | Cumulative
Total Return2 | | | Average Annual
Total Return3 | |
| | |
| A | | | | | | | | |
6-Month | | | +9.82% | | | | +3.48% | |
1-Year | | | +14.34% | | | | +7.76% | |
Since Inception (5/1/15) | | | +7.14% | | | | +0.45% | |
| | |
| Advisor | | | | | | | | |
6-Month | | | +9.92% | | | | +9.92% | |
1-Year | | | +14.54% | | | | +14.54% | |
Since Inception (5/1/15) | | | +7.60% | | | | +3.44% | |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
See page 48 for Performance Summary footnotes.
| | | | | | |
| | | |
| franklintempleton.com | | Semiannual Report | | | 47 | |
FRANKLIN LIFESMART 2055 RETIREMENT TARGET FUND
PERFORMANCE SUMMARY
Distributions (1/1/17–6/30/17)
| | | | |
| Share Class | | Net Investment
Income | |
| A | | | $0.0292 | |
| C | | | $0.0292 | |
| R | | | $0.0292 | |
| R6 | | | $0.0292 | |
| Advisor | | | $0.0292 | |
| | | | | | | | |
| Total Annual Operating Expenses4 | |
| | |
| Share Class | | With Waiver | | | Without Waiver | |
A | | | 1.00% | | | | 4.71% | |
Advisor | | | 0.75% | | | | 4.46% | |
| | | | | | | | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
The Fund’s investment risk changes over time as its asset allocation changes. Since the Fund invests in underlying funds, which may engage in a variety of investment strategies involving certain risks, the Fund is subject to those same risks. All investments involve risks, including possible loss of principal. Principal invested is not guaranteed at any time, including at or after the Fund’s retirement target date; nor is there any guarantee that the Fund will provide sufficient income at or through the investor’s retirement. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks which are heightened in developing countries. These risks are described more fully in the Fund’s prospectus. Investors should consult their financial advisor for help selecting the appropriate fund of funds, or fund combination, based on an evaluation of their investment objectives, retirement time horizons and risk tolerance.
1. The Fund has an expense reduction and a fee waiver associated with any investments it makes in a Franklin Templeton money fund, contractually guaranteed through 4/30/18. Fund investment results reflect the expense reduction and fee waiver; without these reductions, the results would have been lower.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Figures are as stated in the Fund’s current prospectus, including the effect of acquired fund fees and expenses, and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
| | | | |
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| 48 | | Semiannual Report | | franklintempleton.com |
FRANKLIN LIFESMART 2055 RETIREMENT TARGET FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual
(actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
Share
Class | | Beginning
Account
Value 1/1/17 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Ending
Account
Value 6/30/17 | | Expenses
Paid During
Period
1/1/17–6/30/171,2 | | Net
Annualized
Expense
Ratio2 |
A | | $1,000 | | $1,098.20 | | $1.56 | | $1,023.31 | | $1.51 | | 0.30% |
C | | $1,000 | | $1,093.70 | | $5.45 | | $1,019.59 | | $5.26 | | 1.05% |
R | | $1,000 | | $1,097.50 | | $2.86 | | $1,022.07 | | $2.76 | | 0.55% |
R6 | | $1,000 | | $1,099.20 | | $0.00 | | $1,024.79 | | $0.00 | | 0.00% |
Advisor | | $1,000 | | $1,099.20 | | $0.26 | | $1,024.55 | | $0.25 | | 0.05% |
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
| | | | | | |
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| franklintempleton.com | | Semiannual Report | | | 49 | |
FRANKLIN FUND ALLOCATOR SERIES
Financial Highlights
Franklin LifeSmart Retirement Income Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $10.96 | | | | $10.78 | | | | $11.67 | | | | $12.28 | | | | $11.67 | | | | $10.92 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.20 | | | | 0.27 | | | | 0.26 | | | | 0.39 | | | | 0.25 | | | | 0.24 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.12 | | | | 0.28 | | | | (0.55 | ) | | | (0.01 | ) | | | 1.16 | | | | 0.76 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.32 | | | | 0.55 | | | | (0.29 | ) | | | 0.38 | | | | 1.41 | | | | 1.00 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income | | | (0.22 | ) | | | (0.28 | ) | | | (0.27 | ) | | | (0.40 | ) | | | (0.27 | ) | | | (0.25 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.05 | ) | | | (0.33 | ) | | | (0.59 | ) | | | (0.53 | ) | | | — | |
| | | | | | |
Tax return of capital | | | — | | | | (0.04 | ) | | | — | | | | — | | | | — | | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.22 | ) | | | (0.37 | ) | | | (0.60 | ) | | | (0.99 | ) | | | (0.80 | ) | | | (0.25 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $11.06 | | | | $10.96 | | | | $10.78 | | | | $11.67 | | | | $12.28 | | | | $11.67 | |
| | | | |
| | | | | | |
Total returnd | | | 2.90% | | | | 5.25% | | | | (2.59)% | | | | 3.07% | | | | 12.27% | | | | 9.20% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 0.87% | | | | 0.90% | | | | 0.92% | | | | 0.84% | | | | 0.83% | | | | 0.71% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 0.30% | g | | | 0.30% | | | | 0.33% | | | | 0.35% | | | | 0.38% | | | | 0.45% | |
| | | | | | |
Net investment incomec | | | 3.70% | | | | 2.50% | | | | 2.27% | | | | 3.20% | | | | 2.04% | | | | 2.13% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $34,871 | | | | $39,713 | | | | $44,823 | | | | $48,121 | | | | $44,347 | | | | $37,507 | |
| | | | | | |
Portfolio turnover rate | | | 3.01% | | | | 149.53% | | | | 38.48% | | | | 68.98% | | | | 73.66% | | | | 25.12% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.47% for the period ended June 30, 2017.
gBenefit of expense reduction rounds to less than 0.01%.
| | | | |
| | | |
| 50 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart Retirement Income Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $10.83 | | | | $10.66 | | | | $11.55 | | | | $12.16 | | | | $11.57 | | | | $10.83 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.16 | | | | 0.19 | | | | 0.18 | | | | 0.30 | | | | 0.16 | | | | 0.16 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.11 | | | | 0.28 | | | | (0.55 | ) | | | (0.01 | ) | | | 1.15 | | | | 0.75 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.27 | | | | 0.47 | | | | (0.37 | ) | | | 0.29 | | | | 1.31 | | | | 0.91 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income | | | (0.17 | ) | | | (0.22 | ) | | | (0.19 | ) | | | (0.31 | ) | | | (0.19 | ) | | | (0.17 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.05 | ) | | | (0.33 | ) | | | (0.59 | ) | | | (0.53 | ) | | | — | |
| | | | | | |
Tax return of capital | | | — | | | | (0.03 | ) | | | — | | | | — | | | | — | | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.17 | ) | | | (0.30 | ) | | | (0.52 | ) | | | (0.90 | ) | | | (0.72 | ) | | | (0.17 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $10.93 | | | | $10.83 | | | | $10.66 | | | | $11.55 | | | | $12.16 | | | | $11.57 | |
| | | | |
| | | | | | |
Total returnd | | | 2.53% | | | | 4.50% | | | | (3.32)% | | | | 2.39% | | | | 11.46% | | | | 8.44% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 1.62% | | | | 1.64% | | | | 1.64% | | | | 1.54% | | | | 1.53% | | | | 1.41% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 1.05% | g | | | 1.04% | | | | 1.05% | | | | 1.05% | | | | 1.08% | | | | 1.15% | |
| | | | | | |
Net investment incomec | | | 2.95% | | | | 1.76% | | | | 1.55% | | | | 2.50% | | | | 1.34% | | | | 1.43% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $16,927 | | | | $17,570 | | | | $20,858 | | | | $21,189 | | | | $20,395 | | | | $16,912 | |
| | | | | | |
Portfolio turnover rate | | | 3.01% | | | | 149.53% | | | | 38.48% | | | | 68.98% | | | | 73.66% | | | | 25.12% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.47% for the period ended June 30, 2017.
gBenefit of expense reduction rounds to less than 0.01%.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 51 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart Retirement Income Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class R | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $10.92 | | | | $10.74 | | | | $11.64 | | | | $12.25 | | | | $11.64 | | | | $10.89 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.19 | | | | 0.25 | | | | 0.25 | | | | 0.36 | | | | 0.22 | | | | 0.22 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.11 | | | | 0.28 | | | | (0.57 | ) | | | (— | )d | | | 1.16 | | | | 0.75 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.30 | | | | 0.53 | | | | (0.32 | ) | | | 0.36 | | | | 1.38 | | | | 0.97 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income | | | (0.20 | ) | | | (0.26 | ) | | | (0.25 | ) | | | (0.38 | ) | | | (0.24 | ) | | | (0.22 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.05 | ) | | | (0.33 | ) | | | (0.59 | ) | | | (0.53 | ) | | | — | |
| | | | | | |
Tax return of capital | | | — | | | | (0.04 | ) | | | — | | | | — | | | | — | | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.20 | ) | | | (0.35 | ) | | | (0.58 | ) | | | (0.97 | ) | | | (0.77 | ) | | | (0.22 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $11.02 | | | | $10.92 | | | | $10.74 | | | | $11.64 | | | | $12.25 | | | | $11.64 | |
| | | | |
| | | | | | |
Total returne | | | 2.87% | | | | 4.94% | | | | (2.87)% | | | | 2.89% | | | | 12.04% | | | | 8.96% | |
| | | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesg | | | 1.12% | | | | 1.15% | | | | 1.14% | | | | 1.04% | | | | 1.03% | | | | 0.91% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesg | | | 0.55% | h | | | 0.55% | | | | 0.55% | | | | 0.55% | | | | 0.58% | | | | 0.65% | |
| | | | | | |
Net investment incomec | | | 3.45% | | | | 2.25% | | | | 2.05% | | | | 3.00% | | | | 1.84% | | | | 1.93% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $4,529 | | | | $4,920 | | | | $4,130 | | | | $2,828 | | | | $2,279 | | | | $1,862 | |
| | | | | | |
Portfolio turnover rate | | | 3.01% | | | | 149.53% | | | | 38.48% | | | | 68.98% | | | | 73.66% | | | | 25.12% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dAmount rounds to less than $0.01 per share.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.47% for the period ended June 30, 2017.
hBenefit of expense reduction rounds to less than 0.01%.
| | | | |
| | | |
| 52 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart Retirement Income Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class R6 | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.01 | | | | $10.82 | | | | $11.72 | | | | $12.32 | | | | $12.17 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.22 | | | | 0.30 | | | | 0.31 | | | | 0.57 | | | | 0.49 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 0.12 | | | | 0.29 | | | | (0.57 | ) | | | (0.14 | ) | | | 0.44 | |
| | | | |
| | | | | |
Total from investment operations. | | | 0.34 | | | | 0.59 | | | | (0.26 | ) | | | 0.43 | | | | 0.93 | |
| | | | |
| | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income | | | (0.23 | ) | | | (0.31 | ) | | | (0.31 | ) | | | (0.44 | ) | | | (0.25 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.05 | ) | | | (0.33 | ) | | | (0.59 | ) | | | (0.53 | ) |
| | | | | |
Tax return of capital | | | — | | | | (0.04 | ) | | | — | | | | — | | | | — | |
| | | | |
| | | | | |
Total distributions | | | (0.23 | ) | | | (0.40 | ) | | | (0.64 | ) | | | (1.03 | ) | | | (0.78 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $11.12 | | | | $11.01 | | | | $10.82 | | | | $11.72 | | | | $12.32 | |
| | | | |
| | | | | |
Total returne | | | 3.14% | | | | 5.60% | | | | (2.34)% | | | | 3.49% | | | | 7.78% | |
| | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesg | | | 0.50% | | | | 0.55% | | | | 0.53% | | | | 0.44% | | | | 0.60% | |
| | | | | |
Expenses net of waiver and payments by affiliatesg | | | —% | h | | | —% | | | | —% | | | | —% | | | | —% | |
| | | | | |
Net investment incomed | | | 4.00% | | | | 2.80% | | | | 2.60% | | | | 3.55% | | | | 2.42% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $4,107 | | | | $3,930 | | | | $6,828 | | | | $6,709 | | | | $763 | |
| | | | | |
Portfolio turnover rate | | | 3.01% | | | | 149.53% | | | | 38.48% | | | | 68.98% | | | | 73.66% | |
aFor the period May 1, 2013 (effective date) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.47% for the period ended June 30, 2017.
hBenefit of expense reduction rounds to less than 0.01%.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 53 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart Retirement Income Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Advisor Class | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $11.00 | | | | $10.81 | | | | $11.71 | | | | $12.31 | | | | $11.70 | | | | $10.94 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.22 | | | | 0.29 | | | | 0.25 | | | | 0.43 | | | | 0.29 | | | | 0.28 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.12 | | | | 0.29 | | | | (0.52 | ) | | | (— | )d | | | 1.16 | | | | 0.76 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.34 | | | | 0.58 | | | | (0.27 | ) | | | 0.43 | | | | 1.45 | | | | 1.04 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income | | | (0.23 | ) | | | (0.30 | ) | | | (0.30 | ) | | | (0.44 | ) | | | (0.31 | ) | | | (0.28 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.05 | ) | | | (0.33 | ) | | | (0.59 | ) | | | (0.53 | ) | | | — | |
| | | | | | |
Tax return of capital | | | — | | | | (0.04 | ) | | | — | | | | — | | | | — | | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.23 | ) | | | (0.39 | ) | | | (0.63 | ) | | | (1.03 | ) | | | (0.84 | ) | | | (0.28 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $11.11 | | | | $11.00 | | | | $10.81 | | | | $11.71 | | | | $12.31 | | | | $11.70 | |
| | | | |
| | | | | | |
Total returne | | | 3.12% | | | | 5.55% | | | | (2.40)% | | | | 3.45% | | | | 12.55% | | | | 9.59% | |
| | | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesg | | | 0.62% | | | | 0.65% | | | | 0.64% | | | | 0.54% | | | | 0.53% | | | | 0.41% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesg | | | 0.05% | h | | | 0.05% | | | | 0.05% | | | | 0.05% | | | | 0.08% | | | | 0.15% | |
| | | | | | |
Net investment incomec | | | 3.95% | | | | 2.75% | | | | 2.55% | | | | 3.50% | | | | 2.34% | | | | 2.43% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $1,887 | | | | $1,696 | | | | $880 | | | | $2,194 | | | | $2,494 | | | | $1,840 | |
| | | | | | |
Portfolio turnover rate | | | 3.01% | | | | 149.53% | | | | 38.48% | | | | 68.98% | | | | 73.66% | | | | 25.12% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dAmount rounds to less than $0.01 per share.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.47% for the period ended June 30, 2017.
hBenefit of expense reduction rounds to less than 0.01%.
| | | | |
| | | |
| 54 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Statement of Investments, June 30, 2017 (unaudited)
| | | | | | | | | | |
| Franklin LifeSmart Retirement Income Fund | |
| | | | | Shares | | | Value | |
| | Investments in Underlying Funds and Exchange Traded Funds 94.8% | | | | | | | | |
| | Domestic Equity 8.9% | | | | | | | | |
| | iShares U.S. Preferred Stock ETF | | | 142,300 | | | $ | 5,573,891 | |
| | | | | | | | | | |
| | Domestic Fixed Income 64.3% | | | | | | | | |
| a | | Franklin Floating Rate Daily Access Fund, Class R6 | | | 1,667,712 | | | | 14,775,933 | |
| a | | Franklin Strategic Income Fund, Class R6 | | | 595,961 | | | | 5,870,212 | |
| a | | Franklin U.S. Government Securities Fund, Class R6 | | | 2,175,412 | | | | 13,378,782 | |
| | iShares iBoxx High Yield Corporate Bond ETF | | | 68,600 | | | | 6,063,554 | |
| | | | | | | | | | |
| | | | | | | | | 40,088,481 | |
| | | | | | | | | | |
| | Domestic Hybrid 17.3% | | | | | | | | |
| a | | Franklin Income Fund, Class R6 | | | 4,641,136 | | | | 10,767,435 | |
| | | | | | | | | | |
| | Foreign Fixed Income 4.3% | | | | | | | | |
| a | | Templeton Global Total Return Fund, Class R6 | | | 217,513 | | | | 2,677,591 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds
(Cost $57,432,928) | | | | | | | 59,107,398 | |
| | | | | | | | | | |
| | | |
| | | | | Units | | | | | |
| b | | Index-Linked Notes (Cost $2,997,797) 5.1% | | | | | | | | |
| c,d | | Morgan Stanley, senior note, 144A, 4.89%, 3/29/18 | | | 26,778 | | | | 3,169,680 | |
| | | | | | | | | | |
| | Total Investments before Short Term Investments (Cost $60,430,725) | | | | | | | 62,277,078 | |
| | | | | | | | | | |
| | | |
| | | | | Shares | | | | | |
| | Short Term Investments (Cost $252,103) 0.4% | | | | | | | | |
| | Money Market Funds 0.4% | | | | | | | | |
| a,e | | Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 252,103 | | | | 252,103 | |
| | | | | | | | | | |
| | Total Investments (Cost $60,682,828) 100.3% | | | | | | | 62,529,181 | |
| | Other Assets, less Liabilities (0.3)% | | | | | | | (208,144 | ) |
| | | | | | | | | | |
| | Net Assets 100.0% | | | | | | $ | 62,321,037 | |
| | | | | | | | | | |
See Abbreviations on page 141.
aSee Note 3(f) regarding investments in FT Underlying Funds.
bSee Note 1(b) regarding index-linked notes.
cSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees.
dSecurity will pay a coupon each month based on a fixed rate and a variable distribution of the Morgan Stanley Custom Enhanced SPX B DT Index. The coupon rate shown represents the combined rate at period end. Cash payment at maturity or upon early redemption is based on the performance of the Morgan Stanley Custom Enhanced SPX B Index.
eThe rate shown is the annualized seven-day yield at period end.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 55 | |
FRANKLIN FUND ALLOCATOR SERIES
Financial Highlights
Franklin LifeSmart 2020 Retirement Target Fund
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class A | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $10.68 | | | | $10.61 | | | | $11.14 | | | | $10.94 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.06 | | | | 0.13 | | | | 0.24 | | | | 0.33 | | | | 0.16 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 0.61 | | | | 0.19 | | | | (0.48 | ) | | | 0.20 | | | | 0.91 | |
| | | | |
| | | | | |
Total from investment operations. | | | 0.67 | | | | 0.32 | | | | (0.24 | ) | | | 0.53 | | | | 1.07 | |
| | | | |
| | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income | | | (0.05 | ) | | | (0.17 | ) | | | (0.19 | ) | | | (0.27 | ) | | | (0.13 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.08 | ) | | | (0.10 | ) | | | (0.06 | ) | | | (— | )e |
| | | | |
| | | | | |
Total distributions | | | (0.05 | ) | | | (0.25 | ) | | | (0.29 | ) | | | (0.33 | ) | | | (0.13 | ) |
| �� | | | |
| | | | | |
Net asset value, end of period | | | $11.30 | | | | $10.68 | | | | $10.61 | | | | $11.14 | | | | $10.94 | |
| | | | |
| | | | | |
Total returnf | | | 6.26% | | | | 3.03% | | | | (2.18)% | | | | 4.83% | | | | 10.69% | |
| | | | | |
| Ratios to average net assetsg | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesh | | | 0.93% | | | | 0.98% | | | | 1.05% | | | | 2.25% | | | | 11.14% | |
| | | | | |
Expenses net of waiver and payments by affiliatesh | | | 0.30% | | | | 0.30% | | | | 0.32% | | | | 0.35% | | | | 0.24% | |
| | | | | |
Net investment incomed | | | 1.15% | | | | 1.25% | | | | 2.06% | | | | 3.20% | | | | 3.12% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $20,662 | | | | $19,292 | | | | $19,895 | | | | $7,302 | | | | $2,189 | |
| | | | | |
Portfolio turnover rate | | | 30.99% | | | | 87.38% | | | | 47.51% | | | | 64.70% | | | | 33.36% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eAmount rounds to less than $0.01 per share.
fTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.63% for the period ended June 30, 2017.
| | | | |
| | | |
| 56 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2020 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class C | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $10.62 | | | | $10.56 | | | | $11.08 | | | | $10.90 | | | | $10.00 | |
| | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.02 | | | | 0.05 | | | | 0.14 | | | | 0.24 | | | | 0.18 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 0.60 | | | | 0.18 | | | | (0.44 | ) | | | 0.21 | | | | 0.83 | |
| | | | |
| | | | | |
Total from investment operations. | | | 0.62 | | | | 0.23 | | | | (0.30 | ) | | | 0.45 | | | | 1.01 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income | | | (0.01 | ) | | | (0.09 | ) | | | (0.12 | ) | | | (0.21 | ) | | | (0.11 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.08 | ) | | | (0.10 | ) | | | (0.06 | ) | | | (— | )e |
| | | | |
| | | | | |
Total distributions | | | (0.01 | ) | | | (0.17 | ) | | | (0.22 | ) | | | (0.27 | ) | | | (0.11 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $11.23 | | | | $10.62 | | | | $10.56 | | | | $11.08 | | | | $10.90 | |
| | | | |
| | | | | |
Total returnf | | | 5.85% | | | | 2.29% | | | | (2.84)% | | | | 4.09% | | | | 10.16% | |
| | | | | |
| Ratios to average net assetsg | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesh | | | 1.68% | | | | 1.73% | | | | 1.78% | | | | 2.95% | | | | 11.95% | |
| | | | | |
Expenses net of waiver and payments by affiliatesh | | | 1.05% | | | | 1.05% | | | | 1.05% | | | | 1.05% | | | | 1.05% | |
| | | | | |
Net investment incomed | | | 0.40% | | | | 0.50% | | | | 1.33% | | | | 2.50% | | | | 2.31% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $5,496 | | | | $5,138 | | | | $5,221 | | | | $2,617 | | | | $250 | |
| | | | | |
Portfolio turnover rate | | | 30.99% | | | | 87.38% | | | | 47.51% | | | | 64.70% | | | | 33.36% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eAmount rounds to less than $0.01 per share.
fTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.63% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 57 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL STATEMENTS
Franklin LifeSmart 2020 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class R | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $10.66 | | | | $10.59 | | | | $11.12 | | | | $10.93 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.05 | | | | 0.10 | | | | 0.35 | | | | 0.42 | | | | 0.11 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 0.61 | | | | 0.18 | | | | (0.61 | ) | | | 0.08 | | | | 0.93 | |
| | | | |
| | | | | |
Total from investment operations. | | | 0.66 | | | | 0.28 | | | | (0.26 | ) | | | 0.50 | | | | 1.04 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income | | | (0.04 | ) | | | (0.13 | ) | | | (0.17 | ) | | | (0.25 | ) | | | (0.11 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.08 | ) | | | (0.10 | ) | | | (0.06 | ) | | | (— | )e |
| | | | |
| | | | | |
Total distributions | | | (0.04 | ) | | | (0.21 | ) | | | (0.27 | ) | | | (0.31 | ) | | | (0.11 | ) |
| | | | |
| | | | | |
Net asset value, end of period. | | | $11.28 | | | | $10.66 | | | | $10.59 | | | | $11.12 | | | | $10.93 | |
| | | | |
| | | | | |
Total returnf | | | 6.15% | | | | 2.74% | | | | (2.35)% | | | | 4.61% | | | | 10.48% | |
| | | | | |
| Ratios to average net assetsg | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesh | | | 1.18% | | | | 1.23% | | | | 1.28% | | | | 2.45% | | | | 11.45% | |
| | | | | |
Expenses net of waiver and payments by affiliatesh | | | 0.55% | | | | 0.55% | | | | 0.55% | | | | 0.55% | | | | 0.55% | |
| | | | | |
Net investment incomed | | | 0.90% | | | | 1.00% | | | | 1.83% | | | | 3.00% | | | | 2.81% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $2,910 | | | | $3,145 | | | | $3,189 | | | | $80 | | | | $11 | |
| | | | | |
Portfolio turnover rate | | | 30.99% | | | | 87.38% | | | | 47.51% | | | | 64.70% | | | | 33.36% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eAmount rounds to less than $0.01 per share.
fTotal return is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.63% for the period ended June 30, 2017.
| | | | |
| | | |
| 58 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2020 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class R6 | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $10.70 | | | | $10.64 | | | | $11.15 | | | | $10.95 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.08 | | | | 0.17 | | | | 0.23 | | | | 0.45 | | | | 0.14 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 0.61 | | | | 0.17 | | | | (0.42 | ) | | | 0.11 | | | | 0.94 | |
| | | | |
| | | | | |
Total from investment operations. | | | 0.69 | | | | 0.34 | | | | (0.19 | ) | | | 0.56 | | | | 1.08 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income | | | (0.06 | ) | | | (0.20 | ) | | | (0.22 | ) | | | (0.30 | ) | | | (0.13 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.08 | ) | | | (0.10 | ) | | | (0.06 | ) | | | (— | )e |
| | | | |
| | | | | |
Total distributions | | | (0.06 | ) | | | (0.28 | ) | | | (0.32 | ) | | | (0.36 | ) | | | (0.13 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $11.33 | | | | $10.70 | | | | $10.64 | | | | $11.15 | | | | $10.95 | |
| | | | |
| | | | | |
Total returnf | | | 6.49% | | | | 3.33% | | | | (1.80)% | | | | 5.14% | | | | 10.84% | |
| | | | | |
| Ratios to average net assetsg | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesh | | | 0.54% | | | | 0.57% | | | | 0.66% | | | | 1.81% | | | | 11.51% | |
| | | | | |
Expenses net of waiver and payments by affiliatesh | | | —% | | | | —% | | | | —% | | | | —% | | | | —% | |
| | | | | |
Net investment incomed | | | 1.45% | | | | 1.55% | | | | 2.38% | | | | 3.55% | | | | 3.36% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $8,442 | | | | $6,670 | | | | $6,751 | | | | $7,361 | | | | $11 | |
| | | | | |
Portfolio turnover rate | | | 30.99% | | | | 87.38% | | | | 47.51% | | | | 64.70% | | | | 33.36% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eAmount rounds to less than $0.01 per share.
fTotal return is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.63% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 59 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2020 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Advisor Class | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $10.70 | | | | $10.63 | | | | $11.15 | | | | $10.95 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.08 | | | | 0.16 | | | | 0.25 | | | | 0.39 | | | | 0.17 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 0.61 | | | | 0.18 | | | | (0.45 | ) | | | 0.17 | | | | 0.91 | |
| | | | |
| | | | | |
Total from investment operations | | | 0.69 | | | | 0.34 | | | | (0.20 | ) | | | 0.56 | | | | 1.08 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income | | | (0.06 | ) | | | (0.19 | ) | | | (0.22 | ) | | | (0.30 | ) | | | (0.13 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.08 | ) | | | (0.10 | ) | | | (0.06 | ) | | | (— | )e |
| | | | |
| | | | | |
Total distributions | | | (0.06 | ) | | | (0.27 | ) | | | (0.32 | ) | | | (0.36 | ) | | | (0.13 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $11.33 | | | | $10.70 | | | | $10.63 | | | | $11.15 | | | | $10.95 | |
| | | | |
| | | | | |
Total returnf | | | 6.46% | | | | 3.28% | | | | (1.85)% | | | | 5.08% | | | | 10.83% | |
| | | | | |
| Ratios to average net assetsg | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesh | | | 0.68% | | | | 0.73% | | | | 0.78% | | | | 1.95% | | | | 10.95% | |
| | | | | |
Expenses net of waiver and payments by affiliatesh | | | 0.05% | | | | 0.05% | | | | 0.05% | | | | 0.05% | | | | 0.05% | |
| | | | | |
Net investment incomed | | | 1.40% | | | | 1.50% | | | | 2.33% | | | | 3.50% | | | | 3.31% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $451 | | | | $317 | | | | $290 | | | | $98 | | | | $44 | |
| | | | | |
Portfolio turnover rate | | | 30.99% | | | | 87.38% | | | | 47.51% | | | | 64.70% | | | | 33.36% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eAmount rounds to less than $0.01 per share.
fTotal return is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.63% for the period ended June 30, 2017.
| | | | |
| | | |
| 60 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Statement of Investments, June 30, 2017 (unaudited)
| | | | | | | | | | |
| Franklin LifeSmart 2020 Retirement Target Fund | |
| | | | | Shares | | | Value | |
| | Investments in Underlying Funds and Exchange Traded Funds 98.6% | | | | | | | | |
| | Alternative Strategies 7.5% | | | | | | | | |
| a | | Franklin K2 Alternative Strategies Fund, Class R6 | | | 95,709 | | | $ | 1,072,898 | |
| a | | Franklin K2 Long Short Credit Fund, Class R6 | | | 103,421 | | | | 1,089,024 | |
| a,b | | Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 111,271 | | | | 690,995 | |
| | | | | | | | | | |
| | | | | | | | | 2,852,917 | |
| | | | | | | | | | |
| | Domestic Equity 29.4% | | | | | | | | |
| | Financial Select Sector SPDR ETF | | | 40,700 | | | | 1,004,069 | |
| a | | Franklin Growth Fund, Class R6 | | | 45,477 | | | | 3,966,984 | |
| a,b | | Franklin Growth Opportunities Fund, Class R6 | | | 40,924 | | | | 1,560,821 | |
| a | | Franklin LibertyQ U.S. Equity ETF | | | 39,900 | | | | 1,028,622 | |
| a | | Franklin Rising Dividends Fund, Class R6 | | | 28,792 | | | | 1,624,179 | |
| a,b | | Franklin Small Cap Growth Fund, Class R6 | | | 23,693 | | | | 507,502 | |
| a | | Franklin Utilities Fund, Class R6 | | | 36,310 | | | | 687,709 | |
| | iShares S&P 500 Value ETF | | | 7,478 | | | | 784,891 | |
| | | | | | | | | | |
| | | | | | | | | 11,164,777 | |
| | | | | | | | | | |
| | Domestic Fixed Income 34.2% | | | | | | | | |
| a | | Franklin Floating Rate Daily Access Fund, Class R6 | | | 110,593 | | | | 979,854 | |
| a | | Franklin Low Duration Total Return Fund, Class R6 | | | 754,198 | | | | 7,466,556 | |
| a | | Franklin Strategic Income Fund, Class R6 | | | 98,931 | | | | 974,473 | |
| a | | Franklin U.S. Government Securities Fund, Class R6 | | | 218,606 | | | | 1,344,428 | |
| | iShares Core U.S. Aggregate Bond ETF | | | 14,000 | | | | 1,533,140 | |
| | iShares iBoxx $ Investment Grade Corporate Bond ETF | | | 5,500 | | | | 662,805 | |
| | | | | | | | | | |
| | | | | | | | | 12,961,256 | |
| | | | | | | | | | |
| | Foreign Equity 16.5% | | | | | | | | |
| a,b | | Franklin India Growth Fund, Class R6 | | | 47,546 | | | | 722,701 | |
| a | | Franklin International Small Cap Growth Fund, Class R6 | | | 69,012 | | | | 1,378,163 | |
| a | | Franklin LibertyQ Emerging Markets ETF | | | 42,200 | | | | 1,266,844 | |
| a | | Franklin Mutual International Fund, Class R6 | | | 52,793 | | | | 823,568 | |
| | iShares Core MSCI Europe ETF | | | 10,500 | | | | 492,135 | |
| | iShares Global Infrastructure ETF | | | 12,602 | | | | 554,110 | |
| a | | Templeton Foreign Fund, Class R6 | | | 136,157 | | | | 1,041,604 | |
| | | | | | | | | | |
| | | | | | | | | 6,279,125 | |
| | | | | | | | | | |
| | Foreign Fixed Income 11.0% | | | | | | | | |
| a | | Templeton Global Total Return Fund, Class R6 | | | 339,614 | | | | 4,180,643 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds
before Short Term Investments (Cost $34,901,499) | | | | | | | 37,438,718 | |
| | | | | | | | | | |
| | | |
| | Short Term Investments (Cost $574,069) 1.5% | | | | | | | | |
| | Money Market Funds 1.5% | | | | | | | | |
| a,c | | Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 574,069 | | | | 574,069 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds
(Cost $35,475,568) 100.1% | | | | | | | 38,012,787 | |
| | Other Assets, less Liabilities (0.1)% | | | | | | | (50,914 | ) |
| | | | | | | | | | |
| | Net Assets 100.0% | | | | | | $ | 37,961,873 | |
| | | | | | | | | | |
See Abbreviations on page 141.
aSee Note 3(f) regarding investments in FT Underlying Funds.
bNon-income producing.
cThe rate shown is the annualized seven-day yield at period end.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 61 | |
FRANKLIN FUND ALLOCATOR SERIES
Financial Highlights
Franklin LifeSmart 2025 Retirement Target Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $11.49 | | | | $11.44 | | | | $12.36 | | | | $12.76 | | | | $11.11 | | | | $10.22 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.05 | | | | 0.14 | | | | 0.19 | | | | 0.26 | | | | 0.16 | | | | 0.17 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.86 | | | | 0.19 | | | | (0.43 | ) | | | 0.30 | | | | 2.06 | | | | 0.88 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.91 | | | | 0.33 | | | | (0.24 | ) | | | 0.56 | | | | 2.22 | | | | 1.05 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.05 | ) | | | (0.13 | ) | | | (0.19 | ) | | | (0.28 | ) | | | (0.19 | ) | | | (0.16 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.15 | ) | | | (0.49 | ) | | | (0.68 | ) | | | (0.38 | ) | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.05 | ) | | | (0.28 | ) | | | (0.68 | ) | | | (0.96 | ) | | | (0.57 | ) | | | (0.16 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $12.35 | | | | $11.49 | | | | $11.44 | | | | $12.36 | | | | $12.76 | | | | $11.11 | |
| | | | |
| | | | | | |
Total returnd | | | 7.93% | | | | 2.96% | | | | (2.08)% | | | | 4.39% | | | | 20.18% | | | | 10.30% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 0.75% | | | | 0.76% | | | | 0.77% | | | | 0.83% | | | | 0.84% | | | | 0.71% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 0.30% | | | | 0.30% | | | | 0.33% | | | | 0.35% | | | | 0.38% | | | | 0.45% | |
| | | | | | |
Net investment incomec | | | 0.89% | | | | 1.18% | | | | 1.52% | | | | 2.03% | | | | 1.31% | | | | 1.55% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $74,550 | | | | $74,746 | | | | $72,625 | | | | $67,854 | | | | $58,811 | | | | $45,299 | |
| | | | | | |
Portfolio turnover rate | | | 19.53% | | | | 83.67% | | | | 36.22% | | | | 62.00% | | | | 47.39% | | | | 25.67% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.64% for the period ended June 30, 2017.
| | | | |
| | | |
| 61 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2025 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $11.32 | | | | $11.27 | | | | $12.18 | | | | $12.60 | | | | $10.97 | | | | $10.11 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.01 | | | | 0.05 | | | | 0.10 | | | | 0.16 | | | | 0.07 | | | | 0.09 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.83 | | | | 0.20 | | | | (0.42 | ) | | | 0.29 | | | | 2.05 | | | | 0.86 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.84 | | | | 0.25 | | | | (0.32 | ) | | | 0.45 | | | | 2.12 | | | | 0.95 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.05 | ) | | | (0.05 | ) | | | (0.10 | ) | | | (0.19 | ) | | | (0.11 | ) | | | (0.09 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.15 | ) | | | (0.49 | ) | | | (0.68 | ) | | | (0.38 | ) | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.05 | ) | | | (0.20 | ) | | | (0.59 | ) | | | (0.87 | ) | | | (0.49 | ) | | | (0.09 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $12.11 | | | | $11.32 | | | | $11.27 | | | | $12.18 | | | | $12.60 | | | | $10.97 | |
| | | | |
| | | | | | |
Total returnd | | | 7.43% | | | | 2.21% | | | | (2.74)% | | | | 3.58% | | | | 19.52% | | | | 9.42% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 1.50% | | | | 1.51% | | | | 1.49% | | | | 1.53% | | | | 1.54% | | | | 1.41% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 1.05% | | | | 1.05% | | | | 1.05% | | | | 1.05% | | | | 1.08% | | | | 1.15% | |
| | | | | | |
Net investment incomec | | | 0.14% | | | | 0.43% | | | | 0.80% | | | | 1.33% | | | | 0.61% | | | | 0.85% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $26,576 | | | | $26,401 | | | | $29,425 | | | | $28,712 | | | | $25,248 | | | | $18,312 | |
| | | | | | |
Portfolio turnover rate | | | 19.53% | | | | 83.67% | | | | 36.22% | | | | 62.00% | | | | 47.39% | | | | 25.67% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.64% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 63 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2025 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class R | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $11.44 | | | | $11.40 | | | | $12.31 | | | | $12.72 | | | | $11.07 | | | | $10.19 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.04 | | | | 0.11 | | | | 0.17 | | | | 0.23 | | | | 0.13 | | | | 0.15 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.85 | | | | 0.19 | | | | (0.42 | ) | | | 0.30 | | | | 2.07 | | | | 0.87 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.89 | | | | 0.30 | | | | (0.25 | ) | | | 0.53 | | | | 2.20 | | | | 1.02 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.05 | ) | | | (0.11 | ) | | | (0.17 | ) | | | (0.26 | ) | | | (0.17 | ) | | | (0.14 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.15 | ) | | | (0.49 | ) | | | (0.68 | ) | | | (0.38 | ) | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.05 | ) | | | (0.26 | ) | | | (0.66 | ) | | | (0.94 | ) | | | (0.55 | ) | | | (0.14 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $12.28 | | | | $11.44 | | | | $11.40 | | | | $12.31 | | | | $12.72 | | | | $11.07 | |
| | | | |
| | | | | | |
Total returnd | | | 7.79% | | | | 2.65% | | | | (2.20)% | | | | 4.12% | | | | 20.05% | | | | 10.05% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 1.00% | | | | 1.01% | | | | 0.99% | | | | 1.03% | | | | 1.04% | | | | 0.91% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 0.55% | | | | 0.55% | | | | 0.55% | | | | 0.55% | | | | 0.58% | | | | 0.65% | |
| | | | | | |
Net investment incomec | | | 0.64% | | | | 0.93% | | | | 1.30% | | | | 1.83% | | | | 1.11% | | | | 1.35% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $7,708 | | | | $7,411 | | | | $6,062 | | | | $5,361 | | | | $4,835 | | | | $3,442 | |
| | | | | | |
Portfolio turnover rate | | | 19.53% | | | | 83.67% | | | | 36.22% | | | | 62.00% | | | | 47.39% | | | | 25.67% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.64% for the period ended June 30, 2017.
| | | | |
| | | |
| 64 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2025 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class R6 | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.52 | | | | $11.47 | | | | $12.39 | | | | $12.79 | | | | $11.74 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.07 | | | | 0.17 | | | | 0.24 | | | | 0.41 | | | | 0.55 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 0.86 | | | | 0.20 | | | | (0.44 | ) | | | 0.20 | | | | 1.06 | |
| | | | |
| | | | | |
Total from investment operations. | | | 0.93 | | | | 0.37 | | | | (0.20 | ) | | | 0.61 | | | | 1.61 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.05 | ) | | | (0.17 | ) | | | (0.23 | ) | | | (0.33 | ) | | | (0.18 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.15 | ) | | | (0.49 | ) | | | (0.68 | ) | | | (0.38 | ) |
| | | | |
| | | | | |
Total distributions | | | (0.05 | ) | | | (0.32 | ) | | | (0.72 | ) | | | (1.01 | ) | | | (0.56 | ) |
| | | | |
| | | | | |
Net asset value, end of period. | | | $12.40 | | | | $11.52 | | | | $11.47 | | | | $12.39 | | | | $12.79 | |
| | | | |
| | | | | |
Total returne | | | 8.08% | | | | 3.24% | | | | (1.74)% | | | | 4.74% | | | | 13.90% | |
| | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesg | | | 0.36% | | | | 0.37% | | | | 0.36% | | | | 0.39% | | | | 0.45% | |
| | | | | |
Expenses net of waiver and payments by affiliatesg | | | —% | | | | —% | | | | —% | | | | —% | | | | —% | |
| | | | | |
Net investment incomed | | | 1.19% | | | | 1.48% | | | | 1.85% | | | | 2.38% | | | | 1.69% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $15,520 | | | | $13,936 | | | | $17,129 | | | | $14,010 | | | | $2,339 | |
| | | | | |
Portfolio turnover rate | | | 19.53% | | | | 83.67% | | | | 36.22% | | | | 62.00% | | | | 47.39% | |
aFor the period May 1, 2013 (effective date) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.64% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 65 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2025 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Advisor Class | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $11.51 | | | | $11.46 | | | | $12.38 | | | | $12.79 | | | | $11.12 | | | | $10.23 | |
| | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.07 | | | | 0.17 | | | | 0.16 | | | | 0.29 | | | | 0.19 | | | | 0.20 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.86 | | | | 0.19 | | | | (0.37 | ) | | | 0.30 | | | | 2.08 | | | | 0.88 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.93 | | | | 0.36 | | | | (0.21 | ) | | | 0.59 | | | | 2.27 | | | | 1.08 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.05 | ) | | | (0.16 | ) | | | (0.22 | ) | | | (0.32 | ) | | | (0.22 | ) | | | (0.19 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.15 | ) | | | (0.49 | ) | | | (0.68 | ) | | | (0.38 | ) | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.05 | ) | | | (0.31 | ) | | | (0.71 | ) | | | (1.00 | ) | | | (0.60 | ) | | | (0.19 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $12.39 | | | | $11.51 | | | | $11.46 | | | | $12.38 | | | | $12.79 | | | | $11.12 | |
| | | | |
| | | | | | |
Total returnd | | | 8.09% | | | | 3.20% | | | | (1.80)% | | | | 4.61% | | | | 20.66% | | | | 10.59% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 0.50% | | | | 0.51% | | | | 0.49% | | | | 0.53% | | | | 0.54% | | | | 0.41% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 0.05% | | | | 0.05% | | | | 0.05% | | | | 0.05% | | | | 0.08% | | | | 0.15% | |
| | | | | | |
Net investment incomec | | | 1.14% | | | | 1.43% | | | | 1.80% | | | | 2.33% | | | | 1.61% | | | | 1.85% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $1,558 | | | | $1,381 | | | | $1,194 | | | | $2,814 | | | | $2,487 | | | | $1,873 | |
| | | | | | |
Portfolio turnover rate | | | 19.53% | | | | 83.67% | | | | 36.22% | | | | 62.00% | | | | 47.39% | | | | 25.67% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.64% for the period ended June 30, 2017.
| | | | |
| | | |
| 66 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Statement of Investments, June 30, 2017 (unaudited)
Franklin LifeSmart 2025 Retirement Target Fund
| | | | | | | | | | |
| | | | | Shares | | | Value | |
| | Investments in Underlying Funds and Exchange Traded Funds 99.5% | | | | | | | | |
| | Alternative Strategies 7.6% | | | | | | | | |
| a | | Franklin K2 Alternative Strategies Fund, Class R6 | | | 318,718 | | | $ | 3,572,834 | |
| a | | Franklin K2 Long Short Credit Fund, Class R6 | | | 342,964 | | | | 3,611,413 | |
| a,b | | Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 379,719 | | | | 2,358,052 | |
| | | | | | | | | | |
| | | | | | | | | 9,542,299 | |
| | | | | | | | | | |
| | Domestic Equity 39.7% | | | | | | | | |
| | Financial Select Sector SPDR ETF | | | 185,700 | | | | 4,581,219 | |
| a | | Franklin Growth Fund, Class R6 | | | 201,724 | | | | 17,596,359 | |
| a,b | | Franklin Growth Opportunities Fund, Class R6 | | | 178,140 | | | | 6,794,277 | |
| a | | Franklin LibertyQ U.S. Equity ETF | | | 168,800 | | | | 4,351,664 | |
| a | | Franklin Rising Dividends Fund, Class R6 | | | 130,438 | | | | 7,358,003 | |
| a,b | | Franklin Small Cap Growth Fund, Class R6 | | | 126,143 | | | | 2,701,987 | |
| a | | Franklin Utilities Fund, Class R6 | | | 161,053 | | | | 3,050,346 | |
| | iShares S&P 500 Value ETF | | | 33,581 | | | | 3,524,662 | |
| | | | | | | | | | |
| | | | | | | | | 49,958,517 | |
| | | | | | | | | | |
| | Domestic Fixed Income 22.3% | | | | | | | | |
| a | | Franklin Floating Rate Daily Access Fund, Class R6 | | | 222,676 | | | | 1,972,907 | |
| a | | Franklin Low Duration Total Return Fund, Class R6 | | | 1,627,066 | | | | 16,107,958 | |
| a | | Franklin Strategic Income Fund, Class R6 | | | 199,864 | | | | 1,968,665 | |
| a | | Franklin U.S. Government Securities Fund, Class R6 | | | 490,449 | | | | 3,016,259 | |
| | iShares Core U.S. Aggregate Bond ETF | | | 31,900 | | | | 3,493,369 | |
| | iShares iBoxx $ Investment Grade Corporate Bond ETF | | | 13,000 | | | | 1,566,630 | |
| | | | | | | | | | |
| | | | | | | | | 28,125,788 | |
| | | | | | | | | | |
| | Foreign Equity 22.9% | | | | | | | | |
| a,b | | Franklin India Growth Fund, Class R6 | | | 214,628 | | | | 3,262,348 | |
| a | | Franklin International Small Cap Growth Fund, Class R6 | | | 309,885 | | | | 6,188,401 | |
| a | | Franklin LibertyQ Emerging Markets ETF | | | 207,500 | | | | 6,229,150 | |
| a | | Franklin Mutual International Fund, Class R6 | | | 233,818 | | | | 3,647,566 | |
| | iShares Core MSCI Europe ETF | | | 49,200 | | | | 2,306,004 | |
| | iShares Global Infrastructure ETF | | | 65,799 | | | | 2,893,182 | |
| a | | Templeton Foreign Fund, Class R6 | | | 559,229 | | | | 4,278,099 | |
| | | | | | | | | | |
| | | | | | | | | 28,804,750 | |
| | | | | | | | | | |
| | Foreign Fixed Income 7.0% | | | | | | | | |
| a | | Templeton Global Total Return Fund, Class R6 | | | 717,209 | | | | 8,828,837 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds before Short Term Investments (Cost $108,449,924) | | | | | | | 125,260,191 | |
| | | | | | | | | | |
| | | |
| | Short Term Investments (Cost $647,342) 0.5% | | | | | | | | |
| | Money Market Funds 0.5% | | | | | | | | |
| a,c | | Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 647,342 | | | | 647,342 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds
(Cost $109,097,266) 100.0% | | | | | | | 125,907,533 | |
| | Other Assets, less Liabilities 0.0%† | | | | | | | 4,163 | |
| | | | | | | | | | |
| | Net Assets 100.0% | | | | | | $ | 125,911,696 | |
| | | | | | | | | | |
| | | | | | |
| | | |
| franklintempleton.com | | Semiannual Report | | | 67 | |
FRANKLIN FUND ALLOCATOR SERIES
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LifeSmart 2025 Retirement Target Fund (continued)
See Abbreviations on page 141.
†Rounds to less than 0.1% of net assets.
aSee Note 3(f) regarding investments in FT Underlying Funds.
bNon-income producing.
cThe rate shown is the annualized seven-day yield at period end.
| | | | |
| | | |
| 68 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Financial Highlights
Franklin LifeSmart 2030 Retirement Target Fund
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class A | | | | | | | | | | | | | | | | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.08 | | | | $10.95 | | | | $11.45 | | | | $11.11 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.04 | | | | 0.13 | | | | 0.20 | | | | 0.25 | | | | 0.15 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 0.92 | | | | 0.19 | | | | (0.39 | ) | | | 0.33 | | | | 1.07 | |
| | | | |
| | | | | |
Total from investment operations | | | 0.96 | | | | 0.32 | | | | (0.19 | ) | | | 0.58 | | | | 1.22 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.08 | ) | | | (0.09 | ) | | | (0.16 | ) | | | (0.18 | ) | | | (0.11 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.10 | ) | | | (0.15 | ) | | | (0.06 | ) | | | (— | )e |
| | | | |
| | | | | |
Total distributions | | | (0.08 | ) | | | (0.19 | ) | | | (0.31 | ) | | | (0.24 | ) | | | (0.11 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $11.96 | | | | $11.08 | | | | $10.95 | | | | $11.45 | | | | $11.11 | |
| | | | |
| | | | | |
Total returnf | | | 8.68% | | | | 2.93% | | | | (1.75)% | | | | 5.28% | | | | 12.19% | |
| | | | | |
| Ratios to average net assetsg | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesh | | | 0.96% | | | | 1.02% | | | | 1.17% | | | | 2.28% | | | | 20.77% | |
| | | | | |
Expenses net of waiver and payments by affiliatesh | | | 0.30% | | | | 0.30% | | | | 0.32% | | | | 0.35% | | | | 0.23% | |
| | | | | |
Net investment incomed | | | 0.76% | | | | 1.17% | | | | 1.55% | | | | 2.58% | | | | 2.72% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $18,574 | | | | $16,788 | | | | $13,631 | | | | $5,098 | | | | $1,260 | |
| | | | | |
Portfolio turnover rate | | | 17.14% | | | | 81.66% | | | | 44.47% | | | | 81.33% | | | | 12.08% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eAmount rounds to less than $0.01 per share.
fTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.66% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 69 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2030 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class C | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $10.97 | | | | $10.86 | | | | $11.38 | | | | $11.09 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | —e | | | | 0.05 | | | | 0.11 | | | | 0.24 | | | | 0.13 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 0.91 | | | | 0.17 | | | | (0.38 | ) | | | 0.26 | | | | 1.05 | |
| | | | |
| | | | | |
Total from investment operations | | | 0.91 | | | | 0.22 | | | | (0.27 | ) | | | 0.50 | | | | 1.18 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.08 | ) | | | (0.01 | ) | | | (0.10 | ) | | | (0.15 | ) | | | (0.09 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.10 | ) | | | (0.15 | ) | | | (0.06 | ) | | | (— | )e |
| | | | |
| | | | | |
Total distributions | | | (0.08 | ) | | | (0.11 | ) | | | (0.25 | ) | | | (0.21 | ) | | | (0.09 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $11.80 | | | | $10.97 | | | | $10.86 | | | | $11.38 | | | | $11.09 | |
| | | | |
| | | | | |
Total returnf | | | 8.31% | | | | 2.08% | | | | (2.43)% | | | | 4.67% | | | | 11.73% | |
| | | | | |
| Ratios to average net assetsg | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesh | | | 1.71% | | | | 1.77% | | | | 1.90% | | | | 2.98% | | | | 21.59% | |
| | | | | |
Expenses net of waiver and payments by affiliatesh | | | 1.05% | | | | 1.05% | | | | 1.05% | | | | 1.05% | | | | 1.05% | |
| | | | | |
Net investment incomed | | | 0.01% | | | | 0.42% | | | | 0.82% | | | | 1.88% | | | | 1.90% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $6,326 | | | | $5,127 | | | | $4,124 | | | | $1,950 | | | | $132 | |
| | | | | |
Portfolio turnover rate | | | 17.14% | | | | 81.66% | | | | 44.47% | | | | 81.33% | | | | 12.08% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eAmount rounds to less than $0.01 per share.
fTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.66% for the period ended June 30, 2017.
| | | | |
| | | |
| 70 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2030 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class R | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.06 | | | | $10.94 | | | | $11.44 | | | | $11.10 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.03 | | | | 0.10 | | | | 0.18 | | | | 0.18 | | | | 0.13 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 0.91 | | | | 0.18 | | | | (0.39 | ) | | | 0.38 | | | | 1.07 | |
| | | | |
| | | | | |
Total from investment operations | | | 0.94 | | | | 0.28 | | | | (0.21 | ) | | | 0.56 | | | | 1.20 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.08 | ) | | | (0.06 | ) | | | (0.14 | ) | | | (0.16 | ) | | | (0.10 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.10 | ) | | | (0.15 | ) | | | (0.06 | ) | | | (— | )e |
| | | | |
| | | | | |
Total distributions | | | (0.08 | ) | | | (0.16 | ) | | | (0.29 | ) | | | (0.22 | ) | | | (0.10 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $11.92 | | | | $11.06 | | | | $10.94 | | | | $11.44 | | | | $11.10 | |
| | | | |
| | | | | |
Total returnf | | | 8.51% | | | | 2.60% | | | | (1.89)% | | | | 5.07% | | | | 11.98% | |
| | | | | |
| Ratios to average net assetsg | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesh | | | 1.21% | | | | 1.27% | | | | 1.40% | | | | 2.48% | | | | 21.09% | |
| | | | | |
Expenses net of waiver and payments by affiliatesh | | | 0.55% | | | | 0.55% | | | | 0.55% | | | | 0.55% | | | | 0.55% | |
| | | | | |
Net investment incomed | | | 0.51% | | | | 0.92% | | | | 1.32% | | | | 2.38% | | | | 2.40% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $1,312 | | | | $1,398 | | | | $870 | | | | $48 | | | | $47 | |
| | | | | |
Portfolio turnover rate | | | 17.14% | | | | 81.66% | | | | 44.47% | | | | 81.33% | | | | 12.08% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eAmount rounds to less than $0.01 per share.
fTotal return is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.66% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 71 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2030 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class R6 | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.12 | | | | $10.99 | | | | $11.47 | | | | $11.12 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.06 | | | | 0.16 | | | | 0.20 | | | | 0.36 | | | | 0.11 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 0.92 | | | | 0.19 | | | | (0.35 | ) | | | 0.26 | | | | 1.12 | |
| | | | |
| | | | | |
Total from investment operations | | | 0.98 | | | | 0.35 | | | | (0.15 | ) | | | 0.62 | | | | 1.23 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.08 | ) | | | (0.12 | ) | | | (0.18 | ) | | | (0.21 | ) | | | (0.11 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.10 | ) | | | (0.15 | ) | | | (0.06 | ) | | | (— | )e |
| | | | |
| | | | | |
Total distributions | | | (0.08 | ) | | | (0.22 | ) | | | (0.33 | ) | | | (0.27 | ) | | | (0.11 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $12.02 | | | | $11.12 | | | | $10.99 | | | | $11.47 | | | | $11.12 | |
| | | | |
| | | | | |
Total returnf | | | 8.83% | | | | 3.20% | | | | (1.34)% | | | | 5.60% | | | | 12.34% | |
| | | | | |
| Ratios to average net assetsg | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesh | | | 0.52% | | | | 0.57% | | | | 0.68% | | | | 1.74% | | | | 21.00% | |
| | | | | |
Expenses net of waiver and payments by affiliatesh | | | —% | | | | —% | | | | —% | | | | —% | | | | —% | |
| | | | | |
Net investment incomed | | | 1.06% | | | | 1.47% | | | | 1.87% | | | | 2.93% | | | | 2.95% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $16,403 | | | | $14,455 | | | | $13,041 | | | | $12,041 | | | | $11 | |
| | | | | |
Portfolio turnover rate | | | 17.14% | | | | 81.66% | | | | 44.47% | | | | 81.33% | | | | 12.08% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eAmount rounds to less than $0.01 per share.
fTotal return is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.66% for the period ended June 30, 2017.
| | | | |
| | | |
| 72 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2030 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Advisor Class | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.11 | | | | $10.98 | | | | $11.47 | | | | $11.12 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.06 | | | | 0.15 | | | | 0.27 | | | | 0.23 | | | | 0.13 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 0.92 | | | | 0.19 | | | | (0.43 | ) | | | 0.38 | | | | 1.10 | |
| | | | |
| | | | | |
Total from investment operations | | | 0.98 | | | | 0.34 | | | | (0.16 | ) | | | 0.61 | | | | 1.23 | |
| | | | |
| | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.08 | ) | | | (0.11 | ) | | | (0.18 | ) | | | (0.20 | ) | | | (0.11 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.10 | ) | | | (0.15 | ) | | | (0.06 | ) | | | (— | )e |
| | | | |
| | | | | |
Total distributions | | | (0.08 | ) | | | (0.21 | ) | | | (0.33 | ) | | | (0.26 | ) | | | (0.11 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $12.01 | | | | $11.11 | | | | $10.98 | | | | $11.47 | | | | $11.12 | |
| | | | |
| | | | | |
Total returnf | | | 8.84% | | | | 3.15% | | | | (1.46)% | | | | 5.56% | | | | 12.32% | |
| | | | | |
| Ratios to average net assetsg | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesh | | | 0.71% | | | | 0.77% | | | | 0.90% | | | | 1.98% | | | | 20.59% | |
| | | | | |
Expenses net of waiver and payments by affiliatesh | | | 0.05% | | | | 0.05% | | | | 0.05% | | | | 0.05% | | | | 0.05% | |
| | | | | |
Net investment incomed | | | 1.01% | | | | 1.42% | | | | 1.82% | | | | 2.88% | | | | 2.90% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $573 | | | | $332 | | | | $303 | | | | $101 | | | | $82 | |
| | | | | |
Portfolio turnover rate | | | 17.14% | | | | 81.66% | | | | 44.47% | | | | 81.33% | | | | 12.08% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eAmount rounds to less than $0.01 per share.
fTotal return is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.66% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 73 | |
FRANKLIN FUND ALLOCATOR SERIES
Statement of Investments, June 30, 2017 (unaudited)
| | | | | | | | | | |
| Franklin LifeSmart 2030 Retirement Target Fund | |
| | | | | Shares | | | Value | |
| | | | | | | | | | |
| | Investments in Underlying Funds and Exchange Traded Funds 99.2% | | | | | | | | |
| | Alternative Strategies 7.5% | | | | | | | | |
| a | | Franklin K2 Alternative Strategies Fund, Class R6 | | | 110,116 | | | $ | 1,234,400 | |
| a | | Franklin K2 Long Short Credit Fund, Class R6 | | | 120,540 | | | | 1,269,281 | |
| a,b | | Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 120,861 | | | | 750,548 | |
| | | | | | | | | | |
| | | | | | | | | 3,254,229 | |
| | | | | | | | | | |
| | Domestic Equity 44.2% | | | | | | | | |
| | Financial Select Sector SPDR ETF | | | 71,100 | | | | 1,754,037 | |
| a | | Franklin Growth Fund, Class R6 | | | 75,406 | | | | 6,577,707 | |
| a,b | | Franklin Growth Opportunities Fund, Class R6 | | | 64,388 | | | | 2,455,746 | |
| a | | Franklin LibertyQ U.S. Equity ETF | | | 62,400 | | | | 1,608,672 | |
| a | | Franklin Rising Dividends Fund, Class R6 | | | 49,760 | | | | 2,806,969 | |
| a,b | | Franklin Small Cap Growth Fund, Class R6 | | | 56,477 | | | | 1,209,730 | |
| a | | Franklin Utilities Fund, Class R6 | | | 64,549 | | | | 1,222,568 | |
| | iShares S&P 500 Value ETF | | | 13,826 | | | | 1,451,177 | |
| | | | | | | | | | |
| | | | | | | | | 19,086,606 | |
| | | | | | | | | | |
| | Domestic Fixed Income 16.3% | | | | | | | | |
| a | | Franklin Floating Rate Daily Access Fund, Class R6 | | | 58,027 | | | | 514,118 | |
| a | | Franklin Low Duration Total Return Fund, Class R6 | | | 399,958 | | | | 3,959,581 | |
| a | | Franklin Strategic Income Fund, Class R6 | | | 51,925 | | | | 511,463 | |
| a | | Franklin U.S. Government Securities Fund, Class R6 | | | 126,051 | | | | 775,214 | |
| | iShares Core U.S. Aggregate Bond ETF | | | 8,600 | | | | 941,786 | |
| | iShares iBoxx $ Investment Grade Corporate Bond ETF | | | 3,000 | | | | 361,530 | |
| | | | | | | | | | |
| | | | | | | | | 7,063,692 | |
| | | | | | | | | | |
| | Foreign Equity 26.0% | | | | | | | | |
| a,b | | Franklin India Growth Fund, Class R6 | | | 88,774 | | | | 1,349,367 | |
| a | | Franklin International Small Cap Growth Fund, Class R6 | | | 139,725 | | | | 2,790,301 | |
| a | | Franklin LibertyQ Emerging Markets ETF | | | 80,900 | | | | 2,428,618 | |
| a | | Franklin Mutual International Fund, Class R6 | | | 91,708 | | | | 1,430,649 | |
| | iShares Core MSCI Europe ETF | | | 19,100 | | | | 895,217 | |
| | iShares Global Infrastructure ETF | | | 20,194 | | | | 887,930 | |
| a | | Templeton Foreign Fund, Class R6 | | | 188,024 | | | | 1,438,387 | |
| | | | | | | | | | |
| | | | | | | | | 11,220,469 | |
| | | | | | | | | | |
| | Foreign Fixed Income 5.2% | | | | | | | | |
| a | | Templeton Global Total Return Fund, Class R6 | | | 180,926 | | | | 2,227,200 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds
before Short Term Investments (Cost $39,205,658) | | | | | | | 42,852,196 | |
| | | | | | | | | | |
| | Short Term Investments (Cost $201,274) 0.5% | | | | | | | | |
| | Money Market Funds 0.5% | | | | | | | | |
| a,c | | Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 201,274 | | | | 201,274 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds
(Cost $39,406,932) 99.7% | | | | | | | 43,053,470 | |
| | Other Assets, less Liabilities 0.3% | | | | | | | 134,217 | |
| | | | | | | | | | |
| | Net Assets 100.0% | | | | | | $ | 43,187,687 | |
| | | | | | | | | | |
See Abbreviations on page 141.
aSee Note 3(f) regarding investments in FT Underlying Funds.
bNon-income producing.
cThe rate shown is the annualized seven-day yield at period end.
| | | | |
| | | |
| 74 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Financial Highlights
Franklin LifeSmart 2035 Retirement Target Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $11.86 | | | | $11.78 | | | | $12.67 | | | | $12.85 | | | | $11.01 | | | | $10.13 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.04 | | | | 0.13 | | | | 0.17 | | | | 0.22 | | | | 0.14 | | | | 0.15 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.08 | | | | 0.23 | | | | (0.41 | ) | | | 0.42 | | | | 2.26 | | | | 0.89 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.12 | | | | 0.36 | | | | (0.24 | ) | | | 0.64 | | | | 2.40 | | | | 1.04 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.10 | ) | | | (0.18 | ) | | | (0.24 | ) | | | (0.15 | ) | | | (0.16 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.18 | ) | | | (0.47 | ) | | | (0.58 | ) | | | (0.41 | ) | | | (— | )d |
| | | | |
| | | | | | |
Total distributions | | | (0.09 | ) | | | (0.28 | ) | | | (0.65 | ) | | | (0.82 | ) | | | (0.56 | ) | | | (0.16 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $12.89 | | | | $11.86 | | | | $11.78 | | | | $12.67 | | | | $12.85 | | | | $11.01 | |
| | | | |
| | | | | | |
Total returne | | | 9.36% | | | | 3.11% | | | | (2.00)% | | | | 4.96% | | | | 22.06% | | | | 10.33% | |
| | | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesg | | | 0.80% | | | | 0.82% | | | | 0.84% | | | | 0.91% | | | | 0.94% | | | | 0.83% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesg | | | 0.30% | | | | 0.30% | | | | 0.33% | | | | 0.35% | | | | 0.38% | | | | 0.45% | |
| | | | | | |
Net investment incomec | | | 0.65% | | | | 1.15% | | | | 1.30% | | | | 1.76% | | | | 1.17% | | | | 1.45% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $57,141 | | | | $56,650 | | | | $53,701 | | | | $50,264 | | | | $42,510 | | | | $32,095 | |
| | | | | | |
Portfolio turnover rate | | | 15.22% | | | | 77.39% | | | | 33.86% | | | | 61.73% | | | | 49.84% | | | | 27.30% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dAmount rounds to less than $0.01 per share.
eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.67% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 75 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2035 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $11.61 | | | | $11.54 | | | | $12.43 | | | | $12.63 | | | | $10.85 | | | | $9.98 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income (loss)b,c | | | (0.01 | ) | | | 0.04 | | | | 0.07 | | | | 0.12 | | | | 0.06 | | | | 0.08 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.06 | | | | 0.22 | | | | (0.40 | ) | | | 0.41 | | | | 2.21 | | | | 0.89 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.05 | | | | 0.26 | | | | (0.33 | ) | | | 0.53 | | | | 2.27 | | | | 0.97 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.01 | ) | | | (0.09 | ) | | | (0.15 | ) | | | (0.08 | ) | | | (0.10 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.18 | ) | | | (0.47 | ) | | | (0.58 | ) | | | (0.41 | ) | | | (— | )d |
| | | | |
| | | | | | |
Total distributions | | | (0.09 | ) | | | (0.19 | ) | | | (0.56 | ) | | | (0.73 | ) | | | (0.49 | ) | | | (0.10 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $12.57 | | | | $11.61 | | | | $11.54 | | | | $12.43 | | | | $12.63 | | | | $10.85 | |
| | | | |
| | | | | | |
Total returne | | | 9.04% | | | | 2.34% | | | | (2.76)% | | | | 4.23% | | | | 21.17% | | | | 9.72% | |
| | | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesg | | | 1.54% | | | | 1.57% | | | | 1.56% | | | | 1.61% | | | | 1.64% | | | | 1.53% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesg | | | 1.04% | | | | 1.05% | | | | 1.05% | | | | 1.05% | | | | 1.08% | | | | 1.15% | |
| | | | | | |
Net investment income (loss)c | | | (0.09)% | | | | 0.40% | | | | 0.58% | | | | 1.06% | | | | 0.47% | | | | 0.75% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $19,738 | | | | $18,781 | | | | $19,953 | | | | $19,965 | | | | $16,873 | | | | $11,124 | |
| | | | | | |
Portfolio turnover rate | | | 15.22% | | | | 77.39% | | | | 33.86% | | | | 61.73% | | | | 49.84% | | | | 27.30% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dAmount rounds to less than $0.01 per share.
eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.67% for the period ended June 30, 2017.
| | | | |
| | | |
| 76 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2035 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class R | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $11.84 | | | | $11.77 | | | | $12.66 | | | | $12.84 | | | | $11.01 | | | | $10.12 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.02 | | | | 0.12 | | | | 0.13 | | | | 0.19 | | | | 0.11 | | | | 0.14 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.08 | | | | 0.21 | | | | (0.40 | ) | | | 0.42 | | | | 2.26 | | | | 0.89 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.10 | | | | 0.33 | | | | (0.27 | ) | | | 0.61 | | | | 2.37 | | | | 1.03 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.08 | ) | | | (0.15 | ) | | | (0.21 | ) | | | (0.13 | ) | | | (0.14 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.18 | ) | | | (0.47 | ) | | | (0.58 | ) | | | (0.41 | ) | | | (— | )d |
| | | | |
| | | | | | |
Total distributions | | | (0.09 | ) | | | (0.26 | ) | | | (0.62 | ) | | | (0.79 | ) | | | (0.54 | ) | | | (0.14 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $12.85 | | | | $11.84 | | | | $11.77 | | | | $12.66 | | | | $12.84 | | | | $11.01 | |
| | | | |
| | | | | | |
Total returne | | | 9.29% | | | | 2.87% | | | | (2.25)% | | | | 4.75% | | | | 21.77% | | | | 10.24% | |
| | | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesg | | | 1.05% | | | | 1.07% | | | | 1.06% | | | | 1.11% | | | | 1.14% | | | | 1.03% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesg | | | 0.55% | | | | 0.55% | | | | 0.55% | | | | 0.55% | | | | 0.58% | | | | 0.65% | |
| | | | | | |
Net investment incomec | | | 0.40% | | | | 0.90% | | | | 1.08% | | | | 1.56% | | | | 0.97% | | | | 1.25% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $6,232 | | | | $6,080 | | | | $4,688 | | | | $4,577 | | | | $4,093 | | | | $3,035 | |
| | | | | | |
Portfolio turnover rate | | | 15.22% | | | | 77.39% | | | | 33.86% | | | | 61.73% | | | | 49.84% | | | | 27.30% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dAmount rounds to less than $0.01 per share.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.67% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 77 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2035 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class R6 | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.94 | | | | $11.85 | | | | $12.75 | | | | $12.92 | | | | $11.77 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.06 | | | | 0.17 | | | | 0.22 | | | | 0.36 | | | | 0.58 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 1.08 | | | | 0.23 | | | | (0.43 | ) | | | 0.33 | | | | 1.17 | |
| | | | |
| | | | | |
Total from investment operations | | | 1.14 | | | | 0.40 | | | | (0.21 | ) | | | 0.69 | | | | 1.75 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.13 | ) | | | (0.22 | ) | | | (0.28 | ) | | | (0.19 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.18 | ) | | | (0.47 | ) | | | (0.58 | ) | | | (0.41 | ) |
| | | | |
| | | | | |
Total distributions | | | (0.09 | ) | | | (0.31 | ) | | | (0.69 | ) | | | (0.86 | ) | | | (0.60 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $12.99 | | | | $11.94 | | | | $11.85 | | | | $12.75 | | | | $12.92 | |
| | | | |
| | | | | |
Total returne | | | 9.55% | | | | 3.48% | | | | (1.75)% | | | | 5.35% | | | | 15.09% | |
| | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesg | | | 0.38% | | | | 0.39% | | | | 0.38% | | | | 0.42% | | | | 0.49% | |
| | | | | |
Expenses net of waiver and payments by affiliatesg | | | —% | | | | —% | | | | —% | | | | —% | | | | —% | |
| | | | | |
Net investment incomed | | | 0.95% | | | | 1.45% | | | | 1.63% | | | | 2.11% | | | | 1.55% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $24,188 | | | | $22,068 | | | | $20,244 | | | | $16,262 | | | | $2,532 | |
| | | | | |
Portfolio turnover rate | | | 15.22% | | | | 77.39% | | | | 33.86% | | | | 61.73% | | | | 49.84% | |
aFor the period May 1, 2013 (effective date) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.67% for the period ended June 30, 2017.
| | | | |
| | | |
| 78 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2035 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Advisor Class | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $11.95 | | | | $11.86 | | | | $12.75 | | | | $12.93 | | | | $11.07 | | | | $10.17 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.06 | | | | 0.16 | | | | 0.16 | | | | 0.26 | | | | 0.18 | | | | 0.18 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.08 | | | | 0.23 | | | | (0.37 | ) | | | 0.41 | | | | 2.28 | | | | 0.91 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.14 | | | | 0.39 | | | | (0.21 | ) | | | 0.67 | | | | 2.46 | | | | 1.09 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.12 | ) | | | (0.21 | ) | | | (0.27 | ) | | | (0.19 | ) | | | (0.19 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.18 | ) | | | (0.47 | ) | | | (0.58 | ) | | | (0.41 | ) | | | (— | )d |
| | | | |
| | | | | | |
Total distributions | | | (0.09 | ) | | | (0.30 | ) | | | (0.68 | ) | | | (0.85 | ) | | | (0.60 | ) | | | (0.19 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $13.00 | | | | $11.95 | | | | $11.86 | | | | $12.75 | | | | $12.93 | | | | $11.07 | |
| | | | |
| | | | | | |
Total returne | | | 9.54% | | | | 3.42% | | | | (1.76)% | | | | 5.22% | | | | 22.43% | | | | 10.79% | |
| | | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesg | | | 0.55% | | | | 0.57% | | | | 0.56% | | | | 0.61% | | | | 0.64% | | | | 0.53% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesg | | | 0.05% | | | | 0.05% | | | | 0.05% | | | | 0.05% | | | | 0.08% | | | | 0.15% | |
| | | | | | |
Net investment incomec | | | 0.90% | | | | 1.40% | | | | 1.58% | | | | 2.06% | | | | 1.47% | | | | 1.75% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $1,654 | | | | $1,451 | | | | $1,722 | | | | $2,182 | | | | $1,815 | | | | $1,077 | |
| | | | | | |
Portfolio turnover rate | | | 15.22% | | | | 77.39% | | | | 33.86% | | | | 61.73% | | | | 49.84% | | | | 27.30% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dAmount rounds to less than $0.01 per share.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.67% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 79 | |
FRANKLIN FUND ALLOCATOR SERIES
Statement of Investments, June 30, 2017 (unaudited)
Franklin LifeSmart 2035 Retirement Target Fund
| | | | | | | | | | |
| | | | | Shares | | | Value | |
| | Investments in Underlying Funds and Exchange Traded Funds 99.3% | | | | | | | | |
| | Alternative Strategies 7.6% | | | | | | | | |
| a | | Franklin K2 Alternative Strategies Fund, Class R6 | | | 278,273 | | | $ | 3,119,439 | |
| a | | Franklin K2 Long Short Credit Fund, Class R6 | | | 301,161 | | | | 3,171,231 | |
| a,b | | Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 316,860 | | | | 1,967,699 | |
| | | | | | | | | | |
| | | | | | | | | 8,258,369 | |
| | | | | | | | | | |
| | Domestic Equity 46.5% | | | | | | | | |
| | Financial Select Sector SPDR ETF | | | 185,700 | | | | 4,581,219 | |
| a | | Franklin Growth Fund, Class R6 | | | 202,282 | | | | 17,645,056 | |
| a,b | | Franklin Growth Opportunities Fund, Class R6 | | | 204,204 | | | | 7,788,331 | |
| a | | Franklin LibertyQ U.S. Equity ETF | | | 172,700 | | | | 4,452,206 | |
| a | | Franklin Rising Dividends Fund, Class R6 | | | 124,301 | | | | 7,011,810 | |
| a,b | | Franklin Small Cap Growth Fund, Class R6 | | | 122,097 | | | | 2,615,317 | |
| a | | Franklin Utilities Fund, Class R6 | | | 158,549 | | | | 3,002,920 | |
| | iShares S&P 500 Value ETF | | | 33,902 | | | | 3,558,355 | |
| | | | | | | | | | |
| | | | | | | | | 50,655,214 | |
| | | | | | | | | | |
| | Domestic Fixed Income 12.5% | | | | | | | | |
| a | | Franklin Floating Rate Daily Access Fund, Class R6 | | | 103,862 | | | | 920,224 | |
| a | | Franklin Low Duration Total Return Fund, Class R6 | | | 764,927 | | | | 7,572,776 | |
| a | | Franklin Strategic Income Fund, Class R6 | | | 90,231 | | | | 888,776 | |
| a | | Franklin U.S. Government Securities Fund, Class R6 | | | 260,850 | | | | 1,604,226 | |
| | iShares Core U.S. Aggregate Bond ETF | | | 16,300 | | | | 1,785,013 | |
| | iShares iBoxx $ Investment Grade Corporate Bond ETF | | | 6,700 | | | | 807,417 | |
| | | | | | | | | | |
| | | | | | | | | 13,578,432 | |
| | | | | | | | | | |
| | Foreign Equity 28.8% | | | | | | | | |
| a,b | | Franklin India Growth Fund, Class R6 | | | 216,897 | | | | 3,296,828 | |
| a | | Franklin International Small Cap Growth Fund, Class R6 | | | 394,814 | | | | 7,884,442 | |
| a | | Franklin LibertyQ Emerging Markets ETF | | | 200,500 | | | | 6,019,010 | |
| a | | Franklin Mutual International Fund, Class R6 | | | 282,551 | | | | 4,407,799 | |
| | iShares Core MSCI Europe ETF | | | 51,900 | | | | 2,432,553 | |
| | iShares Global Infrastructure ETF | | | 65,936 | | | | 2,899,206 | |
| a | | Templeton Foreign Fund, Class R6 | | | 584,084 | | | | 4,468,241 | |
| | | | | | | | | | |
| | | | | | | | | 31,408,079 | |
| | | | | | | | | | |
| | Foreign Fixed Income 3.9% | | | | | | | | |
| a | | Templeton Global Total Return Fund, Class R6 | | | 349,909 | | | | 4,307,379 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds
before Short Term Investments (Cost $92,643,858) | | | | | | | 108,207,473 | |
| | | | | | | | | | |
| | Short Term Investments (Cost $838,858) 0.8% | | | | | | | | |
| | Money Market Funds 0.8% | | | | | | | | |
| a,c | | Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 838,858 | | | | 838,858 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds
(Cost $93,482,716) 100.1% | | | | | | | 109,046,331 | |
| | Other Assets, less Liabilities (0.1)% | | | | | | | (92,854 | ) |
| | | | | | | | | | |
| | Net Assets 100.0% | | | | | | $ | 108,953,477 | |
| | | | | | | | | | |
See Abbreviations on page 141.
aSee Note 3(f) regarding investments in FT Underlying Funds.
bNon-income producing.
cThe rate shown is the annualized seven-day yield at period end.
| | | | |
| | | |
| 80 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Financial Highlights
Franklin LifeSmart 2040 Retirement Target Fund
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class A | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.20 | | | | $11.06 | | | | $11.58 | | | | $11.19 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.03 | | | | 0.14 | | | | 0.18 | | | | 0.24 | | | | 0.11 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 1.04 | | | | 0.17 | | | | (0.40 | ) | | | 0.39 | | | | 1.18 | |
| | | | |
| | | | | |
Total from investment operations | | | 1.07 | | | | 0.31 | | | | (0.22 | ) | | | 0.63 | | | | 1.29 | |
| | | | |
| | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.08 | ) | | | (0.08 | ) | | | (0.15 | ) | | | (0.18 | ) | | | (0.10 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.09 | ) | | | (0.15 | ) | | | (0.06 | ) | | | (— | )e |
| | | | |
| | | | | |
Total distributions | | | (0.08 | ) | | | (0.17 | ) | | | (0.30 | ) | | | (0.24 | ) | | | (0.10 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $12.19 | | | | $11.20 | | | | $11.06 | | | | $11.58 | | | | $11.19 | |
| | | | |
| | | | | |
Total returnf | | | 9.61% | | | | 2.91% | | | | (1.94)% | | | | 5.67% | | | | 12.91% | |
| | | | | |
| Ratios to average net assetsg | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesh | | | 1.05% | | | | 1.19% | | | | 1.40% | | | | 3.25% | | | | 33.48% | |
| | | | | |
Expenses net of waiver and payments by affiliatesh | | | 0.30% | | | | 0.30% | | | | 0.32% | | | | 0.35% | | | | 0.25% | |
| | | | | |
Net investment incomed | | | 0.59% | | | | 1.22% | | | | 1.41% | | | | 2.37% | | | | 1.98% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $13,803 | | | | $13,213 | | | | $8,177 | | | | $2,891 | | | | $672 | |
| | | | | |
Portfolio turnover rate | | | 19.11% | | | | 72.22% | | | | 41.55% | | | | 92.38% | | | | 16.27% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eAmount rounds to less than $0.01 per share.
fTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.68% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 81 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2040 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class C | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.05 | | | | $10.97 | | | | $11.52 | | | | $11.15 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income (loss)c,d | | | (0.01 | ) | | | 0.05 | | | | 0.11 | | | | 0.17 | | | | 0.08 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 1.02 | | | | 0.18 | | | | (0.41 | ) | | | 0.39 | | | | 1.16 | |
| | | | |
| | | | | |
Total from investment operations | | | 1.01 | | | | 0.23 | | | | (0.30 | ) | | | 0.56 | | | | 1.24 | |
| | | | |
| | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.08 | ) | | | (0.06 | ) | | | (0.10 | ) | | | (0.13 | ) | | | (0.09 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.09 | ) | | | (0.15 | ) | | | (0.06 | ) | | | (— | )e |
| | | | |
| | | | | |
Total distributions | | | (0.08 | ) | | | (0.15 | ) | | | (0.25 | ) | | | (0.19 | ) | | | (0.09 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $11.98 | | | | $11.05 | | | | $10.97 | | | | $11.52 | | | | $11.15 | |
| | | | |
| | | | | |
Total returnf | | | 9.20% | | | | 2.17% | | | | (2.66)% | | | | 5.03% | | | | 12.46% | |
| | | | | |
| Ratios to average net assetsg | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesh | | | 1.80% | | | | 1.94% | | | | 2.13% | | | | 3.95% | | | | 34.28% | |
| | | | | |
Expenses net of waiver and payments by affiliatesh | | | 1.05% | | | | 1.05% | | | | 1.05% | | | | 1.05% | | | | 1.05% | |
| | | | | |
Net investment income (loss)d | | | (0.16)% | | | | 0.47% | | | | 0.68% | | | | 1.67% | | | | 1.18% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $3,224 | | | | $2,686 | | | | $1,988 | | | | $747 | | | | $60 | |
| | | | | |
Portfolio turnover rate | | | 19.11% | | | | 72.22% | | | | 41.55% | | | | 92.38% | | | | 16.27% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eAmount rounds to less than $0.01 per share.
fTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.68% for the period ended June 30, 2017.
| | | | |
| | | |
| 82 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2040 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class R | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.17 | | | | $11.05 | | | | $11.58 | | | | $11.19 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.02 | | | | 0.13 | | | | 0.17 | | | | 0.20 | | | | 0.07 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 1.04 | | | | 0.16 | | | | (0.41 | ) | | | 0.41 | | | | 1.21 | |
| | | | |
| | | | | |
Total from investment operations | | | 1.06 | | | | 0.29 | | | | (0.24 | ) | | | 0.61 | | | | 1.28 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.08 | ) | | | (0.08 | ) | | | (0.14 | ) | | | (0.16 | ) | | | (0.09 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.09 | ) | | | (0.15 | ) | | | (0.06 | ) | | | (— | )e |
| | | | |
| | | | | |
Total distributions | | | (0.08 | ) | | | (0.17 | ) | | | (0.29 | ) | | | (0.22 | ) | | | (0.09 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $12.15 | | | | $11.17 | | | | $11.05 | | | | $11.58 | | | | $11.19 | |
| | | | |
| | | | | |
Total returnf | | | 9.55% | | | | 2.66% | | | | (2.14)% | | | | 5.48% | | | | 12.81% | |
| | | | | |
| Ratios to average net assetsg | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesh | | | 1.30% | | | | 1.43% | | | | 1.63% | | | | 3.45% | | | | 33.78% | |
| | | | | |
Expenses net of waiver and payments by affiliatesh | | | 0.55% | | | | 0.54% | | | | 0.55% | | | | 0.55% | | | | 0.55% | |
| | | | | |
Net investment incomed | | | 0.34% | | | | 0.98% | | | | 1.18% | | | | 2.17% | | | | 1.68% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $1,894 | | | | $2,188 | | | | $1,009 | | | | $37 | | | | $11 | |
| | | | | |
Portfolio turnover rate | | | 19.11% | | | | 72.22% | | | | 41.55% | | | | 92.38% | | | | 16.27% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eAmount rounds to less than $0.01 per share.
fTotal return is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.68% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 83 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2040 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class R6 | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.26 | | | | $11.10 | | | | $11.61 | | | | $11.20 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.05 | | | | 0.16 | | | | 0.19 | | | | 0.33 | | | | 0.10 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 1.05 | | | | 0.18 | | | | (0.37 | ) | | | 0.35 | | | | 1.20 | |
| | | | |
| | | | | |
Total from investment operations | | | 1.10 | | | | 0.34 | | | | (0.18 | ) | | | 0.68 | | | | 1.30 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from
Underlying Funds and exchange traded funds | | | (0.08 | ) | | | (0.09 | ) | | | (0.18 | ) | | | (0.21 | ) | | | (0.10 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.09 | ) | | | (0.15 | ) | | | (0.06 | ) | | | (— | )e |
| | | | |
| | | | | |
Total distributions | | | (0.08 | ) | | | (0.18 | ) | | | (0.33 | ) | | | (0.27 | ) | | | (0.10 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $12.28 | | | | $11.26 | | | | $11.10 | | | | $11.61 | | | | $11.20 | |
| | | | |
| | | | | |
Total returnf | | | 9.83% | | | | 3.16% | | | | (1.62)% | | | | 6.13% | | | | 13.07% | |
| | | | | |
| Ratios to average net assetsg | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesh | | | 0.57% | | | | 0.65% | | | | 0.82% | | | | 2.55% | | | | 33.68% | |
| | | | | |
Expenses net of waiver and payments by affiliatesh | | | —% | | | | —% | | | | —% | | | | —% | | | | —% | |
| | | | | |
Net investment incomed | | | 0.89% | | | | 1.52% | | | | 1.73% | | | | 2.72% | | | | 2.23% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $15,709 | | | | $13,867 | | | | $12,037 | | | | $10,154 | | | | $11 | |
| | | | | |
Portfolio turnover rate | | | 19.11% | | | | 72.22% | | | | 41.55% | | | | 92.38% | | | | 16.27% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eAmount rounds to less than $0.01 per share.
fTotal return is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.68% for the period ended June 30, 2017.
| | | | |
| | | |
| 84 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2040 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Advisor Class | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.25 | | | | $11.09 | | | | $11.61 | | | | $11.20 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.05 | | | | 0.15 | | | | 0.40 | | | | 0.20 | | | | 0.10 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 1.05 | | | | 0.19 | | | | (0.59 | ) | | | 0.48 | | | | 1.20 | |
| | | | |
| | | | | |
Total from investment operations | | | 1.10 | | | | 0.34 | | | | (0.19 | ) | | | 0.68 | | | | 1.30 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from
Underlying Funds and exchange traded funds | | | (0.08 | ) | | | (0.09 | ) | | | (0.18 | ) | | | (0.21 | ) | | | (0.10 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.09 | ) | | | (0.15 | ) | | | (0.06 | ) | | | (— | )e |
| | | | |
| | | | | |
Total distributions | | | (0.08 | ) | | | (0.18 | ) | | | (0.33 | ) | | | (0.27 | ) | | | (0.10 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $12.27 | | | | $11.25 | | | | $11.09 | | | | $11.61 | | | | $11.20 | |
| | | | |
| | | | | |
Total returnf | | | 9.84% | | | | 3.15% | | | | (1.72)% | | | | 6.08% | | | | 13.04% | |
| | | | | |
| Ratios to average net assetsg | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesh | | | 0.80% | | | | 0.94% | | | | 1.13% | | | | 2.95% | | | | 33.28% | |
| | | | | |
Expenses net of waiver and payments by affiliatesh | | | 0.05% | | | | 0.05% | | | | 0.05% | | | | 0.05% | | | | 0.05% | |
| | | | | |
Net investment incomed | | | 0.84% | | | | 1.47% | | | | 1.68% | | | | 2.67% | | | | 2.18% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $152 | | | | $141 | | | | $121 | | | | $23 | | | | $23 | |
| | | | | |
Portfolio turnover rate | | | 19.11% | | | | 72.22% | | | | 41.55% | | | | 92.38% | | | | 16.27% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eAmount rounds to less than $0.01 per share.
fTotal return is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.68% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 85 | |
FRANKLIN FUND ALLOCATOR SERIES
Statement of Investments, June 30, 2017 (unaudited)
| | | | | | | | | | |
| Franklin LifeSmart 2040 Retirement Target Fund | |
| | | | | Shares | | | Value | |
| | Investments in Underlying Funds and Exchange Traded Funds 99.3% | | | | | | | | |
| | Alternative Strategies 7.6% | | | | | | | | |
| a | | Franklin K2 Alternative Strategies Fund, Class R6 | | | 89,159 | | | $ | 999,475 | |
| a | | Franklin K2 Long Short Credit Fund, Class R6 | | | 97,423 | | | | 1,025,867 | |
| a,b | | Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 96,772 | | | | 600,954 | |
| | | | | | | | | | |
| | | | | | | | | 2,626,296 | |
| | | | | | | | | | |
| | Domestic Equity 48.6% | | | | | | | | |
| | Financial Select Sector SPDR ETF | | | 60,200 | | | | 1,485,134 | |
| a | | Franklin Growth Fund, Class R6 | | | 66,958 | | | | 5,840,737 | |
| a,b | | Franklin Growth Opportunities Fund, Class R6 | | | 70,001 | | | | 2,669,827 | |
| a | | Franklin LibertyQ U.S. Equity ETF | | | 58,300 | | | | 1,502,974 | |
| a | | Franklin Rising Dividends Fund, Class R6 | | | 40,970 | | | | 2,311,124 | |
| a,b | | Franklin Small Cap Growth Fund, Class R6 | | | 41,390 | | | | 886,580 | |
| a | | Franklin Utilities Fund, Class R6 | | | 52,568 | | | | 995,636 | |
| | iShares S&P 500 Value ETF | | | 11,617 | | | | 1,219,320 | |
| | | | | | | | | | |
| | | | | | | | | 16,911,332 | |
| | | | | | | | | | |
| | Domestic Fixed Income 10.5% | | | | | | | | |
| a | | Franklin Floating Rate Daily Access Fund, Class R6 | | | 28,614 | | | | 253,521 | |
| a | | Franklin Low Duration Total Return Fund, Class R6 | | | 206,344 | | | | 2,042,802 | |
| a | | Franklin Strategic Income Fund, Class R6 | | | 24,683 | | | | 243,130 | |
| a | | Franklin U.S. Government Securities Fund, Class R6 | | | 81,374 | | | | 500,448 | |
| | iShares Core U.S. Aggregate Bond ETF | | | 4,100 | | | | 448,991 | |
| | iShares iBoxx $ Investment Grade Corporate Bond ETF | | | 1,400 | | | | 168,714 | |
| | | | | | | | | | |
| | | | | | | | | 3,657,606 | |
| | | | | | | | | | |
| | Foreign Equity 29.6% | | | | | | | | |
| a,b | | Franklin India Growth Fund, Class R6 | | | 76,095 | | | | 1,156,637 | |
| a | | Franklin International Small Cap Growth Fund, Class R6 | | | 132,472 | | | | 2,645,465 | |
| a | | Franklin LibertyQ Emerging Markets ETF | | | 65,400 | | | | 1,963,308 | |
| a | | Franklin Mutual International Fund, Class R6 | | | 94,555 | | | | 1,475,061 | |
| | iShares Core MSCI Europe ETF | | | 17,300 | | | | 810,851 | |
| | iShares Global Infrastructure ETF | | | 18,842 | | | | 828,483 | |
| a | | Templeton Foreign Fund, Class R6 | | | 182,388 | | | | 1,395,271 | |
| | | | | | | | | | |
| | | | | | | | | 10,275,076 | |
| | | | | | | | | | |
| | Foreign Fixed Income 3.0% | | | | | | | | |
| a | | Templeton Global Total Return Fund, Class R6 | | | 85,595 | | | | 1,053,679 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds before Short Term Investments (Cost $31,337,954) | | | | | | | 34,523,989 | |
| | | | | | | | | | |
| | | |
| | Short Term Investments (Cost $147,549) 0.4% | | | | | | | | |
| | Money Market Funds 0.4% | | | | | | | | |
| a,c | | Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 147,549 | | | | 147,549 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds
(Cost $31,485,503) 99.7% | | | | | | | 34,671,538 | |
| | Other Assets, less Liabilities 0.3% | | | | | | | 110,925 | |
| | | | | | | | | | |
| | Net Assets 100.0% | | | | | | $ | 34,782,463 | |
| | | | | | | | | | |
See Abbreviations on page 141.
aSee Note 3(f) regarding investments in FT Underlying Funds.
bNon-income producing.
cThe rate shown is the annualized seven-day yield at period end.
| | | | |
| | | |
| 86 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Financial Highlights
Franklin LifeSmart 2045 Retirement Target Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $11.86 | | | | $11.75 | | | | $12.70 | | | | $12.88 | | | | $10.92 | | | | $10.01 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.04 | | | | 0.14 | | | | 0.16 | | | | 0.20 | | | | 0.13 | | | | 0.15 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.11 | | | | 0.24 | | | | (0.42 | ) | | | 0.43 | | | | 2.36 | | | | 0.91 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.15 | | | | 0.38 | | | | (0.26 | ) | | | 0.63 | | | | 2.49 | | | | 1.06 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.10 | ) | | | (0.17 | ) | | | (0.22 | ) | | | (0.15 | ) | | | (0.15 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.17 | ) | | | (0.52 | ) | | | (0.59 | ) | | | (0.38 | ) | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.09 | ) | | | (0.27 | ) | | | (0.69 | ) | | | (0.81 | ) | | | (0.53 | ) | | | (0.15 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $12.92 | | | | $11.86 | | | | $11.75 | | | | $12.70 | | | | $12.88 | | | | $10.92 | |
| | | | |
| | | | | | |
Total returnd | | | 9.69% | | | | 3.29% | | | | (2.17)% | | | | 4.94% | | | | 23.07% | | | | 10.61% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 0.93% | | | | 0.97% | | | | 1.01% | | | | 1.11% | | | | 1.16% | | | | 1.05% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 0.30% | | | | 0.30% | | | | 0.33% | | | | 0.35% | | | | 0.38% | | | | 0.45% | |
| | | | | | |
Net investment incomec | | | 0.57% | | | | 1.15% | | | | 1.26% | | | | 1.57% | | | | 1.08% | | | | 1.41% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $43,731 | | | | $44,521 | | | | $38,444 | | | | $34,259 | | | | $27,991 | | | | $20,765 | |
| | | | | | |
Portfolio turnover rate | | | 14.95% | | | | 75.72% | | | | 34.07% | | | | 65.20% | | | | 44.44% | | | | 32.47% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.67% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 87 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2045 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $11.57 | | | | $11.48 | | | | $12.42 | | | | $12.63 | | | | $10.73 | | | | $9.84 | |
| | | | |
| | | | | | |
| Income from investment operationsa | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income (loss)b,c | | | (0.01 | ) | | | 0.04 | | | | 0.07 | | | | 0.11 | | | | 0.04 | | | | 0.07 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.10 | | | | 0.23 | | | | (0.40 | ) | | | 0.41 | | | | 2.31 | | | | 0.90 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.09 | | | | 0.27 | | | | (0.33 | ) | | | 0.52 | | | | 2.35 | | | | 0.97 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.01 | ) | | | (0.09 | ) | | | (0.14 | ) | | | (0.07 | ) | | | (0.08 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.17 | ) | | | (0.52 | ) | | | (0.59 | ) | | | (0.38 | ) | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.09 | ) | | | (0.18 | ) | | | (0.61 | ) | | | (0.73 | ) | | | (0.45 | ) | | | (0.08 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $12.57 | | | | $11.57 | | | | $11.48 | | | | $12.42 | | | | $12.63 | | | | $10.73 | |
| | | | |
| | | | | | |
Total returnd | | | 9.41% | | | | 2.43% | | | | (2.82)% | | | | 4.15% | | | | 22.20% | | | | 9.85% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 1.67% | | | | 1.72% | | | | 1.73% | | | | 1.81% | | | | 1.86% | | | | 1.74% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 1.04% | | | | 1.05% | | | | 1.05% | | | | 1.05% | | | | 1.08% | | | | 1.14% | |
| | | | | | |
Net investment income (loss)c | | | (0.17)% | | | | 0.40% | | | | 0.54% | | | | 0.87% | | | | 0.38% | | | | 0.72% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $12,515 | | | | $12,527 | | | | $12,850 | | | | $11,785 | | | | $9,484 | | | | $6,680 | |
| | | | | | |
Portfolio turnover rate | | | 14.95% | | | | 75.72% | | | | 34.07% | | | | 65.20% | | | | 44.44% | | | | 32.47% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.67% for the period ended June 30, 2017.
| | | | |
| | | |
| 88 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2045 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Class R | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $11.81 | | | | $11.71 | | | | $12.66 | | | | $12.82 | | | | $10.88 | | | | $9.99 | |
| | | | |
| | | | | | |
| Income from investment operationsa | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.02 | | | | 0.11 | | | | 0.14 | | | | 0.14 | | | | 0.10 | | | | 0.16 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.11 | | | | 0.23 | | | | (0.42 | ) | | | 0.47 | | | | 2.35 | | | | 0.87 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.13 | | | | 0.34 | | | | (0.28 | ) | | | 0.61 | | | | 2.45 | | | | 1.03 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.07 | ) | | | (0.15 | ) | | | (0.18 | ) | | | (0.13 | ) | | | (0.14 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.17 | ) | | | (0.52 | ) | | | (0.59 | ) | | | (0.38 | ) | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.09 | ) | | | (0.24 | ) | | | (0.67 | ) | | | (0.77 | ) | | | (0.51 | ) | | | (0.14 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $12.85 | | | | $11.81 | | | | $11.71 | | | | $12.66 | | | | $12.82 | | | | $10.88 | |
| | | | |
| | | | | | |
Total returnd | | | 9.56% | | | | 2.99% | | | | (2.35)% | | | | 4.75% | | | | 22.76% | | | | 10.35% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 1.18% | | | | 1.22% | | | | 1.23% | | | | 1.31% | | | | 1.36% | | | | 1.25% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 0.55% | | | | 0.55% | | | | 0.55% | | | | 0.55% | | | | 0.58% | | | | 0.65% | |
| | | | | | |
Net investment incomec | | | 0.32% | | | | 0.90% | | | | 1.04% | | | | 1.37% | | | | 0.88% | | | | 1.21% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $5,432 | | | | $4,682 | | | | $4,327 | | | | $3,474 | | | | $4,564 | | | | $3,336 | |
| | | | | | |
Portfolio turnover rate | | | 14.95% | | | | 75.72% | | | | 34.07% | | | | 65.20% | | | | 44.44% | | | | 32.47% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.67% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 89 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2045 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class R6 | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.94 | | | | $11.83 | | | | $12.77 | | | | $12.95 | | | | $11.67 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.06 | | | | 0.17 | | | | 0.21 | | | | 0.33 | | | | 0.60 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 1.12 | | | | 0.24 | | | | (0.42 | ) | | | 0.35 | | | | 1.24 | |
| | | | |
| | | | | |
Total from investment operations | | | 1.18 | | | | 0.41 | | | | (0.21 | ) | | | 0.68 | | | | 1.84 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.13 | ) | | | (0.21 | ) | | | (0.27 | ) | | | (0.18 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.17 | ) | | | (0.52 | ) | | | (0.59 | ) | | | (0.38 | ) |
| | | | |
| | | | | |
Total distributions | | | (0.09 | ) | | | (0.30 | ) | | | (0.73 | ) | | | (0.86 | ) | | | (0.56 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $13.03 | | | | $11.94 | | | | $11.83 | | | | $12.77 | | | | $12.95 | |
| | | | |
| | | | | |
Total returne | | | 9.87% | | | | 3.55% | | | | (1.77)% | | | | 5.24% | | | | 16.08% | |
| | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesg | | | 0.43% | | | | 0.44% | | | | 0.45% | | | | 0.51% | | | | 0.60% | |
| | | | | |
Expenses net of waiver and payments by affiliatesg | | | —% | | | | —% | | | | —% | | | | —% | | | | —% | |
| | | | | |
Net investment incomed | | | 0.87% | | | | 1.45% | | | | 1.59% | | | | 1.92% | | | | 1.46% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $12,415 | | | | $10,912 | | | | $10,975 | | | | $8,987 | | | | $1,718 | |
| | | | | |
Portfolio turnover rate | | | 14.95% | | | | 75.72% | | | | 34.07% | | | | 65.20% | | | | 44.44% | |
aFor the period May 1, 2013 (effective date) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.67% for the period ended June 30, 2017.
| | | | |
| | | |
| 90 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2045 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |
| Advisor Class | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $11.94 | | | | $11.83 | | | | $12.76 | | | | $12.94 | | | | $10.96 | | | | $10.05 | |
| | | | |
| | | | | | |
| Income from investment operationsa: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomeb,c | | | 0.06 | | | | 0.15 | | | | 0.13 | | | | 0.24 | | | | 0.17 | | | | 0.16 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 1.12 | | | | 0.25 | | | | (0.34 | ) | | | 0.43 | | | | 2.37 | | | | 0.93 | |
| | | | |
| | | | | | |
Total from investment operations | | | 1.18 | | | | 0.40 | | | | (0.21 | ) | | | 0.67 | | | | 2.54 | | | | 1.09 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.12 | ) | | | (0.20 | ) | | | (0.26 | ) | | | (0.18 | ) | | | (0.18 | ) |
| | | | | | |
Net realized gains | | | — | | | | (0.17 | ) | | | (0.52 | ) | | | (0.59 | ) | | | (0.38 | ) | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.09 | ) | | | (0.29 | ) | | | (0.72 | ) | | | (0.85 | ) | | | (0.56 | ) | | | (0.18 | ) |
| | | | |
| | | | | | |
Net asset value, end of period | | | $13.03 | | | | $11.94 | | | | $11.83 | | | | $12.76 | | | | $12.94 | | | | $10.96 | |
| | | | |
| | | | | | |
Total returnd | | | 9.87% | | | | 3.49% | | | | (1.82)% | | | | 5.20% | | | | 23.48% | | | | 10.86% | |
| | | | | | |
| Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliatesf | | | 0.68% | | | | 0.72% | | | | 0.73% | | | | 0.81% | | | | 0.86% | | | | 0.75% | |
| | | | | | |
Expenses net of waiver and payments by affiliatesf | | | 0.05% | | | | 0.05% | | | | 0.05% | | | | 0.05% | | | | 0.08% | | | | 0.15% | |
| | | | | | |
Net investment incomec | | | 0.82% | | | | 1.40% | | | | 1.54% | | | | 1.87% | | | | 1.38% | | | | 1.71% | |
| | | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $670 | | | | $479 | | | | $532 | | | | $1,576 | | | | $1,188 | | | | $709 | |
| | | | | | |
Portfolio turnover rate | | | 14.95% | | | | 75.72% | | | | 34.07% | | | | 65.20% | | | | 44.44% | | | | 32.47% | |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.67% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 91 | |
FRANKLIN FUND ALLOCATOR SERIES
Statement of Investments, June 30, 2017 (unaudited)
| | | | | | | | | | |
| Franklin LifeSmart 2045 Retirement Target Fund | |
| | | | | Shares | | | Value | |
| | | | | | | | | | |
| | Investments in Underlying Funds and Exchange Traded Funds 99.4% | | | | | | | | |
| | Alternative Strategies 7.5% | | | | | | | | |
| a | | Franklin K2 Alternative Strategies Fund, Class R6 | | | 189,290 | | | $ | 2,121,940 | |
| a | | Franklin K2 Long Short Credit Fund, Class R6 | | | 203,841 | | | | 2,146,439 | |
| a,b | | Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 222,297 | | | | 1,380,466 | |
| | | | | | | | | | |
| | | | | | | | | 5,648,845 | |
| | | | | | | | | | |
| | Domestic Equity 48.5% | | | | | | | | |
| | Financial Select Sector SPDR ETF | | | 131,700 | | | | 3,249,039 | |
| a | | Franklin Growth Fund, Class R6 | | | 143,366 | | | | 12,505,807 | |
| a,b | | Franklin Growth Opportunities Fund, Class R6 | | | 150,127 | | | | 5,725,843 | |
| a | | Franklin LibertyQ U.S. Equity ETF | | | 126,300 | | | | 3,256,014 | |
| a | | Franklin Rising Dividends Fund, Class R6 | | | 87,696 | | | | 4,946,917 | |
| a,b | | Franklin Small Cap Growth Fund, Class R6 | | | 90,911 | | | | 1,947,311 | |
| a | | Franklin Utilities Fund, Class R6 | | | 112,085 | | | | 2,122,898 | |
| | iShares S&P 500 Value ETF | | | 23,955 | | | | 2,514,316 | |
| | | | | | | | | | |
| | | | | | | | | 36,268,145 | |
| | | | | | | | | | |
| | Domestic Fixed Income 9.7% | | | | | | | | |
| a | | Franklin Floating Rate Daily Access Fund, Class R6 | | | 53,581 | | | | 474,727 | |
| a | | Franklin Low Duration Total Return Fund, Class R6 | | | 390,122 | | | | 3,862,205 | |
| a | | Franklin Strategic Income Fund, Class R6 | | | 47,250 | | | | 465,413 | |
| a | | Franklin U.S. Government Securities Fund, Class R6 | | | 137,078 | | | | 843,031 | |
| | iShares Core U.S. Aggregate Bond ETF | | | 11,100 | | | | 1,215,561 | |
| | iShares iBoxx $ Investment Grade Corporate Bond ETF | | | 3,000 | | | | 361,530 | |
| | | | | | | | | | |
| | | | | | | | | 7,222,467 | |
| | | | | | | | | | |
| | Foreign Equity 30.7% | | | | | | | | |
| a,b | | Franklin India Growth Fund, Class R6 | | | 142,357 | | | | 2,163,827 | |
| a | | Franklin International Small Cap Growth Fund, Class R6 | | | 282,468 | | | | 5,640,885 | |
| a | | Franklin LibertyQ Emerging Markets ETF | | | 148,500 | | | | 4,457,970 | |
| a | | Franklin Mutual International Fund, Class R6 | | | 202,181 | | | | 3,154,018 | |
| | iShares Core MSCI Europe ETF | | | 37,200 | | | | 1,743,564 | |
| | iShares Global Infrastructure ETF | | | 47,675 | | | | 2,096,270 | |
| a | | Templeton Foreign Fund, Class R6 | | | 487,148 | | | | 3,726,687 | |
| | | | | | | | | | |
| | | | | | | | | 22,983,221 | |
| | | | | | | | | | |
| | Foreign Fixed Income 3.0% | | | | | | | | |
| a | | Templeton Global Total Return Fund, Class R6 | | | 179,889 | | | | 2,214,431 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds before Short Term Investments (Cost $63,461,896) | | | | | | | 74,337,109 | |
| | | | | | | | | | |
| | Short Term Investments (Cost $385,271) 0.5% | | | | | | | | |
| | Money Market Funds 0.5% | | | | | | | | |
| a,c | | Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 385,271 | | | | 385,271 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds
(Cost $63,847,167) 99.9% | | | | | | | 74,722,380 | |
| | Other Assets, less Liabilities 0.1% | | | | | | | 41,387 | |
| | | | | | | | | | |
| | Net Assets 100.0% | | | | | | $ | 74,763,767 | |
| | | | | | | | | | |
See Abbreviations on page 141.
aSee Note 3(f) regarding investments in FT Underlying Funds.
bNon-income producing.
cThe rate shown is the annualized seven-day yield at period end.
| | | | |
| | | |
| 92 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Financial Highlights
Franklin LifeSmart 2050 Retirement Target Fund
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class A | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.29 | | | | $11.11 | | | | $11.62 | | | | $11.21 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.03 | | | | 0.14 | | | | 0.22 | | | | 0.22 | | | | 0.10 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 1.09 | | | | 0.23 | | | | (0.41 | ) | | | 0.43 | | | | 1.21 | |
| | | | |
| | | | | |
Total from investment operations | | | 1.12 | | | | 0.37 | | | | (0.19 | ) | | | 0.65 | | | | 1.31 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from
Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.09 | ) | | | (0.16 | ) | | | (0.18 | ) | | | (0.10 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.10 | ) | | | (0.16 | ) | | | (0.06 | ) | | | — | |
| | | | |
| | | | | |
Total distributions | | | (0.09 | ) | | | (0.19 | ) | | | (0.32 | ) | | | (0.24 | ) | | | (0.10 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $12.32 | | | | $11.29 | | | | $11.11 | | | | $11.62 | | | | $11.21 | |
| | | | |
| | | | | |
Total returne | | | 9.91% | | | | 3.32% | | | | (1.76)% | | | | 5.80% | | | | 13.14% | |
| | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesg | | | 1.31% | | | | 1.47% | | | | 1.82% | | | | 4.12% | | | | 34.22% | |
| | | | | |
Expenses net of waiver and payments by affiliatesg | | | 0.30% | | | | 0.30% | | | | 0.32% | | | | 0.35% | | | | 0.23% | |
| | | | | |
Net investment incomed | | | 0.56% | | | | 1.17% | | | | 1.47% | | | | 2.21% | | | | 1.88% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $11,764 | | | | $10,597 | | | | $6,762 | | | | $2,318 | | | | $512 | |
| | | | | |
Portfolio turnover rate | | | 17.89% | | | | 89.82% | | | | 48.90% | | | | 100.08% | | | | 20.66% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.68% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 93 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2050 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class C | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.24 | | | | $11.07 | | | | $11.56 | | | | $11.18 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income (loss)c,d | | | (0.01 | ) | | | 0.05 | | | | 0.07 | | | | 0.15 | | | | 0.09 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 1.07 | | | | 0.23 | | | | (0.33 | ) | | | 0.42 | | | | 1.18 | |
| | | | |
| | | | | |
Total from investment operations | | | 1.06 | | | | 0.28 | | | | (0.26 | ) | | | 0.57 | | | | 1.27 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from
Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.01 | ) | | | (0.07 | ) | | | (0.13 | ) | | | (0.09 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.10 | ) | | | (0.16 | ) | | | (0.06 | ) | | | — | |
| | | | |
| | | | | |
Total distributions | | | (0.09 | ) | | | (0.11 | ) | | | (0.23 | ) | | | (0.19 | ) | | | (0.09 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $12.21 | | | | $11.24 | | | | $11.07 | | | | $11.56 | | | | $11.18 | |
| | | | |
| | | | | |
Total returne | | | 9.41% | | | | 2.56% | | | | (2.40)% | | | | 5.03% | | | | 12.82% | |
| | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesg | | | 2.06% | | | | 2.22% | | | | 2.55% | | | | 4.82% | | | | 35.04% | |
| | | | | |
Expenses net of waiver and payments by affiliatesg | | | 1.05% | | | | 1.05% | | | | 1.05% | | | | 1.05% | | | | 1.05% | |
| | | | | |
Net investment income (loss)d | | | (0.19)% | | | | 0.42% | | | | 0.74% | | | | 1.51% | | | | 1.06% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $3,258 | | | | $2,675 | | | | $1,921 | | | | $943 | | | | $82 | |
| | | | | |
Portfolio turnover rate | | | 17.89% | | | | 89.82% | | | | 48.90% | | | | 100.08% | | | | 20.66% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.68% for the period ended June 30, 2017.
| | | | |
| | | |
| 94 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2050 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class R | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.29 | | | | $11.12 | | | | $11.63 | | | | $11.21 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.02 | | | | 0.11 | | | | 0.16 | | | | 0.18 | | | | 0.06 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 1.08 | | | | 0.22 | | | | (0.37 | ) | | | 0.45 | | | | 1.24 | |
| | | | |
| | | | | |
Total from investment operations | | | 1.10 | | | | 0.33 | | | | (0.21 | ) | | | 0.63 | | | | 1.30 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.06 | ) | | | (0.14 | ) | | | (0.15 | ) | | | (0.09 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.10 | ) | | | (0.16 | ) | | | (0.06 | ) | | | — | |
| | | | |
| | | | | |
Total distributions | | | (0.09 | ) | | | (0.16 | ) | | | (0.30 | ) | | | (0.21 | ) | | | (0.09 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $12.30 | | | | $11.29 | | | | $11.12 | | | | $11.63 | | | | $11.21 | |
| | | | |
| | | | | |
Total returne | | | 9.73% | | | | 3.01% | | | | (1.98)% | | | | 5.67% | | | | 13.02% | |
| | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesg | | | 1.56% | | | | 1.71% | | | | 2.05% | | | | 4.32% | | | | 34.54% | |
| | | | | |
Expenses net of waiver and payments by affiliatesg | | | 0.55% | | | | 0.54% | | | | 0.55% | | | | 0.55% | | | | 0.55% | |
| | | | | |
Net investment incomed | | | 0.31% | | | | 0.93% | | | | 1.24% | | | | 2.01% | | | | 1.56% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $1,605 | | | | $1,219 | | | | $747 | | | | $33 | | | | $11 | |
| | | | | |
Portfolio turnover rate | | | 17.89% | | | | 89.82% | | | | 48.90% | | | | 100.08% | | | | 20.66% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.68% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 95 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2050 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Class R6 | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.34 | | | | $11.16 | | | | $11.65 | | | | $11.23 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.05 | | | | 0.15 | | | | 0.19 | | | | 0.32 | | | | 0.09 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 1.09 | | | | 0.24 | | | | (0.34 | ) | | | 0.37 | | | | 1.25 | |
| | | | |
| | | | | |
Total from investment operations | | | 1.14 | | | | 0.39 | | | | (0.15 | ) | | | 0.69 | | | | 1.34 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.11 | ) | | | (0.18 | ) | | | (0.21 | ) | | | (0.11 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.10 | ) | | | (0.16 | ) | | | (0.06 | ) | | | — | |
| | | | |
| | | | | |
Total distributions | | | (0.09 | ) | | | (0.21 | ) | | | (0.34 | ) | | | (0.27 | ) | | | (0.11 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $12.39 | | | | $11.34 | | | | $11.16 | | | | $11.65 | | | | $11.23 | |
| | | | |
| | | | | |
Total returne | | | 10.04% | | | | 3.55% | | | | (1.39)% | | | | 6.16% | | | | 13.39% | |
| | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesg | | | 0.67% | | | | 0.75% | | | | 1.01% | | | | 3.22% | | | | 34.36% | |
| | | | | |
Expenses net of waiver and payments by affiliatesg | | | —% | | | | —% | | | | —% | | | | —% | | | | —% | |
| | | | | |
Net investment incomed | | | 0.86% | | | | 1.47% | | | | 1.79% | | | | 2.56% | | | | 2.11% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $10,626 | | | | $9,174 | | | | $8,012 | | | | $6,348 | | | | $11 | |
| | | | | |
Portfolio turnover rate | | | 17.89% | | | | 89.82% | | | | 48.90% | | | | 100.08% | | | | 20.66% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.68% for the period ended June 30, 2017.
| | | | |
| | | |
| 96 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2050 Retirement Target Fund (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015 | | | 2014 | | | 2013a | |
| Advisor Class | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net asset value, beginning of period | | | $11.35 | | | | $11.16 | | | | $11.65 | | | | $11.22 | | | | $10.00 | |
| | | | |
| | | | | |
| Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment incomec,d | | | 0.05 | | | | 0.15 | | | | 0.18 | | | | 0.23 | | | | 0.10 | |
| | | | | |
Net realized and unrealized gains (losses) | | | 1.08 | | | | 0.25 | | | | (0.33 | ) | | | 0.47 | | | | 1.23 | |
| | | | |
| | | | | |
Total from investment operations | | | 1.13 | | | | 0.40 | | | | (0.15 | ) | | | 0.70 | | | | 1.33 | |
| | | | |
| | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.09 | ) | | | (0.11 | ) | | | (0.18 | ) | | | (0.21 | ) | | | (0.11 | ) |
| | | | | |
Net realized gains | | | — | | | | (0.10 | ) | | | (0.16 | ) | | | (0.06 | ) | | | — | |
| | | | |
| | | | | |
Total distributions | | | (0.09 | ) | | | (0.21 | ) | | | (0.34 | ) | | | (0.27 | ) | | | (0.11 | ) |
| | | | |
| | | | | |
Net asset value, end of period | | | $12.39 | | | | $11.35 | | | | $11.16 | | | | $11.65 | | | | $11.22 | |
| | | | |
| | | | | |
Total returne | | | 9.94% | | | | 3.59% | | | | (1.43)% | | | | 6.22% | | | | 13.26% | |
| | | | | |
| Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Expenses before waiver and payments by affiliatesg | | | 1.06% | | | | 1.22% | | | | 1.55% | | | | 3.82% | | | | 34.04% | |
| | | | | |
Expenses net of waiver and payments by affiliatesg | | | 0.05% | | | | 0.05% | | | | 0.05% | | | | 0.05% | | | | 0.05% | |
| | | | | |
Net investment incomed | | | 0.81% | | | | 1.42% | | | | 1.74% | | | | 2.51% | | | | 2.06% | |
| | | | | |
| Supplemental data | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net assets, end of period (000’s) | | | $454 | | | | $395 | | | | $394 | | | | $327 | | | | $75 | |
| | | | | |
Portfolio turnover rate | | | 17.89% | | | | 89.82% | | | | 48.90% | | | | 100.08% | | | | 20.66% | |
aFor the period July 1, 2013 (commencement of operations) to December 31, 2013.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.68% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 97 | |
FRANKLIN FUND ALLOCATOR SERIES
Statement of Investments, June 30, 2017 (unaudited)
| | | | | | | | | | |
| Franklin LifeSmart 2050 Retirement Target Fund | |
| | | | | Shares | | | Value | |
| | Investments in Underlying Funds and Exchange Traded Funds 99.1% | | | | | | | | |
| | Alternative Strategies 7.5% | | | | | | | | |
| a | | Franklin K2 Alternative Strategies Fund, Class R6 | | | 70,869 | | | $ | 794,438 | |
| a | | Franklin K2 Long Short Credit Fund, Class R6 | | | 75,937 | | | | 799,619 | |
| a,b | | Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 79,899 | | | | 496,171 | |
| | | | | | | | | | |
| | | | | | | | | 2,090,228 | |
| | | | | | | | | | |
| | Domestic Equity 49.0% | | | | | | | | |
| | Financial Select Sector SPDR ETF | | | 49,000 | | | | 1,208,830 | |
| a | | Franklin Growth Fund, Class R6 | | | 54,842 | | | | 4,783,914 | |
| a,b | | Franklin Growth Opportunities Fund, Class R6 | | | 56,728 | | | | 2,163,594 | |
| a | | Franklin LibertyQ U.S. Equity ETF | | | 49,500 | | | | 1,276,110 | |
| a | | Franklin Rising Dividends Fund, Class R6 | | | 32,749 | | | | 1,847,378 | |
| a,b | | Franklin Small Cap Growth Fund, Class R6 | | | 28,365 | | | | 607,578 | |
| a | | Franklin Utilities Fund, Class R6 | | | 41,940 | | | | 794,342 | |
| | iShares S&P 500 Value ETF | | | 8,592 | | | | 901,816 | |
| | | | | | | | | | |
| | | | | | | | | 13,583,562 | |
| | | | | | | | | | |
| | Domestic Fixed Income 8.8% | | | | | | | | |
| a | | Franklin Floating Rate Daily Access Fund, Class R6 | | | 19,433 | | | | 172,180 | |
| a | | Franklin Low Duration Total Return Fund, Class R6 | | | 132,762 | | | | 1,314,343 | |
| a | | Franklin Strategic Income Fund, Class R6 | | | 16,593 | | | | 163,440 | |
| a | | Franklin U.S. Government Securities Fund, Class R6 | | | 49,706 | | | | 305,693 | |
| | iShares Core U.S. Aggregate Bond ETF | | | 3,000 | | | | 328,530 | |
| | iShares iBoxx $ Investment Grade Corporate Bond ETF | | | 1,300 | | | | 156,663 | |
| | | | | | | | | | |
| | | | | | | | | 2,440,849 | |
| | | | | | | | | | |
| | Foreign Equity 31.2% | | | | | | | | |
| a,b | | Franklin India Growth Fund, Class R6 | | | 55,783 | | | | 847,903 | |
| a | | Franklin International Small Cap Growth Fund, Class R6 | | | 105,713 | | | | 2,111,090 | |
| a | | Franklin LibertyQ Emerging Markets ETF | | | 58,400 | | | | 1,753,168 | |
| a | | Franklin Mutual International Fund, Class R6 | | | 75,907 | | | | 1,184,148 | |
| | iShares Core MSCI Europe ETF | | | 14,100 | | | | 660,867 | |
| | iShares Global Infrastructure ETF | | | 14,743 | | | | 648,249 | |
| a | | Templeton Foreign Fund, Class R6 | | | 186,151 | | | | 1,424,057 | |
| | | | | | | | | | |
| | | | | | | | | 8,629,482 | |
| | | | | | | | | | |
| | Foreign Fixed Income 2.6% | | | | | | | | |
| a | | Templeton Global Total Return Fund, Class R6 | | | 58,717 | | | | 722,804 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds before Short Term Investments (Cost $24,732,710) | | | | | | | 27,466,925 | |
| | | | | | | | | | |
| | | |
| | Short Term Investments (Cost $155,870) 0.6% | | | | | | | | |
| | Money Market Funds 0.6% | | | | | | | | |
| a,c | | Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 155,870 | | | | 155,870 | |
| | | | | | | | | | |
| | Total Investments in Underlying Funds and Exchange Traded Funds (Cost $24,888,580) 99.7% | | | | | | | 27,622,795 | |
| | Other Assets, less Liabilities 0.3% | | | | | | | 82,453 | |
| | | | | | | | | | |
| | Net Assets 100.0% | | | | | | $ | 27,705,248 | |
| | | | | | | | | | |
See Abbreviations on page 141.
aSee Note 3(f) regarding investments in FT Underlying Funds.
bNon-income producing.
cThe rate shown is the annualized seven-day yield at period end.
| | | | |
| | | |
| 98 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
Financial Highlights
Franklin LifeSmart 2055 Retirement Target Fund
| | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015a | |
| Class A | | | | | | | | | | | | |
| | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | |
| | | |
Net asset value, beginning of period | | | $9.47 | | | | $9.34 | | | | $10.00 | |
| | | | |
| | | |
| Income from investment operationsb: | | | | | | | | | | | | |
| | | |
Net investment incomec,d | | | 0.03 | | | | 0.12 | | | | 0.16 | |
| | | |
Net realized and unrealized gains (losses) | | | 0.90 | | | | 0.17 | | | | (0.70 | ) |
| | | | |
| | | |
Total from investment operations | | | 0.93 | | | | 0.29 | | | | (0.54 | ) |
| | | | |
| | | |
| Less distributions from: | | | | | | | | | | | | |
| | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.03 | ) | | | (0.10 | ) | | | (0.12 | ) |
| | | |
Net realized gains | | | — | | | | (0.06 | ) | | | — | |
| | | | |
| | | |
Total distributions | | | (0.03 | ) | | | (0.16 | ) | | | (0.12 | ) |
| | | | |
| | | |
Net asset value, end of period | | | $10.37 | | | | $9.47 | | | | $9.34 | |
| | | | |
| | | |
Total returne | | | 9.82% | | | | 3.13% | | | | (5.40)% | |
| | | |
| Ratios to average net assetsf | | | | | | | | | | | | |
| | | |
Expenses before waiver and payments by affiliatesg | | | 2.68% | | | | 5.09% | | | | 9.66% | |
| | | |
Expenses net of waiver and payments by affiliatesg | | | 0.30% | | | | 0.32% | | | | 0.19% | |
| | | |
Net investment incomed | | | 0.53% | | | | 1.43% | | | | 2.62% | |
| | | |
| Supplemental data | | | | | | | | | | | | |
| | | |
Net assets, end of period (000’s) | | | $3,724 | | | | $2,732 | | | | $1,817 | |
| | | |
Portfolio turnover rate | | | 15.89% | | | | 93.35% | | | | 78.16% | |
aFor the period May 1, 2015 (commencement of operations) to December 31, 2015.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
fRatios are annualized for periods less than one year, except for non-recurring expenses, if any.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.68% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 99 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2055 Retirement Target Fund (continued)
| | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015a | |
| Class C | | | | | | | | | | | | |
| | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | |
| | | |
Net asset value, beginning of period | | | $9.39 | | | | $9.30 | | | | $10.00 | |
| | | | |
| | | |
| Income from investment operationsb: | | | | | | | | | | | | |
| | | |
Net investment income (loss)c,d | | | (0.01 | ) | | | 0.08 | | | | 0.24 | |
| | | |
Net realized and unrealized gains (losses) | | | 0.89 | | | | 0.14 | | | | (0.84 | ) |
| | | | |
| | | |
Total from investment operations | | | 0.88 | | | | 0.22 | | | | (0.60 | ) |
| | | | |
| | | |
| Less distributions from: | | | | | | | | | | | | |
| | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.03 | ) | | | (0.07 | ) | | | (0.10 | ) |
| | | |
Net realized gains | | | — | | | | (0.06 | ) | | | — | |
| | | | |
| | | |
Total distributions | | | (0.03 | ) | | | (0.13 | ) | | | (0.10 | ) |
| | | | |
| | | |
Net asset value, end of period | | | $10.24 | | | | $9.39 | | | | $9.30 | |
| | | | |
| | | |
Total returne | | | 9.37% | | | | 2.36% | | | | (5.99)% | |
| | | |
| Ratios to average net assetsf | | | | | | | | | | | | |
| | | |
Expenses before waiver and payments by affiliatesg | | | 3.43% | | | | 5.82% | | | | 10.52% | |
| | | |
Expenses net of waiver and payments by affiliatesg | | | 1.05% | | | | 1.05% | | | | 1.05% | |
| | | |
Net investment income (loss)d | | | (0.22)% | | | | 0.70% | | | | 1.76% | |
| | | |
| Supplemental data | | | | | | | | | | | | |
| | | |
Net assets, end of period (000’s) | | | $975 | | | | $572 | | | | $172 | |
| | | |
Portfolio turnover rate | | | 15.89% | | | | 93.35% | | | | 78.16% | |
aFor the period May 1, 2015 (commencement of operations)] to December 31, 2015.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
fRatios are annualized for periods less than one year, except for non-recurring expenses, if any.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.68% for the period ended June 30, 2017.
| | | | |
| | | |
| 100 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2055 Retirement Target Fund (continued)
| | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015a | |
| Class R | | | | | | | | | | | | |
| | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | |
| | | |
Net asset value, beginning of period | | | $9.44 | | | | $9.33 | | | | $10.00 | |
| | | | |
| | | |
| Income from investment operationsb: | | | | | | | | | | | | |
| | | |
Net investment incomec,d | | | 0.01 | | | | 0.12 | | | | 0.18 | |
| | | |
Net realized and unrealized gains (losses) | | | 0.91 | | | | 0.14 | | | | (0.74 | ) |
| | | | |
| | | |
Total from investment operations | | | 0.92 | | | | 0.26 | | | | (0.56 | ) |
| | | | |
| | | |
| Less distributions from: | | | | | | | | | | | | |
| | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.03 | ) | | | (0.09 | ) | | | (0.11 | ) |
| | | |
Net realized gains | | | — | | | | (0.06 | ) | | | — | |
| | | | |
| | | |
Total distributions | | | (0.03 | ) | | | (0.15 | ) | | | (0.11 | ) |
| | | | |
| | | |
Net asset value, end of period | | | $10.33 | | | | $9.44 | | | | $9.33 | |
| | | | |
| | | |
Total returne | | | 9.75% | | | | 2.84% | | | | (5.61)% | |
| | | |
| Ratios to average net assetsf | | | | | | | | | | | | |
| | | |
Expenses before waiver and payments by affiliatesg | | | 2.93% | | | | 5.32% | | | | 9.98% | |
| | | |
Expenses net of waiver and payments by affiliatesg | | | 0.55% | | | | 0.55% | | | | 0.51% | |
| | | |
Net investment incomed | | | 0.28% | | | | 1.20% | | | | 2.30% | |
| | | |
| Supplemental data | | | | | | | | | | | | |
| | | |
Net assets, end of period (000’s) | | | $375 | | | | $357 | | | | $41 | |
| | | |
Portfolio turnover rate | | | 15.89% | | | | 93.35% | | | | 78.16% | |
aFor the period May 1, 2015 (commencement of operations) to December 31, 2015.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year, except for non-recurring expenses, if any.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.68% for the period ended June 30, 2017.
| | | | | | |
| | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 101 | |
FRANKLIN FUND ALLOCATOR SERIES
FINANCIAL HIGHLIGHTS
Franklin LifeSmart 2055 Retirement Target Fund (continued)
| | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015a | |
| Class R6 | | | | | | | | | | | | |
| | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | |
| | | |
Net asset value, beginning of period | | | $9.48 | | | | $9.34 | | | | $10.00 | |
| | | | |
| | | |
| Income from investment operationsb: | | | | | | | | | | | | |
| | | |
Net investment incomec,d | | | 0.04 | | | | 0.21 | | | | 0.32 | |
| | | |
Net realized and unrealized gains (losses) | | | 0.90 | | | | 0.11 | | | | (0.85 | ) |
| | | | |
| | | |
Total from investment operations | | | 0.94 | | | | 0.32 | | | | (0.53 | ) |
| | | | |
| | | |
| Less distributions from: | | | | | | | | | | | | |
| | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.03 | ) | | | (0.12 | ) | | | (0.13 | ) |
| | | |
Net realized gains | | | — | | | | (0.06 | ) | | | — | |
| | | | |
| | | |
Total distributions | | | (0.03 | ) | | | (0.18 | ) | | | (0.13 | ) |
| | | | |
| | | |
Net asset value, end of period | | | $10.39 | | | | $9.48 | | | | $9.34 | |
| | | | |
| | | |
Total returne | | | 9.92% | | | | 3.49% | | | | (5.33)% | |
| | | |
| Ratios to average net assetsf | | | | | | | | | | | | |
| | | |
Expenses before waiver and payments by affiliatesg | | | 1.82% | | | | 4.21% | | | | 10.04% | |
| | | |
Expenses net of waiver and payments by affiliatesg | | | —% | | | | —% | | | | —% | |
| | | |
Net investment incomed | | | 0.83% | | | | 1.75% | | | | 2.81% | |
| | | |
| Supplemental data | | | | | | | | | | | | |
| | | |
Net assets, end of period (000’s) | | | $2,356 | | | | $1,618 | | | | $92 | |
| | | |
Portfolio turnover rate | | | 15.89% | | | | 93.35% | | | | 78.16% | |
aFor the period May 1, 2015 (commencement of operations) to December 31 2015.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year, except for non-recurring expenses, if any.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.68% for the period ended June 30, 2017.
| | | | |
| | | |
| 102 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
F I N A N C I A L H I G H L I G H T S
Franklin LifeSmart 2055 Retirement Target Fund (continued)
| | | | | | | | | | | | |
| | | Six Months Ended June 30, 2017 | | | Year Ended December 31, | |
| | | (unaudited) | | | 2016 | | | 2015a | |
| Advisor Class | | | | | | | | | | | | |
| | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | |
| | | |
Net asset value, beginning of period | | | $ 9.48 | | | | $9.35 | | | | $10.00 | |
| | | | |
| | | |
| Income from investment operationsb: | | | | | | | | | | | | |
| | | |
Net investment incomec,d | | | 0.04 | | | | 0.13 | | | | 0.10 | |
| | | |
Net realized and unrealized gains (losses) | | | 0.90 | | | | 0.18 | | | | (0.63 | ) |
| | | | |
| | | |
Total from investment operations | | | 0.94 | | | | 0.31 | | | | (0.53 | ) |
| | | | |
| | | |
| Less distributions from: | | | | | | | | | | | | |
| | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds | | | (0.03 | ) | | | (0.12 | ) | | | (0.12 | ) |
| | | |
Net realized gains | | | — | | | | (0.06 | ) | | | — | |
| | | | |
| | | |
Total distributions | | | (0.03 | ) | | | (0.18 | ) | | | (0.12 | ) |
| | | | |
| | | |
| Net asset value, end of period | | | $10.39 | | | | $9.48 | | | | $ 9.35 | |
| | | | |
| | | |
Total returne | | | 9.92% | | | | 3.45% | | | | (5.37)% | |
| | | |
| Ratios to average net assetsf | | | | | | | | | | | | |
| | | |
Expenses before waiver and payments by affiliatesg | | | 2.43% | | | | 4.82% | | | | 9.52% | |
| | | |
Expenses net of waiver and payments by affiliatesg | | | 0.05% | | | | 0.05% | | | | 0.05% | |
| | | |
Net investment incomed | | | 0.78% | | | | 1.70% | | | | 2.76% | |
| | | |
| Supplemental data | | | | | | | | | | | | |
| | | |
Net assets, end of period (000’s) | | | $31 | | | | $13 | | | | $11 | |
| | | |
Portfolio turnover rate | | | 15.89% | | | | 93.35% | | | | 78.16% | |
aFor the period May 1, 2015 (commencement of operations) to December 31, 2015.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year, except for non-recurring expenses, if any.
gDoes not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.68% for the period ended June 30, 2017.
| | | | | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 103 | |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
Statement of Investments, June 30, 2017 (unaudited)
| | | | | | | | |
| Franklin LifeSmart 2055 Retirement Target Fund | | | | | | |
| | | Shares | | | Value | |
| |
Investments in Underlying Funds and Exchange Traded Funds 97.6% | | | | | | | | |
Alternative Strategies 7.5% | | | | | | | | |
aFranklin K2 Alternative Strategies Fund, Class R6 | | | 18,653 | | | $ | 209,098 | |
aFranklin K2 Long Short Credit Fund, Class R6 | | | 19,993 | | | | 210,524 | |
a,bFranklin Pelagos Commodities Strategy Fund, Class R6 | | | 21,844 | | | | 135,652 | |
| | | | | | | | |
| | | | | | | 555,274 | |
| | | | | | | | |
Domestic Equity 48.8% | | | | | | | | |
Financial Select Sector SPDR ETF | | | 13,100 | | | | 323,177 | |
aFranklin Growth Fund, Class R6 | | | 15,006 | | | | 1,308,981 | |
a,bFranklin Growth Opportunities Fund, Class R6 | | | 15,085 | | | | 575,328 | |
aFranklin LibertyQ U.S. Equity ETF | | | 13,400 | | | | 345,452 | |
aFranklin Rising Dividends Fund, Class R6 | | | 9,068 | | | | 511,538 | |
a,bFranklin Small Cap Growth Fund, Class R6 | | | 7,924 | | | | 169,727 | |
aFranklin Utilities Fund, Class R6 | | | 11,682 | | | | 221,256 | |
iShares S&P 500 Value ETF | | | 1,795 | | | | 188,403 | |
| | | | | | | | |
| | | | | | | 3,643,862 | |
| | | | | | | | |
Domestic Fixed Income 8.1% | | | | | | | | |
aFranklin Floating Rate Daily Access Fund, Class R6 | | | 4,870 | | | | 43,152 | |
aFranklin Low Duration Total Return Fund, Class R6 | | | 34,093 | | | | 337,522 | |
aFranklin Strategic Income Fund, Class R6 | | | 4,126 | | | | 40,643 | |
aFranklin U.S. Government Securities Fund, Class R6 | | | 11,553 | | | | 71,049 | |
iShares Core U.S. Aggregate Bond ETF | | | 800 | | | | 87,608 | |
iShares iBoxx $ Investment Grade Corporate Bond ETF | | | 200 | | | | 24,102 | |
| | | | | | | | |
| | | | | | | 604,076 | |
| | | | | | | | |
Foreign Equity 30.8% | | | | | | | | |
a,bFranklin India Growth Fund, Class R6 | | | 15,028 | | | | 228,418 | |
aFranklin International Small Cap Growth Fund, Class R6 | | | 29,138 | | | | 581,892 | |
aFranklin LibertyQ Emerging Markets ETF | | | 14,900 | | | | 447,298 | |
aFranklin Mutual International Fund, Class R6 | | | 20,838 | | | | 325,078 | |
iShares Core MSCI Europe ETF | | | 3,000 | | | | 140,610 | |
iShares Global Infrastructure ETF | | | 3,797 | | | | 166,954 | |
aTempleton Foreign Fund, Class R6 | | | 53,208 | | | | 407,044 | |
| | | | | | | | |
| | | | | | | 2,297,294 | |
| | | | | | | | |
Foreign Fixed Income 2.4% | | | | | | | | |
aTempleton Global Total Return Fund, Class R6 | | | 14,412 | | | | 177,415 | |
| | | | | | | | |
Total Investments in Underlying Funds and Exchange Traded Funds before Short Term Investments (Cost $6,697,156) | | | | | | | 7,277,921 | |
| | | | | | | | |
| | |
Short Term Investments (Cost $68,204) 0.9% | | | | | | | | |
Money Market Funds 0.9% | | | | | | | | |
a,c Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 68,204 | | | | 68,204 | |
| | | | | | | | |
Total Investments in Underlying Funds and Exchange Traded Funds (Cost $6,765,360) 98.5% | | | | | | | 7,346,125 | |
Other Assets, less Liabilities 1.5% | | | | | | | 114,943 | |
| | | | | | | | |
Net Assets 100.0% | | | | | | $ | 7,461,068 | |
| | | | | | | | |
See Abbreviations on page 141.
aSee Note 3(f) regarding investments in FT Underlying Funds.
bNon-income producing.
cThe rate shown is the annualized seven-day yield at period end.
| | | | |
| 104 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
Financial Statements
Statements of Assets and Liabilities
June 30, 2017 (unaudited)
| | | | | | | | | | | | |
| | | Franklin LifeSmart Retirement Income Fund | | | Franklin LifeSmart 2020 Retirement Target Fund | | | Franklin LifeSmart 2025 Retirement Target Fund | |
| |
Assets: | | | | | | | | | | | | |
Investments in securities: | | | | | | | | | | | | |
Cost - Unaffiliated issuers | | | $ 2,997,797 | | | | $ — | | | | $ — | |
Cost - Non-controlled affiliates (Note 3f) | | | 46,407,717 | | | | 30,631,971 | | | | 91,625,707 | |
Cost - Unaffiliated Exchange traded funds | | | 11,277,314 | | | | 4,843,597 | | | | 17,471,559 | |
| | | | |
Total cost of investments | | | $60,682,828 | | | | $35,475,568 | | | | $109,097,266 | |
| | | | |
Value - Unaffiliated issuers | | | $ 3,169,680 | | | | $ — | | | | $ — | |
Value - Non-controlled affiliates (Note 3f) | | | 47,722,056 | | | | 32,981,637 | | | | 107,542,467 | |
Value - Unaffiliated Exchange traded funds | | | 11,637,445 | | | | 5,031,150 | | | | 18,365,066 | |
| | | | |
Total value of investments | | | 62,529,181 | | | | 38,012,787 | | | | 125,907,533 | |
Cash | | | 1,448 | | | | — | | | | — | |
Receivables: | | | | | | | | | | | | |
Capital shares sold | | | 43,267 | | | | 62,750 | | | | 115,869 | |
Interest | | | 4,996 | | | | — | | | | — | |
Affiliates | | | 90,381 | | | | 57,093 | | | | 81,436 | |
Other assets | | | 22,531 | | | | 34,198 | | | | 24,646 | |
| | | | |
Total assets | | | 62,691,804 | | | | 38,166,828 | | | | 126,129,484 | |
| | | | |
Liabilities: | | | | | | | | | | | | |
Payables: | | | | | | | | | | | | |
Investment securities purchased | | | — | | | | — | | | | 33,961 | |
Capital shares redeemed | | | 229,918 | | | | 156,694 | | | | 62,016 | |
Distribution fees | | | 46,590 | | | | 19,521 | | | | 82,260 | |
Transfer agent fees | | | 9,237 | | | | 7,433 | | | | 4,783 | |
Reports to shareholders | | | 9,922 | | | | 4,747 | | | | 17,463 | |
Professional fees | | | 67,171 | | | | 12,075 | | | | 12,459 | |
Accrued expenses and other liabilities | | | 7,929 | | | | 4,485 | | | | 4,846 | |
| | | | |
Total liabilities | | | 370,767 | | | | 204,955 | | | | 217,788 | |
| | | | |
Net assets, at value | | | $62,321,037 | | | | $37,961,873 | | | | $125,911,696 | |
| | | | |
Net assets consist of: | | | | | | | | | | | | |
Paid-in capital | | | $62,712,285 | | | | $37,592,635 | | | | $112,894,053 | |
| | | | |
Undistributed net investment income | | | — | | | | 46,891 | | | | 466,472 | |
Distributions in excess of net investment income | | | (74,064 | ) | | | — | | | | — | |
Net unrealized appreciation (depreciation) | | | 1,846,353 | | | | 2,537,219 | | | | 16,810,267 | |
Accumulated net realized gain (loss) | | | (2,163,537 | ) | | | (2,214,872 | ) | | | (4,259,096 | ) |
| | | | |
Net assets, at value | | | $62,321,037 | | | | $37,961,873 | | | | $125,911,696 | |
| | | | |
| | | | | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 105 | |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
F I N A N C I A L S T A T E M E N T S
Statements of Assets and Liabilities (continued)
June 30, 2017 (unaudited)
| | | | | | | | | | | | |
| | | Franklin LifeSmart Retirement Income Fund | | | Franklin LifeSmart 2020 Retirement Target Fund | | | Franklin LifeSmart 2025 Retirement Target Fund | |
| |
| Class A: | | | | | | | | | | | | |
Net assets, at value | | | $34,870,805 | | | | $20,662,239 | | | | $74,550,395 | |
| | | | |
Shares outstanding | | | 3,151,867 | | | | 1,828,519 | | | | 6,038,315 | |
| | | | |
Net asset value per sharea | | | $11.06 | | | | $11.30 | | | | $12.35 | |
| | | | |
Maximum offering price per share (net asset value per share ÷ 94.25%) | | | $11.73 | | | | $11.99 | | | | $13.10 | |
| | | | |
| Class C: | | | | | | | | | | | | |
Net assets, at value | | | $16,927,428 | | | | $ 5,495,961 | | | | $26,576,193 | |
| | | | |
Shares outstanding | | | 1,548,373 | | | | 489,241 | | | | 2,194,137 | |
| | | | |
Net asset value and maximum offering price per sharea | | | $10.93 | | | | $11.23 | | | | $12.11 | |
| | | | |
| Class R: | | | | | | | | | | | | |
Net assets, at value | | | $4,529,149 | | | | $ 2,910,140 | | | | $ 7,707,812 | |
| | | | |
Shares outstanding | | | 411,028 | | | | 258,024 | | | | 627,893 | |
| | | | |
Net asset value and maximum offering price per share | | | $11.02 | | | | $11.28 | | | | $12.28 | |
| | | | |
| Class R6: | | | | | | | | | | | | |
Net assets, at value | | | $ 4,107,092 | | | | $ 8,442,287 | | | | $15,519,538 | |
| | | | |
Shares outstanding | | | 369,450 | | | | 745,323 | | | | 1,251,692 | |
| | | | |
Net asset value and maximum offering price per share | | | $11.12 | | | | $11.33 | | | | $12.40 | |
| | | | |
| Advisor Class: | | | | | | | | | | | | |
Net assets, at value | | | $ 1,886,563 | | | | $ 451,246 | | | | $ 1,557,758 | |
| | | | |
Shares outstanding | | | 169,867 | | | | 39,834 | | | | 125,758 | |
| | | | |
Net asset value and maximum offering price per share | | | $11.11 | | | | $11.33 | | | | $12.39 | |
| | | | |
aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.
| | | | |
| 106 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
F I N A N C I A L S T A T E M E N T S
Statements of Assets and Liabilities (continued)
June 30, 2017 (unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart 2030 Retirement Target Fund | | | Franklin LifeSmart 2035 Retirement Target Fund | | | Franklin LifeSmart 2040 Retirement Target Fund | |
| |
Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Investments in securities: | | | | | | | | | | | | | | | | | | | | | | | | |
Cost - Non-controlled affiliates (Note 3f) | | | | | | $ | 33,428,283 | | | | | | | $ | 78,323,752 | | | | | | | $ | 26,801,897 | |
Cost - Unaffiliated Exchange traded funds | | | | | | | 5,978,649 | | | | | | | | 15,158,964 | | | | | | | | 4,683,606 | |
| | | | |
Total cost of investments | | | | | | $ | 39,406,932 | | | | | | | $ | 93,482,716 | | | | | | | $ | 31,485,503 | |
| | | | |
Value - Non-controlled affiliates (Note 3f) | | | | | | $ | 36,761,793 | | | | | | | $ | 92,982,568 | | | | | | | $ | 29,710,045 | |
Value - Unaffiliated Exchange traded funds | | | | | | | 6,291,677 | | | | | | | | 16,063,763 | | | | | | | | 4,961,493 | |
| | | | |
Total value of investments | | | | | | | 43,053,470 | | | | | | | | 109,046,331 | | | | | | | | 34,671,538 | |
Receivables: | | | | | | | | | | | | | | | | | | | | | | | | |
Capital shares sold | | | | | | | 151,862 | | | | | | | | 103,578 | | | | | | | | 52,897 | |
Affiliates | | | | | | | 63,246 | | | | | | | | 81,545 | | | | | | | | 60,197 | |
Other assets | | | | | | | 33,413 | | | | | | | | 23,800 | | | | | | | | 32,333 | |
| | | | |
Total assets | | | | | | | 43,301,991 | | | | | | | | 109,255,254 | | | | | | | | 34,816,965 | |
| | | | |
| | | | | | |
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
Payables: | | | | | | | | | | | | | | | | | | | | | | | | |
Investment securities purchased | | | | | | | 28,203 | | | | | | | | — | | | | | | | | — | |
Capital shares redeemed | | | | | | | 39,210 | | | | | | | | 206,215 | | | | | | | | 1,670 | |
Distribution fees | | | | | | | 19,076 | | | | | | | | 62,153 | | | | | | | | 12,674 | |
Transfer agent fees | | | | | | | 5,248 | | | | | | | | 1,461 | | | | | | | | 2,739 | |
Reports to shareholders | | | | | | | 4,389 | | | | | | | | 14,871 | | | | | | | | 3,520 | |
Professional fees | | | | | | | 12,111 | | | | | | | | 12,349 | | | | | | | | 11,835 | |
Accrued expenses and other liabilities | | | | | | | 6,067 | | | | | | | | 4,728 | | | | | | | | 2,064 | |
| | | | |
Total liabilities | | | | | | | 114,304 | | | | | | | | 301,777 | | | | | | | | 34,502 | |
| | | | |
Net assets, at value | | | | | | $ | 43,187,687 | | | | | | | $ | 108,953,477 | | | | | | | $ | 34,782,463 | |
| | | | |
Net assets consist of: | | | | | | | | | | | | | | | | | | | | | | | | |
Paid-in capital | | | | | | $ | 41,188,336 | | | | | | | $ | 95,782,507 | | | | | | | $ | 32,576,436 | |
Undistributed net investment income. | | | | | | | 154,761 | | | | | | | | 302,872 | | | | | | | | 107,901 | |
Net unrealized appreciation (depreciation) | | | | | | | 3,646,538 | | | | | | | | 15,563,615 | | | | | | | | 3,186,035 | |
Accumulated net realized gain (loss) | | | | | | | (1,801,948 | ) | | | | | | | (2,695,517 | ) | | | | | | | (1,087,909 | ) |
| | | | |
Net assets, at value | | | | | | $ | 43,187,687 | | | | | | | $ | 108,953,477 | | | | | | | $ | 34,782,463 | |
| | | | |
| | | | | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 107 | |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
F I N A N C I A L S T A T E M E N T S
Statements of Assets and Liabilities (continued)
June 30, 2017 (unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart 2030 Retirement Target Fund | | | Franklin LifeSmart 2035 Retirement Target Fund | | | Franklin LifeSmart 2040 Retirement Target Fund | |
| |
| Class A: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, at value | | | | | | $ | 18,573,519 | | | | | | | $ | 57,141,158 | | | | | | | $ | 13,802,640 | |
| | | | |
Shares outstanding | | | | | | | 1,552,600 | | | | | | | | 4,434,677 | | | | | | | | 1,131,911 | |
| | | | |
Net asset value per sharea | | | | | | | $11.96 | | | | | | | | $12.89 | | | | | | | | $12.19 | |
| | | | |
Maximum offering price per share (net asset value per share ÷ 94.25%) | | | | | | | $12.69 | | | | | | | | $13.68 | | | | | | | | $12.93 | |
| | | | |
| Class C: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, at value | | | | | | $ | 6,326,137 | | | | | | | $ | 19,737,977 | | | | | | | $ | 3,224,393 | |
| | | | |
Shares outstanding | | | | | | | 535,949 | | | | | | | | 1,570,424 | | | | | | | | 269,113 | |
| | | | |
Net asset value and maximum offering price per sharea | | | | | | | $11.80 | | | | | | | | $12.57 | | | | | | | | $11.98 | |
| | | | |
| Class R: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, at value | | | | | | $ | 1,312,479 | | | | | | | $ | 6,232,167 | | | | | | | $ | 1,894,260 | |
| | | | |
Shares outstanding | | | | | | | 110,070 | | | | | | | | 485,041 | | | | | | | | 155,941 | |
| | | | |
Net asset value and maximum offering price per share | | | | | | | $11.92 | | | | | | | | $12.85 | | | | | | | | $12.15 | |
| | | | |
| Class R6: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, at value | | | | | | $ | 16,402,561 | | | | | | | $ | 24,188,287 | | | | | | | $ | 15,709,437 | |
| | | | |
Shares outstanding | | | | | | | 1,364,401 | | | | | | | | 1,862,181 | | | | | | | | 1,279,338 | |
| | | | |
Net asset value and maximum offering price per share | | | | | | | $12.02 | | | | | | | | $12.99 | | | | | | | | $12.28 | |
| | | | |
| Advisor Class: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, at value | | | | | | $ | 572,991 | | | | | | | $ | 1,653,888 | | | | | | | $ | 151,733 | |
| | | | |
Shares outstanding | | | | | | | 47,709 | | | | | | | | 127,218 | | | | | | | | 12,367 | |
| | | | |
Net asset value and maximum offering price per share | | | | | | | $12.01 | | | | | | | | $13.00 | | | | | | | | $12.27 | |
| | | | |
aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.
| | | | |
| 108 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
F I N A N C I A L S T A T E M E N T S
Statements of Assets and Liabilities (continued)
June 30, 2017 (unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart 2045 Retirement Target Fund | | | Franklin LifeSmart 2050 Retirement Target Fund | | | Franklin LifeSmart 2055 Retirement Target Fund | |
| |
Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Investments in securities: | | | | | | | | | | | | | | | | | | | | | | | | |
Cost - Non-controlled affiliates (Note 3f) | | | | | | $ | 53,318,090 | | | | | | | $ | 21,202,803 | | | | | | | $ | 5,877,109 | |
Cost - Unaffiliated Exchange traded funds | | | | | | | 10,529,077 | | | | | | | | 3,685,777 | | | | | | | | 888,251 | |
| | | | |
Total cost of investments | | | | | | $ | 63,847,167 | | | | | | | $ | 24,888,580 | | | | | | | $ | 6,765,360 | |
| | | | |
Value - Non-controlled affiliates (Note 3f) | | | | | | $ | 63,542,100 | | | | | | | $ | 23,717,840 | | | | | | | $ | 6,415,271 | |
Value - Unaffiliated Exchange traded funds | | | | | | �� | 11,180,280 | | | | | | | | 3,904,955 | | | | | | | | 930,854 | |
| | | | |
Total value of investments | | | | | | | 74,722,380 | | | | | | | | 27,622,795 | | | | | | | | 7,346,125 | |
Receivables: | | | | | | | | | | | | | | | | | | | | | | | | |
Capital shares sold | | | | | | | 175,990 | | | | | | | | 69,149 | | | | | | | | 45,427 | |
Affiliates | | | | | | | 71,060 | | | | | | | | 65,704 | | | | | | | | 61,214 | |
Other assets | | | | | | | 24,914 | | | | | | | | 32,684 | | | | | | | | 41,165 | |
| | | | |
Total assets | | | | | | | 74,994,344 | | | | | | | | 27,790,332 | | | | | | | | 7,493,931 | |
| | | | |
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
Payables: | | | | | | | | | | | | | | | | | | | | | | | | |
Investment securities purchased | | | | | | | 10,954 | | | | | | | | 18,029 | | | | | | | | 15,452 | |
Capital shares redeemed | | | | | | | 144,886 | | | | | | | | 31,719 | | | | | | | | — | |
Distribution fees | | | | | | | 43,324 | | | | | | | | 11,398 | | | | | | | | 2,729 | |
Transfer agent fees | | | | | | | — | | | | | | | | 4,827 | | | | | | | | 1,181 | |
Reports to shareholders | | | | | | | 12,584 | | | | | | | | 4,989 | | | | | | | | 1,484 | |
Professional fees | | | | | | | 12,592 | | | | | | | | 12,082 | | | | | | | | 11,690 | |
Accrued expenses and other liabilities | | | | | | | 6,237 | | | | | | | | 2,040 | | | | | | | | 327 | |
| | | | |
Total liabilities | | | | | | | 230,577 | | | | | | | | 85,084 | | | | | | | | 32,863 | |
| | | | |
Net assets, at value | | | | | | $ | 74,763,767 | | | | | | | $ | 27,705,248 | | | | | | | $ | 7,461,068 | |
| | | | |
Net assets consist of: | | | | | | | | | | | | | | | | | | | | | | | | |
Paid-in capital | | | | | | $ | 65,249,121 | | | | | | | $ | 25,771,664 | | | | | | | $ | 6,959,105 | |
Undistributed net investment income | | | | | | | 177,520 | | | | | | | | 75,080 | | | | | | | | 16,288 | |
Net unrealized appreciation (depreciation) | | | | | | | 10,875,213 | | | | | | | | 2,734,215 | | | | | | | | 580,765 | |
Accumulated net realized gain (loss) | | | | | | | (1,538,087 | ) | | | | | | | (875,711 | ) | | | | | | | (95,090 | ) |
| | | | |
Net assets, at value | | | | | | $ | 74,763,767 | | | | | | | $ | 27,705,248 | | | | | | | $ | 7,461,068 | |
| | | | |
| | | | | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 109 | |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
F I N A N C I A L S T A T E M E N T S
Statements of Assets and Liabilities (continued)
June 30, 2017 (unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart 2045 Retirement Target Fund | | | Franklin LifeSmart 2050 Retirement Target Fund | | | Franklin LifeSmart 2055 Retirement Target Fund | |
| |
| Class A: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, at value | | | | | | $ | 43,731,325 | | | | | | | $ | 11,763,518 | | | | | | | $ | 3,724,133 | |
| | | | |
Shares outstanding | | | | | | | 3,383,590 | | | | | | | | 955,167 | | | | | | | | 359,114 | |
| | | | |
Net asset value per sharea | | | | | | | $12.92 | | | | | | | | $12.32 | | | | | | | | $10.37 | |
| | | | |
Maximum offering price per share (net asset value per share ÷ 94.25%) | | | | | | | $13.71 | | | | | | | | $13.07 | | | | | | | | $11.00 | |
| | | | |
| Class C: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, at value | | | | | | $ | 12,515,112 | | | | | | | $ | 3,257,870 | | | | | | | $ | 974,794 | |
| | | | |
Shares outstanding | | | | | | | 995,863 | | | | | | | | 266,843 | | | | | | | | 95,172 | |
| | | | |
Net asset value and maximum offering price per sharea | | | | | | | $12.57 | | | | | | | | $12.21 | | | | | | | | $10.24 | |
| | | | |
| Class R: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, at value | | | | | | $ | 5,431,773 | | | | | | | $ | 1,604,728 | | | | | | | $ | 375,169 | |
| | | | |
Shares outstanding | | | | | | | 422,559 | | | | | | | | 130,451 | | | | | | | | 36,331 | |
| | | | |
Net asset value and maximum offering price per share | | | | | | | $12.85 | | | | | | | | $12.30 | | | | | | | | $10.33 | |
| | | | |
| Class R6: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, at value | | | | | | $ | 12,415,269 | | | | | | | $ | 10,625,548 | | | | | | | $ | 2,355,992 | |
| | | | |
Shares outstanding | | | | | | | 952,811 | | | | | | | | 857,518 | | | | | | | | 226,750 | |
| | | | |
Net asset value and maximum offering price per share | | | | | | | $13.03 | | | | | | | | $12.39 | | | | | | | | $10.39 | |
| | | | |
| Advisor Class: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, at value | | | | | | $ | 670,288 | | | | | | | $ | 453,584 | | | | | | | $ | 30,980 | |
| | | | |
Shares outstanding | | | | | | | 51,443 | | | | | | | | 36,607 | | | | | | | | 2,982 | |
| | | | |
Net asset value and maximum offering price per share | | | | | | | $13.03 | | | | | | | | $12.39 | | | | | | | | $10.39 | |
| | | | |
aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.
| | | | |
| 110 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
F I N A N C I A L S T A T E M E N T S
Statements of Operations
for the six months ended June 30, 2017 (unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart Retirement Income Fund | | | Franklin LifeSmart 2020 Retirement Target Fund | | | Franklin LifeSmart 2025 Retirement Target Fund | |
| |
Investment income: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends: | | | | | | | | | | | | | | | | | | | | | | | | |
Non-controlled affiliates (Note 3f) | | | | | | $ | 918,627 | | | | | | | $ | 201,068 | | | | | | | $ | 513,372 | |
Unaffililated Exchange traded funds | | | | | | | 273,384 | | | | | | | | 60,388 | | | | | | | | 225,417 | |
Interest | | | | | | | 84,341 | | | | | | | | — | | | | | | | | — | |
| | | | |
Total investment income | | | | | | | 1,276,352 | | | | | | | | 261,456 | | | | | | | | 738,789 | |
| | | | |
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Management and asset allocation fees (Note 3a) | | | | | | | 79,903 | | | | | | | | 45,065 | | | | | | | | 155,605 | |
Distribution fees: (Note 3c) | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | 45,498 | | | | | | | | 24,126 | | | | | | | | 92,388 | |
Class C | | | | | | | 85,003 | | | | | | | | 25,842 | | | | | | | | 133,003 | |
Class R | | | | | | | 11,688 | | | | | | | | 7,555 | | | | | | | | 19,420 | |
Transfer agent fees: (Note 3e) | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | 24,277 | | | | | | | | 13,613 | | | | | | | | 49,992 | |
Class C | | | | | | | 11,340 | | | | | | | | 3,646 | | | | | | | | 18,006 | |
Class R | | | | | | | 3,117 | | | | | | | | 2,133 | | | | | | | | 5,254 | |
Class R6 | | | | | | | 205 | | | | | | | | 71 | | | | | | | | 82 | |
Advisor Class | | | | | | | 1,221 | | | | | | | | 299 | | | | | | | | 999 | |
Custodian fees (Note 4) | | | | | | | 85 | | | | | | | | 26 | | | | | | | | 74 | |
Reports to shareholders | | | | | | | 8,714 | | | | | | | | 5,004 | | | | | | | | 16,338 | |
Registration and filing fees | | | | | | | 37,507 | | | | | | | | 33,253 | | | | | | | | 35,986 | |
Professional fees | | | | | | | 27,909 | | | | | | | | 12,448 | | | | | | | | 12,902 | |
Trustees’ fees and expenses | | | | | | | 276 | | | | | | | | — | | | | | | | | 488 | |
Other | | | | | | | 2,756 | | | | | | | | 2,036 | | | | | | | | 2,511 | |
| | | | |
Total expenses | | | | | | | 339,499 | | | | | | | | 175,117 | | | | | | | | 543,048 | |
Expense reductions (Note 4) | | | | | | | (11 | ) | | | | | | | — | | | | | | | | — | |
Expenses waived/paid by affiliates (Note 3f and 3g) | | | | | | | (182,317 | ) | | | | | | | (110,614 | ) | | | | | | | (270,795 | ) |
| | | | |
Net expenses | | | | | | | 157,171 | | | | | | | | 64,503 | | | | | | | | 272,253 | |
| | | | |
Net investment income | | | | | | | 1,119,181 | | | | | | | | 196,953 | | | | | | | | 466,536 | |
| | | | |
Realized and unrealized gains (losses): | | | | | | | | | | | | | | | | | | | | | | | | |
Net realized gain (loss) from: | | | | | | | | | | | | | | | | | | | | | | | | |
Sale of investments: | | | | | | | | | | | | | | | | | | | | | | | | |
Non-controlled affiliates (Note 3f) | | | | | | | 48,823 | | | | | | | | 110,678 | | | | | | | | 518,429 | |
Unaffiliated Exchange traded funds | | | | | | | 26,617 | | | | | | | | 48,978 | | | | | | | | 154,018 | |
| | | | |
Net realized gain (loss) | | | | | | | 75,440 | | | | | | | | 159,656 | | | | | | | | 672,447 | |
| | | | |
Net change in unrealized appreciation (depreciation) on investments | | | | | | | 620,783 | | | | | | | | 1,826,185 | | | | | | | | 8,282,986 | |
| | | | |
Net realized and unrealized gain (loss) | | | | | | | 696,223 | | | | | | | | 1,985,841 | | | | | | | | 8,955,433 | |
| | | | |
Net increase (decrease) in net assets resulting from operations | | | | | | $ | 1,815,404 | | | | | | | $ | 2,182,794 | | | | | | | $ | 9,421,969 | |
| | | | |
| | | | | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 111 | |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
F I N A N C I A L S T A T E M E N T S
Statements of Operations (continued)
for the six months ended June 30, 2017 (unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart 2030 Retirement Target Fund | | | Franklin LifeSmart 2035 Retirement Target Fund | | | Franklin LifeSmart 2040 Retirement Target Fund | |
| |
Investment income: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends: | | | | | | | | | | | | | | | | | | | | | | | | |
Non-controlled affiliates (Note 3f) | | | | | | $ | 141,432 | | | | | | | $ | 310,253 | | | | | | | $ | 89,596 | |
Unaffililated Exchange traded funds | | | | | | | 73,022 | | | | | | | | 195,285 | | | | | | | | 59,976 | |
| | | | |
Total investment income | | | | | | | 214,454 | | | | | | | | 505,538 | | | | | | | | 149,572 | |
| | | | |
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Asset allocation fees (Note 3a) | | | | | | | 50,405 | | | | | | | | 133,655 | | | | | | | | 42,042 | |
Distribution fees: (Note 3c) | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | 21,799 | | | | | | | | 71,298 | | | | | | | | 16,948 | |
Class C | | | | | | | 28,156 | | | | | | | | 95,047 | | | | | | | | 14,787 | |
Class R | | | | | | | 3,262 | | | | | | | | 15,328 | | | | | | | | 5,171 | |
Transfer agent fees: (Note 3e) | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | 16,643 | | | | | | | | 49,324 | | | | | | | | 15,847 | |
Class C | | | | | | | 5,374 | | | | | | | | 16,573 | | | | | | | | 3,458 | |
Class R | | | | | | | 1,246 | | | | | | | | 5,301 | | | | | | | | 2,421 | |
Class R6 | | | | | | | 72 | | | | | | | | 107 | | | | | | | | 82 | |
Advisor Class | | | | | | | 474 | | | | | | | | 1,190 | | | | | | | | 170 | |
Custodian fees (Note 4) | | | | | | | 30 | | | | | | | | 66 | | | | | | | | 15 | |
Reports to shareholders | | | | | | | 4,877 | | | | | | | | 14,177 | | | | | | | | 4,571 | |
Registration and filing fees | | | | | | | 33,320 | | | | | | | | 36,909 | | | | | | | | 34,058 | |
Professional fees | | | | | | | 12,432 | | | | | | | | 12,842 | | | | | | | | 12,007 | |
Trustees’ fees and expenses | | | | | | | — | | | | | | | | 391 | | | | | | | | — | |
Other | | | | | | | 3,652 | | | | | | | | 2,402 | | | | | | | | 2,372 | |
| | | | |
Total expenses | | | | | | | 181,742 | | | | | | | | 454,610 | | | | | | | | 153,949 | |
Expenses waived/paid by affiliates (Note 3f and 3g) | | | | | | | (122,306 | ) | | | | | | | (252,007 | ) | | | | | | | (112,360 | ) |
| | | | |
Net expenses | | | | | | | 59,436 | | | | | | | | 202,603 | | | | | | | | 41,589 | |
| | | | |
Net investment income | | | | | | | 155,018 | | | | | | | | 302,935 | | | | | | | | 107,983 | |
| | | | |
Realized and unrealized gains (losses): | | | | | | | | | | | | | | | | | | | | | | | | |
Net realized gain (loss) from: | | | | | | | | | | | | | | | | | | | | | | | | |
Sale of investments: | | | | | | | | | | | | | | | | | | | | | | | | |
Non-controlled affiliates (Note 3f) | | | | | | | 154,015 | | | | | | | | 546,066 | | | | | | | | 169,365 | |
Unaffiliated Exchange traded funds | | | | | | | 43,046 | | | | | | | | 98,315 | | | | | | | | 24,021 | |
| | | | |
Net realized gain (loss) | | | | | | | 197,061 | | | | | | | | 644,381 | | | | | | | | 193,386 | |
| | | | |
Net change in unrealized appreciation (depreciation) on investments | | | | | | | 2,999,627 | | | | | | | | 8,635,789 | | | | | | | | 2,807,036 | |
| | | | |
Net realized and unrealized gain (loss) | | | | | | | 3,196,688 | | | | | | | | 9,280,170 | | | | | | | | 3,000,422 | |
| | | | |
Net increase (decrease) in net assets resulting from operations | | | | | | $ | 3,351,706 | | | | | | | $ | 9,583,105 | | | | | | | $ | 3,108,405 | |
| | | | |
| | | | |
| 112 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
F I N A N C I A L S T A T E M E N T S
Statements of Operations (continued)
for the six months ended June 30, 2017 (unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart 2045 Retirement Target Fund | | | Franklin LifeSmart 2050 Retirement Target Fund | | | Franklin LifeSmart 2055 Retirement Target Fund | |
| |
Investment income: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends: | | | | | | | | | | | | | | | | | | | | | | | | |
Non-controlled affiliates (Note 3f) | | | | | | $ | 186,725 | | | | | | | | $ 65,007 | | | | | | | $ | 15,545 | |
Unaffililated Exchange traded funds | | | | | | | 136,274 | | | | | | | | 45,939 | | | | | | | | 10,608 | |
| | | | |
Total investment income | | | | | | | 322,999 | | | | | | | | 110,946 | | | | | | | | 26,153 | |
| | | | |
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Asset allocation fees (Note 3a) | | | | | | | 92,426 | | | | | | | | 32,059 | | | | | | | | 7,905 | |
Distribution fees: (Note 3c) | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | 55,019 | | | | | | | | 13,782 | | | | | | | | 4,028 | |
Class C | | | | | | | 61,547 | | | | | | | | 14,610 | | | | | | | | 3,884 | |
Class R | | | | | | | 12,779 | | | | | | | | 3,516 | | | | | | | | 849 | |
Transfer agent fees: (Note 3e) | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | 55,060 | | | | | | | | 21,654 | | | | | | | | 9,952 | |
Class C | | | | | | | 15,537 | | | | | | | | 5,740 | | | | | | | | 2,398 | |
Class R | | | | | | | 6,395 | | | | | | | | 2,776 | | | | | | | | 1,049 | |
Class R6 | | | | | | | 104 | | | | | | | | 72 | | | | | | | | 71 | |
Advisor Class | | | | | | | 787 | | | | | | | | 837 | | | | | | | | 71 | |
Custodian fees (Note 4) | | | | | | | 51 | | | | | | | | 14 | | | | | | | | — | |
Reports to shareholders | | | | | | | 12,878 | | | | | | | | 5,626 | | | | | | | | 1,893 | |
Registration and filing fees | | | | | | | 35,066 | | | | | | | | 33,310 | | | | | | | | 35,013 | |
Professional fees | | | | | | | 12,743 | | | | | | | | 12,177 | | | | | | | | 11,962 | |
Trustees’ fees and expenses | | | | | | | 267 | | | | | | | | — | | | | | | | | — | |
Other | | | | | | | 3,848 | | | | | | | | 2,344 | | | | | | | | 523 | |
| | | | |
Total expenses | | | | | | | 364,507 | | | | | | | | 148,517 | | | | | | | | 79,598 | |
Expenses waived/paid by affiliates (Note 3f and 3g) | | | | | | | (219,620 | ) | | | | | | | (112,661 | ) | | | | | | | (69,747 | ) |
| | | | |
Net expenses | | | | | | | 144,887 | | | | | | | | 35,856 | | | | | | | | 9,851 | |
| | | | |
Net investment income | | | | | | | 178,112 | | | | | | | | 75,090 | | | | | | | | 16,302 | |
| | | | |
Realized and unrealized gains (losses): | | | | | | | | | | | | | | | | | | | | | | | | |
Net realized gain (loss) from: | | | | | | | | | | | | | | | | | | | | | | | | |
Sale of investments: | | | | | | | | | | | | | | | | | | | | | | | | |
Non-controlled affiliates (Note 3f) | | | | | | | 476,678 | | | | | | | | 185,619 | | | | | | | | 34,393 | |
Unaffiliated Exchange traded funds | | | | | | | 55,210 | | | | | | | | 21,201 | | | | | | | | 3,278 | |
| | | | |
Net realized gain (loss) | | | | | | | 531,888 | | | | | | | | 206,820 | | | | | | | | 37,671 | |
| | | | |
Net change in unrealized appreciation (depreciation) on investments | | | | | | | 6,186,661 | | | | | | | | 2,111,614 | | | | | | | | 519,373 | |
| | | | |
Net realized and unrealized gain (loss) | | | | | | | 6,718,549 | | | | | | | | 2,318,434 | | | | | | | | 557,044 | |
| | | | |
Net increase (decrease) in net assets resulting from operations | | | | | | $ | 6,896,661 | | | | | | | | $2,393,524 | | | | | | | $ | 573,346 | |
| | | | |
| | | | | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 113 | |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
F I N A N C I A L S T A T E M E N T S
Statements of Changes in Net Assets
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart Retirement Income Fund | | | Franklin LifeSmart 2020 Retirement Target Fund | |
| | | | |
| | | Six Months Ended June 30, 2017 (unaudited) | | | Year Ended December 31, 2016 | | | Six Months Ended June 30, 2017 (unaudited) | | | Year Ended December 31, 2016 | |
| |
Increase (decrease) in net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | | | | $ | 1,119,181 | | | | | | | $ | 1,654,982 | | | | | | | $ | 196,953 | | | | | | | $ | 408,608 | |
Net realized gain (loss) | | | | | | | 75,440 | | | | | | | | (1,309,613 | ) | | | | | | | 159,656 | | | | | | | | (1,718,865 | ) |
Net change in unrealized appreciation (depreciation) | | | | | | | 620,783 | | | | | | | | 3,026,905 | | | | | | | | 1,826,185 | | | | | | | | 2,259,234 | |
| | | | |
Net increase (decrease) in net assets resulting from operations . | | | | | | | 1,815,404 | | | | | | | | 3,372,274 | | | | | | | | 2,182,794 | | | | | | | | 948,977 | |
| | | | |
Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | (713,807 | ) | | | | | | | (1,067,178 | ) | | | | | | | (85,625 | ) | | | | | | | (295,979 | ) |
Class C | | | | | | | (271,462 | ) | | | | | | | (373,226 | ) | | | | | | | (5,090 | ) | | | | | | | (42,176 | ) |
Class R | | | | | | | (85,835 | ) | | | | | | | (115,568 | ) | | | | | | | (9,453 | ) | | | | | | | (41,080 | ) |
Class R6 | | | | | | | (83,718 | ) | | | | | | | (143,332 | ) | | | | | | | (47,232 | ) | | | | | | | (128,117 | ) |
Advisor Class | | | | | | | (38,423 | ) | | | | | | | (28,206 | ) | | | | | | | (2,662 | ) | | | | | | | (5,734 | ) |
Net realized gains: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | — | | | | | | | | (207,339 | ) | | | | | | | — | | | | | | | | (147,075 | ) |
Class C | | | | | | | — | | | | | | | | (93,502 | ) | | | | | | | — | | | | | | | | (38,213 | ) |
Class R | | | | | | | — | | | | | | | | (23,580 | ) | | | | | | | — | | | | | | | | (23,056 | ) |
Class R6 | | | | | | | — | | | | | | | | (22,885 | ) | | | | | | | — | | | | | | | | (50,620 | ) |
Advisor Class | | | | | | | — | | | | | | | | (2,809 | ) | | | | | | | — | | | | | | | | (2,386 | ) |
Tax return of capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | — | | | | | | | | (154,983 | ) | | | | | | | — | | | | | | | | — | |
Class C | | | | | | | — | | | | | | | | (55,963 | ) | | | | | | | — | | | | | | | | — | |
Class R | | | | | | | — | | | | | | | | (17,001 | ) | | | | | | | — | | | | | | | | — | |
Class R6 | | | | | | | — | | | | | | | | (20,450 | ) | | | | | | | — | | | | | | | | — | |
Advisor Class | | | | | | | — | | | | | | | | (4,180 | ) | | | | | | | — | | | | | | | | — | |
| | | | |
Total distributions to shareholders | | | | | | | (1,193,245 | ) | | | | | | | (2,330,202 | ) | | | | | | | (150,062 | ) | | | | | | | (774,436 | ) |
| | | | |
Capital share transactions: (Note 2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | (5,206,809 | ) | | | | | | | (5,766,509 | ) | | | | | | | 274,487 | | | | | | | | (678,470 | ) |
Class C | | | | | | | (802,340 | ) | | | | | | | (3,530,632 | ) | | | | | | | 67,451 | | | | | | | | (126,761 | ) |
Class R | | | | | | | (436,206 | ) | | | | | | | 701,188 | | | | | | | | (408,630 | ) | | | | | | | (59,597 | ) |
Class R6 | | | | | | | 140,786 | | | | | | | | (2,957,601 | ) | | | | | | | 1,320,965 | | | | | | | | (117,450 | ) |
Advisor Class | | | | | | | 174,847 | | | | | | | | 821,012 | | | | | | | | 112,426 | | | | | | | | 24,559 | |
| | | | |
Total capital share transactions | | | | | | | (6,129,722 | ) | | | | | | | (10,732,542 | ) | | | | | | | 1,366,699 | | | | | | | | (957,719 | ) |
| | | | |
Net increase (decrease) in net assets | | | | | | | (5,507,563 | ) | | | | | | | (9,690,470 | ) | | | | | | | 3,399,431 | | | | | | | | (783,178 | ) |
Net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | | | | | 67,828,600 | | | | | | | | 77,519,070 | | | | | | | | 34,562,442 | | | | | | | | 35,345,620 | |
| | | | |
End of period | | | | | | $ | 62,321,037 | | | | | | | $ | 67,828,600 | | | | | | | $ | 37,961,873 | | | | | | | $ | 34,562,442 | |
| | | | |
Undistributed net investment income included in net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | | | | $ | — | | | | | | | $ | — | | | | | | | $ | 46,891 | | | | | | | $ | — | |
| | | | |
Distributions in excess of net investment income included in net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | | | | $ | (74,064 | ) | | | | | | $ | — | | | | | | | $ | — | | | | | | | $ | — | |
| | | | |
| | | | |
| 114 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
F I N A N C I A L S T A T E M E N T S
Statements of Changes in Net Assets (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart 2025 Retirement Target Fund | | | Franklin LifeSmart 2030 Retirement Target Fund | |
| | | | |
| | | Six Months Ended June 30, 2017 (unaudited) | | | Year Ended December 31, 2016 | | | Six Months Ended June 30, 2017 (unaudited) | | | Year Ended December 31, 2016 | |
| |
Increase (decrease) in net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | | | | | $ 466,536 | | | | | | | | $ 1,310,993 | | | | | | | | $ 155,018 | | | | | | | | $ 411,328 | |
Net realized gain (loss) | | | | | | | 672,447 | | | | | | | | (3,773,763 | ) | | | | | | | 197,061 | | | | | | | | (1,654,056 | ) |
Net change in unrealized appreciation (depreciation) | | | | | | | 8,282,986 | | | | | | | | 6,097,411 | | | | | | | | 2,999,627 | | | | | | | | 2,378,481 | |
| | | | |
Net increase (decrease) in net assets resulting from operations | | | | | | | 9,421,969 | | | | | | | | 3,634,641 | | | | | | | | 3,351,706 | | | | | | | | 1,135,753 | |
| | | | |
Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | (302,921 | ) | | | | | | | (878,508 | ) | | | | | | | (116,276 | ) | | | | | | | (126,582 | ) |
Class C | | | | | | | (111,299 | ) | | | | | | | (110,040 | ) | | | | | | | (37,422 | ) | | | | | | | (4,373 | ) |
Class R | | | | | | | (31,750 | ) | | | | | | | (65,898 | ) | | | | | | | (8,749 | ) | | | | | | | (7,457 | ) |
Class R6 | | | | | | | (60,127 | ) | | | | | | | (221,187 | ) | | | | | | | (105,020 | ) | | | | | | | (147,921 | ) |
Advisor Class | | | | | | | (6,138 | ) | | | | | | | (18,598 | ) | | | | | | | (3,722 | ) | | | | | | | (3,285 | ) |
Net realized gains: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | — | | | | | | | | (950,733 | ) | | | | | | | — | | | | | | | | (142,848 | ) |
Class C | | | | | | | — | | | | | | | | (371,035 | ) | | | | | | | — | | | | | | | | (44,370 | ) |
Class R | | | | | | | — | | | | | | | | (89,222 | ) | | | | | | | — | | | | | | | | (13,218 | ) |
Class R6 | | | | | | | — | | | | | | | | (198,247 | ) | | | | | | | — | | | | | | | | (116,284 | ) |
Advisor Class | | | | | | | — | | | | | | | | (15,098 | ) | | | | | | | — | | | | | | | | (2,570 | ) |
| | | | |
Total distributions to shareholders | | | | | | | (512,235 | ) | | | | | | | (2,918,566 | ) | | | | | | | (271,189 | ) | | | | | | | (608,908 | ) |
| | | | |
Capital share transactions: (Note 2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | (5,552,223 | ) | | | | | | | 1,701,071 | | | | | | | | 445,453 | | | | | | | | 2,929,403 | |
Class C | | | | | | | (1,651,314 | ) | | | | | | | (3,132,785 | ) | | | | | | | 796,478 | | | | | | | | 912,677 | |
Class R | | | | | | | (257,979 | ) | | | | | | | 1,274,985 | | | | | | | | (187,938 | ) | | | | | | | 492,452 | |
Class R6 | | | | | | | 520,330 | | | | | | | | (3,302,638 | ) | | | | | | | 747,987 | | | | | | | | 1,247,649 | |
Advisor Class | | | | | | | 68,882 | | | | | | | | 183,035 | | | | | | | | 205,660 | | | | | | | | 20,840 | |
| | | | |
Total capital share transactions | | | | | | | (6,872,304 | ) | | | | | | | (3,276,332 | ) | | | | | | | 2,007,640 | | | | | | | | 5,603,021 | |
| | | | |
Net increase (decrease) in net assets | | | | | | | 2,037,430 | | | | | | | | (2,560,257 | ) | | | | | | | 5,088,157 | | | | | | | | 6,129,866 | |
Net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | | | | | 123,874,266 | | | | | | | | 126,434,523 | | | | | | | | 38,099,530 | | | | | | | | 31,969,664 | |
| | | | |
End of period | | | | | | | $125,911,696 | | | | | | | | $123,874,266 | | | | | | | | $43,187,687 | | | | | | | | $38,099,530 | |
| | | | |
Undistributed net investment income included in net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | | | | | $ 466,472 | | | | | | | | $ 512,171 | | | | | | | | $ 154,761 | | | | | | | | $ 270,932 | |
| | | | |
| | | | | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 115 | |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
F I N A N C I A L S T A T E M E N T S
Statements of Changes in Net Assets (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart 2035 Retirement Target Fund | | | Franklin LifeSmart 2040 Retirement Target Fund | |
| | | | |
| | | Six Months Ended June 30, 2017 (unaudited) | | | Year Ended December 31, 2016 | | | Six Months Ended June 30, 2017 (unaudited) | | | Year Ended December 31, 2016 | |
| |
Increase (decrease) in net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | | | | $ | 302,935 | | | | | | | $ | 1,073,370 | | | | | | | $ | 107,983 | | | | | | | $ | 343,851 | |
Net realized gain (loss) | | | | | | | 644,381 | | | | | | | | (2,678,698 | ) | | | | | | | 193,386 | | | | | | | | (1,016,680 | ) |
Net change in unrealized appreciation (depreciation) | | | | | | | 8,635,789 | | | | | | | | 4,700,786 | | | | | | | | 2,807,036 | | | | | | | | 1,592,824 | |
| | | | |
Net increase (decrease) in net assets resulting from operations | | | | | | | 9,583,105 | | | | | | | | 3,095,458 | | | | | | | | 3,108,405 | | | | | | | | 919,995 | |
| | | | |
Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | (400,579 | ) | | | | | | | (456,196 | ) | | | | | | | (96,010 | ) | | | | | | | (96,332 | ) |
Class C | | | | | | | (135,701 | ) | | | | | | | (16,809 | ) | | | | | | | (21,286 | ) | | | | | | | (14,559 | ) |
Class R | | | | | | | (42,444 | ) | | | | | | | (38,744 | ) | | | | | | | (16,517 | ) | | | | | | | (14,619 | ) |
Class R6 | | | | | | | (161,640 | ) | | | | | | | (239,563 | ) | | | | | | | (105,542 | ) | | | | | | | (113,150 | ) |
Advisor Class | | | | | | | (8,691 | ) | | | | | | | (15,115 | ) | | | | | | | (1,081 | ) | | | | | | | (933 | ) |
Net realized gains: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | — | | | | | | | | (866,788 | ) | | | | | | | — | | | | | | | | (81,000 | ) |
Class C | | | | | | | — | | | | | | | | (294,076 | ) | | | | | | | — | | | | | | | | (19,378 | ) |
Class R | | | | | | | — | | | | | | | | (76,428 | ) | | | | | | | — | | | | | | | | (9,693 | ) |
Class R6 | | | | | | | — | | | | | | | | (286,348 | ) | | | | | | | — | | | | | | | | (105,785 | ) |
Advisor Class | | | | | | | — | | | | | | | | (25,258 | ) | | | | | | | — | | | | | | | | (865 | ) |
| | | | |
Total distributions to shareholders | | | | | | | (749,055 | ) | | | | | | | (2,315,325 | ) | | | | | | | (240,436 | ) | | | | | | | (456,314 | ) |
| | | | |
Capital share transactions: (Note 2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | (4,262,602 | ) | | | | | | | 2,414,240 | | | | | | | | (574,067 | ) | | | | | | | 4,880,830 | |
Class C | | | | | | | (558,348 | ) | | | | | | | (1,236,171 | ) | | | | | | | 303,064 | | | | | | | | 664,099 | |
Class R | | | | | | | (351,263 | ) | | | | | | | 1,387,939 | | | | | | | | (469,473 | ) | | | | | | | 1,132,018 | |
Class R6 | | | | | | | 176,253 | | | | | | | | 1,659,173 | | | | | | | | 560,917 | | | | | | | | 1,603,590 | |
Advisor Class | | | | | | | 85,407 | | | | | | | | (282,775 | ) | | | | | | | (1,497 | ) | | | | | | | 18,185 | |
| | | | |
Total capital share transactions | | | | | | | (4,910,553 | ) | | | | | | | 3,942,406 | | | | | | | | (181,056 | ) | | | | | | | 8,298,722 | |
| | | | |
Net increase (decrease) in net assets | | | | | | | 3,923,497 | | | | | | | | 4,722,539 | | | | | | | | 2,686,913 | | | | | | | | 8,762,403 | |
Net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | | | | | 105,029,980 | | | | | | | | 100,307,441 | | | | | | | | 32,095,550 | | | | | | | | 23,333,147 | |
| | | | |
End of period | | | | | | $ | 108,953,477 | | | | | | | $ | 105,029,980 | | | | | | | $ | 34,782,463 | | | | | | | $ | 32,095,550 | |
| | | | |
Undistributed net investment income included in net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | | | | $ | 302,872 | | | | | | | $ | 748,992 | | | | | | | $ | 107,901 | | | | | | | $ | 240,354 | |
| | | | |
| | | | |
| 116 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
F I N A N C I A L S T A T E M E N T S
Statements of Changes in Net Assets (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart 2045 Retirement Target Fund | | | Franklin LifeSmart 2050 Retirement Target Fund | |
| | | | |
| | | Six Months Ended June 30, 2017 (unaudited) | | | Year Ended December 31, 2016 | | | Six Months Ended June 30, 2017 (unaudited) | | | Year Ended December 31, 2016 | |
| |
Increase (decrease) in net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | | | | $ | 178,112 | | | | | | | | $ 726,730 | | | | | | | | $ 75,090 | | | | | | | $ | 263,282 | |
Net realized gain (loss) | | | | | | | 531,888 | | | | | | | | (1,614,004 | ) | | | | | | | 206,820 | | | | | | | | (712,315 | ) |
Net change in unrealized appreciation (depreciation) | | | | | | | 6,186,661 | | | | | | | | 3,133,971 | | | | | | | | 2,111,614 | | | | | | | | 1,368,939 | |
| | | | |
Net increase (decrease) in net assets resulting from operations | | | | | | | 6,896,661 | | | | | | | | 2,246,697 | | | | | | | | 2,393,524 | | | | | | | | 919,906 | |
| | | | |
Distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | (309,556 | ) | | | | | | | (360,611 | ) | | | | | | | (76,797 | ) | | | | | | | (79,243 | ) |
Class C | | | | | | | (85,972 | ) | | | | | | | (11,455 | ) | | | | | | | (20,896 | ) | | | | | | | (2,729 | ) |
Class R | | | | | | | (35,468 | ) | | | | | | | (27,720 | ) | | | | | | | (10,717 | ) | | | | | | | (6,596 | ) |
Class R6 | | | | | | | (80,358 | ) | | | | | | | (117,669 | ) | | | | | | | (69,845 | ) | | | | | | | (90,757 | ) |
Advisor Class | | | | | | | (4,638 | ) | | | | | | | (4,985 | ) | | | | | | | (3,067 | ) | | | | | | | (3,716 | ) |
Net realized gains: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | — | | | | | | | | (593,026 | ) | | | | | | | — | | | | | | | | (72,692 | ) |
Class C | | | | | | | — | | | | | | | | (180,569 | ) | | | | | | | — | | | | | | | | (20,602 | ) |
Class R | | | | | | | — | | | | | | | | (60,988 | ) | | | | | | | — | | | | | | | | (8,463 | ) |
Class R6 | | | | | | | — | | | | | | | | (145,665 | ) | | | | | | | — | | | | | | | | (94,425 | ) |
Advisor Class | | | | | | | — | | | | | | | | (8,268 | ) | | | | | | | — | | | | | | | | (3,495 | ) |
| | | | |
Total distributions to shareholders | | | | | | | (515,992 | ) | | | | | | | (1,510,956 | ) | | | | | | | (181,322 | ) | | | | | | | (382,718 | ) |
| | | | |
Capital share transactions: (Note 2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | | | | | (4,625,225 | ) | | | | | | | 5,592,714 | | | | | | | | 209,291 | | | | | | | | 3,681,070 | |
Class C | | | | | | | (1,050,982 | ) | | | | | | | (406,063 | ) | | | | | | | 344,689 | | | | | | | | 700,198 | |
Class R | | | | | | | 319,620 | | | | | | | | 355,637 | | | | | | | | 269,873 | | | | | | | | 447,082 | |
Class R6 | | | | | | | 479,930 | | | | | | | | (218,042 | ) | | | | | | | 588,414 | | | | | | | | 863,376 | |
Advisor Class | | | | | | | 139,204 | | | | | | | | (67,298 | ) | | | | | | | 20,941 | | | | | | | | (6,134 | ) |
| | | | |
Total capital share transactions | | | | | | | (4,737,453 | ) | | | | | | | 5,256,948 | | | | | | | | 1,433,208 | | | | | | | | 5,685,592 | |
| | | | |
Net increase (decrease) in net assets | | | | | | | 1,643,216 | | | | | | | | 5,992,689 | | | | | | | | 3,645,410 | | | | | | | | 6,222,780 | |
Net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | | | | | 73,120,551 | | | | | | | | 67,127,862 | | | | | | | | 24,059,838 | | | | | | | | 17,837,058 | |
| | | | |
End of period | | | | | | $ | 74,763,767 | | | | | | | | $73,120,551 | | | | | | | | $27,705,248 | | | | | | | $ | 24,059,838 | |
| | | | |
Undistributed net investment income included in net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | | | | $ | 177,520 | | | | | | | | $ 515,400 | | | | | | | | $ 75,080 | | | | | | | $ | 181,312 | |
| | | | |
| | | | | | |
| franklintempleton.com | | The accompanying notes are an integral part of these financial statements. | Semiannual Report | | | 117 | |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
F I N A N C I A L S T A T E M E N T S
Statements of Changes in Net Assets (continued)
| | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart 2055 Retirement Target Fund | |
| | | | |
| | | Six Months Ended June 30, 2017 (unaudited) | | | Year Ended December 31, 2016 | |
| |
Increase (decrease) in net assets: | | | | | | | | | | | | | | | | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income | | | | | | $ | 16,302 | | | | | | | $ | 47,134 | |
Net realized gain (loss) | | | | | | | 37,671 | | | | | | | | (54,517 | ) |
Net change in unrealized appreciation (depreciation) | | | | | | | 519,373 | | | | | | | | 129,837 | |
| | | | |
Net increase (decrease) in net assets resulting from operations | | | | | | | 573,346 | | | | | | | | 122,454 | |
| | | | |
Distributions to shareholders from: | | | | | | | | | | | | | | | | |
Net investment income and short term gains received from Underlying Funds and exchange traded funds: | | | | | | | | | | | | | | | | |
Class A | | | | | | | (9,241 | ) | | | | | | | (27,206 | ) |
Class C | | | | | | | (2,227 | ) | | | | | | | (3,443 | ) |
Class R | | | | | | | (920 | ) | | | | | | | (3,039 | ) |
Class R6 | | | | | | | (5,614 | ) | | | | | | | (18,759 | ) |
Advisor Class | | | | | | | (84 | ) | | | | | | | (158 | ) |
Net realized gains: | | | | | | | | | | | | | | | | |
Class A | | | | | | | — | | | | | | | | (13,471 | ) |
Class C | | | | | | | — | | | | | | | | (1,934 | ) |
Class R | | | | | | | — | | | | | | | | (1,284 | ) |
Class R6 | | | | | | | — | | | | | | | | (878 | ) |
Advisor Class | | | | | | | — | | | | | | | | (74 | ) |
| | | | |
Total distributions to shareholders | | | | | | | (18,086 | ) | | | | | | | (70,246 | ) |
| | | | |
Capital share transactions: (Note 2) | | | | | | | | | | | | | | | | |
Class A | | | | | | | 709,623 | | | | | | | | 878,999 | |
Class C | | | | | | | 339,870 | | | | | | | | 396,100 | |
Class R | | | | | | | (12,260 | ) | | | | | | | 308,455 | |
Class R6 | | | | | | | 561,704 | | | | | | | | 1,520,706 | |
Advisor Class | | | | | | | 16,239 | | | | | | | | 1,808 | |
| | | | |
Total capital share transactions | | | | | | | 1,615,176 | | | | | | | | 3,106,068 | |
| | | | |
Net increase (decrease) in net assets | | | | | | | 2,170,436 | | | | | | | | 3,158,276 | |
Net assets: | | | | | | | | | | | | | | | | |
Beginning of period | | | | | | | 5,290,632 | | | | | | | | 2,132,356 | |
| | | | |
End of period | | | | | | $ | 7,461,068 | | | | | | | $ | 5,290,632 | |
| | | | |
Undistributed net investment income included in net assets: | | | | | | | | | | | | | | | | |
End of period | | | | | | $ | 16,288 | | | | | | | $ | 18,072 | |
| | | | |
| | | | |
| 118 | | Semiannual Report | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
Notes to Financial Statements (unaudited)
1. Organization and Significant Accounting Policies
Franklin Fund Allocator Series (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of twenty-four separate funds, nine of which are included in this report (Funds) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Funds invest primarily in mutual funds (Underlying Funds) and exchange traded funds (ETFs), including affiliated funds managed by Franklin Templeton (FT Underlying Funds). The Funds offer five classes of shares: Class A, Class C, Class R, Class R6, and Advisor Class. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees primarily due to differing arrangements for distribution and transfer agent fees.
The accounting policies of the Underlying Funds are outlined in their respective shareholder reports. A copy of the Underlying Funds’ shareholder reports, in which each fund invests, is available on the U.S. Securities and Exchange Commission (SEC) website at sec.gov or at the SEC’s Public Reference Room in Washington, D.C. The Underlying Funds’ shareholder reports are not covered by this report.
The following summarizes the Funds’ significant accounting policies.
a. Financial Instrument Valuation
The Funds’ investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Funds calculate the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Funds’ administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Funds’ valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Funds to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to
determine fair value. Investments in the Underlying Funds are valued at their closing NAV each trading day. ETFs listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively.
Debt securities generally trade in the over-the-counter market rather than on a securities exchange. The Funds’ pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value.
The Funds have procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.
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F R A N K L I N F U N D A L L O C A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D)
1. Organization and Significant Accounting Policies (continued)
b. Index-Linked Notes
Certain or all Funds invest in index-linked notes. Index-linked notes are senior, unsecured, subordinated debt securities issued by a financial institution, and the value is based on the price movements of the underlying index. Index-linked notes are designed to provide investors access to the returns of various market benchmarks and intended to replicate the economic effects that would apply had the Fund directly purchased the underlying referenced asset or basket of assets. The risks of investing in index-linked notes include unfavorable price movements in the underlying index and the credit risk of the issuing financial institution. There may be no guarantee of a return of principal with index-linked notes and the appreciation potential may be limited. Index-linked notes may be more volatile and less liquid than other investments held by the Funds.
c. Income Taxes
It is each Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. Each Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.
Each Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of June 30, 2017, each Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on each tax jurisdiction’s statute of limitation.
d. Security Transactions, Investment Income, Expenses and Distributions
Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income and realized gain distributions are recorded on the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date. The Franklin LifeSmart
Retirement Income Fund employs a managed distribution policy. Under this policy, the fund will distribute level monthly distributions in any given year regardless of the performance of the fund; however, the twelfth monthly payment may be greater than the initially anticipated amount if additional income or capital gains are required to be distributed. These distributions may include income and capital gains generated by the Underlying Funds, as well as a possible return of capital component, if necessary, to meet the annual distribution rate. The annual payout rate may be adjusted higher or lower from year to year in response to market conditions. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.
Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the Fund that incurred the expense.
The Funds indirectly bear their proportionate share of expenses from the Underlying Funds and ETFs. Since the Underlying Funds and ETFs have varied expense levels and the Funds may own different proportions of the Underlying Funds and ETFs at different times, the amount of expenses incurred indirectly by the Funds will vary.
Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.
e. Accounting Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
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F R A N K L I N F U N D A L L O C A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N TS ( U N A U D I T E D )
f. Guarantees and Indemnifications
Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Funds, enters into contracts with service providers
that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.
2. Shares of Beneficial Interest
At June 30, 2017, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart Retirement
Income Fund | | | | | | Franklin LifeSmart 2020
Retirement Target Fund | |
| | | Shares | | | Amount | | | | | | Shares | | | Amount | |
| | | | | |
| Class A Shares: | | | | | | | | | | | | | | | | | | | | |
| Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 322,011 | | | $ | 3,568,444 | | | | | | | | 465,483 | | | $ | 5,189,705 | |
| Shares issued in reinvestment of distributions | | | 63,308 | | | | 700,778 | | | | | | | | 7,593 | | | | 85,445 | |
| Shares redeemed | | | (856,674 | ) | | | (9,476,031 | ) | | | | | | | (451,122 | ) | | | (5,000,663 | ) |
Net increase (decrease) | | | (471,355 | ) | | $ | (5,206,809 | ) | | | | | | | 21,954 | | | $ | 274,487 | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 695,856 | | | $ | 7,455,570 | | | | | | | | 617,122 | | | $ | 6,540,723 | |
| Shares issued in reinvestment of distributions | | | 131,058 | | | | 1,418,310 | | | | | | | | 42,020 | | | | 441,853 | |
| Shares redeemed | | | (1,363,440 | ) | | | (14,640,389 | ) | | | | | | | (727,268 | ) | | | (7,661,046 | ) |
Net increase (decrease) | | | (536,526 | ) | | $ | (5,766,509 | ) | | | | | | | (68,126 | ) | | $ | (678,470 | ) |
Class C Shares: | | | | | | | | | | | | | | | | | | | | |
| Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 268,096 | | | $ | 2,934,875 | | | | | | | | 109,627 | | | $ | 1,210,817 | |
| Shares issued in reinvestment of distributions | | | 23,607 | | | | 258,253 | | | | | | | | 453 | | | | 5,090 | |
| Shares redeemed | | | (365,442 | ) | | | (3,995,468 | ) | | | | | | | (104,621 | ) | | | (1,148,456 | ) |
Net increase (decrease) | | | (73,739 | ) | | $ | (802,340 | ) | | | | | | | 5,459 | | | $ | 67,451 | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 302,723 | | | $ | 3,199,411 | | | | | | | | 221,499 | | | $ | 2,302,903 | |
| Shares issued in reinvestment of distributions | | | 45,783 | | | | 489,755 | | | | | | | | 7,681 | | | | 80,216 | |
| Shares redeemed | | | (683,166 | ) | | | (7,219,798 | ) | | | | | | | (240,026 | ) | | | (2,509,880 | ) |
Net increase (decrease) | | | (334,660 | ) | | $ | (3,530,632 | ) | | | | | | | (10,846 | ) | | $ | (126,761 | ) |
Class R Shares: | | | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 28,994 | | | $ | 319,559 | | | | | | | | 23,332 | | | $ | 256,678 | |
| Shares issued in reinvestment of distributions | | | 6,130 | | | | 67,568 | | | | | | | | 842 | | | | 9,453 | |
| Shares redeemed | | | (74,749 | ) | | | (823,333 | ) | | | | | | | (61,214 | ) | | | (674,761 | ) |
Net increase (decrease) | | | (39,625 | ) | | $ | (436,206 | ) | | | | | | | (37,040 | ) | | $ | (408,630 | ) |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 200,171 | | | $ | 2,125,002 | | | | | | | | 193,372 | | | $ | 2,029,744 | |
| Shares issued in reinvestment of distributions | | | 11,598 | | | | 125,084 | | | | | | | | 6,110 | | | | 64,137 | |
| Shares redeemed | | | (145,721 | ) | | | (1,548,898 | ) | | | | | | | (205,538 | ) | | | (2,153,478 | ) |
Net increase (decrease) | | | 66,048 | | | $ | 701,188 | | | | | | | | (6,056 | ) | | $ | (59,597 | ) |
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F R A N K L I N F U N D A L L O C A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D )
2. Shares of Beneficial Interest (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart Retirement
Income Fund | | | | | | Franklin LifeSmart 2020
Retirement Target Fund | |
| | | Shares | | | Amount | | | | | | Shares | | | Amount | |
| | | | | |
| Class R6 Shares: | | | | | | | | | | | | | | | | | | | | |
| Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 45,341 | | | $ | 504,215 | | | | | | | | 183,270 | | | $ | 1,997,196 | |
| Shares issued in reinvestment of distributions | | | 3,818 | | | | 42,465 | | | | | | | | 53 | | | | 597 | |
| Shares redeemed | | | (36,540 | ) | | | (405,894 | ) | | | | | | | (61,171 | ) | | | (676,828 | ) |
Net increase (decrease) | | | 12,619 | | | $ | 140,786 | | | | | | | | 122,152 | | | $ | 1,320,965 | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 134,808 | | | $ | 1,473,919 | | | | | | | | 196,499 | | | $ | 2,090,521 | |
| Shares issued in reinvestment of distributions | | | 8,589 | | | | 93,485 | | | | | | | | 433 | | | | 4,655 | |
| Shares redeemed | | | (417,505 | ) | | | (4,525,005 | ) | | | | | | | (208,572 | ) | | | (2,212,626 | ) |
Net increase (decrease) | | | (274,108 | ) | | $ | (2,957,601 | ) | | | | | | | (11,640 | ) | | $ | (117,450 | ) |
Advisor Class Shares: | | | | | | | | | | | | | | | | | | | | |
| Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 26,408 | | | $ | 293,486 | | | | | | | | 98,737 | | | $ | 1,103,679 | |
| Shares issued in reinvestment of distributions | | | 2,438 | | | | 27,099 | | | | | | | | 236 | | | | 2,662 | |
| Shares redeemed | | | (13,069 | ) | | | (145,738 | ) | | | | | | | (88,789 | ) | | | (993,915 | ) |
Net increase (decrease) | | | 15,777 | | | $ | 174,847 | | | | | | | | 10,184 | | | $ | 112,426 | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 164,439 | | | $ | 1,779,545 | | | | | | | | 7,866 | | | $ | 82,109 | |
| Shares issued in reinvestment of distributions | | | 2,865 | | | | 31,253 | | | | | | | | 770 | | | | 8,120 | |
| Shares redeemed | | | (94,632 | ) | | | (989,786 | ) | | | | | | | (6,224 | ) | | | (65,670 | ) |
Net increase (decrease) | | | 72,672 | | | $ | 821,012 | | | | | | | | 2,412 | | | $ | 24,559 | |
| | | |
| | | Franklin LifeSmart 2025
Retirement Target Fund | | | | | | Franklin LifeSmart 2030
Retirement Target Fund | |
| | | Shares | | | Amount | | | | | | Shares | | | Amount | |
| | | | | |
| Class A Shares: | | | | | | | | | | | | | | | | | | | | |
| Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 681,232 | | | $ | 8,210,887 | | | | | | | | 282,207 | | | $ | 3,287,806 | |
| Shares issued in reinvestment of distributions | | | 24,536 | | | | 295,421 | | | | | | | | 9,997 | | | | 116,271 | |
| Shares redeemed | | | (1,171,168 | ) | | | (14,058,531 | ) | | | | | | | (254,880 | ) | | | (2,958,624 | ) |
Net increase (decrease) | | | (465,400 | ) | | $ | (5,552,223 | ) | | | | | | | 37,324 | | | $ | 445,453 | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
| Shares sold | | | 1,527,835 | | | $ | 17,243,185 | | | | | | | | 775,851 | | | $ | 8,429,666 | |
| Shares issued in reinvestment of distributions | | | 159,079 | | | | 1,789,340 | | | | | | | | 24,988 | | | | 269,391 | |
| Shares redeemed | | | (1,528,993 | ) | | | (17,331,454 | ) | | | | | | | (530,055 | ) | | | (5,769,654 | ) |
Net increase (decrease) | | | 157,921 | | | $ | 1,701,071 | | | | | | | | 270,784 | | | $ | 2,929,403 | |
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F R A N K L I N F U N D A L L O C A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N T S (U N A U D I T E D)
| | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart 2025 Retirement Target Fund | | | | | Franklin LifeSmart 2030 Retirement Target Fund | |
| | | | |
| | | Shares | | | Amount | | | | | Shares | | | Amount | |
| |
| | | | | |
| Class C Shares: | | | | | | | | | | | | | | | | | | |
| Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | |
Shares sold | | | 238,677 | | | $ | 2,815,875 | | | | | | 120,806 | | | $ | 1,390,477 | |
Shares issued in reinvestment of distributions | | | 8,785 | | | | 103,924 | | | | | | 3,257 | | | | 37,422 | |
Shares redeemed | | | (385,995 | ) | | | (4,571,113 | ) | | | | | (55,298 | ) | | | (631,421) | |
| | | | |
| | | | | |
Net increase (decrease) | | | (138,533 | ) | | $ | (1,651,314 | ) | | | | | 68,765 | | | $ | 796,478 | |
| | | | |
| Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | |
Shares sold | | | 478,332 | | | $ | 5,300,604 | | | | | | 182,868 | | | $ | 1,944,397 | |
Shares issued in reinvestment of distributions | | | 40,222 | | | | 438,767 | | | | | | 4,667 | | | | 48,734 | |
Shares redeemed | | | (796,509 | ) | | | (8,872,156 | ) | | | | | (100,159 | ) | | | (1,080,454) | |
| | | | |
| | | | | |
Net increase (decrease) | | | (277,955 | ) | | $ | (3,132,785 | ) | | | | | 87,376 | | | $ | 912,677 | |
| | | | |
| | | | | |
| Class R Shares: | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | |
Shares sold | | | 111,841 | | | $ | 1,315,127 | | | | | | 26,640 | | | $ | 302,380 | |
Shares issued in reinvestment of distributions | | | 2,258 | | | | 27,026 | | | | | | 754 | | | | 8,749 | |
Shares redeemed | | | (133,935 | ) | | | (1,600,132 | ) | | | | | (43,779 | ) | | | (499,067) | |
| | | | |
| | | | | |
Net increase (decrease) | | | (19,836 | ) | | $ | (257,979 | ) | | | | | (16,385 | ) | | $ | (187,938) | |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | |
Shares sold | | | 279,412 | | | $ | 3,125,853 | | | | | | 111,812 | | | $ | 1,210,333 | |
Shares issued in reinvestment of distributions | | | 10,939 | | | | 122,196 | | | | | | 1,933 | | | | 20,674 | |
Shares redeemed | | | (174,531 | ) | | | (1,973,064 | ) | | | | | (66,882 | ) | | | (738,555) | |
| | | | |
| | | | | |
Net increase (decrease) | | | 115,820 | | | $ | 1,274,985 | | | | | | 46,863 | | | $ | 492,452 | |
| | | | |
| | | | | |
| Class R6 Shares: | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | |
Shares sold | | | 177,007 | | | $ | 2,117,876 | | | | | | 98,675 | | | $ | 1,143,334 | |
Shares issued in reinvestment of distributions | | | 1,232 | | | | 14,883 | | | | | | 96 | | | | 1,116 | |
Shares redeemed | | | (135,832 | ) | | | (1,612,429 | ) | | | | | (34,600 | ) | | | (396,463) | |
| | | | |
| | | | | |
Net increase (decrease) | | | 42,407 | | | $ | 520,330 | | | | | | 64,171 | | | $ | 747,987 | |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | |
Shares sold | | | 325,212 | | | $ | 3,663,572 | | | | | | 302,640 | | | $ | 3,302,312 | |
Shares issued in reinvestment of distributions | | | 11,223 | | | | 126,825 | | | | | | 108 | | | | 1,199 | |
Shares redeemed | | | (620,112 | ) | | | (7,093,035 | ) | | | | | (189,407 | ) | | | (2,055,862) | |
| | | | |
| | | | | |
Net increase (decrease) | | | (283,677 | ) | | $ | (3,302,638 | ) | | | | | 113,341 | | | $ | 1,247,649 | |
| | | | |
| | | | | |
| Advisor Class Shares: | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | |
Shares sold | | | 47,884 | | | $ | 581,048 | | | | | | 19,218 | | | $ | 221,744 | |
Shares issued in reinvestment of distributions | | | 373 | | | | 4,500 | | | | | | 319 | | | | 3,722 | |
Shares redeemed | | | (42,430 | ) | | | (516,666 | ) | | | | | (1,706 | ) | | | (19,806) | |
| | | | |
| | | | | |
Net increase (decrease) | | | 5,827 | | | $ | 68,882 | | | | | | 17,831 | | | $ | 205,660 | |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | |
Shares sold | | | 42,218 | | | $ | 483,916 | | | | | | 10,128 | | | $ | 106,086 | |
Shares issued in reinvestment of distributions | | | 2,413 | | | | 27,297 | | | | | | 539 | | | | 5,855 | |
Shares redeemed | | | (28,829 | ) | | | (328,178 | ) | | | | | (8,430 | ) | | | (91,101) | |
| | | | |
| | | | | |
Net increase (decrease) | | | 15,802 | | | $ | 183,035 | | | | | | 2,237 | | | $ | 20,840 | |
| | | | |
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F R A N K L I N F U N D A L L O C A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N T S (U N A U D I T E D)
2. Shares of Beneficial Interest (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart 2035 Retirement Target Fund | | | | | | Franklin LifeSmart 2040 Retirement Target Fund | |
| | | | |
| | | Shares | | | Amount | | | | | | Shares | | | Amount | |
| |
| | | | | |
| Class A Shares: | | | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 486,451 | | | $ | 6,073,010 | | | | | | | | 241,431 | | | $ | 2,859,263 | |
Shares issued in reinvestment of distributions | | | 31,401 | | | | 392,194 | | | | | | | | 8,130 | | | | 96,010 | |
Shares redeemed | | | (859,055 | ) | | | (10,727,806 | ) | | | | | | | (297,332 | ) | | | (3,529,340) | |
| | | | |
| | | | | |
Net increase (decrease) | | | (341,203 | ) | | $ | (4,262,602 | ) | | | | | | | (47,771 | ) | | $ | (574,067) | |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 1,227,250 | | | $ | 14,276,281 | | | | | | | | 685,758 | | | $ | 7,556,809 | |
Shares issued in reinvestment of distributions | | | 112,551 | | | | 1,289,236 | | | | | | | | 16,243 | | | | 177,333 | |
Shares redeemed | | | (1,122,898 | ) | | | (13,151,277 | ) | | | | | | | (261,414 | ) | | | (2,853,312) | |
| | | | |
| | | | | |
Net increase (decrease) | | | 216,903 | | | $ | 2,414,240 | | | | | | | | 440,587 | | | $ | 4,880,830 | |
| | | | |
| | | | | |
| Class C Shares: | | | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 173,734 | | | $ | 2,119,611 | | | | | | | | 53,957 | | | $ | 627,745 | |
Shares issued in reinvestment of distributions | | | 10,455 | | | | 127,654 | | | | | | | | 1,830 | | | | 21,286 | |
Shares redeemed | | | (230,737 | ) | | | (2,805,613 | ) | | | | | | | (29,821 | ) | | | (345,967) | |
| | | | |
| | | | | |
Net increase (decrease) | | | (46,548 | ) | | $ | (558,348 | ) | | | | | | | 25,966 | | | $ | 303,064 | |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 351,442 | | | $ | 3,984,942 | | | | | | | | 107,552 | | | $ | 1,157,854 | |
Shares issued in reinvestment of distributions | | | 25,834 | | | | 284,112 | | | | | | | | 3,167 | | | | 33,937 | |
Shares redeemed | | | (489,008 | ) | | | (5,505,225 | ) | | | | | | | (48,818 | ) | | | (527,692) | |
| | | | |
| | | | | |
Net increase (decrease) | | | (111,732 | ) | | $ | (1,236,171 | ) | | | | | | | 61,901 | | | $ | 664,099 | |
| | | | |
| | | | | |
| Class R Shares: | | | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 55,619 | | | $ | 692,079 | | | | | | | | 20,022 | | | $ | 233,388 | |
Shares issued in reinvestment of distributions | | | 2,966 | | | | 36,963 | | | | | | | | 1,403 | | | | 16,517 | |
Shares redeemed | | | (86,928 | ) | | | (1,080,305 | ) | | | | | | | (61,394 | ) | | | (719,378) | |
| | | | |
| | | | | |
Net increase (decrease) | | | (28,343 | ) | | $ | (351,263 | ) | | | | | | | (39,969 | ) | | $ | (469,473) | |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 256,085 | | | $ | 2,976,063 | | | | | | | | 171,432 | | | $ | 1,876,713 | |
Shares issued in reinvestment of distributions | | | 8,810 | | | | 100,647 | | | | | | | | 2,225 | | | | 24,311 | |
Shares redeemed | | | (149,803 | ) | | | (1,688,771 | ) | | | | | | | (69,062 | ) | | | (769,006) | |
| | | | |
| | | | | |
Net increase (decrease) | | | 115,092 | | | $ | 1,387,939 | | | | | | | | 104,595 | | | $ | 1,132,018 | |
| | | | |
| | | | | |
| Class R6 Shares: | | | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 158,982 | | | $ | 1,997,730 | | | | | | | | 125,975 | | | $ | 1,489,900 | |
Shares issued in reinvestment of distributions | | | 1,738 | | | | 21,863 | | | | | | | | 199 | | | | 2,367 | |
Shares redeemed | | | (146,890 | ) | | | (1,843,340 | ) | | | | | | | (78,248 | ) | | | (931,350) | |
| | | | |
| | | | | |
Net increase (decrease) | | | 13,830 | | | $ | 176,253 | | | | | | | | 47,926 | | | $ | 560,917 | |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 578,628 | | | $ | 6,817,030 | | | | | | | | 298,115 | | | $ | 3,268,049 | |
Shares issued in reinvestment of distributions | | | 5,645 | | | | 65,547 | | | | | | | | 280 | | | | 3,113 | |
Shares redeemed | | | (443,829 | ) | | | (5,223,404 | ) | | | | | | | (151,648 | ) | | | (1,667,572) | |
| | | | |
| | | | | |
Net increase (decrease) | | | 140,444 | | | $ | 1,659,173 | | | | | | | | 146,747 | | | $ | 1,603,590 | |
| | | | |
| | | | |
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F R A N K L I N F U N D A L L OC A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D )
| | | | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart 2035 Retirement Target Fund | | | | | | Franklin LifeSmart 2040 Retirement Target Fund | |
| | | | |
| | | Shares | | | Amount | | | | | | Shares | | | Amount | |
| |
| | | | | |
| Advisor Class Shares: | | | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 45,643 | | | $ | 589,685 | | | | | | | | 1,087 | | | $ | 12,917 | |
Shares issued in reinvestment of distributions | | | 685 | | | | 8,621 | | | | | | | | 91 | | | | 1,081 | |
Shares redeemed | | | (40,500 | ) | | | (512,899 | ) | | | | | | | (1,320 | ) | | | (15,495) | |
| | | | |
| | | | | |
Net increase (decrease) | | | 5,828 | | | $ | 85,407 | | | | | | | | (142 | ) | | $ | (1,497) | |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 33,208 | | | $ | 388,986 | | | | | | | | 4,243 | | | $ | 47,068 | |
Shares issued in reinvestment of distributions | | | 3,477 | | | | 40,189 | | | | | | | | 164 | | | | 1,798 | |
Shares redeemed | | | (60,441 | ) | | | (711,950 | ) | | | | | | | (2,830 | ) | | | (30,681) | |
| | | | |
| | | | | |
Net increase (decrease) | | | (23,756 | ) | | $ | (282,775 | ) | | | | | | | 1,577 | | | $ | 18,185 | |
| | | | |
| | | |
| | | Franklin LifeSmart 2045 Retirement Target Fund | | | | | | Franklin LifeSmart 2050 Retirement Target Fund | |
| | | | |
| | | Shares | | | Amount | | | | | | Shares | | | Amount | |
| |
| | | | | |
| Class A Shares: | | | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 397,224 | | | $ | 4,957,247 | | | | | | | | 235,972 | | | $ | 2,806,553 | |
Shares issued in reinvestment of distributions | | | 23,906 | | | | 299,066 | | | | | | | | 6,442 | | | | 76,788 | |
Shares redeemed | | | (792,565 | ) | | | (9,881,538 | ) | | | | | | | (225,673 | ) | | | (2,674,050) | |
| | | | |
| | | | | |
Net increase (decrease) | | | (371,435 | ) | | $ | (4,625,225 | ) | | | | | | | 16,741 | | | $ | 209,291 | |
| | | | |
| | | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 1,047,274 | | | $ | 12,170,415 | | | | | | | | 551,064 | | | $ | 6,086,355 | |
Shares issued in reinvestment of distributions | | | 80,144 | | | | 917,854 | | | | | | | | 13,818 | | | | 151,925 | |
Shares redeemed | | | (643,017 | ) | | | (7,495,555 | ) | | | | | | | (234,873 | ) | | | (2,557,210) | |
| | | | |
| | | | | |
Net increase (decrease) | | | 484,401 | | | $ | 5,592,714 | | | | | | | | 330,009 | | | $ | 3,681,070 | |
| | | | |
| | | | | |
| Class C Shares: | | | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 132,931 | | | $ | 1,616,114 | | | | | | | | 66,575 | | | $ | 789,421 | |
Shares issued in reinvestment of distributions | | | 6,438 | | | | 78,485 | | | | | | | | 1,765 | | | | 20,897 | |
Shares redeemed | | | (225,882 | ) | | | (2,745,581 | ) | | | | | | | (39,558 | ) | | | (465,629) | |
| | | | |
| | | | | |
Net increase (decrease) | | | (86,513 | ) | | $ | (1,050,982 | ) | | | | | | | 28,782 | | | $ | 344,689 | |
| | | | |
| | | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 318,196 | | | $ | 3,589,892 | | | | | | | | 116,007 | | | $ | 1,268,037 | |
Shares issued in reinvestment of distributions | | | 15,898 | | | | 173,952 | | | | | | | | 2,187 | | | | 23,313 | |
Shares redeemed | | | (370,873 | ) | | | (4,169,907 | ) | | | | | | | (53,715 | ) | | | (591,152) | |
| | | | |
| | | | | |
Net increase (decrease) | | | (36,779 | ) | | $ | (406,063 | ) | | | | | | | 64,479 | | | $ | 700,198 | |
| | | | |
| | | | | | |
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F R A N K L I N F U N D A L L O C A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D )
2. Shares of Beneficial Interest (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Franklin LifeSmart 2045 Retirement Target Fund | | | | | | Franklin LifeSmart 2050 Retirement Target Fund | |
| | | | |
| | | Shares | | | Amount | | | | | | Shares | | | Amount | |
| |
| | | | | |
| Class R Shares: | | | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 56,756 | | | $ | 703,376 | | | | | | | | 29,444 | | | $ | 351,794 | |
Shares issued in reinvestment of distributions | | | 2,543 | | | | 31,666 | | | | | | | | 899 | | | | 10,713 | |
Shares redeemed | | | (33,279 | ) | | | (415,422 | ) | | | | | | | (7,823 | ) | | | (92,634) | |
| | | | |
| | | | | |
Net increase (decrease) | | | 26,020 | | | $ | 319,620 | | | | | | | | 22,520 | | | $ | 269,873 | |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 152,373 | | | $ | 1,746,860 | | | | | | | | 55,187 | | | $ | 609,289 | |
Shares issued in reinvestment of distributions | | | 6,979 | | | | 79,240 | | | | | | | | 1,378 | | | | 15,064 | |
Shares redeemed | | | (132,301 | ) | | | (1,470,463 | ) | | | | | | | (15,822 | ) | | | (177,271) | |
| | | | |
| | | | | |
Net increase (decrease) | | | 27,051 | | | $ | 355,637 | | | | | | | | 40,743 | | | $ | 447,082 | |
| | | | |
| | | | | |
| Class R6 Shares: | | | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 113,047 | | | $ | 1,415,112 | | | | | | | | 105,369 | | | $ | 1,257,330 | |
Shares issued in reinvestment of distributions | | | 920 | | | | 11,596 | | | | | | | | 89 | | | | 1,072 | |
Shares redeemed | | | (75,430 | ) | | | (946,778 | ) | | | | | | | (56,618 | ) | | | (669,988) | |
| | | | |
| | | | | |
Net increase (decrease) | | | 38,537 | | | $ | 479,930 | | | | | | | | 48,840 | | | $ | 588,414 | |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 264,518 | | | $ | 3,069,422 | | | | | | | | 502,692 | | | $ | 5,535,624 | |
Shares issued in reinvestment of distributions | | | 3,207 | | | | 37,169 | | | | | | | | 200 | | | | 2,226 | |
Shares redeemed | | | (281,389 | ) | | | (3,324,633 | ) | | | | | | | (412,376 | ) | | | (4,674,474) | |
| | | | |
| | | | | |
Net increase (decrease) | | | (13,664 | ) | | $ | (218,042 | ) | | | | | | | 90,516 | | | $ | 863,376 | |
| | | | |
| | | | | |
| Advisor Class Shares: | | | | | | | | | | | | | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 15,431 | | | $ | 192,157 | | | | | | | | 2,282 | | | $ | 27,474 | |
Shares issued in reinvestment of distributions | | | 367 | | | | 4,623 | | | | | | | | 256 | | | | 3,067 | |
Shares redeemed | | | (4,475 | ) | | | (57,576 | ) | | | | | | | (789 | ) | | | (9,600) | |
| | | | |
| | | | | |
Net increase (decrease) | | | 11,323 | | | $ | 139,204 | | | | | | | | 1,749 | | | $ | 20,941 | |
| | | | |
Year ended December 31, 2016 | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 21,630 | | | $ | 248,772 | | | | | | | | 4,060 | | | $ | 45,309 | |
Shares issued in reinvestment of distributions | | | 1,148 | | | | 13,243 | | | | | | | | 653 | | | | 7,211 | |
Shares redeemed | | | (27,642 | ) | | | (329,313 | ) | | | | | | | (5,181 | ) | | | (58,654) | |
| | | | |
| | | | | |
Net increase (decrease) | | | (4,864 | ) | | $ | (67,298 | ) | | | | | | | (468 | ) | | $ | (6,134) | |
| | | | |
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F R A N K L I N F U N D A L L O C A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D )
| | | | | | | | |
| | | Franklin LifeSmart 2055
Retirement Target Fund | |
| | | Shares | | | Amount | |
| | |
| Class A Shares: | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | |
Shares sold | | | 95,118 | | | $ | 954,414 | |
Shares issued in reinvestment of distributions | | | 712 | | | | 7,143 | |
Shares redeemed | | | (25,140 | ) | | | (251,934) | |
| | | | |
| | |
Net increase (decrease) | | | 70,690 | | | $ | 709,623 | |
| | | | |
| | |
Year ended December 31, 2016 | | | | | | | | |
Shares sold | | | 167,691 | | | $ | 1,569,365 | |
Shares issued in reinvestment of distributions | | | 2,970 | | | | 27,647 | |
Shares redeemed | | | (76,729 | ) | | | (718,013) | |
| | | | |
| | |
Net increase (decrease) | | | 93,932 | | | $ | 878,999 | |
| | | | |
| | |
| Class C Shares: | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | |
Shares sold | | | 42,376 | | | $ | 420,369 | |
Shares issued in reinvestment of distributions | | | 224 | | | | 2,227 | |
Shares redeemed | | | (8,316 | ) | | | (82,726) | |
| | | | |
| | |
Net increase (decrease) | | | 34,284 | | | $ | 339,870 | |
| | | | |
| | |
Year ended December 31, 2016 | | | | | | | | |
Shares sold | | | 56,005 | | | $ | 514,754 | |
Shares issued in reinvestment of distributions | | | 585 | | | | 5,377 | |
Shares redeemed | | | (14,194 | ) | | | (124,031) | |
| | | �� | |
| | |
Net increase (decrease) | | | 42,396 | | | $ | 396,100 | |
| | | | |
| | |
| Class R Shares: | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | |
Shares sold. | | | 8,099 | | | $ | 81,369 | |
Shares issued in reinvestment of distributions | | | 92 | | | | 920 | |
Shares redeemed | | | (9,646 | ) | | | (94,549) | |
| | | | |
| | |
Net increase (decrease) | | | (1,455 | ) | | $ | (12,260) | |
| | | | |
| | |
Year ended December 31, 2016 | | | | | | | | |
Shares sold | | | 35,820 | | | $ | 330,982 | |
Shares issued in reinvestment of distributions | | | 457 | | | | 4,253 | |
Shares redeemed | | | (2,833 | ) | | | (26,780) | |
| | | | |
| | |
Net increase (decrease) | | | 33,444 | | | $ | 308,455 | |
| | | | |
| | |
| Class R6 Shares: | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | |
Shares sold | | | 63,615 | | | $ | 637,461 | |
Shares issued in reinvestment of distributions | | | 67 | | | | 670 | |
Shares redeemed | | | (7,636 | ) | | | (76,427) | |
| | | | |
| | |
Net increase (decrease) | | | 56,046 | | | $ | 561,704 | |
| | | | |
| | |
Year ended December 31, 2016 | | | | | | | | |
Shares sold | | | 185,229 | | | $ | 1,752,259 | |
Shares issued in reinvestment of distributions | | | 340 | | | | 3,178 | |
Shares redeemed | | | (24,754 | ) | | | (234,731) | |
| | | | |
| | |
Net increase (decrease) | | | 160,815 | | | $ | 1,520,706 | |
| | | | |
| | | | | | |
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F R A N K L I N F U N D A L L O C A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D )
2. Shares of Beneficial Interest (continued)
| | | | | | | | |
| | | Franklin LifeSmart 2055
Retirement Target Fund | |
| | | Shares | | | Amount | |
| | |
| Advisor Class Shares: | | | | | | | | |
Six Months ended June 30, 2017 | | | | | | | | |
Shares sold | | | 1,701 | | | $ | 16,975 | |
Shares issued in reinvestment of distributions | | | 5 | | | | 55 | |
Shares redeemed | | | (80 | ) | | | (791) | |
| | | | |
| | |
Net increase (decrease) | | | 1,626 | | | $ | 16,239 | |
| | | | |
| | |
Year ended December 31, 2016 | | | | | | | | |
Shares sold | | | 236 | | | $ | 2,172 | |
Shares issued in reinvestment of distributions | | | 6 | | | | 55 | |
Shares redeemed | | | (45 | ) | | | (419) | |
| | | | |
| | |
Net increase (decrease) | | | 197 | | | $ | 1,808 | |
| | | | |
3. Transactions with Affiliates
Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Funds are also officers and/or directors/trustees of certain of the FT Underlying Funds and of the following subsidiaries:
| | |
| Subsidiary | | Affiliation |
Franklin Advisers, Inc. (Advisers) | | Investment manager |
Franklin Templeton Services, LLC (FT Services) | | Administrative manager |
Franklin Templeton Distributors, Inc. (Distributors) | | Principal underwriter |
Franklin Templeton Investor Services, LLC (Investor Services) | | Transfer agent |
a. Management and Asset Allocation Fees
The Funds, except Franklin LifeSmart Retirement Income Fund, pay an asset allocation fee to Advisers of 0.25% per year of the average daily net assets of each of the Funds for investment advisory services, consisting principally of determining the allocation of assets of the Funds among the Underlying Funds and ETFs.
Franklin LifeSmart Retirement Income Fund pays an investment management fee to Advisers of 0.25% per year of the average daily net assets of the fund.
b. Administrative Fees
Under an agreement with Advisers, FT Services provides administrative services to the Funds and is not paid by the Funds for the services.
c. Distribution Fees
The Board has adopted distribution plans for each share class, with the exception of Class R6 and Advisor Class shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Funds’ Class A reimbursement distribution plans, the Funds reimburse Distributors for costs incurred in connection with the servicing, sale and distribution of each Fund’s shares up to the maximum annual plan rate for each class. Under the Class A reimbursement distribution plans, costs exceeding the maximum for the current plan year cannot be reimbursed in subsequent periods. In addition, under the Funds’ Class C and R compensation distribution plans, the Funds pay
| | | | |
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F R A N K L I N F U N D A L L O C A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D )
Distributors for costs incurred in connection with the servicing, sale and distribution of each Fund’s shares up to the maximum annual plan rate for each class. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31 for each Fund.
The maximum annual plan rates, based on the average daily net assets, for each class, are as follows:
| | | | |
Class A | | | 0.35 | % |
Class C | | | 1.00 | % |
Class R | | | 0.50 | % |
The Board has set the current rate at 0.25% per year for Class A shares until further notice and approval by the Board.
d. Sales Charges/Underwriting Agreements
Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Funds. These charges are deducted from the proceeds of sales of fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Funds of the following commission transactions related to the sales and redemptions of the Funds’ shares for the period:
| | | | | | | | | | | | |
| | | Franklin
LifeSmart
Retirement
Income Fund | | | Franklin
LifeSmart
2020 Retirement
Target Fund | | | Franklin
LifeSmart
2025 Retirement
Target Fund | |
| |
Sales charges retained net of commissions paid to unaffiliated brokers/dealers | | | $9,077 | | | | $6,117 | | | | $24,563 | |
CDSC retained | | | $1,118 | | | | $ 421 | | | | $ 2,483 | |
| | | |
| | | Franklin
LifeSmart
2030 Retirement
Target Fund | | | Franklin
LifeSmart 2035 Retirement Target Fund | | | Franklin LifeSmart 2040 Retirement Target Fund | |
| |
Sales charges retained net of commissions paid to unaffiliated brokers/dealers | | | $12,292 | | | | $21,413 | | | | $9,572 | |
CDSC retained | | | $ 742 | | | | $ 1,510 | | | | $ 721 | |
| | | |
| | | Franklin
LifeSmart 2045 Retirement Target Fund | | | Franklin LifeSmart 2050 Retirement Target Fund | | | Franklin LifeSmart 2055 Retirement Target Fund | |
| |
Sales charges retained net of commissions paid to unaffiliated brokers/dealers | | | $19,790 | | | | $8,888 | | | | $4,970 | |
CDSC retained | | | $ 3,183 | | | | $1,101 | | | | $ 267 | |
e. Transfer Agent Fees
Each class of shares, except for Class R6, pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations and reimburses Investor Services for out of pocket expenses incurred, including shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.
| | | | | | |
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F R A N K L I N F U N D A L L O C A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D )
3. Transactions with Affiliates (continued)
e. Transfer Agent Fees (continued)
For the period ended June 30, 2017, the Funds paid transfer agent fees as noted in the Statements of Operations of which the following amounts were retained by Investor Services:
| | | | | | | | | | | | |
| | | Franklin
LifeSmart
Retirement
Income Fund | | | Franklin
LifeSmart
2020 Retirement
Target Fund | | | Franklin
LifeSmart
2025 Retirement
Target Fund | |
| |
Transfer agent fees | | | $19,328 | | | | $10,147 | | | | $41,944 | |
| | | |
| | | Franklin
LifeSmart
2030 Retirement
Target Fund | | | Franklin
LifeSmart
2035 Retirement
Target Fund | | | Franklin
LifeSmart
2040 Retirement
Target Fund | |
| |
Transfer agent fees | | | $14,410 | | | | $43,166 | | | | $14,264 | |
| | | |
| | | Franklin
LifeSmart
2045 Retirement
Target Fund | | | Franklin
LifeSmart
2050 Retirement
Target Fund | | | Franklin
LifeSmart
2055 Retirement
Target Fund | |
| |
Transfer agent fees | | | $49,503 | | | | $21,627 | | | | $10,444 | |
f. Investments in FT Underlying Funds
The Funds invest in FT Underlying Funds which are managed by Advisers (or an affiliate of Advisers). The Funds do not invest in FT Underlying Funds for the purpose of exercising a controlling influence over the management or policies. Management and asset allocation fees paid by the Funds are waived on assets invested in Institutional Fiduciary Trust Money Market Portfolio (Sweep Money Fund), as noted in the Statements of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund. Prior to January 1, 2014, the waiver was accounted for as a reduction to asset allocation fees.
Investments in FT Underlying Funds for the period ended June 30, 2017, were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FT Underlying Funds | | Number of Shares Held at Beginning of Period | | | Gross Additions | | | Gross Reductions | | | Number of
Shares Held at End of Period | | | Value at End of Period | | | Investment Income | | | Realized Gain (Loss) | | | % of FT Underlying
Fund Shares
Outstanding
Held at End of Period | |
| | | | | | | | |
| Franklin LifeSmart Retirement Income Fund | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-Controlled Affiliates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Franklin Floating Rate Daily Access Fund, Class R6 | | | 1,884,664 | | | | 80,508 | | | | (297,460 | ) | | | 1,667,712 | | | $ | 14,775,933 | | | $ | 271,896 | | | $ | 12,800 | | | | 0.4 | % |
Franklin Income Fund, Class R6 | | | 5,166,874 | | | | 178,657 | | | | (704,395 | ) | | | 4,641,136 | | | | 10,767,435 | | | | 302,095 | | | | 50,534 | | | | –a | |
Franklin Strategic Income Fund, Class R6 | | | 622,444 | | | | 78,959 | | | | (105,442 | ) | | | 595,961 | | | | 5,870,212 | | | | 60,637 | | | | 29,133 | | | | 0.1 | % |
Franklin U.S. Government Securities Fund, Class R6 | | | 2,398,566 | | | | 102,732 | | | | (325,886 | ) | | | 2,175,412 | | | | 13,378,782 | | | | 234,823 | | | | (62,515) | | | | 0.2 | % |
Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 15 | | | | 6,890,942 | | | | (6,638,854 | ) | | | 252,103 | | | | 252,103 | | | | 390 | | | | — | | |
| —a
|
|
Templeton Global Total Return Fund, Class R6 | | | 239,735 | | | | 10,398 | | | | (32,620 | ) | | | 217,513 | | | | 2,677,591 | | | | 48,786 | | | | 18,871 | | |
| —a
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | $ | 47,722,056 | | | $ | 918,627 | | | $ | 48,823 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
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F R A N K L I N F U N D A L L O C A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D )
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FT Underlying Funds | | Number of Shares Held at Beginning of Period | | | Gross Additions | | | Gross Reductions | | | Number of
Shares Held at End of Period | | | Value at End of Period | | | Investment Income | | | Realized Gain (Loss) | | | % of FT Underlying
Fund Shares
Outstanding
Held at End of Period | |
| | | | | | | | |
| Franklin LifeSmart 2020 Retirement Target Fund | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-Controlled Affiliates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Franklin Floating Rate Daily Access Fund, Class R6 | | | — | | | | 118,174 | | | | (7,581 | ) | | | 110,593 | | | $ | 979,854 | | | $ | 10,037 | | | $ | (136) | | | | —a | |
Franklin Focused Core Equity Fund, Class R6 | | | 71,450 | | | | 5,090 | | | | (76,540 | ) | | | — | | | | —b | | | | — | | | | 94,388 | | | | — | |
Franklin Growth Fund, Class R6 | | | 48,806 | | | | 4,914 | | | | (8,243 | ) | | | 45,477 | | | | 3,966,984 | | | | — | | | | 12,937 | | | | —a | |
Franklin Growth Opportunities Fund, Class R6 | | | 43,927 | | | | 4,430 | | | | (7,433 | ) | | | 40,924 | | | | 1,560,821 | | | | — | | | | 3,179 | | | | —a | |
Franklin India Growth Fund, Class R6 | | | 50,406 | | | | 5,707 | | | | (8,567 | ) | | | 47,546 | | | | 722,701 | | | | — | | | | (515) | | | | 0.4 | % |
Franklin International Small Cap Growth Fund, Class R6 | | | 73,900 | | | | 7,433 | | | | (12,321 | ) | | | 69,012 | | | | 1,378,163 | | | | — | | | | (9,263) | | | | 0.1 | % |
Franklin K2 Alternative Strategies Fund, Class R6 | | | 90,400 | | | | 10,611 | | | | (5,302 | ) | | | 95,709 | | | | 1,072,898 | | | | — | | | | 406 | | | | 0.1 | % |
Franklin K2 Long Short Credit Fund, Class R6 | | | 97,573 | | | | 11,499 | | | | (5,651 | ) | | | 103,421 | | | | 1,089,024 | | | | — | | | | 304 | | | | 1.4 | % |
Franklin LibertyQ Emerging Markets ETF | | | 46,200 | | | | 4,600 | | | | (8,600 | ) | | | 42,200 | | | | 1,266,844 | | | | 12,120 | | | | 5,425 | | | | 0.4 | % |
Franklin LibertyQ U.S. Equity ETF | | | — | | | | 40,100 | | | | (200 | ) | | | 39,900 | | | | 1,028,622 | | | | 269 | | | | 37 | | | | 0.9 | % |
Franklin Low Duration Total Return Fund, Class R6 | | | 482,134 | | | | 329,790 | | | | (57,726 | ) | | | 754,198 | | | | 7,466,556 | | | | 60,466 | | | | (9,538) | | | | 0.3 | % |
Franklin Mutual International Fund, Class R6 | | | 56,683 | | | | 5,707 | | | | (9,597 | ) | | | 52,793 | | | | 823,568 | | | | — | | | | 655 | | | | 0.4 | % |
Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 104,776 | | | | 12,357 | | | | (5,862 | ) | | | 111,271 | | | | 690,995 | | | | — | | | | (931) | | | | 0.5 | % |
Franklin Rising Dividends Fund, Class R6 | | | 41,021 | | | | 3,615 | | | | (15,844 | ) | | | 28,792 | | | | 1,624,179 | | | | 5,809 | | | | 44,152 | | | | —a | |
Franklin Small Cap Growth Fund, Class R6 | | | 25,385 | | | | 2,549 | | | | (4,241 | ) | | | 23,693 | | | | 507,502 | | | | — | | | | 1,198 | | | | —a | |
Franklin Strategic Income Fund, Class R6 | | | 173,601 | | | | 35,312 | | | | (109,982 | ) | | | 98,931 | | | | 974,473 | | | | 13,083 | | | | 3,613 | | | | —a | |
Franklin U.S. Government Securities Fund, Class R6 | | | 381,149 | | | | 78,797 | | | | (241,340 | ) | | | 218,606 | | | | 1,344,428 | | | | 25,815 | | | | (43,853) | | | | —a | |
Franklin Utilities Fund, Class R6 | | | 38,257 | | | | 4,375 | | | | (6,322 | ) | | | 36,310 | | | | 687,709 | | | | 9,307 | | | | 2,945 | | | | —a | |
Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 190,417 | | | | 7,155,351 | | | | (6,771,699 | ) | | | 574,069 | | | | 574,069 | | | | 424 | | | | — | | | | —a | |
Templeton Foreign Fund, Class R6 | | | 146,086 | | | | 14,720 | | | | (24,649 | ) | | | 136,157 | | | | 1,041,604 | | | | — | | | | 4,086 | | | | —a | |
Templeton Global Total Return Fund, Class R6 | | | 195,805 | | | | 173,492 | | | | (29,683 | ) | | | 339,614 | | | | 4,180,643 | | | | 63,738 | | | | 1,589 | | | | 0.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | $ | 32,981,637 | | | $ | 201,068 | | | $ | 110,678 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| Franklin LifeSmart 2025 Retirement Target Fund | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-Controlled Affiliates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Franklin Floating Rate Daily Access Fund, Class R6 | | | — | | | | 231,108 | | | | (8,432 | ) | | | 222,676 | | | $ | 1,972,907 | | | $ | 20,843 | | | $ | (115) | | | | 0.1 | % |
Franklin Focused Core Equity Fund, Class R6 | | | 310,586 | | | | 4,350 | | | | (314,936 | ) | | | — | | | | —b | | | | — | | | | 364,563 | | | | — | |
Franklin Growth Fund, Class R6 | | | 222,262 | | | | 3,182 | | | | (23,720 | ) | | | 201,724 | | | | 17,596,359 | | | | — | | | | 84,928 | | | | 0.1 | % |
Franklin Growth Opportunities Fund, Class R6 | | | 196,335 | | | | 2,810 | | | | (21,005 | ) | | | 178,140 | | | | 6,794,277 | | | | — | | | | 28,185 | | | | 0.2 | % |
Franklin India Growth Fund, Class R6 | | | 236,461 | | | | 3,316 | | | | (25,149 | ) | | | 214,628 | | | | 3,262,348 | | | | — | | | | 4,463 | | | | 2.0 | % |
Franklin International Small Cap Growth Fund, Class R6 | | | 341,435 | | | | 4,883 | | | | (36,433 | ) | | | 309,885 | | | | 6,188,401 | | | | — | | | | (4,397) | | | | 0.4 | % |
Franklin K2 Alternative Strategies Fund, Class R6 | | | 322,782 | | | | 9,080 | | | | (13,144 | ) | | | 318,718 | | | | 3,572,834 | | | | — | | | | 2,629 | | | | 0.3 | % |
Franklin K2 Long Short Credit Fund, Class R6 | | | 347,486 | | | | 9,772 | | | | (14,294 | ) | | | 342,964 | | | | 3,611,413 | | | | — | | | | 1,022 | | | | 4.5 | % |
Franklin LibertyQ Emerging Markets ETF | | | 230,100 | | | | 3,200 | | | | (25,800 | ) | | | 207,500 | | | | 6,229,150 | | | | 60,020 | | | | 27,627 | | | | 1.9 | % |
Franklin LibertyQ U.S. Equity ETF | | | — | | | | 171,600 | | | | (2,800 | ) | | | 168,800 | | | | 4,351,664 | | | | 1,143 | | | | 233 | | | | 3.8 | % |
Franklin Low Duration Total Return Fund, Class R6 | | | 1,135,007 | | | | 607,996 | | | | (115,937 | ) | | | 1,627,066 | | | | 16,107,958 | | | | 133,806 | | | | (31,043) | | | | 0.6 | % |
Franklin Mutual International Fund, Class R6 | | | 257,590 | | | | 3,601 | | | | (27,373 | ) | | | 233,818 | | | | 3,647,566 | | | | — | | | | (32,978) | | | | 1.9 | % |
Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 384,794 | | | | 10,854 | | | | (15,929 | ) | | | 379,719 | | | | 2,358,052 | | | | — | | | | (1,131) | | | | 1.9 | % |
| | | | | | |
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F R A N K L I N F U N D A L L O C A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D )
3. Transactions with Affiliates (continued)
f. Investments in FT Underlying Funds (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FT Underlying Funds | | Number of Shares Held at Beginning of Period | | | Gross Additions | | | Gross Reductions | | | Number of
Shares Held at End of Period | | | Value at End of Period | | | Investment Income | | | Realized Gain (Loss) | | | % of FT Underlying
Fund Shares
Outstanding
Held at End of Period | |
| | | | | | | | |
| Franklin LifeSmart 2025 Retirement Target Fund (continued) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-Controlled Affiliates (continued) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Franklin Rising Dividends Fund, Class R6 | | | 191,281 | | | | 2,951 | | | | (63,794 | ) | | | 130,438 | | | $ | 7,358,003 | | | $ | 27,066 | | | $ | 215,156 | | | | —a | |
Franklin Small Cap Growth Fund, Class R6 | | | 139,063 | | | | 1,994 | | | | (14,914 | ) | | | 126,143 | | | | 2,701,987 | | | | — | | | | 26,188 | | | | 0.1 | % |
Franklin Strategic Income Fund, Class R6 | | | 390,110 | | | | 43,823 | | | | (234,069 | ) | | | 199,864 | | | | 1,968,665 | | | | 27,356 | | | | (119,259) | | | | —a | |
Franklin U.S. Government Securities Fund, Class R6 | | | 931,341 | | | | 107,955 | | | | (548,847 | ) | | | 490,449 | | | | 3,016,259 | | | | 59,737 | | | | (100,940) | | | | 0.1 | % |
Franklin Utilities Fund, Class R6 | | | 175,188 | | | | 4,703 | | | | (18,838 | ) | | | 161,053 | | | | 3,050,346 | | | | 42,458 | | | | 14,823 | | | | —a | |
Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 722,986 | | | | 16,092,437 | | | | (16,168,082 | ) | | | 647,342 | | | | 647,342 | | | | 1,028 | | | | — | | | | —a | |
Templeton Foreign Fund, Class R6 | | | 616,488 | | | | 8,626 | | | | (65,885 | ) | | | 559,229 | | | | 4,278,099 | | | | — | | | | 38,033 | | | | 0.1 | % |
Templeton Global Total Return Fund, Class R6 | | | 462,110 | | | | 312,541 | | | | (57,442 | ) | | | 717,209 | | | | 8,828,837 | | | | 139,915 | | | | 442 | | | | 0.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | $ | 107,542,467 | | | $ | 513,372 | | | $ | 518,429 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| Franklin LifeSmart 2030 Retirement Target Fund | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-Controlled Affiliates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Franklin Floating Rate Daily Access Fund, Class R6 | | | — | | | | 58,908 | | | | (881 | ) | | | 58,027 | | | $ | 514,118 | | | $ | 5,217 | | | $ | (9) | | | | —a | |
Franklin Focused Core Equity Fund, Class R6 | | | 100,655 | | | | 5,311 | | | | (105,966 | ) | | | — | | | | —b | | | | — | | | | 135,149 | | | | — | |
Franklin Growth Fund, Class R6 | | | 72,816 | | | | 4,596 | | | | (2,006 | ) | | | 75,406 | | | | 6,577,707 | | | | — | | | | 2,775 | | | | —a | |
Franklin Growth Opportunities Fund, Class R6 | | | 66,763 | | | | 3,938 | | | | (6,313 | ) | | | 64,388 | | | | 2,455,746 | | | | — | | | | 6,901 | | | | 0.1 | % |
Franklin India Growth Fund, Class R6 | | | 85,606 | | | | 5,401 | | | | (2,233 | ) | | | 88,774 | | | | 1,349,367 | | | | — | | | | 883 | | | | 0.8 | % |
Franklin International Small Cap Growth Fund, Class R6 | | | 134,599 | | | | 8,464 | | | | (3,338 | ) | | | 139,725 | | | | 2,790,301 | | | | — | | | | (3,690) | | | | 0.2 | % |
Franklin K2 Alternative Strategies Fund, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Class R6 | | | 99,662 | | | | 13,114 | | | | (2,660 | ) | | | 110,116 | | | | 1,234,400 | | | | — | | | | (18) | | | | 0.1 | % |
Franklin K2 Long Short Credit Fund, Class R6 | | | 109,077 | | | | 14,374 | | | | (2,911 | ) | | | 120,540 | | | | 1,269,281 | | | | — | | | | (252) | | | | 1.6 | % |
Franklin LibertyQ Emerging Markets ETF | | | 78,100 | | | | 5,100 | | | | (2,300 | ) | | | 80,900 | | | | 2,428,618 | | | | 23,169 | | | | 1,289 | | | | 0.7 | % |
Franklin LibertyQ U.S. Equity ETF | | | — | | | | 62,400 | | | | — | | | | 62,400 | | | | 1,608,672 | | | | 418 | | | | — | | | | 1.4 | % |
Franklin Low Duration Total Return Fund, Class R6 | | | 270,854 | | | | 141,112 | | | | (12,008 | ) | | | 399,958 | | | | 3,959,581 | | | | 31,652 | | | | (2,991) | | | | 0.2 | % |
Franklin Mutual International Fund, Class R6 | | | 88,600 | | | | 5,546 | | | | (2,438 | ) | | | 91,708 | | | | 1,430,649 | | | | — | | | | (2,142) | | | | 0.7 | % |
Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 109,178 | | | | 14,421 | | | | (2,738 | ) | | | 120,861 | | | | 750,548 | | | | — | | | | (481) | | | | 0.6 | % |
Franklin Rising Dividends Fund, Class R6 | | | 63,789 | | | | 3,361 | | | | (17,390 | ) | | | 49,760 | | | | 2,806,969 | | | | 9,805 | | | | 45,633 | | | | —a | |
Franklin Small Cap Growth Fund, Class R6 | | | 54,396 | | | | 3,431 | | | | (1,350 | ) | | | 56,477 | | | | 1,209,730 | | | | — | | | | 117 | | | | —a | |
Franklin Strategic Income Fund, Class R6 | | | 95,407 | | | | 8,472 | | | | (51,954 | ) | | | 51,925 | | | | 511,463 | | | | 6,716 | | | | (8,448) | | | | —a | |
Franklin U.S. Government Securities Fund, Class R6 | | | 224,100 | | | | 19,909 | | | | (117,958 | ) | | | 126,051 | | | | 775,214 | | | | 14,438 | | | | (21,466) | | | | —a | |
Franklin Utilities Fund, Class R6 | | | 61,409 | | | | 4,734 | | | | (1,594 | ) | | | 64,549 | | | | 1,222,568 | | | | 16,179 | | | | 71 | | | | —a | |
Institutional Fiduciary Trust Money Market | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio, 0.58% | | | 61,193 | | | | 6,490,501 | | | | (6,350,420 | ) | | | 201,274 | | | | 201,274 | | | | 461 | | | | — | | | | —a | |
Templeton Foreign Fund, Class R6 | | | 181,114 | | | | 11,425 | | | | (4,515 | ) | | | 188,024 | | | | 1,438,387 | | | | — | | | | 611 | | | | —a | |
Templeton Global Total Return Fund, Class R6 | | | 109,721 | | | | 76,797 | | | | (5,592 | ) | | | 180,926 | | | | 2,227,200 | | | | 33,377 | | | | 83 | | | | —a | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | $ | 36,761,793 | | | $ | 141,432 | | | $ | 154,015 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
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F R A N K L I N F U N D A L L O C A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FT Underlying Funds | | Number of Shares Held at Beginning of Period | | | Gross Additions | | | Gross Reductions | | | Number of
Shares Held at End of Period | | | Value at End of Period | | | Investment Income | | | Realized Gain (Loss) | | | % of FT Underlying
Fund Shares
Outstanding
Held at End of Period | |
| | | | | | | | |
| Franklin LifeSmart 2035 Retirement Target Fund | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-Controlled Affiliates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Franklin Floating Rate Daily Access Fund, Class R6 | | | — | | | | 108,284 | | | | (4,422 | ) | | | 103,862 | | | $ | 920,224 | | | $ | 9,616 | | | $ | (75) | | | | —a | |
Franklin Focused Core Equity Fund, Class R6 | | | 307,928 | | | | 1,090 | | | | (309,018 | ) | | | — | | | | —b | | | | — | | | | 314,947 | | | | — | |
Franklin Growth Fund, Class R6 | | | 216,137 | | | | 1,111 | | | | (14,966 | ) | | | 202,282 | | | | 17,645,056 | | | | — | | | | 61,956 | | | | 0.1 | % |
Franklin Growth Opportunities Fund, Class R6 | | | 218,186 | | | | 1,122 | | | | (15,104 | ) | | | 204,204 | | | | 7,788,331 | | | | — | | | | 51,290 | | | | 0.2 | % |
Franklin India Growth Fund, Class R6 | | | 231,375 | | | | 1,193 | | | | (15,671 | ) | | | 216,897 | | | | 3,296,828 | | | | — | | | | 12,771 | | | | 2.0 | % |
Franklin International Small Cap Growth Fund, Class R6 | | | 421,648 | | | | 2,133 | | | | (28,967 | ) | | | 394,814 | | | | 7,884,442 | | | | — | | | | (2,005) | | | | 0.6 | % |
Franklin K2 Alternative Strategies Fund, Class R6 | | | 276,640 | | | | 14,459 | | | | (12,826 | ) | | | 278,273 | | | | 3,119,439 | | | | — | | | | 846 | | | | 0.3 | % |
Franklin K2 Long Short Credit Fund, Class R6 | | | 299,300 | | | | 15,646 | | | | (13,785 | ) | | | 301,161 | | | | 3,171,231 | | | | — | | | | 703 | | | | 3.9 | % |
Franklin LibertyQ Emerging Markets ETF | | | 215,500 | | | | 1,100 | | | | (16,100 | ) | | | 200,500 | | | | 6,019,010 | | | | 57,909 | | | | 28,930 | | | | 1.9 | % |
Franklin LibertyQ U.S. Equity ETF | | | — | | | | 175,100 | | | | (2,400 | ) | | | 172,700 | | | | 4,452,206 | | | | 1,167 | | | | 175 | | | | 3.9 | % |
Franklin Low Duration Total Return Fund, Class R6 | | | 548,374 | | | | 277,288 | | | | (60,735 | ) | | | 764,927 | | | | 7,572,776 | | | | 62,153 | | | | (14,876) | | | | 0.3 | % |
Franklin Mutual International Fund, Class R6 | | | 301,451 | | | | 1,539 | | | | (20,439 | ) | | | 282,551 | | | | 4,407,799 | | | | — | | | | (19,086) | | | | 2.3 | % |
Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 314,820 | | | | 16,537 | | | | (14,497 | ) | | | 316,860 | | | | 1,967,699 | | | | — | | | | (1,440) | | | | 1.5 | % |
Franklin Rising Dividends Fund, Class R6 | | | 176,199 | | | | 1,160 | | | | (53,058 | ) | | | 124,301 | | | | 7,011,810 | | | | 26,148 | | | | 158,738 | | | | —a | |
Franklin Small Cap Growth Fund, Class R6 | | | 130,369 | | | | 671 | | | | (8,943 | ) | | | 122,097 | | | | 2,615,317 | | | | — | | | | 10,173 | | | | 0.1 | % |
Franklin Strategic Income Fund, Class R6 | | | 184,001 | | | | 14,423 | | | | (108,193 | ) | | | 90,231 | | | | 888,776 | | | | 12,237 | | | | (40,529) | | | | —a | |
Franklin U.S. Government Securities Fund, Class R6 | | | 493,378 | | | | 36,816 | | | | (269,344 | ) | | | 260,850 | | | | 1,604,226 | | | | 31,057 | | | | (49,607) | | | | —a | |
Franklin Utilities Fund, Class R6 | | | 166,994 | | | | 3,055 | | | | (11,500 | ) | | | 158,549 | | | | 3,002,920 | | | | 41,607 | | | | 11,388 | | | | —a | |
Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 376,115 | | | | 13,863,871 | | | | (13,401,128 | ) | | | 838,858 | | | | 838,858 | | | | 913 | | | | — | | | | —a | |
Templeton Foreign Fund, Class R6 | | | 622,852 | | | | 3,169 | | | | (41,937 | ) | | | 584,084 | | | | 4,468,241 | | | | — | | | | 20,666 | | | | 0.1 | % |
Templeton Global Total Return Fund, Class R6 | | | 233,322 | | | | 146,750 | | | | (30,163 | ) | | | 349,909 | | | | 4,307,379 | | | | 67,446 | | | | 1,101 | | | | 0.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | $ | 92,982,568 | | | $ | 310,253 | | | $ | 546,066 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| Franklin LifeSmart 2040 Retirement Target Fund | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-Controlled Affiliates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Franklin Floating Rate Daily Access Fund, Class R6 | | | — | | | | 30,171 | | | | (1,557 | ) | | | 28,614 | | | $ | 253,521 | | | $ | 2,632 | | | $ | (29) | | | | —a | |
Franklin Focused Core Equity Fund, Class R6 | | | 99,364 | | | | 4,593 | | | | (103,957 | ) | | | — | | | | —b | | | | — | | | | 126,302 | | | | — | |
Franklin Growth Fund, Class R6 | | | 67,717 | | | | 3,698 | | | | (4,457 | ) | | | 66,958 | | | | 5,840,737 | | | | — | | | | 11,779 | | | | —a | |
Franklin Growth Opportunities Fund, Class R6 | | | 70,803 | | | | 3,865 | | | | (4,667 | ) | | | 70,001 | | | | 2,669,827 | | | | — | | | | 7,578 | | | | 0.1 | % |
Franklin India Growth Fund, Class R6 | | | 76,925 | | | | 4,181 | | | | (5,011 | ) | | | 76,095 | | | | 1,156,637 | | | | — | | | | 2,435 | | | | 0.7 | % |
Franklin International Small Cap Growth Fund, Class R6 | | | 134,099 | | | | 7,355 | | | | (8,982 | ) | | | 132,472 | | | | 2,645,465 | | | | — | | | | (10,202) | | | | 0.2 | % |
Franklin K2 Alternative Strategies Fund, Class R6 | | | 84,269 | | | | 9,654 | | | | (4,764 | ) | | | 89,159 | | | | 999,475 | | | | — | | | | 230 | | | | 0.1 | % |
Franklin K2 Long Short Credit Fund, Class R6 | | | 92,199 | | | | 10,592 | | | | (5,368 | ) | | | 97,423 | | | | 1,025,867 | | | | — | | | | (609) | | | | 1.3 | % |
Franklin LibertyQ Emerging Markets ETF | | | 67,200 | | | | 3,800 | | | | (5,600 | ) | | | 65,400 | | | | 1,963,308 | | | | 18,888 | | | | 5,582 | | | | 0.6 | % |
Franklin LibertyQ U.S. Equity ETF | | | — | | | | 58,900 | | | | (600 | ) | | | 58,300 | | | | 1,502,974 | | | | 395 | | | | 43 | | | | 1.3 | % |
Franklin Low Duration Total Return Fund, Class R6 | | | 146,850 | | | | 76,915 | | | | (17,421 | ) | | | 206,344 | | | | 2,042,802 | | | | 16,425 | | | | (1,004) | | | | 0.1 | % |
Franklin Mutual International Fund, Class R6 | | | 95,684 | | | | 5,166 | | | | (6,295 | ) | | | 94,555 | | | | 1,475,061 | | | | — | | | | (5,869) | | | | 0.8 | % |
Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 91,571 | | | | 10,498 | | | | (5,297 | ) | | | 96,772 | | | | 600,954 | | | | — | | | | (1,151) | | | | 0.5 | % |
| | | | | | |
| franklintempleton.com | | Semiannual Report | | | 133 | |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D)
3. Transactions with Affiliates (continued)
f. Investments in FT Underlying Funds (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FT Underlying Funds | | Number of Shares Held at Beginning of Period | | | Gross Additions | | | Gross Reductions | | | Number of
Shares Held at End of Period | | | Value at End of Period | | | Investment Income | | | Realized Gain (Loss) | | | % of FT Underlying
Fund Shares
Outstanding
Held at End of Period | |
| | | | | | | | |
| Franklin LifeSmart 2040 Retirement Target Fund (continued) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-Controlled Affiliates (continued) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Franklin Rising Dividends Fund, Class R6 | | | 54,989 | | | | 2,723 | | | | (16,742 | ) | | | 40,970 | | | $ | 2,311,124 | | | $ | 8,497 | | | $ | 33,284 | | | | —a | |
Franklin Small Cap Growth Fund, Class R6 | | | 41,829 | | | | 2,301 | | | | (2,740 | ) | | | 41,390 | | | | 886,580 | | | | — | | | | 757 | | | | —a | |
Franklin Strategic Income Fund, Class R6 | | | 50,488 | | | | 3,435 | | | | (29,240 | ) | | | 24,683 | | | | 243,130 | | | | 3,304 | | | | 7,126 | | | | —a | |
Franklin U.S. Government Securities Fund, Class R6 | | | 137,788 | | | | 9,389 | | | | (65,803 | ) | | | 81,374 | | | | 500,448 | | | | 9,266 | | | | (12,181) | | | | —a | |
Franklin Utilities Fund, Class R6 | | | 52,313 | | | | 3,615 | | | | (3,360 | ) | | | 52,568 | | | | 995,636 | | | | 13,613 | | | | 1,317 | | | | —a | |
Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 183,134 | | | | 5,551,528 | | | | (5,587,113 | ) | | | 147,549 | | | | 147,549 | | | | 343 | | | | — | | | | —a | |
Templeton Foreign Fund, Class R6 | | | 184,504 | | | | 10,017 | | | | (12,133 | ) | | | 182,388 | | | | 1,395,271 | | | | — | | | | 2,400 | | | | —a | |
Templeton Global Total Return Fund, Class R6 | | | 56,988 | | | | 36,573 | | | | (7,966 | ) | | | 85,595 | | | | 1,053,679 | | | | 16,233 | | | | 1,577 | | | | —a | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | $ | 29,710,045 | | | $ | 89,596 | | | $ | 169,365 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| Franklin LifeSmart 2045 Retirement Target Fund | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-Controlled Affiliates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Franklin Floating Rate Daily Access Fund, Class R6 | | | — | | | | 57,063 | | | | (3,482 | ) | | | 53,581 | | | $ | 474,727 | | | $ | 4,911 | | | $ | (75) | | | | —a | |
Franklin Focused Core Equity Fund, Class R6 | | | 226,425 | | | | 4,116 | | | | (230,541 | ) | | | — | | | | —b | | | | — | | | | 229,379 | | | | — | |
Franklin Growth Fund, Class R6 | | | 153,668 | | | | 3,035 | | | | (13,337 | ) | | | 143,366 | | | | 12,505,807 | | | | — | | | | 50,062 | | | | 0.1 | % |
Franklin Growth Opportunities Fund, Class R6 | | | 160,883 | | | | 3,173 | | | | (13,929 | ) | | | 150,127 | | | | 5,725,843 | | | | — | | | | 42,745 | | | | 0.2 | % |
Franklin India Growth Fund, Class R6 | | | 152,337 | | | | 3,039 | | | | (13,019 | ) | | | 142,357 | | | | 2,163,827 | | | | — | | | | 12,841 | | | | 1.3 | % |
Franklin International Small Cap Growth Fund, Class R6 | | | 302,418 | | | | 5,967 | | | | (25,917 | ) | | | 282,468 | | | | 5,640,885 | | | | — | | | | (7,828) | | | | 0.4 | % |
Franklin K2 Alternative Strategies Fund, Class R6 | | | 191,089 | | | | 11,312 | | | | (13,111 | ) | | | 189,290 | | | | 2,121,940 | | | | — | | | | 1,796 | | | | 0.2 | % |
Franklin K2 Long Short Credit Fund, Class R6 | | | 205,705 | | | | 12,187 | | | | (14,051 | ) | | | 203,841 | | | | 2,146,439 | | | | — | | | | 1,059 | | | | 2.7 | % |
Franklin LibertyQ Emerging Markets ETF | | | 161,000 | | | | 3,100 | | | | (15,600 | ) | | | 148,500 | | | | 4,457,970 | | | | 42,925 | | | | 29,459 | | | | 1.4 | % |
Franklin LibertyQ U.S. Equity ETF | | | — | | | | 127,000 | | | | (700 | ) | | | 126,300 | | | | 3,256,014 | | | | 854 | | | | 46 | | | | 2.8 | % |
Franklin Low Duration Total Return Fund, Class R6 | | | 302,710 | | | | 130,894 | | | | (43,482 | ) | | | 390,122 | | | | 3,862,205 | | | | 31,782 | | | | (6,463) | | | | 0.1 | % |
Franklin Mutual International Fund, Class R6 | | | 216,679 | | | | 4,281 | | | | (18,779 | ) | | | 202,181 | | | | 3,154,018 | | | | — | | | | (19,725) | | | | 1.6 | % |
Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 224,286 | | | | 13,297 | | | | (15,286 | ) | | | 222,297 | | | | 1,380,466 | | | | — | | | | (932) | | | | 1.1 | % |
Franklin Rising Dividends Fund, Class R6 | | | 124,876 | | | | 2,600 | | | | (39,780 | ) | | | 87,696 | | | | 4,946,917 | | | | 18,666 | | | | 108,439 | | | | —a | |
Franklin Small Cap Growth Fund, Class R6 | | | 97,302 | | | | 1,939 | | | | (8,330 | ) | | | 90,911 | | | | 1,947,311 | | | | — | | | | 6,270 | | | | 0.1 | % |
Franklin Strategic Income Fund, Class R6 | | | 104,214 | | | | 3,497 | | | | (60,461 | ) | | | 47,250 | | | | 465,413 | | | | 6,453 | | | | 17,198 | | | | —a | |
Franklin U.S. Government Securities Fund, Class R6 | | | 275,361 | | | | 10,804 | | | | (149,087 | ) | | | 137,078 | | | | 843,031 | | | | 16,346 | | | | (27,556) | | | | —a | |
Franklin Utilities Fund, Class R6 | | | 118,411 | | | | 4,029 | | | | (10,355 | ) | | | 112,085 | | | | 2,122,898 | | | | 29,707 | | | | 11,131 | | | | —a | |
Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 468,586 | | | | 9,987,837 | | | | (10,071,151 | ) | | | 385,271 | | | | 385,271 | | | | 663 | | | | — | | | | —a | |
Templeton Foreign Fund, Class R6 | | | 521,744 | | | | 10,308 | | | | (44,904 | ) | | | 487,148 | | | | 3,726,687 | | | | — | | | | 19,576 | | | | 0.1 | % |
Templeton Global Total Return Fund, Class R6 | | | 129,291 | | | | 73,632 | | | | (23,034 | ) | | | 179,889 | | | | 2,214,431 | | | | 34,418 | | | | 9,256 | | | | —a | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | $ | 63,542,100 | | | $ | 186,725 | | | $ | 476,678 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| 134 | | Semiannual Report | | franklintempleton.com |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D )
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FT Underlying Funds | | Number of Shares Held at Beginning of Period | | | Gross Additions | | | Gross Reductions | | | Number of
Shares Held at End of Period | | | Value at End of Period | | | Investment Income | | | Realized Gain (Loss) | | | % of FT Underlying
Fund Shares
Outstanding
Held at End of Period | |
| | | | | | | | |
| Franklin LifeSmart 2050 Retirement Target Fund | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-Controlled Affiliates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Franklin Floating Rate Daily Access Fund, Class R6 | | | — | | | | 20,425 | | | | (992 | ) | | | 19,433 | | | $ | 172,180 | | | $ | 1,751 | | | $ | (20) | | | | —a | |
Franklin Focused Core Equity Fund, Class R6 | | | 78,484 | | | | 6,065 | | | | (84,549 | ) | | | — | | | | —b | | | | — | | | | 143,710 | | | | — | |
Franklin Growth Fund, Class R6 | | | 51,909 | | | | 5,007 | | | | (2,074 | ) | | | 54,842 | | | | 4,783,914 | | | | — | | | | 3,583 | | | | —a | |
Franklin Growth Opportunities Fund, Class R6 | | | 53,630 | | | | 5,204 | | | | (2,106 | ) | | | 56,728 | | | | 2,163,594 | | | | — | | | | 2,183 | | | | 0.1 | % |
Franklin India Growth Fund, Class R6 | | | 52,795 | | | | 5,092 | | | | (2,104 | ) | | | 55,783 | | | | 847,903 | | | | — | | | | 139 | | | | 0.5 | % |
Franklin International Small Cap Growth Fund, Class R6 | | | 100,058 | | | | 9,682 | | | | (4,027 | ) | | | 105,713 | | | | 2,111,090 | | | | — | | | | (3,283) | | | | 0.2 | % |
Franklin K2 Alternative Strategies Fund, Class R6 | | | 62,928 | | | | 9,421 | | | | (1,480 | ) | | | 70,869 | | | | 794,438 | | | | — | | | | 21 | | | | 0.1 | % |
Franklin K2 Long Short Credit Fund, Class R6 | | | 67,452 | | | | 10,069 | | | | (1,584 | ) | | | 75,937 | | | | 799,619 | | | | — | | | | (212) | | | | 1.0 | % |
Franklin LibertyQ Emerging Markets ETF | | | 55,900 | | | | 5,600 | | | | (3,100 | ) | | | 58,400 | | | | 1,753,168 | | | | 16,749 | | | | 2,328 | | | | 0.5 | % |
Franklin LibertyQ U.S. Equity ETF | | | — | | | | 49,700 | | | | (200 | ) | | | 49,500 | | | | 1,276,110 | | | | 332 | | | | 37 | | | | 1.1 | % |
Franklin Low Duration Total Return Fund, Class R6 | | | 97,303 | | | | 51,736 | | | | (16,277 | ) | | | 132,762 | | | | 1,314,343 | | | | 10,442 | | | | (185) | | | | —a | |
Franklin Mutual International Fund, Class R6 | | | 71,811 | | | | 6,996 | | | | (2,900 | ) | | | 75,907 | | | | 1,184,148 | | | | — | | | | 330 | | | | 0.6 | % |
Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 70,838 | | | | 10,623 | | | | (1,562 | ) | | | 79,899 | | | | 496,171 | | | | — | | | | (411) | | | | 0.4 | % |
Franklin Rising Dividends Fund, Class R6 | | | 41,207 | | | | 3,275 | | | | (11,733 | ) | | | 32,749 | | | | 1,847,378 | | | | 6,393 | | | | 34,680 | | | | —a | |
Franklin Small Cap Growth Fund, Class R6 | | | 26,850 | | | | 2,614 | | | | (1,099 | ) | | | 28,365 | | | | 607,578 | | | | — | | | | 242 | | | | —a | |
Franklin Strategic Income Fund, Class R6 | | | 33,073 | | | | 3,549 | | | | (20,029 | ) | | | 16,593 | | | | 163,440 | | | | 2,178 | | | | 8,180 | | | | —a | |
Franklin U.S. Government Securities Fund, Class R6 | | | 86,663 | | | | 10,288 | | | | (47,245 | ) | | | 49,706 | | | | 305,693 | | | | 5,589 | | | | (8,586) | | | | —a | |
Franklin Utilities Fund, Class R6 | | | 39,182 | | | | 4,394 | | | | (1,636 | ) | | | 41,940 | | | | 794,342 | | | | 10,412 | | | | 251 | | | | —a | |
Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 181,567 | | | | 5,170,832 | | | | (5,196,529 | ) | | | 155,870 | | | | 155,870 | | | | 331 | | | | — | | | | —a | |
Templeton Foreign Fund, Class R6 | | | 176,382 | | | | 16,962 | | | | (7,193 | ) | | | 186,151 | | | | 1,424,057 | | | | — | | | | 1,026 | | | | —a | |
Templeton Global Total Return Fund, Class R6 | | | 38,236 | | | | 27,530 | | | | (7,049 | ) | | | 58,717 | | | | 722,804 | | | | 10,830 | | | | 1,606 | | | | —a | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | $ | 23,717,840 | | | $ | 65,007 | | | $ | 185,619 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| Franklin LifeSmart 2055 Retirement Target Fund | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-Controlled Affiliates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Franklin Floating Rate Daily Access Fund, Class R6 | | | — | | | | 5,040 | | | | (170 | ) | | | 4,870 | | | $ | 43,152 | | | $ | 410 | | | $ | (3) | | | | —a | |
Franklin Focused Core Equity Fund, Class R6 | | | 17,233 | | | | 4,526 | | | | (21,759 | ) | | | — | | | | —b | | | | — | | | | 31,325 | | | | — | |
Franklin Growth Fund, Class R6 | | | 11,630 | | | | 3,670 | | | | (294 | ) | | | 15,006 | | | | 1,308,981 | | | | — | | | | 50 | | | | —a | |
Franklin Growth Opportunities Fund, Class R6 | | | 11,687 | | | | 3,692 | | | | (294 | ) | | | 15,085 | | | | 575,328 | | | | — | | | | 65 | | | | —a | |
Franklin India Growth Fund, Class R6 | | | 11,601 | | | | 3,721 | | | | (294 | ) | | | 15,028 | | | | 228,418 | | | | — | | | | (42) | | | | 0.1 | % |
Franklin International Small Cap Growth Fund, Class R6 | | | 22,604 | | | | 7,112 | | | | (578 | ) | | | 29,138 | | | | 581,892 | | | | — | | | | (350) | | | | —a | |
Franklin K2 Alternative Strategies Fund, Class R6 | | | 13,497 | | | | 5,365 | | | | (209 | ) | | | 18,653 | | | | 209,098 | | | | — | | | | 1 | | | | —a | |
Franklin K2 Long Short Credit Fund, Class R6 | | | 14,523 | | | | 5,710 | | | | (240 | ) | | | 19,993 | | | | 210,524 | | | | — | | | | (65) | | | | 0.3 | % |
Franklin LibertyQ Emerging Markets ETF | | | 11,100 | | | | 4,400 | | | | (600 | ) | | | 14,900 | | | | 447,298 | | | | 4,165 | | | | 71 | | | | 0.1 | % |
Franklin LibertyQ U.S. Equity ETF | | | — | | | | 13,400 | | | | — | | | | 13,400 | | | | 345,452 | | | | 89 | | | | — | | | | 0.3 | % |
Franklin Low Duration Total Return Fund, Class R6 | | | 19,590 | | | | 18,757 | | | | (4,254 | ) | | | 34,093 | | | | 337,522 | | | | 2,387 | | | | (38) | | | | —a | |
Franklin Mutual International Fund, Class R6 | | | 16,099 | | | | 5,132 | | | | (393 | ) | | | 20,838 | | | | 325,078 | | | | — | | | | (11) | | | | 0.2 | % |
Franklin Pelagos Commodities Strategy Fund, Class R6 | | | 15,880 | | | | 6,208 | | | | (244 | ) | | | 21,844 | | | | 135,652 | | | | — | | | | (33) | | | | 0.1 | % |
| | | | | | |
| franklintempleton.com | | Semiannual Report | | | 135 | |
F R A N K L I N F U N D A L L O C A T O R S E R I E S
N O T E S T O F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D)
3. Transactions with Affiliates (continued)
f. Investments in FT Underlying Funds (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FT Underlying Funds | | Number of Shares Held at Beginning of Period | | | Gross Additions | | | Gross Reductions | | | Number of
Shares Held at End of Period | | | Value at End of Period | | | Investment Income | | | Realized Gain (Loss) | | | % of FT Underlying
Fund Shares
Outstanding
Held at End of Period | |
| | | |
| Franklin LifeSmart 2055 Retirement Target Fund (continued) | | | | | | | | | | | | | |
| Non-Controlled Affiliates (continued) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Franklin Rising Dividends Fund, Class R6 | | | 9,309 | | | | 2,513 | | | | (2,754 | ) | | | 9,068 | | | $ | 511,538 | | | $ | 1,618 | | | $ | 4,307 | | | | —a | |
Franklin Small Cap Growth Fund, Class R6 | | | 6,123 | | | | 1,963 | | | | (162 | ) | | | 7,924 | | | | 169,727 | | | | — | | | | (35) | | | | —a | |
Franklin Strategic Income Fund, Class R6 | | | 6,730 | | | | 2,171 | | | | (4,775 | ) | | | 4,126 | | | | 40,643 | | | | 489 | | | | 867 | | | | —a | |
Franklin U.S. Government Securities Fund, Class R6 | | | 16,523 | | | | 5,721 | | | | (10,691 | ) | | | 11,553 | | | | 71,049 | | | | 1,163 | | | | (1,664) | | | | —a | |
Franklin Utilities Fund, Class R6 | | | 8,945 | | | | 2,964 | | | | (227 | ) | | | 11,682 | | | | 221,256 | | | | 2,712 | | | | (27) | | | | —a | |
Institutional Fiduciary Trust Money Market Portfolio, 0.58% | | | 83,312 | | | | 1,849,270 | | | | (1,864,378 | ) | | | 68,204 | | | | 68,204 | | | | 113 | | | | — | | | | —a | |
Templeton Foreign Fund, Class R6 | | | 41,260 | | | | 12,992 | | | | (1,044 | ) | | | 53,208 | | | | 407,044 | | | | — | | | | (8) | | | | —a | |
Templeton Global Total Return Fund, Class R6 | | | 7,573 | | | | 8,655 | | | | (1,816 | ) | | | 14,412 | | | | 177,415 | | | | 2,399 | | | | (17) | | | | —a | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | $ | 6,415,271 | | | $ | 15,545 | | | $ | 34,393 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
aRounds to less than 0.1%
bAs of June 30, 2017, no longer held by the fund.
g. Waiver and Expense Reimbursements
Advisers and Investor Services have contractually agreed in advance to waive or limit their respective fees and to assume as their own expense certain expenses otherwise payable by the Funds so that the expenses (excluding distribution fees and acquired fund fees and expenses) for Class A, Class C, Class R and Advisor Class of the Funds do not exceed 0.05%, and Class R6 does not exceed 0.00% based on the average net assets of each class (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until April 30, 2018. Total expenses waived or paid are not subject to recapture subsequent to the Funds’ fiscal year end.
h. Other Affiliated Transactions
At June 30, 2017, Franklin Advisers, Inc. owned 10.0% of Franklin LifeSmart 2055 Retirement Target Fund’s outstanding shares.
4. Expense Offset Arrangement
The Funds have entered into an arrangement with their custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Funds’ custodian expenses. During the period ended June 30, 2017, the custodian fees were reduced as noted in the Statements of Operations.
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N O T E S T O F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D )
5. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains, if any. At December 31, 2016, the capital loss carryforwards were as follows:
| | | | | | | | | | | | |
| | | Franklin
LifeSmart
Retirement
Income Fund | | | Franklin
LifeSmart
2020 Retirement
Target Fund | | | Franklin
LifeSmart
2025 Retirement
Target Fund | |
Capital loss carryforwards not subject to expiration: | | | | | | | | | | | | |
Short term | | | $ 282,659 | | | | $ 894,442 | | | | $2,302,218 | |
Long term | | | 1,167,078 | | | | 549,093 | | | | 35,479 | |
Total capital loss carryforwards | | | $1,449,737 | | | | $1,443,535 | | | | $2,337,697 | |
| | | |
| | | Franklin
LifeSmart 2030 Retirement
Target Fund | | | Franklin
LifeSmart 2035 Retirement
Target Fund | | | Franklin
LifeSmart 2040 Retirement
Target Fund | |
Capital loss carryforwards not subject to expiration: | | | | | | | | | | | | |
Short term | | | $ 717,247 | | | | $1,974,221 | | | | $564,383 | |
Long term | | | 647,900 | | | | 112,031 | | | | 256,422 | |
Total capital loss carryforwards | | | $1,365,147 | | | | $2,086,252 | | | | $820,805 | |
| | | |
| | | Franklin
LifeSmart
2045 Retirement
Target Fund | | | Franklin
LifeSmart 2050 Retirement
Target Fund | | | Franklin
LifeSmart 2055 Retirement
Target Fund | |
Capital loss carryforwards not subject to expiration: | | | | | | | | | | | | |
Short term | | | $1,321,191 | | | | $371,048 | | | | $28,425 | |
Long term | | | — | | | | 289,997 | | | | — | |
Total capital loss carryforwards | | | $1,321,191 | | | | $661,045 | | | | $28,425 | |
At June 30, 2017, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
| | | | | | | | | | | | |
| | | |
| | | Franklin
LifeSmart
Retirement
Income Fund | | | Franklin
LifeSmart
2020 Retirement
Target Fund | | | Franklin
LifeSmart
2025 Retirement
Target Fund | |
Cost of investments | | | $61,472,079 | | | | $36,406,558 | | | | $111,691,126 | |
| Unrealized appreciation | | | $ 2,321,227 | | | | $ 2,614,001 | | | | $ 17,068,669 | |
| Unrealized depreciation | | | (1,264,125 | ) | | | (1,007,772 | ) | | | (2,852,262 | ) |
Net unrealized appreciation (depreciation) | | | $ 1,057,102 | | | | $ 1,606,229 | | | | $ 14,216,407 | |
| | | |
| | | Franklin
LifeSmart
2030 Retirement
Target Fund | | | Franklin
LifeSmart
2035 Retirement
Target Fund | | | Franklin
LifeSmart
2040 Retirement
Target Fund | |
Cost of investments | | | $40,040,792 | | | | $94,736,353 | | | | $31,945,998 | |
| Unrealized appreciation | | | $ 3,702,231 | | | | $15,673,912 | | | | $ 3,217,859 | |
| Unrealized depreciation | | | (689,553 | ) | | | (1,363,934 | ) | | | (492,319 | ) |
Net unrealized appreciation (depreciation) | | | $ 3,012,678 | | | | $14,309,978 | | | | $ 2,725,540 | |
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N O T E S T O F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D )
5. Income Taxes (continued)
| | | | | | | | | | | | |
| | | |
| | | Franklin
LifeSmart
2045 Retirement
Target Fund | | | Franklin
LifeSmart
2050 Retirement
Target Fund | | | Franklin
LifeSmart
2055 Retirement Target Fund | |
Cost of investments | | | $64,595,952 | | | | $25,310,067 | | | | $6,869,696 | |
Unrealized appreciation | | | $10,943,384 | | | | $ 2,752,691 | | | | $ 584,625 | |
Unrealized depreciation | | | (816,956 | ) | | | (439,963 | ) | | | (108,196 | ) |
Net unrealized appreciation (depreciation) | | | $10,126,428 | | | | $ 2,312,728 | | | | $ 476,429 | |
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of short term capital gains distributions from Underlying Funds and ETFs and wash sales.
6. Investment Transactions
Purchases and sales of Underlying Funds and ETFs (excluding short term securities) for the period ended June 30, 2017, were as follows:
| | | | | | | | | | | | |
| | | |
| | | Franklin
LifeSmart
Retirement
Income Fund | | | Franklin
LifeSmart
2020 Retirement
Target Fund | | | Franklin
LifeSmart
2025 Retirement
Target Fund | |
Purchases | | | $1,943,756 | | | | $11,992,727 | | | | $24,314,252 | |
Sales | | | $9,275,901 | | | | $11,154,846 | | | | $31,736,168 | |
| | | |
| | | Franklin
LifeSmart
2030 Retirement
Target Fund | | | Franklin
LifeSmart
2035 Retirement
Target Fund | | | Franklin
LifeSmart
2040 Retirement
Target Fund | |
Purchases | | | $8,690,766 | | | | $16,254,923 | | | | $6,400,673 | |
Sales | | | $6,886,465 | | | | $22,063,559 | | | | $6,757,279 | |
| | | |
| | | Franklin
LifeSmart
2045 Retirement
Target Fund | | | Franklin
LifeSmart
2050 Retirement
Target Fund | | | Franklin
LifeSmart
2055 Retirement
Target Fund | |
Purchases | | | $11,049,691 | | | | $5,871,135 | | | | $2,531,236 | |
Sales | | | $16,360,383 | | | | $4,574,707 | | | | $ 989,334 | |
7. Credit Facility
The Funds, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matures on February 9, 2018. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.
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N O T E S T O F I N A N C I A L S T A T E M E N T S (U N A U D I T E D)
Under the terms of the Global Credit Facility, the Funds shall, in addition to interest charged on any borrowings made by the Funds and other costs incurred by the Funds, pay their share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon their relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statements of Operations. During the period ended June 30, 2017, the Funds did not use the Global Credit Facility.
8. Fair Value Measurements
The Funds follow a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Funds’ own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds’ financial instruments and are summarized in the following fair value hierarchy:
| | • | Level 1 – quoted prices in active markets for identical financial instruments |
| | • | Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.) |
| | • | Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of financial instruments) |
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
For movements between the levels within the fair value hierarchy, the Funds have adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.
A summary of inputs used as of June��30, 2017, in valuing the Funds’ assets carried at fair value, is as follows:
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| |
Franklin LifeSmart Retirement Income Fund | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Underlying Funds and Exchange Traded Funds | | $ | 59,107,398 | | | $ | — | | | $ | — | | | $ | 59,107,398 | |
Index-Linked Notes | | | — | | | | 3,169,680 | | | | — | | | | 3,169,680 | |
Short Term Investments | | | 252,103 | | | | — | | | | — | | | | 252,103 | |
| | | | |
Total Investments in Securities | | $ | 59,359,501 | | | $ | 3,169,680 | | | $ | — | | | $ | 62,529,181 | |
| | | | |
Franklin LifeSmart 2020 Retirement Target Fund | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Underlying Funds and Exchange Traded Funds | | $ | 37,438,718 | | | $ | — | | | $ | — | | | $ | 37,438,718 | |
Short Term Investments | | | 574,069 | | | | — | | | | — | | | | 574,069 | |
| | | | |
Total Investments in Securities | | $ | 38,012,787 | | | $ | — | | | $ | — | | | $ | 38,012,787 | |
| | | | |
Franklin LifeSmart 2025 Retirement Target Fund | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Underlying Funds and Exchange Traded Funds | | $ | 125,260,191 | | | $ | — | | | $ | — | | | $ | 125,260,191 | |
Short Term Investments | | | 647,342 | | | | — | | | | — | | | | 647,342 | |
| | | | |
Total Investments in Securities | | $ | 125,907,533 | | | $ | — | | | $ | — | | | $ | 125,907,533 | |
| | | | |
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N O T E S T O F I N A N C I A L S T A T E M E N T S (U N A U D I T E D)
8. Fair Value Measurements (continued)
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| |
Franklin LifeSmart 2030 Retirement Target Fund | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Underlying Funds and Exchange Traded Funds | | $ | 42,852,196 | | | $ | — | | | $ | — | | | $ | 42,852,196 | |
Short Term Investments | | | 201,274 | | | | — | | | | — | | | | 201,274 | |
| | | | |
Total Investments in Securities | | $ | 43,053,470 | | | $ | — | | | $ | — | | | $ | 43,053,470 | |
| | | | |
Franklin LifeSmart 2035 Retirement Target Fund | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Underlying Funds and Exchange Traded Funds | | $ | 108,207,473 | | | $ | — | | | $ | — | | | $ | 108,207,473 | |
Short Term Investments | | | 838,858 | | | | — | | | | — | | | | 838,858 | |
| | | | |
Total Investments in Securities | | $ | 109,046,331 | | | $ | — | | | $ | — | | | $ | 109,046,331 | |
| | | | |
Franklin LifeSmart 2040 Retirement Target Fund | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Underlying Funds and Exchange Traded Funds | | $ | 34,523,989 | | | $ | — | | | $ | — | | | $ | 34,523,989 | |
Short Term Investments | | | 147,549 | | | | — | | | | — | | | | 147,549 | |
| | | | |
Total Investments in Securities | | $ | 34,671,538 | | | $ | — | | | $ | — | | | $ | 34,671,538 | |
| | | | |
Franklin LifeSmart 2045 Retirement Target Fund | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Underlying Funds and Exchange Traded Funds | | $ | 74,337,109 | | | $ | — | | | $ | — | | | $ | 74,337,109 | |
Short Term Investments | | | 385,271 | | | | — | | | | — | | | | 385,271 | |
| | | | |
Total Investments in Securities | | $ | 74,722,380 | | | $ | — | | | $ | — | | | $ | 74,722,380 | |
| | | | |
Franklin LifeSmart 2050 Retirement Target Fund | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Underlying Funds and Exchange Traded Funds | | $ | 27,466,925 | | | $ | — | | | $ | — | | | $ | 27,466,925 | |
Short Term Investments | | | 155,870 | | | | — | | | | — | | | | 155,870 | |
| | | | |
Total Investments in Securities | | $ | 27,622,795 | | | $ | — | | | $ | — | | | $ | 27,622,795 | |
| | | | |
Franklin LifeSmart 2055 Retirement Target Fund | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Underlying Funds and Exchange Traded Funds | | $ | 7,277,921 | | | $ | — | | | $ | — | | | $ | 7,277,921 | |
Short Term Investments | | | 68,204 | | | | — | | | | — | | | | 68,204 | |
| | | | |
Total Investments in Securities | | $ | 7,346,125 | | | $ | — | | | $ | — | | | $ | 7,346,125 | |
| | | | |
9. Investment Company Reporting Modernization
In October 2016, the U.S. Securities and Exchange Commission adopted new rules and amended existing rules (together, final rules) intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosures about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017. Management has reviewed the requirements and believes the adoption of the amendments to Regulation S-X will not have a material impact on the Funds’ financial statements and related disclosures.
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N O T E S T O F I N A N C I A L S T A T E M E N T S (U N A U D I T E D)
10. Subsequent Events
The Funds have evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.
Abbreviations
| | |
| Selected Portfolio |
| ETF | | Exchange Traded Fund |
| SPDR | | S&P Depository Receipt |
| SPX B | | S&P 500 Index Buy-Write |
| SPX B DT | | S&P 500 Index Buy-Write Distribution |
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Shareholder Information
Board Approval of Investment Management Agreements
FRANKLIN FUND ALLOCATOR SERIES
Franklin LifeSmart Retirement Income Fund
Franklin LifeSmart 2020 Retirement Target Fund
Franklin LifeSmart 2025 Retirement Target Fund
Franklin LifeSmart 2030 Retirement Target Fund
Franklin LifeSmart 2035 Retirement Target Fund
Franklin LifeSmart 2040 Retirement Target Fund
Franklin LifeSmart 2045 Retirement Target Fund
Franklin LifeSmart 2050 Retirement Target Fund
Franklin LifeSmart 2055 Retirement Target Fund
(each a Fund)
At an in-person meeting held on February 28, 2017 (Meeting), the Board of Trustees (Board) of Franklin Fund Allocator Series, including a majority of the trustees who are not “interested persons” as defined in the Investment Company Act of 1940 (Independent Trustees), reviewed and approved the continuance of the investment management agreement between Franklin Advisers, Inc. (Manager) and each Fund (each a Management Agreement) for an additional one-year period. The Independent Trustees received advice from and met separately with Independent Trustee counsel in considering whether to approve the continuation of each Management Agreement. Although the Management Agreements for the Funds were considered at the same Board meeting, the Board considered the information provided to it about the Funds together and with respect to each Fund separately as the Board deemed appropriate.
In considering the continuation of each Management Agreement, the Board reviewed and considered information provided by the Manager at the Meeting and throughout the year at meetings of the Board and its committees. The Board also reviewed and considered information provided in response to a detailed set of requests for information submitted to the Manager by Independent Trustee counsel on behalf of the Independent Trustees in connection with the annual contract renewal process. In addition, prior to the Meeting, the Independent Trustees held a telephonic contract renewal meeting at which the Independent Trustees conferred amongst themselves and Independent Trustee counsel about contract renewal matters. The Board reviewed and considered all of the factors it deemed relevant in approving the continuance of each Management Agreement, including, but not limited to: (i) the nature, extent, and quality of the services provided by the Manager; (ii) the investment performance of each Fund; (iii)
the costs of the services provided and profits realized by the Manager and its affiliates from the relationship with each Fund; (iv) the extent to which economies of scale are realized as each Fund grows; and (v) whether fee levels reflect these economies of scale for the benefit of Fund investors.
In approving the continuance of each Management Agreement, the Board, including a majority of the Independent Trustees, determined that the existing management fees are fair and reasonable and that the continuance of such Management Agreement is in the interests of the applicable Fund and its shareholders. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s determination.
Nature, Extent and Quality of Services
The Board reviewed and considered information regarding the nature, extent and quality of investment management services provided by the Manager and its affiliates to the Funds and their shareholders. This information included, among other things, the qualifications, background and experience of the senior management and investment personnel of the Manager; the structure of investment personnel compensation; oversight of third-party service providers; investment performance reports and related financial information for each Fund; reports on expenses, shareholder services, marketing support payments made to financial intermediaries and third party servicing arrangements; legal and compliance matters; risk controls; pricing and other services provided by the Manager and its affiliates; and management fees charged by the Manager and its affiliates to U.S. funds and other accounts, including management’s explanation of differences among accounts where relevant. The Board noted management’s continual efforts and expenditures in establishing effective business continuity plans and developing strategies to address areas of heightened concern in the mutual fund industry, such as cybersecurity, derivatives and liquidity risk management.
The Board also reviewed and considered the benefits provided to Fund shareholders of investing in a fund that is part of the Franklin Templeton family of funds. The Board noted the financial position of Franklin Resources, Inc. (FRI), the Manager’s parent, and its commitment to the mutual fund business as evidenced by its continued introduction of new funds, reassessment of the fund offerings in response to the market environment and project initiatives and capital investments relating to the services provided to the Funds by the Franklin Templeton Investments (FTI) organization.
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FRANKLIN FUND ALLOCATOR SERIES
SHAREHOLDER INFORMATION
Following consideration of such information, the Board was satisfied with the nature, extent and quality of services provided by the Manager and its affiliates to the Funds and their shareholders.
Fund Performance
The Board reviewed and considered the performance results of each Fund over various time periods ended December 31, 2016. The Board considered the performance returns for each Fund in comparison to the performance returns of mutual funds deemed comparable to the Fund included in a universe (Performance Universe) selected by Broadridge Financial Solutions, Inc. (Broadridge), an independent provider of investment company data. The Board received a description of the methodology used by Broadridge to select the mutual funds included in a Performance Universe. The Board also reviewed and considered Fund performance reports provided and discussions that occurred with portfolio managers at Board meetings throughout the year. A summary of each Fund’s performance results is below.
Overall, the Board observed that the performance of a number of the Funds was impacted by their respective allocations to global markets, energy and currencies, as well as U.S. fixed income. These allocations, while consistent with the Funds’ longer term perspectives, were detrimental to short term returns and comparisons to peers. The Board also noted that the Funds’ performance reflects the conservative nature of the LifeSmart Retirement Funds generally and the performance of the funds in which they invest.
Franklin LifeSmart Retirement Income Fund, Franklin LifeSmart 2025 Retirement Target Fund, Franklin LifeSmart 2035 Retirement Target Fund, and Franklin LifeSmart 2045 Retirement Target Fund - The Performance Universe for each of the Franklin LifeSmart 2025 Retirement Target Fund, Franklin LifeSmart 2035 Retirement Target Fund and Franklin LifeSmart 2045 Retirement Target Fund included the Fund and all retail and institutional mixed-asset target 2025, 2035, or 2045 funds, respectively. The Performance Universe for the Franklin Retirement Income Fund included the Fund and all retail and institutional retirement income funds. The Board noted that the Funds’ annualized total returns for the one-, three- and five-year periods were below the medians of their respective Performance Universes, but for the 10-year period were above the medians of their respective Performance Universes. The Board concluded that the Funds’ performance was acceptable. In doing so, the Board noted management’s explanation that the Funds’ underperformance has had less to
do with broad asset allocation positioning and more to do with underlying fund performance within particular asset classes. Management explained that broad asset allocation has had a largely neutral impact on performance, while underlying fund performance has been a persistent negative contributor. The Board then noted that the Funds had positive annualized total returns for each of the one-, three-, five- and 10-year periods and that the Funds’ annualized total returns for the five-year period, while below the median, exceeded 5%.
Franklin LifeSmart 2020 Retirement Target Fund, Franklin LifeSmart 2030 Retirement Target Fund, Franklin LifeSmart 2040 Retirement Target Fund, and Franklin LifeSmart 2050 Retirement Target Fund - The Performance Universe for each of the Franklin LifeSmart 2020 Retirement Target Fund, Franklin LifeSmart 2030 Retirement Target Fund, Franklin LifeSmart 2040 Retirement Target Fund and Franklin LifeSmart 2050 Retirement Target Fund included the Fund and all retail and institutional mixed-asset target 2020, 2030, 2040, or 2050 funds, respectively. The Funds commenced operations on July 1, 2013, and thus have been in operation for less than four years. The Board noted that the Funds’ annualized total returns for the one- and three-year periods were below the medians of their respective Performance Universes. The Board concluded that the Funds’ performance was acceptable given their short period of operation. In doing so, the Board noted management’s explanation that the Funds’ underperformance has had less to do with broad asset allocation positioning and more to do with underlying fund performance within particular asset classes. Management explained that broad asset allocation has had a largely neutral impact on performance, while underlying fund performance has been a persistent negative contributor. The Board then noted that the Funds’ annualized total returns for the one- and three-year periods, while below the median, exceeded 2.9% and 1.8%, respectively.
Franklin LifeSmart 2055 Retirement Target Fund - The Performance Universe for this Fund included the Fund and all retail and institutional mixed-asset target 2055+ funds. The Fund commenced operations on May 1, 2015, and thus has been in operation for less than two years. The Board noted that the Fund’s annualized total return for the one-year period was below the median of its Performance Universe. The Board concluded that the Fund’s performance was acceptable given its short period of operation. In doing so, the Board noted that the Fund’s annualized total return for the one-year period, while below the median, exceeded 3%.
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FRANKLIN FUND ALLOCATOR SERIES
SHAREHOLDER INFORMATION
Comparative Fees and Expenses
The Board reviewed and considered information regarding each Fund’s actual total expense ratio and its various components, including, as applicable, management fees; transfer agent expenses; underlying fund expenses; Rule 12b-1 and non-Rule 12b-1 service fees; and other non-management fees. The Board also noted that at its February meeting each year, it receives an annual report on all marketing support payments made by FTI to financial intermediaries. The Board considered the actual total expense ratio and, separately, the contractual management fee rate, without the effect of fee waivers, if any (Management Rate) of each Fund in comparison to the median ratio and median Management Rate, respectively, of other mutual funds deemed comparable to and with a similar expense structure as the Fund selected by Broadridge (Expense Group). Broadridge fee and expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios and Management Rates generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Broadridge to be an appropriate measure of comparative fees and expenses. The Broadridge Management Rate includes administrative charges, and the actual total expense ratio, for comparative consistency, was shown for Class A shares for funds with multiple classes of shares. The Board received a description of the methodology used by Broadridge to select the mutual funds included in an Expense Group.
Franklin LifeSmart Retirement Income Fund - The Expense Group for this Fund included the Fund and four other retirement income funds. The Board noted that the Management Rate and actual total expense ratio for the Fund were above the medians of its Expense Group. The Board further noted that the Fund recently entered into a revised investment management agreement that permits the Fund to pay fees for services other than asset allocation services in order for the Fund to pursue an options strategy to generate income for its managed distribution policy. The Board further noted that the Fund invests in third-party mutual funds or exchange-traded funds in excess of the statutory limitations under the Investment Company Act of 1940 by relying on exemptive relief provided by the U.S. Securities and Exchange Commission to each underlying fund. Pursuant to the conditions of the exemptive relief, the Board determined that the Management Rate paid by the Fund is based on services provided that are in addition to, rather than duplicative of, the
services provided under the investment management agreements of the underlying funds in which the Fund invests. The Board concluded that the Management Rate charged to the Fund is fair and reasonable. In doing so, the Board noted the small size of the Expense Group and that the Management Rate and total expense ratio for the Fund were only 3.5 and 5.0 basis points above the medians of its Expense Group, respectively. The Board also noted that the Fund’s actual total expense ratio reflected a fee waiver from management.
Franklin LifeSmart 2025 Retirement Target Fund and Franklin LifeSmart 2035 Retirement Target Fund - The Expense Group for each of the Franklin LifeSmart 2025 Retirement Target Fund and Franklin LifeSmart 2035 Retirement Target Fund included the Fund and six other mixed-asset target 2025 or 2035 funds, respectively. The Board noted that the Management Rates for these Funds were equal to the medians of their respective Expense Groups, but their actual total expense ratios were below the medians of their respective Expense Groups. The Board concluded that the Management Rates charged to these Funds are fair and reasonable. In doing so, the Board noted that each Fund’s actual total expense ratio reflected a fee waiver from management and that the Management Rate paid by each Fund is solely for asset allocation services as each Fund invests substantially all of its assets in underlying funds.
Franklin LifeSmart 2020 Retirement Target Fund, Franklin LifeSmart 2030 Retirement Target Fund, Franklin LifeSmart 2040 Retirement Target Fund, Franklin LifeSmart 2045 Retirement Target Fund, Franklin LifeSmart 2050 Retirement Target Fund, and Franklin LifeSmart 2055 Retirement Target Fund - The Expense Group for each of the Franklin LifeSmart 2020 Retirement Target Fund, Franklin LifeSmart 2030 Retirement Target Fund, Franklin LifeSmart 2040 Retirement Target Fund, Franklin LifeSmart 2045 Retirement Target Fund, Franklin LifeSmart 2050 Retirement Target Fund and Franklin LifeSmart 2055 Retirement Target Fund included the Fund and seven to twelve other mixed-asset target 2020, 2030, 2040, 2045, 2050, or 2055+ funds, respectively. The Board noted that the Management Rates for these Funds were above the medians of their respective Expense Groups, but their actual total expense ratios were below the medians of their respective Expense Groups. The Board concluded that the Management Rates charged to these Funds are fair and reasonable. In doing so, the Board noted that each Fund’s actual total expense ratio reflected a fee waiver from management and that the Management Rate paid by each Fund is solely for asset
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FRANKLIN FUND ALLOCATOR SERIES
SHAREHOLDER INFORMATION
allocation services as each Fund invests substantially all of its assets in underlying funds.
Profitability
The Board reviewed and considered information regarding the profits realized by the Manager and its affiliates in connection with the operation of each Fund. In this respect, the Board considered the Fund profitability analysis provided by the Manager that addresses the overall profitability of FTI’s U.S. fund business, as well as its profits in providing investment management and other services to each of the individual funds during the 12-month period ended September 30, 2016, being the most recent fiscal year-end for FRI. The Board noted that although management continually makes refinements to its methodologies used in calculating profitability in response to organizational and product-related changes, the overall methodology has remained consistent with that used in the Funds’ profitability report presentations from prior years. Additionally, the Funds’ independent registered public accounting firm has been engaged by the Manager to periodically review the reasonableness of the allocation methodologies to be used solely by the Funds’ Board with respect to the profitability analysis.
The Board noted management’s belief that costs incurred in establishing the infrastructure necessary for the type of mutual fund operations conducted by the Manager and its affiliates may not be fully reflected in the expenses allocated to each Fund in determining its profitability, as well as the fact that the level of profits, to a certain extent, reflected operational cost savings and efficiencies initiated by management. The Board also noted management’s expenditures in improving shareholder services provided to the Funds, as well as the need to implement systems and meet additional regulatory and compliance requirements resulting from recent SEC and other regulatory requirements.
The Board also considered the extent to which the Manager and its affiliates might derive ancillary benefits from fund operations, including revenues generated from transfer agent services, potential benefits resulting from personnel and systems enhancements necessitated by fund growth, as well as increased leverage with service providers and counterparties. Based upon its consideration of all these factors, the Board concluded that the level of profits realized by the Manager and its affiliates from providing services to each Fund was not excessive in view of the nature, quality and extent of services provided to each Fund.
Economies of Scale
The Board reviewed and considered the extent to which the Manager may realize economies of scale, if any, as each Fund grows larger and whether the Fund’s management fee structure reflects any economies of scale for the benefit of shareholders. The Board considered the Manager’s view that any analyses of potential economies of scale in managing a particular fund are inherently limited in light of the joint and common costs and investments the Manager incurs across the Franklin Templeton family of funds as a whole. The Board noted that the Funds are not of a sufficient size to likely be able to realize economies of scale and that the asset allocation services covered by the current Management Rate may be less likely to experience economies of scale as assets grow.
Conclusion
Based on its review, consideration and evaluation of all factors it believed relevant, including the above-described factors and conclusions, the Board unanimously approved the continuation of each Management Agreement for an additional one-year period.
Proxy Voting Policies and Procedures
The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.
Quarterly Statement of Investments
The Trust files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.
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Semiannual Report and Shareholder Letter
Franklin Fund Allocator Series
Investment Manager
Franklin Advisers, Inc.
Distributor
Franklin Templeton Distributors, Inc.
(800) DIAL BEN® / 342-5236
franklintempleton.com
Shareholder Services
(800) 632-2301
Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.
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| © 2017 Franklin Templeton Investments. All rights reserved. | | RTF S 08/17 |
(a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.
| Item 3. | Audit Committee Financial Expert. |
(a)(1) The Registrant has an audit committee financial expert serving on its audit committee.
(2) The audit committee financial expert is John B. Wilson and he is “independent” as defined under the relevant Securities and Exchange Commission Rules and Releases.
| Item 4. | Principal Accountant Fees and Services. N/A |
| Item 5. | Audit Committee of Listed Registrants. N/A |
| Item 6. | Schedule of Investments. N/A |
| Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. N/A |
| Item 8. | Portfolio Managers of Closed-End Management Investment Companies. N/A |
| Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. N/A |
| Item 10. | Submission of Matters to a Vote of Security Holders. |
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees that would require disclosure herein.
| Item 11. | Controls and Procedures. |
(a) Evaluation of Disclosure Controls and Procedures. The Registrant maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.
(b) Changes in Internal Controls. There have been no changes in the Registrant’s internal controls or in other factors that could materially affect the internal controls over financial reporting subsequent to the date of their evaluation in connection with the preparation of this Shareholder Report on Form N-CSR.
(a) (1) Code of Ethics
(a) (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| FRANKLIN FUND ALLOCATOR SERIES |
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| By | | /s/ Matthew T. Hinkle |
| | Matthew T. Hinkle |
| | Chief Executive Officer - Finance and Administration |
Date August 25, 2017
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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| By | | /s/ Matthew T. Hinkle |
| | Matthew T. Hinkle |
| | Chief Executive Officer - Finance and Administration |
Date August 25, 2017
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| By | | /s/ Gaston Gardey |
| | Gaston Gardey |
| | Chief Financial Officer and Chief Accounting Officer |
Date August 25, 2017
