UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-05569
Franklin Universal Trust
(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: 8/31
Date of reporting period: 8/31/21
Item 1. Reports to Stockholders.
a.)
The following is a copy of the report transmitted to shareholders pursuant to Rule30e-1 under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30e-1.)
b.)
Include a copy of each notice transmitted to stockholders in reliance on Rule 30e-3 under the Act (17 CFR 270.30e-3) that contains disclosures specified by paragraph (c)(3) of that rule.
Not Applicable
.
Annual
Report
Franklin
Universal
Trust
August
31,
2021
Not
FDIC
Insured
May
Lose
Value
No
Bank
Guarantee
franklintempleton.com
Annual
Report
1
Contents
Annual
Report
Franklin
Universal
Trust
2
Performance
Summary
5
Financial
Highlights
and
Statement
of
Investments
8
Financial
Statements
22
Notes
to
Financial
Statements
26
Report
of
Independent
Registered
Public
Accounting
Firm
38
Tax
Information
39
Important
Information
to
Shareholders
40
Annual
Meeting
of
Shareholders
45
Dividend
Reinvestment
and
Cash
Purchase
Plan
46
Board
Members
and
Officers
48
Shareholder
Information
53
Visit
franklintempleton.com
for
fund
updates
and
documents,
or
to
find
helpful
financial
planning
tools.
2
franklintempleton.com
Annual
Report
ANNUAL
REPORT
Franklin
Universal
Trust
Dear
Shareholder:
This
annual
report
for
Franklin
Universal
Trust
covers
the
fiscal
year
ended
August
31,
202
1
.
Your
Fund’s
Goal
and
Main
Investments
The
Fund’s
primary
investment
objective
is
to
provide
high,
current
income
consistent
with
preservation
of
capital.
Its
secondary
objective
is
growth
of
income
through
dividend
increases
and
capital
appreciation.
Performance
Overview
For
the
12
months
under
review,
the
Fund’s
cumulative
total
returns
were
+15.33%
based
on
net
asset
value
and
+29.55%
based
on
market
price,
as
shown
in
the
Performance
Summary
on
page
5
.
For
comparison,
the
Credit
Suisse
(CS)
High
Yield
Index,
which
is
designed
to
mirror
the
investable
universe
of
the
U.S.
dollar-denominated
high-yield
debt
market,
posted
a
+10.25%
cumulative
total
return,
1
and
utilities
stocks,
as
measured
by
the
Standard
&
Poor’s
®
(S&P
®
)
500
Utilities
Index,
which
tracks
all
utility
stocks
in
the
broad
S&P
500
®
Index,
posted
a
+19.66%
cumulative
total
return
for
the
same
period.
2
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.
Economic
and
Market
Overview
The
U.S.
bond
market,
as
measured
by
the
Bloomberg
U.S.
Aggregate
Bond
Index,
posted
a
-0.08%
total
return
for
the
12
months
ended
August
31,
2021.
2
As
the
U.S.
economy
continued
to
recover
from
the
novel
coronavirus
(COVID-19)
pandemic,
investor
appetite
for
risk
increased
and
inflation
concerns
rose.
Consequently,
lower-rated
bonds
posted
significantly
greater
returns
than
higher-rated
bonds,
while
shorter-term
bonds
generally
outperformed
longer-term
bonds,
which
tend
to
be
more
sensitive
to
inflation.
The
inflation
rate
surged
during
the
period
amid
increased
demand
and
supply-chain
bottlenecks,
with
the
price
pressures
coming
principally
from
the
areas
particularly
impacted
by
the
shutdown,
such
as
used
vehicles,
airfares,
semiconductors
and
building
materials.
In
an
effort
to
support
the
economy,
the
U.S.
Federal
Reserve
(Fed)
kept
the
federal
funds
target
rate
at
a
record-low
range
of
0.00%–0.25%.
The
Fed
also
maintained
quantitative
easing
measures
aimed
at
ensuring
credit
flows
to
borrowers
and
supporting
credit
markets
with
open-ended
U.S.
Treasury
and
mortgage
bond
purchasing.
However,
in
an
August
2021
speech,
Fed
Chair
Jerome
Powell
stated
that
he
anticipated
the
Fed
would
begin
reducing
its
bond
purchases
later
in
2021,
although
further
progress
was
needed
on
increasing
employment
before
the
Fed
would
consider
raising
interest
rates.
U.S.
Treasury
bonds,
as
measured
by
the
Bloomberg
U.S.
Treasury
Index,
posted
a
-2.11%
total
return
for
the
12-month
period.
2
The
10-year
U.S.
Treasury
yield
(which
moves
inversely
to
price)
was
near
all-time
lows
as
the
period
began.
However,
yields
rose
thereafter
amid
many
investors’
increasing
inflation
expectations.
Mortgage-
backed
securities
(MBS),
as
measured
by
the
Bloomberg
MBS
Index,
posted
a
-0.18%
total
return
for
the
period,
as
low
interest
rates
accelerated
prepayments
from
mortgage
refinancing.
2
Fed
action
was
a
catalyst
for
the
recovery
in
the
corporate
bond
market,
which
advanced
overall
but
varied
significantly
based
on
credit
rating.
The
strengthening
economy
and
prospect
of
a
return
to
normal
conditions
tempered
concerns
about
credit
quality,
which
benefited
lower-rated
bonds.
In
this
environment,
high-yield
corporate
bonds,
as
represented
by
the
Bloomberg
U.S.
Corporate
High
Yield
Bond
Index,
posted
a
+10.14%
total
return,
outpacing
investment-grade
corporate
bonds,
as
represented
by
the
Bloomberg
U.S.
Corporate
Bond
Index,
which
nevertheless
posted
a
+2.53%
total
return.
2
1.
Source:
Credit
Suisse
Group.
2.
Source:
Morningstar.
Treasuries,
if
held
to
maturity,
offer
a
fixed
rate
of
return
and
a
fixed
principal
value;
their
interest
payments
and
principal
are
guaranteed.
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
Statement
of
Investments
(SOI).
The
SOI
begins
on
page
9
.
Franklin
Universal
Trust
3
franklintempleton.com
Annual
Report
Investment
Strategy
We
invest
primarily
in
two
asset
classes:
high-yield
bonds
and
utility
stocks.
Within
the
high-yield
portion
of
the
portfolio,
we
use
fundamental
research
to
invest
in
a
diversified
portfolio
of
bonds.
Within
the
utility
portion
of
the
portfolio,
we
focus
on
companies
with
attractive
dividend
yields
and
with
a
history
of
increasing
their
dividends.
Manager’s
Discussion
In
the
early
part
of
the
period
leading
up
to
the
2020
U.S.
presidential
election,
continued
low
yields
across
the
U.S.
Treasury
(UST)
curve,
along
with
low
or
negative
government
bond
yields
globally,
supported
demand
for
both
high-yield
(HY)
corporate
bonds
and
dividend-paying
stocks.
Although
the
Fed’s
support
for
the
HY
market,
in
the
form
of
direct
and
indirect
purchases
of
HY
corporate
securities
by
the
Fed’s
Secondary
Market
Corporate
Credit
Facility,
were
modest,
the
perceived
support
had
buoyed
the
HY
market
in
general,
leading
to
a
persistent
tailwind
for
HY
corporate
bonds
for
much
of
2020.
As
financial
markets
settled
into
2021,
amid
a
stronger-than-expected
U.S.
economic
recovery
and
surging
longer-term
UST
yields,
concerns
about
potential
inflationary
pressures
resurfaced.
Investors
consequently
began
to
assess
more
closely
the
implications
of
unprecedented
fiscal
stimulus,
an
accommodative
Fed
and
an
economy
poised
to
rebound
as
vaccination
campaigns
paved
the
way
for
reopening
businesses.
While
reflation
(return
to
growth)
was
the
key
driver
for
markets
in
2021’s
first
quarter,
inflation
and
commensurate
risks
of
higher
commodity
prices
took
center
stage.
The
Fed
initially
had
assured
the
market
that
the
recent
rise
in
inflation
measures
will
prove
temporary,
and
market
consensus
had
largely
accepted
this
optimistic
view.
More
recently
though,
the
Fed
acknowledged
that
inflation
risks
are
skewed
to
the
upside.
As
a
result,
market
participants
have
debated
the
growth
and
inflation
outlook
with
equity
market
returns
reflecting
potential
for
positive
growth,
while
Treasury
markets
turned
more
cautious
on
the
growth
outlook
toward
the
end
of
2021’s
second
quarter,
as
reflected
in
lower
10-year
U.S.
Treasury
yields.
Amid
the
COVID-19
Delta
variant
and
ever-changing
views
around
the
trajectory
of
Fed
tapering,
UST
yields
moved
higher
across
the
curve
at
the
end
of
the
performance
period
under
review.
*
Percentage
of
total
investments
of
the
Fund.
Total
investments
of
the
fund
include
long-term
and
short
-term
investments,
excluding
long-term
debt
issued
by
the
Fund.
**
Includes
convertible
bonds,
escrows
and
litigation
trusts,
preferred
stocks,
and
warrants.
High-Yield
Corporate
Bonds
For
the
12-month
period
under
review,
the
CS
High
Yield
Index
posted
a
+10.25%
total
return
as
lower-rated
HY
bonds
generally
outperformed
their
higher-rated
counterparts.
1
From
a
sector/industry
standpoint,
issuers
in
energy,
aerospace
and
retail
were
notable
outperformers.
The
U.S.
HY
market
benefited
from
a
favorable
environment
for
leveraged
credit
heading
into
2021.
Against
the
backdrop
of
further
reopening
of
the
economy,
supportive
fiscal
and
monetary
policies
combined
with
wide-open
capital
markets
have
led
to
strong
overall
credit
market
performance.
Issuers
experienced
improved
credit
profiles,
leading
to
ratings
agency
upgrades
outpacing
downgrades.
Consequently,
market
consensus
is
for
diminishing
default
risk
for
the
balance
of
2021
and
into
2022.
While
inflation
pressure
has
become
a
topic
of
concern
in
the
U.S.
HY
market
as
well
as
the
broader
markets,
not
all
HY
issuers
are
expected
to
be
impacted
to
the
same
degree.
Industries
with
an
elevated
risk
of
repricing
due
to
input
cost
inflation,
such
as
automobiles
and
food
and
beverage,
are
expected
to
be
Portfolio
Composition
8/31/21
%
of
Total
Investments*
Corporate
Bonds
61.1%
Common
Stocks
33.3%
Asset-Backed
Securities
1.8%
Marketplace
Loans
1.2%
Other**
0.3%
Short-Term
Investments
2.3%
Top
10
Holdings
8/31/21
Issuer
%
of
Total
Net
Assets
a
a
NextEra
Energy,
Inc.
4.5%
Sempra
Energy
2.7%
American
Electric
Power
Co.,
Inc.
2.6%
CMS
Energy
Corp.
2.6%
Evergy
,
Inc.
2.4%
Dominion
Energy,
Inc.
2.3%
Alliant
Energy
Corp.
2.2%
Duke
Energy
Corp.
2.1%
Xcel
Energy,
Inc
1.8%
Southern
Co.
(The)
1.8%
Franklin
Universal
Trust
4
franklintempleton.com
Annual
Report
in
the
minority
in
the
universe
of
U.S.
HY
issuers.
On
the
contrary,
there
are
sectors/industries
such
as
energy
and
metals
and
mining
that
are
expected
to
benefit
from
higher
commodity
prices
as
inflation
pressure
further
increases.
Inflows
from
institutional
investors
continue
to
offset
the
year-to-date
outflow
(through
August
31,
2021)
from
U.S.
HY
retail
funds,
driving
the
strong
technical
environment
that
has
continued
to
dominate
the
market,
in
spite
of
issuance
that
has
continued
at
a
record-setting
pace
year-to-date.
Amid
elevated
sensitivity
to
the
likely
timing
of
Fed
tapering
and
historically
low
dispersion
of
credit
spreads
across
industries
and
ratings
categories,
our
focus
remains
on
prudent
security
selection
across
the
quality
spectrum
with
a
general
aversion
to
securities
with
longer-term
secular
challenges.
Utility
Stocks
Regarding
utilities,
the
sector’s
+19.66%
total
return
underperformed
the
S&P
500’s
+31.17%
total
return
but
outperformed
HY
corporate
bonds
for
the
12-month
period.
2
Utilities
continue
to
be
impacted
by
unfavorable
sector
rotation
and
catastrophic
climate
events.
Fundamentally,
utilities
have
weathered
COVID-19
headwinds,
and
the
growth
outlook
is
robust,
driven
by
sustainable
initiatives
and
continuous
grid-hardening
measures.
Relative
to
other
industries,
utilities
remained
relatively
insulated
from
supply-chain
pressures
and
provided
solid
long-term
corporate
guidance.
Duke
Energy,
Evergy
and
Southern
were
relative
outperformers.
Duke
Energy’s
outperformance
was
attributable
to
its
long-term
renewable
growth
outlook
and
activist
investor
Elliott
Management
taking
a
stake
in
the
company,
while
Evergy’s
new
management
team
continues
to
execute
on
regulated
growth
opportunities
going
into
a
well-anticipated
analyst
day
shortly
after
period-end.
Southern’s
long-term
growth
opportunity
remains
strong,
as
company
management
recently
disclosed
a
sizable
amount
in
incremental
capital-expenditure
opportunities.
NextEra
Energy
continued
its
solid
performance
but
gave
up
some
of
its
top-tier
premium
from
the
renewable
trade
reversal.
CMS
Energy
and
Xcel
Energy
were
relative
underperformers,
mainly
driven
by
the
reversal
of
top-tier
valuations.
We
believe
the
long-term
thesis
remains
intact
for
both
stocks,
characterized
as
leaders
in
the
renewables
space
while
located
in
constructive
regulatory
jurisdictions.
Dominion
Energy
faces
a
regulatory
overhang
with
the
triennial
review
and
gave
up
some
of
its
top-tier
valuation
premium.
We
remain
bullish
on
the
sector,
as
relative
valuations
continue
to
screen
attractively
and
long-term
growth
prospects
remain
abundant.
Thank
you
for
your
continued
participation
in
Franklin
Universal
Trust.
We
look
forward
to
serving
your
future
investment
needs.
Sincerely,
Glenn
I.
Voyles,
CFA
Jonathan
G.
Belk,
CFA
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
August
31,
2021,
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.
Performance
Summary
as
of
August
31,
2021
Franklin
Universal
Trust
5
franklintempleton.com
Annual
Report
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Total
returns
do
not
reflect
any
sales
charges
paid
at
inception
or
brokerage
commissions
paid
on
secondary
market
purchases.
The
performance
table
and
graph
do
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.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
8/31/21
1
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.
Cumulative
Total
Return
2
Average
Annual
Total
Return
2
Based
on
NAV
3
Based
on
market
price
4
Based
on
NAV
3
Based
on
market
price
4
1-Year
+15.33%
+29.55%
+15.33%
+29.55%
5-Year
+47.66%
+65.02%
+8.11%
+10.54%
10-Year
+123.89%
+149.78%
+8.39%
+9.59%
See
page
7
for
Performance
Summary
footnotes.
Franklin
Universal
Trust
Performance
Summary
6
franklintempleton.com
Annual
Report
See
page
7
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
Total
return
represents
the
change
in
value
of
an
investment
over
the
period
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
indexes
include
reinvestment
of
any
income
or
distributions.
They
differ
from
the
Fund
in
composition
and
do
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
9/1/11–8/31/21
Franklin
Universal
Trust
Performance
Summary
7
franklintempleton.com
Annual
Report
Shares
Prices
1
All
investments
involve
risks,
including
possible
loss
of
principal.
Bond
prices
generally
move
in
the
opposite
direction
of
interest
rates.
As
prices
of
bonds
in
a
fund
adjust
to
a
rise
in
interest
rates,
the
fund’s
share
price
may
decline.
Investments
in
lower-rated
bonds
include
higher
risk
of
default
and
loss
of
principal.
Stock
prices
fluctuate,
sometimes
rapidly
and
dramatically,
due
to
factors
affecting
individual
companies,
particular
industries
or
sectors,
or
general
market
con-
ditions.
In
addition
to
having
sensitivity
to
other
factors,
securities
issued
by
utility
companies
have
historically
been
sensitive
to
interest
rate
changes.
When
interest
rates
fall,
utility
securities
prices,
and
thus
a
utilities
fund’s
share
price,
tend
to
rise;
when
interest
rates
rise,
their
prices
generally
fall.
For
stocks
paying
dividends,
dividends
are
not
guaranteed,
and
can
increase,
decrease
or
be
totally
eliminated
without
notice.
Events
such
as
the
spread
of
deadly
diseases,
disas-
ters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund
is
actively
managed
but
there
is
no
guarantee
that
the
manager’s
investment
decisions
will
produce
the
desire
results.
1.
The
Fund
has
a
fee
waiver
associated
with
any
investment
it
makes
in
a
Franklin
Templeton
money
fund
and/or
other
Franklin
Templeton
fund,
contractually
guaranteed
through
10/31/22.
Fund
investment
results
reflect
the
fee
waiver;
without
this
waiver,
the
results
would
have
been
lower.
2.
Total
return
calculations
represent
the
cumulative
and
average
annual
changes
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
3.
Assumes
reinvestment
of
distributions
based
on
net
asset
value.
4.
Assumes
reinvestment
of
distributions
based
on
the
dividend
reinvestment
and
cash
purchase
plan.
5.
Source:
Credit
Suisse.
The
CS
High
Yield
Index
is
designed
to
mirror
the
investable
universe
of
the
U.S.
dollar-denominated
high-yield
debt
traded
in
the
U.S.
credit
market.
6.
Source:
Morningstar.
The
S&P
500
Utilities
Index
is
market
capitalization
weighted
and
consists
of
all
utility
stocks
in
the
S&P
500.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Symbol:
FT
8/31/21
8/31/20
Change
Net
Asset
Value
(NAV)
$8.92
$8.12
+$0.80
Market
Price
(NYSE)
$8.59
$7.00
+$1.59
Distributions
(9/1/20–8/31/21)
Net
Investment
Income
$0.4260
Franklin
Universal
Trust
Financial
Highlights
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
8
a
Year
Ended
August
31,
2021
2020
2019
2018
2017
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$8.12
$8.57
$7.99
$8.24
$7.67
Income
from
investment
operations:
Net
investment
income
a
.........................
0.38
0.41
0.38
0.39
0.38
Net
realized
and
unrealized
gains
(losses)
...........
0.85
(0.48)
0.58
(0.26)
0.57
Total
from
investment
operations
....................
1.23
(0.07)
0.96
0.13
0.95
Less
distributions
from:
Net
investment
income
..........................
(0.43)
(0.38)
(0.38)
(0.38)
(0.38)
Net
realized
gains
.............................
—
(—)
b
—
—
—
Total
distributions
...............................
(0.43)
(0.38)
(0.38)
(0.38)
(0.38)
Net
asset
value,
end
of
year
.......................
$8.92
$8.12
$8.57
$7.99
$8.24
Market
value,
end
of
year
c
.........................
$8.59
$7.00
$7.37
$6.77
$7.24
Total
return
(based
on
market
value
per
share)
.........
29.55%
0.25%
15.02%
(1.18)%
11.81%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
2.50%
2.49%
2.45%
1.98%
2.00%
Expenses
net
of
waiver
and
payments
by
affiliates
d
......
2.50%
e
2.49%
e
2.44%
1.98%
e
1.99%
Net
investment
income
...........................
4.38%
5.01%
4.69%
4.91%
4.81%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$224,246
$204,094
$215,292
$200,796
$206,965
Portfolio
turnover
rate
............................
36.58%
35.26%
21.70%
22.96%
23.25%
Total
debt
outstanding
at
end
of
year
(000's)
...........
$65,000
$65,000
$65,000
$65,000
$60,000
Asset
coverage
per
$1,000
of
debt
..................
$4,450
$4,140
$4,312
$4,089
$4,449
Average
amount
of
senior
rate
fixed
Notes
per
share
during
the
year
......................................
$2.59
$2.59
$2.59
$2.39
$2.39
a
Based
on
average
daily
shares
outstanding.
b
Amount
rounds
to
less
than
$0.01
per
share.
c
Based
on
the
last
sale
on
the
New
York
Stock
Exchange.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
e
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Universal
Trust
Statement
of
Investments,
August
31,
2021
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
9
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
42.7%
Electric
Utilities
23.6%
Alliant
Energy
Corp.
...................................
United
States
80,000
$
4,863,200
American
Electric
Power
Co.,
Inc.
.........................
United
States
65,000
5,822,050
Duke
Energy
Corp.
....................................
United
States
46,060
4,820,640
Edison
International
...................................
United
States
36,000
2,082,240
Entergy
Corp.
........................................
United
States
30,000
3,318,300
Evergy
,
Inc.
..........................................
United
States
80,000
5,476,000
Exelon
Corp.
.........................................
United
States
80,000
3,921,600
FirstEnergy
Corp.
.....................................
United
States
40,000
1,554,800
NextEra
Energy,
Inc.
...................................
United
States
120,000
10,078,805
Pinnacle
West
Capital
Corp.
.............................
United
States
30,000
2,307,000
PPL
Corp.
...........................................
United
States
24,500
719,075
Southern
Co.
(The)
....................................
United
States
60,000
3,943,800
Xcel
Energy,
Inc.
......................................
United
States
60,000
4,125,000
53,032,510
Machinery
0.2%
a
Birch
Permian
Holdings,
Inc.
.............................
United
States
3,694
55,410
a
Birch
Permian
Holdings,
Inc.
.............................
United
States
28,796
428,340
483,750
Metals
&
Mining
2.1%
BHP
Group
plc,
ADR
...................................
Australia
25,185
1,577,589
Freeport-McMoRan,
Inc.
................................
United
States
80,380
2,925,028
b
South32
Ltd.,
ADR
....................................
Australia
10,074
115,851
4,618,468
Multi-Utilities
15.3%
CenterPoint
Energy,
Inc.
................................
United
States
122,800
3,081,052
CMS
Energy
Corp.
....................................
United
States
90,000
5,771,700
Consolidated
Edison,
Inc.
...............................
United
States
40,000
3,018,000
Dominion
Energy,
Inc.
..................................
United
States
67,200
5,230,848
DTE
Energy
Co.
......................................
United
States
30,000
3,610,200
NiSource,
Inc.
........................................
United
States
60,000
1,479,000
Public
Service
Enterprise
Group,
Inc.
......................
United
States
45,000
2,877,300
Sempra
Energy
.......................................
United
States
45,000
5,956,200
WEC
Energy
Group,
Inc.
................................
United
States
35,000
3,306,800
34,331,100
Oil,
Gas
&
Consumable
Fuels
1.5%
a
Amplify
Energy
Corp.
..................................
United
States
245
897
Bonanza
Creek
Energy,
Inc.
.............................
United
States
18,598
723,090
a
California
Resources
Corp.
..............................
United
States
27
924
Chesapeake
Energy
Corp.
..............................
United
States
588
32,816
a
DT
Midstream,
Inc.
....................................
United
States
15,000
697,050
Enbridge,
Inc.
........................................
Canada
39,360
1,547,242
a
Goodrich
Petroleum
Corp.
...............................
United
States
19,379
314,909
a,c
Riviera
Resources,
Inc.
.................................
United
States
5,042
1,302
3,318,230
Total
Common
Stocks
(Cost
$38,409,075)
......................................
95,784,058
Preferred
Stocks
0.3%
Electric
Utilities
0.3%
SCE
Trust
II,
5.1%
....................................
United
States
27,500
687,775
Total
Preferred
Stocks
(Cost
$598,125)
.........................................
687,775
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
10
a
a
Country
Warrants
a
Value
a
a
a
a
a
a
Warrants
0.0%
†
Oil,
Gas
&
Consumable
Fuels
0.0%
†
a,c
Battalion
Oil
Corp.,
A,
10/08/22
...........................
United
States
583
$
62
a,c
Battalion
Oil
Corp.,
B,
10/08/22
...........................
United
States
728
41
a,c
Battalion
Oil
Corp.,
C,
10/08/22
...........................
United
States
937
22
a
California
Resources
Corp.,
10/27/24
......................
United
States
64
487
a
Chesapeake
Energy
Corp.,
2/09/26
........................
United
States
1,109
26,150
26,762
Paper
&
Forest
Products
0.0%
†
a
Verso
Corp.,
7/25/23
...................................
United
States
350
1,400
Total
Warrants
(Cost
$602,519)
................................................
28,162
Principal
Amount
*
Convertible
Bonds
0.0%
†
Wireless
Telecommunication
Services
0.0%
†
d,e,f
Digicel
Group
Holdings
Ltd.
,
Sub.
Bond
,
144A,
PIK,
7
%
,
Perpetual
Bermuda
24,428
18,510
Total
Convertible
Bonds
(Cost
$5,227)
.........................................
18,510
Corporate
Bonds
78.4%
Airlines
1.0%
f
American
Airlines
Inc
/
AAdvantage
Loyalty
IP
Ltd.
,
Senior
Secured
Note
,
144A,
5.5
%
,
4/20/26
.............................
United
States
700,000
738,675
f
Delta
Air
Lines,
Inc.
/
SkyMiles
IP
Ltd.
,
Senior
Secured
Note
,
144A,
4.75
%
,
10/20/28
.....................................
United
States
1,000,000
1,115,714
f
United
Airlines,
Inc.
,
Senior
Secured
Note,
144A,
4.375%,
4/15/26
..............
United
States
100,000
103,938
Senior
Secured
Note,
144A,
4.625%,
4/15/29
..............
United
States
300,000
311,632
2,269,959
Auto
Components
2.5%
f
Allison
Transmission,
Inc.
,
Senior
Bond,
144A,
3.75%,
1/30/31
......................
United
States
700,000
700,101
Senior
Note,
144A,
4.75%,
10/01/27
.....................
United
States
600,000
629,703
Dana,
Inc.
,
Senior
Note
,
5.625
%
,
6/15/28
...................
United
States
1,400,000
1,506,638
Goodyear
Tire
&
Rubber
Co.
(The)
,
Senior
Note,
9.5%,
5/31/25
............................
United
States
900,000
998,145
f
Senior
Note,
144A,
5%,
7/15/29
........................
United
States
600,000
635,400
f
Real
Hero
Merger
Sub
2,
Inc.
,
Senior
Note
,
144A,
6.25
%
,
2/01/29
.
United
States
1,000,000
1,036,920
5,506,907
Automobiles
0.6%
f
Jaguar
Land
Rover
Automotive
plc
,
Senior
Note
,
144A,
5.5
%
,
7/15/29
...........................................
United
Kingdom
1,300,000
1,288,040
Banks
0.4%
e
JPMorgan
Chase
&
Co.
,
R
,
Junior
Sub.
Bond
,
6%
to
8/01/23,
FRN
thereafter
,
Perpetual
.................................
United
States
900,000
956,363
Beverages
0.3%
f
Primo
Water
Holdings,
Inc.
,
Senior
Note
,
144A,
4.375
%
,
4/30/29
..
Canada
700,000
707,532
Biotechnology
0.4%
f
Emergent
BioSolutions
,
Inc.
,
Senior
Note
,
144A,
3.875
%
,
8/15/28
.
United
States
900,000
878,684
Building
Products
1.3%
f
Cornerstone
Building
Brands,
Inc.
,
Senior
Note
,
144A,
6.125
%
,
1/15/29
...........................................
United
States
300,000
321,090
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
11
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Building
Products
(continued)
f
JELD-WEN,
Inc.
,
Senior
Note,
144A,
4.625%,
12/15/25
....................
United
States
300,000
$
306,101
Senior
Note,
144A,
4.875%,
12/15/27
....................
United
States
300,000
313,138
f
Standard
Industries,
Inc.
,
Senior
Bond,
144A,
4.75%,
1/15/28
......................
United
States
500,000
519,762
Senior
Bond,
144A,
4.375%,
7/15/30
.....................
United
States
100,000
102,866
Senior
Bond,
144A,
3.375%,
1/15/31
.....................
United
States
200,000
193,031
Senior
Note,
144A,
5%,
2/15/27
........................
United
States
300,000
310,500
f
Summit
Materials
LLC
/
Summit
Materials
Finance
Corp.
,
Senior
Note
,
144A,
5.25
%
,
1/15/29
............................
United
States
800,000
848,032
2,914,520
Chemicals
3.2%
f
Axalta
Coating
Systems
LLC
,
Senior
Note
,
144A,
3.375
%
,
2/15/29
United
States
400,000
392,538
CF
Industries,
Inc.
,
Senior
Bond
,
5.15
%
,
3/15/34
..............
United
States
900,000
1,126,723
f
CVR
Partners
LP
/
CVR
Nitrogen
Finance
Corp.
,
Senior
Secured
Note
,
144A,
6.125
%
,
6/15/28
...........................
United
States
300,000
307,126
f
Element
Solutions,
Inc.
,
Senior
Note
,
144A,
3.875
%
,
9/01/28
.....
United
States
700,000
714,906
f
GPD
Cos.,
Inc.
,
Senior
Secured
Note
,
144A,
10.125
%
,
4/01/26
...
United
States
1,500,000
1,621,793
f
Illuminate
Buyer
LLC
/
Illuminate
Holdings
IV,
Inc.
,
Senior
Note
,
144A,
9
%
,
7/01/28
...................................
United
States
1,000,000
1,106,250
f
Ingevity
Corp.
,
Senior
Note
,
144A,
3.875
%
,
11/01/28
...........
United
States
400,000
402,014
f
Rain
CII
Carbon
LLC
/
CII
Carbon
Corp.
,
Secured
Note
,
144A,
7.25
%
,
4/01/25
.....................................
United
States
600,000
621,144
f
SCIH
Salt
Holdings,
Inc.
,
Senior
Note,
144A,
6.625%,
5/01/29
.....................
United
States
500,000
492,418
Senior
Secured
Note,
144A,
4.875%,
5/01/28
..............
United
States
300,000
302,565
7,087,477
Commercial
Services
&
Supplies
2.2%
f
Allied
Universal
Holdco
LLC
/
Allied
Universal
Finance
Corp.
,
Senior
Note
,
144A,
6
%
,
6/01/29
..............................
United
States
200,000
200,241
f
Allied
Universal
Holdco
LLC
/
Allied
Universal
Finance
Corp.
/
Atlas
LuxCo
4
SARL
,
Senior
Secured
Note
,
144A,
4.625
%
,
6/01/28
..
United
States
400,000
402,250
f
APX
Group,
Inc.
,
Senior
Note
,
144A,
5.75
%
,
7/15/29
...........
United
States
800,000
803,000
f
Harsco
Corp.
,
Senior
Note
,
144A,
5.75
%
,
7/31/27
.............
United
States
500,000
519,375
f
Nielsen
Finance
LLC
/
Nielsen
Finance
Co.
,
Senior
Note
,
144A,
4.5
%
,
7/15/29
......................................
United
States
1,200,000
1,190,790
f
Prime
Security
Services
Borrower
LLC
/
Prime
Finance,
Inc.
,
Senior
Secured
Note
,
144A,
3.375
%
,
8/31/27
....................
United
States
600,000
579,750
f
Stericycle,
Inc.
,
Senior
Note
,
144A,
3.875
%
,
1/15/29
...........
United
States
1,200,000
1,222,806
4,918,212
Communications
Equipment
0.7%
f
CommScope
,
Inc.
,
Senior
Note
,
144A,
7.125
%
,
7/01/28
.........
United
States
1,600,000
1,680,000
Construction
&
Engineering
1.7%
f
Arcosa
,
Inc.
,
Senior
Note
,
144A,
4.375
%
,
4/15/29
.............
United
States
300,000
309,363
f
Great
Lakes
Dredge
&
Dock
Corp.
,
Senior
Note
,
144A,
5.25
%
,
6/01/29
...........................................
United
States
500,000
516,875
f
New
Enterprise
Stone
&
Lime
Co.,
Inc.
,
Senior
Secured
Note
,
144A,
6.25
%
,
3/15/26
.....................................
United
States
900,000
925,875
f
VM
Consolidated,
Inc.
,
Senior
Note
,
144A,
5.5
%
,
4/15/29
.......
United
States
800,000
818,000
f
Weekley
Homes
LLC
/
Weekley
Finance
Corp.
,
Senior
Note
,
144A,
4.875
%
,
9/15/28
.....................................
United
States
1,300,000
1,349,029
3,919,142
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
12
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Consumer
Finance
1.3%
f
FirstCash
,
Inc.
,
Senior
Note
,
144A,
4.625
%
,
9/01/28
...........
United
States
400,000
$
416,482
Navient
Corp.
,
Senior
Note
,
7.25
%
,
9/25/23
..................
United
States
600,000
659,926
OneMain
Finance
Corp.
,
Senior
Bond,
5.375%,
11/15/29
.........................
United
States
1,000,000
1,093,885
Senior
Note,
6.625%,
1/15/28
..........................
United
States
700,000
809,106
2,979,399
Containers
&
Packaging
4.2%
f
Ardagh
Packaging
Finance
plc
/
Ardagh
Holdings
USA,
Inc.
,
Senior
Note,
144A,
5.25%,
8/15/27
......................
United
States
600,000
621,750
Senior
Secured
Note,
144A,
5.25%,
4/30/25
...............
United
States
800,000
838,000
f
Mauser
Packaging
Solutions
Holding
Co.
,
Senior
Note,
144A,
7.25%,
4/15/25
......................
United
States
1,800,000
1,781,640
Senior
Secured
Note,
144A,
8.5%,
4/15/24
................
United
States
1,000,000
1,037,425
f
Owens-Brockway
Glass
Container,
Inc.
,
Senior
Note,
144A,
5.875%,
8/15/23
.....................
United
States
500,000
531,875
Senior
Note,
144A,
6.625%,
5/13/27
.....................
United
States
500,000
539,915
f
Plastipak
Holdings,
Inc.
,
Senior
Note
,
144A,
6.25
%
,
10/15/25
....
United
States
1,700,000
1,731,875
f
Reynolds
Group
Issuer,
Inc.
/
Reynolds
Group
Issuer
LLC
/
Reynolds
Group
Issuer
Luxembourg
SA
,
Senior
Secured
Note
,
144A,
4
%
,
10/15/27
..........................................
United
States
1,200,000
1,201,086
f
Sealed
Air
Corp.
,
Senior
Bond
,
144A,
5.5
%
,
9/15/25
...........
United
States
200,000
224,632
f
Trivium
Packaging
Finance
BV
,
Senior
Note
,
144A,
8.5
%
,
8/15/27
.
Netherlands
800,000
860,000
9,368,198
Diversified
Financial
Services
0.5%
f
Jefferson
Capital
Holdings
LLC
,
Senior
Note
,
144A,
6
%
,
8/15/26
..
United
States
1,200,000
1,210,608
Diversified
Telecommunication
Services
3.2%
f
Altice
France
Holding
SA
,
Senior
Secured
Note
,
144A,
10.5
%
,
5/15/27
...........................................
Luxembourg
1,500,000
1,650,000
f
CCO
Holdings
LLC
/
CCO
Holdings
Capital
Corp.
,
Senior
Bond,
144A,
5.75%,
2/15/26
......................
United
States
350,000
360,062
Senior
Bond,
144A,
5.375%,
6/01/29
.....................
United
States
500,000
546,875
Senior
Bond,
144A,
4.5%,
8/15/30
.......................
United
States
1,700,000
1,778,506
Senior
Bond,
144A,
4.25%,
2/01/31
......................
United
States
200,000
205,507
f
DKT
Finance
ApS
,
Senior
Secured
Note
,
144A,
9.375
%
,
6/17/23
..
Denmark
1,500,000
1,533,938
f
Virgin
Media
Secured
Finance
plc
,
Senior
Secured
Bond
,
144A,
4.5
%
,
8/15/30
......................................
United
Kingdom
1,100,000
1,117,105
7,191,993
Electric
Utilities
0.6%
f
Vistra
Operations
Co.
LLC
,
Senior
Note,
144A,
5.625%,
2/15/27
.....................
United
States
1,000,000
1,042,560
Senior
Note,
144A,
4.375%,
5/01/29
.....................
United
States
400,000
406,500
1,449,060
Electrical
Equipment
0.5%
f
Sensata
Technologies
BV
,
Senior
Note
,
144A,
4
%
,
4/15/29
......
United
States
1,000,000
1,036,300
Electronic
Equipment,
Instruments
&
Components
0.2%
f
TTM
Technologies,
Inc.
,
Senior
Note
,
144A,
4
%
,
3/01/29
........
United
States
500,000
506,875
Energy
Equipment
&
Services
1.4%
f
CSI
Compressco
LP
/
CSI
Compressco
Finance,
Inc.
,
d
Secured
Note,
144A,
PIK,
10%,
4/01/26
..................
United
States
965,556
878,772
Senior
Secured
Note,
144A,
7.5%,
4/01/25
................
United
States
402,000
401,218
f
Nabors
Industries
Ltd.
,
Senior
Note
,
144A,
7.25
%
,
1/15/26
......
United
States
600,000
558,750
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
13
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Energy
Equipment
&
Services
(continued)
Nabors
Industries,
Inc.
,
Senior
Note
,
5.75
%
,
2/01/25
...........
United
States
500,000
$
422,500
f
Weatherford
International
Ltd.
,
Senior
Note
,
144A,
11
%
,
12/01/24
.
United
States
917,000
959,411
3,220,651
Entertainment
1.1%
f
Banijay
Entertainment
SASU
,
Senior
Secured
Note
,
144A,
5.375
%
,
3/01/25
...........................................
France
1,000,000
1,028,750
f
Live
Nation
Entertainment,
Inc.
,
Senior
Secured
Note
,
144A,
3.75
%
,
1/15/28
...........................................
United
States
200,000
200,380
Netflix,
Inc.
,
Senior
Bond,
5.875%,
11/15/28
.........................
United
States
800,000
993,028
f
Senior
Note,
144A,
3.625%,
6/15/25
.....................
United
States
300,000
322,125
2,544,283
Equity
Real
Estate
Investment
Trusts
(REITs)
1.5%
f
Global
Net
Lease,
Inc.
/
Global
Net
Lease
Operating
Partnership
LP
,
Senior
Note
,
144A,
3.75
%
,
12/15/27
......................
United
States
800,000
791,775
f
HAT
Holdings
I
LLC
/
HAT
Holdings
II
LLC
,
Senior
Note
,
144A,
6
%
,
4/15/25
...........................................
United
States
600,000
633,264
MPT
Operating
Partnership
LP
/
MPT
Finance
Corp.
,
Senior
Bond
,
5.25
%
,
8/01/26
.....................................
United
States
300,000
309,504
f
Park
Intermediate
Holdings
LLC
/
PK
Domestic
Property
LLC
/
PK
Finance
Co-Issuer
,
Senior
Secured
Note
,
144A,
5.875
%
,
10/01/28
United
States
500,000
533,125
f
VICI
Properties
LP
/
VICI
Note
Co.,
Inc.
,
Senior
Note
,
144A,
3.75
%
,
2/15/27
...........................................
United
States
700,000
728,875
f
XHR
LP
,
Senior
Secured
Note
,
144A,
4.875
%
,
6/01/29
.........
United
States
400,000
412,500
3,409,043
Food
Products
1.4%
f
Chobani
LLC
/
Chobani
Finance
Corp.,
Inc.
,
Senior
Secured
Note
,
144A,
4.625
%
,
11/15/28
...............................
United
States
800,000
832,192
f
JBS
Finance
Luxembourg
SARL
,
Senior
Bond
,
144A,
3.625
%
,
1/15/32
...........................................
United
States
400,000
414,586
f,g
Pilgrim's
Pride
Corp.
,
Senior
Bond
,
144A,
3.5
%
,
3/01/32
........
United
States
300,000
306,808
f
Post
Holdings,
Inc.
,
Senior
Bond,
144A,
5.625%,
1/15/28
.....................
United
States
300,000
316,125
Senior
Bond,
144A,
4.625%,
4/15/30
.....................
United
States
500,000
511,159
Senior
Bond,
144A,
4.5%,
9/15/31
.......................
United
States
700,000
707,000
3,087,870
Health
Care
Equipment
&
Supplies
0.1%
f
Ortho-Clinical
Diagnostics,
Inc.
/
Ortho-Clinical
Diagnostics
SA
,
Senior
Note
,
144A,
7.375
%
,
6/01/25
......................
United
States
180,000
191,025
Health
Care
Providers
&
Services
4.0%
Centene
Corp.
,
Senior
Bond,
2.5%,
3/01/31
............................
United
States
500,000
499,335
Senior
Note,
2.45%,
7/15/28
...........................
United
States
500,000
508,034
Senior
Note,
2.625%,
8/01/31
..........................
United
States
500,000
507,500
f
CHS/Community
Health
Systems,
Inc.
,
Secured
Note,
144A,
6.125%,
4/01/30
....................
United
States
500,000
504,687
Senior
Secured
Note,
144A,
6.625%,
2/15/25
..............
United
States
500,000
526,189
Senior
Secured
Note,
144A,
6%,
1/15/29
..................
United
States
300,000
320,250
f
DaVita,
Inc.
,
Senior
Note
,
144A,
4.625
%
,
6/01/30
.............
United
States
700,000
732,487
HCA,
Inc.
,
Senior
Bond
,
5.875
%
,
2/15/26
...................
United
States
1,400,000
1,625,470
f
ModivCare
Escrow
Issuer,
Inc.
,
Senior
Note
,
144A,
5
%
,
10/01/29
.
United
States
100,000
102,797
f
ModivCare
,
Inc.
,
Senior
Note
,
144A,
5.875
%
,
11/15/25
.........
United
States
1,000,000
1,063,750
f
MPH
Acquisition
Holdings
LLC
,
Senior
Note
,
144A,
5.75
%
,
11/01/28
United
States
1,500,000
1,434,495
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
14
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Health
Care
Providers
&
Services
(continued)
f
Tenet
Healthcare
Corp.
,
Senior
Note
,
144A,
6.125
%
,
10/01/28
....
United
States
1,000,000
$
1,057,500
8,882,494
Hotels,
Restaurants
&
Leisure
7.2%
f
1011778
BC
ULC
/
New
Red
Finance,
Inc.
,
Secured
Bond
,
144A,
4
%
,
10/15/30
.......................................
Canada
1,000,000
995,730
f,h
24
Hour
Fitness
Worldwide,
Inc.
,
Senior
Note
,
144A,
8
%
,
6/01/22
.
United
States
1,800,000
540
f
Boyd
Gaming
Corp.
,
Senior
Note
,
144A,
8.625
%
,
6/01/25
.......
United
States
800,000
868,840
f
Boyne
USA,
Inc.
,
Senior
Note
,
144A,
4.75
%
,
5/15/29
...........
United
States
300,000
310,125
f
Caesars
Entertainment,
Inc.
,
Senior
Secured
Note
,
144A,
6.25
%
,
7/01/25
...........................................
United
States
700,000
740,740
f
Caesars
Resort
Collection
LLC
/
CRC
Finco
,
Inc.
,
Senior
Secured
Note
,
144A,
5.75
%
,
7/01/25
............................
United
States
400,000
420,800
f
Carnival
Corp.
,
Senior
Note,
144A,
7.625%,
3/01/26
.....................
United
States
400,000
425,800
Senior
Note,
144A,
5.75%,
3/01/27
......................
United
States
1,500,000
1,535,497
f
Downstream
Development
Authority
of
the
Quapaw
Tribe
of
Oklahoma
,
Senior
Secured
Note
,
144A,
10.5
%
,
2/15/23
.......
United
States
1,500,000
1,567,500
f
Everi
Holdings,
Inc.
,
Senior
Note
,
144A,
5
%
,
7/15/29
...........
United
States
700,000
717,325
f
Golden
Nugget,
Inc.
,
Senior
Note
,
144A,
6.75
%
,
10/15/24
.......
United
States
1,300,000
1,304,615
f
International
Game
Technology
plc
,
Senior
Secured
Note,
144A,
4.125%,
4/15/26
..............
United
States
300,000
311,940
Senior
Secured
Note,
144A,
5.25%,
1/15/29
...............
United
States
400,000
427,500
f
Motion
Bondco
DAC
,
Senior
Note
,
144A,
6.625
%
,
11/15/27
......
United
Kingdom
200,000
201,817
f
NCL
Corp.
Ltd.
,
Senior
Note
,
144A,
5.875
%
,
3/15/26
...........
United
States
300,000
301,125
f
Penn
National
Gaming,
Inc.
,
Senior
Note
,
144A,
4.125
%
,
7/01/29
.
United
States
400,000
400,008
f
Premier
Entertainment
Sub
LLC
/
Premier
Entertainment
Finance
Corp.
,
Senior
Bond,
144A,
5.875%,
9/01/31
.....................
United
States
500,000
513,158
Senior
Note,
144A,
5.625%,
9/01/29
.....................
United
States
1,000,000
1,026,930
f
Royal
Caribbean
Cruises
Ltd.
,
Senior
Note
,
144A,
5.5
%
,
8/31/26
..
United
States
500,000
507,500
f
Six
Flags
Theme
Parks,
Inc.
,
Senior
Secured
Note
,
144A,
7
%
,
7/01/25
...........................................
United
States
200,000
214,000
f
Studio
City
Finance
Ltd.
,
Senior
Note
,
144A,
5
%
,
1/15/29
.......
Macau
1,600,000
1,579,432
f
Vail
Resorts,
Inc.
,
Senior
Note
,
144A,
6.25
%
,
5/15/25
..........
United
States
300,000
320,037
f
Wynn
Macau
Ltd.
,
Senior
Note
,
144A,
5.625
%
,
8/26/28
.........
Macau
300,000
304,263
f
Wynn
Resorts
Finance
LLC
/
Wynn
Resorts
Capital
Corp.
,
Senior
Note
,
144A,
7.75
%
,
4/15/25
............................
United
States
1,000,000
1,063,790
16,059,012
Household
Durables
1.1%
f
Ashton
Woods
USA
LLC
/
Ashton
Woods
Finance
Co.
,
Senior
Note
,
144A,
4.625
%
,
8/01/29
................................
United
States
1,500,000
1,502,183
f
M/I
Homes,
Inc.
,
Senior
Note
,
144A,
3.95
%
,
2/15/30
...........
United
States
600,000
607,152
f
Williams
Scotsman
International,
Inc.
,
Senior
Secured
Note
,
144A,
4.625
%
,
8/15/28
.....................................
United
States
300,000
311,625
2,420,960
Independent
Power
and
Renewable
Electricity
Producers
3.4%
f
Atlantica
Sustainable
Infrastructure
plc
,
Senior
Note
,
144A,
4.125
%
,
6/15/28
...........................................
Spain
400,000
419,906
f
Calpine
Corp.
,
Senior
Bond,
144A,
5%,
2/01/31
........................
United
States
900,000
916,947
Senior
Note,
144A,
4.625%,
2/01/29
.....................
United
States
700,000
703,220
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
15
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Independent
Power
and
Renewable
Electricity
Producers
(continued)
Clearway
Energy
Operating
LLC
,
Senior
Note,
5%,
9/15/26
.............................
United
States
700,000
$
719,593
f
Senior
Note,
144A,
4.75%,
3/15/28
......................
United
States
600,000
635,970
f
Senior
Note,
144A,
3.75%,
2/15/31
......................
United
States
300,000
305,247
f
InterGen
NV
,
Senior
Secured
Bond
,
144A,
7
%
,
6/30/23
.........
Netherlands
1,900,000
1,883,432
f
Leeward
Renewable
Energy
Operations
LLC
,
Senior
Note
,
144A,
4.25
%
,
7/01/29
.....................................
United
States
1,000,000
1,022,105
Talen
Energy
Supply
LLC
,
Senior
Note
,
6.5
%
,
6/01/25
..........
United
States
2,100,000
905,772
7,512,192
Insurance
0.5%
f
Alliant
Holdings
Intermediate
LLC
/
Alliant
Holdings
Co-Issuer
,
Senior
Note
,
144A,
6.75
%
,
10/15/27
...........................
United
States
1,100,000
1,145,375
Internet
&
Direct
Marketing
Retail
0.2%
f
Match
Group
Holdings
II
LLC
,
Senior
Note
,
144A,
4.625
%
,
6/01/28
United
States
500,000
522,725
IT
Services
1.8%
f
Cablevision
Lightpath
LLC
,
Senior
Secured
Note
,
144A,
3.875
%
,
9/15/27
...........................................
United
States
500,000
495,100
f
Cogent
Communications
Group,
Inc.
,
Senior
Secured
Note
,
144A,
3.5
%
,
5/01/26
......................................
United
States
500,000
512,225
f
Gartner,
Inc.
,
Senior
Note,
144A,
4.5%,
7/01/28
.......................
United
States
500,000
530,000
Senior
Note,
144A,
3.625%,
6/15/29
.....................
United
States
200,000
206,160
Senior
Note,
144A,
3.75%,
10/01/30
.....................
United
States
300,000
314,295
f
Northwest
Fiber
LLC
/
Northwest
Fiber
Finance
Sub,
Inc.
,
Senior
Note
,
144A,
6
%
,
2/15/28
..............................
United
States
1,100,000
1,096,167
f
Presidio
Holdings,
Inc.
,
Senior
Note
,
144A,
8.25
%
,
2/01/28
......
United
States
900,000
977,445
4,131,392
Life
Sciences
Tools
&
Services
0.1%
f
Charles
River
Laboratories
International,
Inc.
,
Senior
Note
,
144A,
3.75
%
,
3/15/29
.....................................
United
States
200,000
206,426
Machinery
1.5%
f
ATS
Automation
Tooling
Systems,
Inc.
,
Senior
Note
,
144A,
4.125
%
,
12/15/28
..........................................
Canada
1,300,000
1,341,223
f
Manitowoc
Co.,
Inc.
(The)
,
Secured
Note
,
144A,
9
%
,
4/01/26
....
United
States
1,000,000
1,072,520
f
TK
Elevator
U.S.
Newco
,
Inc.
,
Senior
Secured
Note
,
144A,
5.25
%
,
7/15/27
...........................................
Germany
600,000
634,692
f
Vertical
Holdco
GmbH
,
Senior
Note
,
144A,
7.625
%
,
7/15/28
.....
Germany
300,000
325,314
3,373,749
Media
4.4%
f
Clear
Channel
International
BV
,
Senior
Secured
Note
,
144A,
6.625
%
,
8/01/25
.....................................
United
Kingdom
400,000
416,500
f
Clear
Channel
Outdoor
Holdings,
Inc.
,
Senior
Note,
144A,
7.75%,
4/15/28
......................
United
States
300,000
313,125
Senior
Note,
144A,
7.5%,
6/01/29
.......................
United
States
300,000
310,875
f
Clear
Channel
Worldwide
Holdings,
Inc.
,
Senior
Secured
Note
,
144A,
5.125
%
,
8/15/27
................................
United
States
500,000
515,300
CSC
Holdings
LLC
,
Senior
Bond,
5.25%,
6/01/24
...........................
United
States
400,000
432,000
f
Senior
Note,
144A,
7.5%,
4/01/28
.......................
United
States
300,000
328,875
f
Diamond
Sports
Group
LLC
/
Diamond
Sports
Finance
Co.
,
Senior
Note,
144A,
6.625%,
8/15/27
.....................
United
States
700,000
301,875
Senior
Secured
Note,
144A,
5.375%,
8/15/26
..............
United
States
400,000
266,220
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
16
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Media
(continued)
f
DIRECTV
Holdings
LLC
/
DIRECTV
Financing
Co.,
Inc.
,
Senior
Secured
Note
,
144A,
5.875
%
,
8/15/27
....................
United
States
200,000
$
209,331
f
Gray
Television,
Inc.
,
Senior
Note,
144A,
7%,
5/15/27
........................
United
States
500,000
536,900
Senior
Note,
144A,
4.75%,
10/15/30
.....................
United
States
300,000
296,902
f
LCPR
Senior
Secured
Financing
DAC
,
Senior
Secured
Note
,
144A,
6.75
%
,
10/15/27
.....................................
United
States
500,000
535,000
f
News
Corp.
,
Senior
Note
,
144A,
3.875
%
,
5/15/29
.............
United
States
200,000
205,900
f
Nexstar
Media,
Inc.
,
Senior
Note
,
144A,
5.625
%
,
7/15/27
.......
United
States
800,000
850,888
f
Outfront
Media
Capital
LLC
/
Outfront
Media
Capital
Corp.
,
Senior
Note
,
144A,
4.25
%
,
1/15/29
............................
United
States
400,000
401,500
f
Scripps
Escrow,
Inc.
,
Senior
Note
,
144A,
5.875
%
,
7/15/27
.......
United
States
600,000
616,674
f
Sinclair
Television
Group,
Inc.
,
Senior
Bond
,
144A,
5.5
%
,
3/01/30
.
United
States
700,000
686,868
f
Sirius
XM
Radio,
Inc.
,
Senior
Note,
144A,
3.125%,
9/01/26
.....................
United
States
500,000
510,100
Senior
Note,
144A,
4%,
7/15/28
........................
United
States
600,000
613,710
f
Univision
Communications,
Inc.
,
Senior
Secured
Note,
144A,
9.5%,
5/01/25
................
United
States
800,000
873,000
Senior
Secured
Note,
144A,
4.5%,
5/01/29
................
United
States
600,000
609,390
9,830,933
Metals
&
Mining
2.0%
Commercial
Metals
Co.
,
Senior
Bond
,
3.875
%
,
2/15/31
.........
United
States
1,200,000
1,229,796
f
Constellium
SE
,
Senior
Note
,
144A,
3.75
%
,
4/15/29
...........
United
States
600,000
597,591
f
FMG
Resources
August
2006
Pty.
Ltd.
,
Senior
Bond
,
144A,
4.375
%
,
4/01/31
...........................................
Australia
1,000,000
1,079,020
f
Joseph
T
Ryerson
&
Son,
Inc.
,
Senior
Secured
Note
,
144A,
8.5
%
,
8/01/28
...........................................
United
States
588,000
656,346
f
Novelis
Corp.
,
Senior
Bond,
144A,
3.875%,
8/15/31
.....................
United
States
100,000
101,061
Senior
Note,
144A,
3.25%,
11/15/26
.....................
United
States
100,000
102,649
f
SunCoke
Energy,
Inc.
,
Senior
Secured
Note
,
144A,
4.875
%
,
6/30/29
United
States
600,000
608,466
4,374,929
Mortgage
Real
Estate
Investment
Trusts
(REITs)
0.4%
f
Apollo
Commercial
Real
Estate
Finance,
Inc.
,
Senior
Secured
Note
,
144A,
4.625
%
,
6/15/29
................................
United
States
1,000,000
975,220
Oil,
Gas
&
Consumable
Fuels
9.9%
f
Antero
Resources
Corp.
,
Senior
Note,
144A,
8.375%,
7/15/26
.....................
United
States
130,000
147,389
Senior
Note,
144A,
7.625%,
2/01/29
.....................
United
States
200,000
220,252
Senior
Note,
144A,
5.375%,
3/01/30
.....................
United
States
700,000
713,324
Bonanza
Creek
Energy,
Inc.
,
Senior
Note
,
7.5
%
,
4/30/26
........
United
States
199,676
201,072
Calumet
Specialty
Products
Partners
LP
/
Calumet
Finance
Corp.
,
Senior
Note
,
7.75
%
,
4/15/23
...........................
United
States
800,000
791,740
Cenovus
Energy,
Inc.
,
Senior
Bond,
6.75%,
11/15/39
..........................
Canada
400,000
540,911
Senior
Bond,
5.4%,
6/15/47
............................
Canada
300,000
370,188
Cheniere
Energy
Partners
LP
,
Senior
Note,
5.625%,
10/01/26
.........................
United
States
700,000
725,305
Senior
Note,
4.5%,
10/01/29
...........................
United
States
1,200,000
1,294,500
f
Senior
Note,
144A,
4%,
3/01/31
........................
United
States
1,200,000
1,264,500
Cheniere
Energy,
Inc.
,
Senior
Secured
Note
,
4.625
%
,
10/15/28
...
United
States
700,000
739,375
f
Chesapeake
Energy
Corp.
,
Senior
Note
,
144A,
5.5
%
,
2/01/26
....
United
States
500,000
523,120
f
Continental
Resources,
Inc.
,
Senior
Bond
,
144A,
5.75
%
,
1/15/31
..
United
States
700,000
854,000
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
17
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Oil,
Gas
&
Consumable
Fuels
(continued)
Crestwood
Midstream
Partners
LP
/
Crestwood
Midstream
Finance
Corp.
,
Senior
Note,
5.75%,
4/01/25
...........................
United
States
800,000
$
818,000
f
Senior
Note,
144A,
6%,
2/01/29
........................
United
States
700,000
715,064
f
CrownRock
LP
/
CrownRock
Finance,
Inc.
,
Senior
Note
,
144A,
5
%
,
5/01/29
...........................................
United
States
300,000
308,622
f
DT
Midstream,
Inc.
,
Senior
Note
,
144A,
4.125
%
,
6/15/29
........
United
States
700,000
718,375
f
Endeavor
Energy
Resources
LP
/
EER
Finance,
Inc.
,
Senior
Bond,
144A,
5.75%,
1/30/28
......................
United
States
300,000
316,125
Senior
Note,
144A,
6.625%,
7/15/25
.....................
United
States
500,000
530,850
d,f
EnQuest
plc
,
Senior
Note
,
144A,
Reg
S,
PIK,
7
%
,
10/15/23
......
United
Kingdom
652,663
591,977
f
EQT
Corp.
,
Senior
Note
,
144A,
3.125
%
,
5/15/26
..............
United
States
300,000
308,625
c,d,i
Goodrich
Petroleum
Corp.
,
144A,
PIK,
13.5
%
,
5/31/23
.........
United
States
1,571,558
1,624,844
f
Hilcorp
Energy
I
LP
/
Hilcorp
Finance
Co.
,
Senior
Bond,
144A,
6%,
2/01/31
........................
United
States
200,000
205,750
Senior
Note,
144A,
5.75%,
2/01/29
......................
United
States
200,000
203,250
f
Martin
Midstream
Partners
LP
/
Martin
Midstream
Finance
Corp.
,
Secured
Note
,
144A,
11.5
%
,
2/28/25
.....................
United
States
776,232
798,553
d,f,h
Murray
Energy
Corp.
,
Secured
Note
,
144A,
PIK,
12
%
,
4/15/24
...
United
States
757,734
3,864
f
Oasis
Midstream
Partners
LP
/
OMP
Finance
Corp.
,
Senior
Note
,
144A,
8
%
,
4/01/29
...................................
United
States
500,000
518,152
Occidental
Petroleum
Corp.
,
Senior
Bond,
6.45%,
9/15/36
...........................
United
States
700,000
876,207
j
Senior
Note,
FRN,
1.575%,
(3-month
USD
LIBOR
+
1.45%),
8/15/22
...........................................
United
States
400,000
398,489
Senior
Note,
8.875%,
7/15/30
..........................
United
States
1,100,000
1,511,009
Senior
Note,
6.625%,
9/01/30
..........................
United
States
200,000
249,779
Senior
Note,
6.125%,
1/01/31
..........................
United
States
300,000
363,179
f
Renewable
Energy
Group,
Inc.
,
Senior
Secured
Note
,
144A,
5.875
%
,
6/01/28
...........................................
United
States
400,000
414,714
Sunoco
LP
/
Sunoco
Finance
Corp.
,
Senior
Note,
6%,
4/15/27
.............................
United
States
1,000,000
1,046,205
Senior
Note,
4.5%,
5/15/29
............................
United
States
200,000
202,812
f
Venture
Global
Calcasieu
Pass
LLC
,
Senior
Secured
Bond,
144A,
4.125%,
8/15/31
..............
United
States
300,000
315,029
Senior
Secured
Note,
144A,
3.875%,
8/15/29
..............
United
States
300,000
309,585
f
Viper
Energy
Partners
LP
,
Senior
Note
,
144A,
5.375
%
,
11/01/27
..
United
States
400,000
420,162
22,154,897
Personal
Products
0.1%
f
Prestige
Brands,
Inc.
,
Senior
Bond
,
144A,
3.75
%
,
4/01/31
.......
United
States
300,000
296,636
Pharmaceuticals
2.9%
f
Bausch
Health
Americas,
Inc.
,
Senior
Note
,
144A,
9.25
%
,
4/01/26
.
United
States
1,400,000
1,510,250
f
Bausch
Health
Cos.,
Inc.
,
Senior
Bond
,
144A,
6.125
%
,
4/15/25
...
United
States
370,000
378,787
f
Endo
Dac
/
Endo
Finance
LLC
/
Endo
Finco
,
Inc.
,
Secured
Note,
144A,
9.5%,
7/31/27
......................
United
States
302,000
297,129
Senior
Note,
144A,
6%,
6/30/28
........................
United
States
389,000
243,660
f
Endo
Luxembourg
Finance
Co.
I
SARL
/
Endo
US,
Inc.
,
Senior
Secured
Note
,
144A,
6.125
%
,
4/01/29
....................
United
States
500,000
495,642
f
Jazz
Securities
DAC
,
Senior
Secured
Note
,
144A,
4.375
%
,
1/15/29
United
States
1,300,000
1,348,939
f
Organon
&
Co.
/
Organon
Foreign
Debt
Co-Issuer
BV
,
Senior
Bond,
144A,
5.125%,
4/30/31
.....................
United
States
500,000
525,120
Senior
Secured
Note,
144A,
4.125%,
4/30/28
..............
United
States
1,000,000
1,032,950
f
Par
Pharmaceutical,
Inc.
,
Senior
Secured
Note
,
144A,
7.5
%
,
4/01/27
United
States
225,000
228,094
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
18
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Pharmaceuticals
(continued)
Teva
Pharmaceutical
Finance
Netherlands
III
BV
,
Senior
Note
,
7.125
%
,
1/31/25
.....................................
Israel
500,000
$
546,725
6,607,296
Real
Estate
Management
&
Development
0.6%
f
Five
Point
Operating
Co.
LP
/
Five
Point
Capital
Corp.
,
Senior
Note
,
144A,
7.875
%
,
11/15/25
...............................
United
States
700,000
733,008
f
Forestar
Group,
Inc.
,
Senior
Note
,
144A,
3.85
%
,
5/15/26
........
United
States
500,000
505,000
1,238,008
Road
&
Rail
0.6%
f
First
Student
Bidco
,
Inc.
/
First
Transit
Parent,
Inc.
,
Senior
Secured
Note
,
144A,
4
%
,
7/31/29
..............................
United
States
900,000
894,312
f
NESCO
Holdings
II,
Inc.
,
Secured
Note
,
144A,
5.5
%
,
4/15/29
....
United
States
500,000
519,275
1,413,587
Semiconductors
&
Semiconductor
Equipment
0.3%
f
Amkor
Technology,
Inc.
,
Senior
Note
,
144A,
6.625
%
,
9/15/27
.....
United
States
400,000
431,320
f
ON
Semiconductor
Corp.
,
Senior
Note
,
144A,
3.875
%
,
9/01/28
...
United
States
300,000
315,600
746,920
Software
1.8%
d,f
Anagram
International,
Inc.
/
Anagram
Holdings
LLC
,
Secured
Note
,
144A,
PIK,
10
%
,
8/15/26
..............................
United
States
210,556
204,857
f
Blackboard,
Inc.
,
Secured
Note
,
144A,
10.375
%
,
11/15/24
.......
United
States
1,600,000
1,693,584
f
Camelot
Finance
SA
,
Senior
Secured
Note
,
144A,
4.5
%
,
11/01/26
.
United
States
900,000
940,320
f
Rocket
Software,
Inc.
,
Senior
Note
,
144A,
6.5
%
,
2/15/29
........
United
States
1,300,000
1,226,693
4,065,454
Specialty
Retail
1.8%
f
Bath
&
Body
Works,
Inc.
,
Senior
Note
,
144A,
6.625
%
,
10/01/30
...
United
States
500,000
576,875
f
Lithia
Motors,
Inc.
,
Senior
Bond,
144A,
4.375%,
1/15/31
.....................
United
States
300,000
325,875
Senior
Note,
144A,
4.625%,
12/15/27
....................
United
States
400,000
424,500
Senior
Note,
144A,
3.875%,
6/01/29
.....................
United
States
200,000
209,960
f
Michaels
Cos.,
Inc.
(The)
,
Senior
Note,
144A,
7.875%,
5/01/29
.....................
United
States
600,000
619,020
Senior
Secured
Note,
144A,
5.25%,
5/01/28
...............
United
States
300,000
308,250
Murphy
Oil
USA,
Inc.
,
Senior
Note
,
4.75
%
,
9/15/29
............
United
States
700,000
741,125
f,j
Party
City
Holdings,
Inc.
,
Senior
Secured
Note
,
144A,
FRN
,
5.75
%
,
(
6-month
USD
LIBOR
+
5
%
),
7/15/25
.....................
United
States
370,005
346,978
f
Victoria's
Secret
&
Co.
,
Senior
Note
,
144A,
4.625
%
,
7/15/29
.....
United
States
400,000
401,250
3,953,833
Textiles,
Apparel
&
Luxury
Goods
0.5%
f
Hanesbrands,
Inc.
,
Senior
Note
,
144A,
4.625
%
,
5/15/24
........
United
States
1,000,000
1,062,500
Thrifts
&
Mortgage
Finance
0.9%
f
Ladder
Capital
Finance
Holdings
LLLP
/
Ladder
Capital
Finance
Corp.
,
Senior
Note
,
144A,
4.75
%
,
6/15/29
.................
United
States
300,000
307,125
MGIC
Investment
Corp.
,
Senior
Note
,
5.25
%
,
8/15/28
..........
United
States
500,000
536,525
f
PennyMac
Financial
Services,
Inc.
,
Senior
Note
,
144A,
5.375
%
,
10/15/25
..........................................
United
States
400,000
414,416
Radian
Group,
Inc.
,
Senior
Note
,
6.625
%
,
3/15/25
.............
United
States
600,000
677,250
1,935,316
Trading
Companies
&
Distributors
0.5%
f
H&E
Equipment
Services,
Inc.
,
Senior
Note
,
144A,
3.875
%
,
12/15/28
United
States
600,000
603,270
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
19
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Trading
Companies
&
Distributors
(continued)
f
WESCO
Distribution,
Inc.
,
Senior
Note
,
144A,
7.25
%
,
6/15/28
....
United
States
400,000
$
445,376
1,048,646
Wireless
Telecommunication
Services
1.6%
d,f
Digicel
Group
Holdings
Ltd.
,
Senior
Note
,
144A,
PIK,
8
%
,
4/01/25
.
Bermuda
48,600
41,556
Hughes
Satellite
Systems
Corp.
,
Senior
Note
,
6.625
%
,
8/01/26
...
United
States
1,300,000
1,478,893
T-Mobile
USA,
Inc.
,
Senior
Bond,
2.875%,
2/15/31
..........................
United
States
300,000
308,625
Senior
Bond,
3.5%,
4/15/31
............................
United
States
200,000
213,200
Senior
Note,
2.625%,
2/15/29
..........................
United
States
300,000
304,125
Senior
Note,
4.75%,
2/01/28
...........................
United
States
600,000
641,370
f
Vmed
O2
UK
Financing
I
plc
,
Senior
Secured
Bond
,
144A,
4.25
%
,
1/31/31
...........................................
United
Kingdom
500,000
501,885
3,489,654
Total
Corporate
Bonds
(Cost
$174,516,361)
.....................................
175,770,295
a
k
Marketplace
Loans
1.5%
Diversified
Financial
Services
1.5%
c
Freedom
Financial
Asset
Management
LLC,
5.99%
-
25.49%,
8/01/23
-
10/25/26
...................................
United
States
608,668
609,629
c
Lending
Club
-
LCX
PM,
8.46%
-
21.99%,
10/30/23
-
1/14/26
.....
United
States
168,365
155,871
c
Lending
Club
-
LCX,
14.3%
-
25.65%,
8/26/22
-
2/07/25
.........
United
States
113,660
108,132
c
Lending
Club,
5%
-
25.65%,
6/14/22
-
3/16/25
................
United
States
1,954,239
1,828,813
c
Prosper,
12.06%
-
29.74%,
8/17/24
-
8/30/26
.................
United
States
534,600
560,786
c
Upgrade,
24.99%
-
30.17%,
11/14/22
-
12/23/24
..............
United
States
42,167
34,755
3,297,986
a
a
a
a
a
a
Total
Marketplace
Loans
(Cost
$3,490,583)
.....................................
3,297,986
Asset-Backed
Securities
2.3%
Diversified
Financial
Services
2.3%
f,l
Consumer
Loan
Underlying
Bond
Certificate
Issuer
Trust
I
,
2019-26,
PT,
144A,
FRN,
18.103%,
8/15/44
................
United
States
367,837
367,587
2019-31,
PT,
144A,
FRN,
17.384%,
9/15/44
................
United
States
330,256
327,468
2019-37,
PT,
144A,
FRN,
18.323%,
10/17/44
...............
United
States
344,057
339,673
2019-42,
PT,
144A,
FRN,
17.972%,
11/15/44
...............
United
States
353,384
353,061
2019-51,
PT,
144A,
FRN,
15.74%,
1/15/45
.................
United
States
443,909
443,850
2019-52,
PT,
144A,
FRN,
16.222%,
1/15/45
................
United
States
384,285
386,863
2019-S3,
PT,
144A,
FRN,
14.124%,
6/15/44
................
United
States
87,548
87,140
2019-S4,
PT,
144A,
FRN,
10.647%,
8/15/44
................
United
States
296,834
296,853
2019-S5,
PT,
144A,
FRN,
12.766%,
9/15/44
................
United
States
309,612
309,449
2019-S6,
PT,
144A,
FRN,
11.361%,
10/17/44
...............
United
States
300,809
295,221
2019-S7,
PT,
144A,
FRN,
10.781%,
12/15/44
...............
United
States
269,806
266,565
2019-S8,
PT,
144A,
FRN,
9.972%,
1/15/45
.................
United
States
320,245
315,165
2020-2,
PT,
144A,
FRN,
16.225%,
3/15/45
.................
United
States
359,508
360,523
2020-7,
PT,
144A,
FRN,
16.13%,
4/17/45
..................
United
States
208,061
206,118
f,l
Prosper
Pass-Thru
Trust
III
,
2020-PT1,
A,
144A,
FRN,
8.796%,
3/15/26
.................
United
States
224,760
224,882
2020-PT2,
A,
144A,
FRN,
9.444%,
4/15/26
.................
United
States
259,741
255,163
2020-PT3,
A,
144A,
FRN,
7.183%,
5/15/26
.................
United
States
51,135
51,223
f,l
Upgrade
Master
Pass-Thru
Trust
,
2019-PT2
,
A
,
144A,
FRN
,
14.189
%
,
2/15/26
....................................
United
States
257,016
259,856
5,146,660
a
a
a
a
a
a
Total
Asset-Backed
Securities
(Cost
$5,006,502)
................................
5,146,660
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
20
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Escrows
and
Litigation
Trusts
0.0%
†
a
Chesapeake
Energy
Corp.,
Escrow
Account
.................
United
States
1,500,000
$
41,250
Total
Escrows
and
Litigation
Trusts
(Cost
$48,985)
..............................
41,250
Total
Long
Term
Investments
(Cost
$222,677,377)
...............................
280,774,696
a
Short
Term
Investments
3.0%
a
a
Country
Shares
a
Value
a
Money
Market
Funds
3.0%
m,n
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.....
United
States
6,675,578
6,675,578
Total
Money
Market
Funds
(Cost
$6,675,578)
...................................
6,675,578
o
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
0.0%
†
a
a
a
a
a
Money
Market
Funds
0.0%
†
m,n
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.....
United
States
46,000
46,000
Principal
Amount
*
Repurchase
Agreements
0.0%
†
p
Joint
Repurchase
Agreement,
BofA
Securities,
Inc.,
0.05%,
9/01/21
(Maturity
Value
$12,148)
Collateralized
by
U.S.
Treasury
Note,
1.125%,
2/28/25
(valued
at
$12,391)
..........................................
12,148
12,148
Total
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
(Cost
$58,148)
...............................................................
58,148
Total
Short
Term
Investments
(Cost
$6,733,726
)
.................................
6,733,726
a
Total
Investments
(Cost
$229,411,103)
128.2%
..................................
$287,508,422
Notes
Payable
(29.0)%
.......................................................
(64,945,576)
Other
Assets,
less
Liabilities
0.8%
.............................................
1,683,000
Net
Assets
100.0%
...........................................................
$224,245,846
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
21
See
Abbreviations
on
page
37
.
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
†
Rounds
to
less
than
0.1%
of
net
assets.
a
Non-income
producing.
b
A
portion
or
all
of
the
security
is
on
loan
at
August
31,
2021.
See
Note
1(e).
c
Fair
valued
using
significant
unobservable
inputs.
See
Note
11
regarding
fair
value
measurements.
d
Income
may
be
received
in
additional
securities
and/or
cash.
e
Perpetual
security
with
no
stated
maturity
date.
f
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
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.
Regulation
S
securities
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
August
31,
2021,
the
aggregate
value
of
these
securities
was
$148,430,694,
representing
66.2%
of
net
assets.
g
A
portion
or
all
of
the
security
purchased
on
a
delayed
delivery
basis.
See
Note
1(c).
h
See
Note
8
regarding
credit
risk
and
defaulted
securities.
i
See
Note
10
regarding
restricted
securities.
j
The
coupon
rate
shown
represents
the
rate
at
period
end.
k
See
Note
1(f)
regarding
Marketplace
Lending.
l
Adjustable
rate
security
with
an
interest
rate
that
is
not
based
on
a
published
reference
index
and
spread. The
rate
is
based
on
the
structure
of
the
agreement
and
current
market
conditions.
The
coupon
rate
shown
represents
the
rate
at
period
end.
m
See
Note
4(c)
regarding
investments
in
affiliated
management
investment
companies.
n
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
o
See
Note
1(e)
regarding
securities
on
loan.
p
See
Note
1(d)
regarding
joint
repurchase
agreement.
Franklin
Universal
Trust
Financial
Statements
Statement
of
Assets
and
Liabilities
August
31,
2021
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
22
Franklin
Universal
Trust
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
...................................................................
$222,677,377
Cost
-
Non-controlled
affiliates
(Note
4c)
........................................................
6,721,578
Cost
-
Unaffiliated
repurchase
agreements
......................................................
12,148
Value
-
Unaffiliated
issuers
(Includes
securities
loaned
of
$57,374)
....................................
$280,774,696
Value
-
Non-controlled
affiliates
(Note
4c)
.......................................................
6,721,578
Value
-
Unaffiliated
repurchase
agreements
......................................................
12,148
Cash
....................................................................................
1,417,475
Receivables:
Investment
securities
sold
...................................................................
215,250
Dividends
and
interest
.....................................................................
3,081,869
Total
assets
..........................................................................
292,223,016
Liabilities:
Payables:
Investment
securities
purchased
..............................................................
300,000
Management
fees
.........................................................................
181,570
Trustees'
fees
and
expenses
.................................................................
2,429
Distributions
to
shareholders
.................................................................
1,068,105
Accrued
interest
(Note
3)
...................................................................
1,176,749
Payable
upon
return
of
securities
loaned
(Note
1e)
..................................................
58,148
Senior
fixed
rate
Notes,
at
par
value
of
$65,000,000
less
unamortized
Note
issuance
costs
of
$54,424
(Note
3)
....
64,945,576
Accrued
expenses
and
other
liabilities
...........................................................
244,593
Total
liabilities
.........................................................................
67,977,170
Net
assets,
at
value
.................................................................
$224,245,846
Net
assets
consist
of:
Paid-in
capital
.............................................................................
$164,229,882
Total
distributable
earnings
(losses)
.............................................................
60,015,964
Net
assets,
at
value
.................................................................
$224,245,846
Shares
outstanding
.........................................................................
25,131,894
Net
asset
value
per
share
....................................................................
$8.92
Franklin
Universal
Trust
Financial
Statements
Statement
of
Operations
for
the
year
ended
August
31,
2021
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
23
Franklin
Universal
Trust
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$15,516)
Unaffiliated
issuers
........................................................................
$2,988,561
Non-controlled
affiliates
(Note
4
c
)
.............................................................
354
Interest:
Unaffiliated
issuers
........................................................................
11,894,974
Income
from
securities
loaned:
Unaffiliated
entities
(net
of
fees
and
rebates)
.....................................................
2,763
Non-controlled
affiliates
(Note
4
c
)
.............................................................
25
Total
investment
income
...................................................................
14,886,677
Expenses:
Management
fees
(Note
4
a
)
...................................................................
2,109,786
Interest
expense
(Note
3
)
.....................................................................
2,544,983
Transfer
agent
fees
.........................................................................
64,642
Custodian
fees
(Note
5
)
......................................................................
1,755
Reports
to
shareholders
......................................................................
11,904
Professional
fees
...........................................................................
280,502
Trustees'
fees
and
expenses
..................................................................
7,658
Amortization
of
note
issuance
costs
(Note
3
)
......................................................
17,168
Marketplace
lending
fees
(Note
1f)
..............................................................
240,880
Other
....................................................................................
132,893
Total
expenses
.........................................................................
5,412,171
Expense
reductions
(Note
5
)
...............................................................
(4)
Expenses
waived/paid
by
affiliates
(Note
4c)
...................................................
(4,783)
Net
expenses
.........................................................................
5,407,384
Net
investment
income
................................................................
9,479,293
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
......................................................................
3,848,648
Foreign
currency
transactions
................................................................
695
Net
realized
gain
(loss)
..................................................................
3,849,343
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
......................................................................
17,529,709
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
..............................
(444)
Net
change
in
unrealized
appreciation
(depreciation)
............................................
17,529,265
Net
realized
and
unrealized
gain
(loss)
............................................................
21,378,608
Net
increase
(decrease)
in
net
assets
resulting
from
operations
..........................................
$30,857,901
Franklin
Universal
Trust
Financial
Statements
Statements
of
Changes
in
Net
Assets
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
24
Franklin
Universal
Trust
Year
Ended
August
31,
2021
Year
Ended
August
31,
2020
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
.................................................
$9,479,293
$10,341,077
Net
realized
gain
(loss)
.................................................
3,849,343
(1,265,255)
Net
change
in
unrealized
appreciation
(depreciation)
...........................
17,529,265
(10,590,299)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
................
30,857,901
(1,514,477)
Distributions
to
shareholders
..............................................
(10,706,188)
(9,683,318)
Net
increase
(decrease)
in
net
assets
...................................
20,151,713
(11,197,795)
Net
assets:
Beginning
of
year
.......................................................
204,094,133
215,291,928
End
of
year
...........................................................
$224,245,846
$204,094,133
Franklin
Universal
Trust
Financial
Statements
Statement
of
Cash
Flows
for
the
year
ended
August
31,
2021
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
25
Franklin
Universal
Trust
Cash
flow
from
operating
activities:
Dividends,
interest
and
other
income
received
.....................................................
$
14,429,327
Operating
expenses
paid
.....................................................................
(2,765,331)
Interest
expense
paid
........................................................................
(2,541,500)
Cash
collateral
received
for
securities
loaned
......................................................
57,816
Realized
gain
on
foreign
currency
transactions
.....................................................
695
Purchases
of
long-term
investments
.............................................................
(99,868,953)
Sales
and
maturities
of
long-term
investments
.....................................................
103,011,291
Net
purchases
of
short-term
investments
.........................................................
(1,497,089)
Cash
provided
-
operating
activities
..........................................................
10,826,256
Cash
flow
from
financing
activities:
Cash
distributions
to
shareholders
..............................................................
(10,442,304)
Cash
used
-
financing
activities
.............................................................
(10,442,304)
Net
increase
(decrease)
in
cash
.................................................................
383,952
Cash
at
beginning
of
year
......................................................................
1,033,523
Cash
at
end
of
year
...........................................................................
$1,417,475
Reconciliation
of
Net
Increase
(Decrease)
in
Net
Assets
resulting
from
Operating
Activities
to
Net
Cash
Provided
by
Operating
Activities
for
the
year
ended
August
31,
2021
Net
increase
(decrease)
in
net
assets
resulting
from
operating
activities
....................................
$
30,857,901
Adjustments
to
reconcile
net
increase
(decrease)
in
net
assets
resulting
from
operating
activities
to
net
cash
provided
by
operating
activities:
Net
amortization
income
..................................................................
(521,138)
Amortization
of
Note
issuance
costs
..........................................................
17,168
Reinvested
dividends
from
non-controlled
affiliates
...............................................
(354)
Interest
received
in
the
form
of
securities
......................................................
(143,896)
Decrease
in
dividends
and
interest
receivable
and
other
assets
.....................................
351,490
Increase
in
interest
payable
................................................................
3,483
Increase
in
payable
to
affiliates,
accrued
expenses,
and
other
liabilities
...............................
79,902
Increase
in
payable
for
investments
purchased
.................................................
90,250
Decrease
in
receivable
for
investments
sold
....................................................
623,375
Increase
in
collateral
for
securities
loaned
.....................................................
57,816
Increase
in
cost
of
investments
.............................................................
(3,060,476)
Decrease
in
unrealized
depreciation
on
investments.
.............................................
(17,529,265)
Net
cash
provided
by
operating
activities
...........................................................
$10,826,256
Franklin
Universal
Trust
Notes
to
Financial
Statements
26
franklintempleton.com
Annual
Report
1.
Organization
and
Significant
Accounting
Policies
Franklin
Universal
Trust (Fund)
is
registered under
the
Investment
Company
Act
of
1940
(1940
Act)
as
a
closed-
end
management
investment
company
and
applies
the
specialized
accounting
and
reporting
guidance
in
U.S.
Generally
Accepted
Accounting
Principles
(U.S.
GAAP).
The
following
summarizes
the
Fund's
significant
accounting
policies.
a.
Financial
Instrument
Valuation
The
Fund's
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
Fund
calculates
the
net
asset
value
(NAV)
per
share
each business
day as
of
4
p.m.
Eastern
time
or
the
regularly
scheduled
close
of
the
New
York
Stock
Exchange
(NYSE),
whichever
is
earlier.
Senior
Fixed
Rate
Notes
issued
by
the
Fund
are
carried
at
cost.
Under
compliance
policies
and
procedures
approved
by
the
Fund's
Board
of
Trustees
(the
Board),
the Fund's
administrator
has
responsibility
for
oversight
of
valuation,
including
leading
the
cross-functional
Valuation
Committee
(VC).
The
Fund
may
utilize
independent
pricing
services,
quotations
from
securities
and
financial
instrument
dealers,
and
other
market
sources
to
determine
fair
value.
Equity
securities
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.
Foreign
equity
securities
are
valued
as
of
the
close
of
trading
on
the
foreign
stock
exchange
on
which
the
security
is
primarily
traded,
or
as
of
4
p.m.
Eastern
time.
The
value
is
then
converted
into
its
U.S.
dollar
equivalent
at
the
foreign
exchange
rate
in
effect
at
4
p.m.
Eastern
time
on
the
day
that
the
value
of
the
security
is
determined.
Over-the-counter
(OTC)
securities
are
valued
within
the
range
of
the
most
recent
quoted
bid
and
ask
prices.
Securities
that
trade
in
multiple
markets
or
on
multiple
exchanges
are
valued
according
to
the
broadest
and
most
representative
market.
Certain
equity
securities
are
valued
based
upon
fundamental
characteristics
or
relationships
to
similar
securities.
Debt
securities
generally
trade
in
the
OTC
market
rather
than
on
a
securities
exchange.
The
Fund's
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.
Securities
denominated
in
a
foreign
currency
are
converted
into
their
U.S.
dollar
equivalent
at
the
foreign
exchange
rate
in
effect
at
4
p.m.
Eastern
time
on
the
date
that
the
values
of
the
foreign
debt
securities
are
determined.
Investments
in
open-end
mutual
funds
are
valued
at
the
closing
NAV.
Investments
in
repurchase
agreements
are
valued
at
cost,
which
approximates
fair
value.
The
Fund
has
procedures
to
determine
the
fair
value
of
financial
instruments
for
which
market
prices
are
not
reliable
or
readily
available.
Under
these
procedures,
the Fund
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.
Trading
in
securities
on
foreign
securities
stock
exchanges
and
OTC
markets
may
be
completed
before
4
p.m.
Eastern
time.
In
addition,
trading
in
certain
foreign
markets
may
not
take
place
on
every
Fund's
business
day. Events
can occur
between
the
time
at
which
trading
in
a
foreign
security
is
completed
and
4
p.m.
Eastern
time
that
might
call
into
question
the
reliability
of
the
value
of
a
portfolio
security
held
by
the
Fund.
As
a
result,
differences
may
arise
between
the
value
of
the
Fund's
portfolio
securities
as
determined
at
the
foreign
market
close
and
the
latest
indications
of
value
at
4
p.m.
Eastern
time. In
order
to
minimize
the
potential
for
these
differences,
an
independent
pricing
service
may
be
Franklin
Universal
Trust
Notes
to
Financial
Statements
27
franklintempleton.com
Annual
Report
used
to
adjust
the
value
of
the
Fund's
portfolio
securities
to
the
latest
indications
of
fair
value
at
4
p.m.
Eastern
time.
At
August
31,
2021,
certain
securities
may
have
been
fair
valued
using
these
procedures,
in
which
case
the
securities
were
categorized
as
Level
2
inputs
within
the
fair
value
hierarchy
(referred
to
as
“market
level
fair
value”).
See
the
Fair
Value
Measurements
note
for
more
information.
When
the
last
day
of
the
reporting
period
is
a
non-business
day,
certain
foreign
markets
may
be
open
on
those
days
that
the
Fund's
NAV
is
not
calculated,
which
could
result
in
differences
between
the
value
of
the
Fund's
portfolio
securities
on
the
last
business
day
and
the
last
calendar
day
of
the
reporting
period.
Any
security
valuation
changes
due
to
an
open
foreign
market
are
adjusted
and
reflected
by
the
Fund
for
financial
reporting
purposes.
b.
Foreign
Currency
Translation
Portfolio
securities
and
other
assets
and
liabilities
denominated
in
foreign
currencies
are
translated
into
U.S.
dollars
based
on
the
exchange
rate
of
such
currencies
against
U.S.
dollars
on
the
date
of
valuation.
The
Fund
may
enter
into
foreign
currency
exchange
contracts
to
facilitate
transactions
denominated
in
a
foreign
currency.
Purchases
and
sales
of
securities,
income
and
expense
items
denominated
in
foreign
currencies
are
translated
into
U.S.
dollars
at
the
exchange
rate
in
effect
on
the
transaction
date.
Portfolio
securities
and
assets
and
liabilities
denominated
in
foreign
currencies
contain
risks
that
those
currencies
will
decline
in
value
relative
to
the
U.S.
dollar.
Occasionally,
events
may
impact
the
availability
or
reliability
of
foreign
exchange
rates
used
to
convert
the
U.S.
dollar
equivalent
value.
If
such
an
event
occurs,
the
foreign
exchange
rate
will
be
valued
at
fair
value
using
procedures
established
and
approved
by
the
Board.
The
Fund
does
not
separately
report
the
effect
of
changes
in
foreign
exchange
rates
from
changes
in
market
prices
on
securities
held.
Such
changes
are
included
in
net
realized
and
unrealized
gain
or
loss
from
investments
in
the
Statement of
Operations.
Realized
foreign
exchange
gains
or
losses
arise
from
sales
of
foreign
currencies,
currency
gains
or
losses
realized
between
the
trade
and
settlement
dates
on
securities
transactions
and
the
difference
between
the
recorded
amounts
of
dividends,
interest,
and
foreign
withholding
taxes
and
the
U.S.
dollar
equivalent
of
the
amounts
actually
received
or
paid.
Net
unrealized
foreign
exchange
gains
and
losses
arise
from
changes
in
foreign
exchange
rates
on
foreign
denominated
assets
and
liabilities
other
than
investments
in
securities
held
at
the
end
of
the
reporting
period.
c.
Securities
Purchased
on
a
Delayed
Delivery
Basis
The
Fund
purchases
securities
on
a
delayed
delivery
basis,
with
payment
and
delivery
scheduled
for
a
future
date.
These
transactions
are
subject
to
market
fluctuations
and
are
subject
to
the
risk
that
the
value
at
delivery
may
be
more
or
less
than
the
trade
date
purchase
price.
Although
the
Fund
will
generally
purchase
these
securities
with
the
intention
of
holding
the
securities,
it
may
sell
the
securities
before
the
settlement
date.
d.
Joint
Repurchase
Agreement
The
Fund
enters
into
a
joint
repurchase
agreement
whereby
its
uninvested
cash
balance
is
deposited
into
a
joint
cash
account
with
other
funds
managed
by
the
investment
manager
or
an
affiliate
of
the
investment
manager
and
is
used
to
invest
in
one
or
more
repurchase
agreements.
The
value
and
face
amount
of
the
joint
repurchase
agreement
are
allocated
to
the
funds
based
on
their
pro-rata
interest.
A
repurchase
agreement
is
accounted
for
as
a
loan
by
the
Fund
to
the
seller,
collateralized
by
securities
which
are
delivered
to
the
Fund's
custodian.
The
fair
value,
including
accrued
interest,
of
the
initial
collateralization
is
required
to
be
at
least
102%
of
the
dollar
amount
invested
by
the
funds,
with
the
value
of
the
underlying
securities
marked
to
market
daily
to
maintain
coverage
of
at
least
100%.
Repurchase
agreements
are
subject
to
the
terms
of
Master
Repurchase
Agreements
(MRAs)
with
approved
counterparties
(sellers).
The
MRAs
contain
various
provisions,
including
but
not
limited
to
events
of
default
and
maintenance
of
collateral
for
repurchase
agreements.
In
the
event
of
default
by
either
the
seller
or
the
Fund,
certain
MRAs
may
permit
the
non-
defaulting
party
to
net
and
close-out
all
transactions,
if
any,
traded
under
such
agreements.
The
Fund
may
sell
securities
it
holds
as
collateral
and
apply
the
proceeds
towards
the
repurchase
price
and
any
other
amounts
owed
by
the
seller
to
the
Fund
in
the
event
of
default
by
the
seller.
This
could
involve
costs
or
delays
in
addition
to
a
loss
on
the
securities
if
their
value
falls
below
the
repurchase
price
owed
by
the
1.
Organization
and
Significant
Accounting
Policies
(continued)
a.
Financial
Instrument
Valuation
(continued)
Franklin
Universal
Trust
Notes
to
Financial
Statements
28
franklintempleton.com
Annual
Report
seller.
The
joint
repurchase
agreement
held
by
the Fund
at
year
end,
as
indicated
in
the
Statement
of
Investments,
had
been
entered
into
on
August
31,
2021.
e.
Securities
Lending
The
Fund
participates
in
an
agency
based
securities
lending
program
to
earn
additional
income.
The
Fund
receives
collateral
in
the
form
of
cash
and/or
U.S.
Government
and
Agency
securities
against
the
loaned
securities
in
an
amount
equal
to
at
least
102%
of
the
fair
value
of
the
loaned
securities.
Collateral
is
maintained
over
the
life
of
the
loan
in
an
amount
not
less
than
100%
of
the
fair
value
of
loaned
securities,
as
determined
at
the
close
of
Fund
business
each
day;
any
additional
collateral
required
due
to
changes
in
security
values
is
delivered
to
the
Fund
on
the
next
business
day.
Any
cash
collateral
received
is
deposited
into
a
joint
cash
account
with
other
funds
and
is
used
to
invest
in
a
money
market
fund
managed
by
Franklin
Advisers,
Inc.,
an
affiliate
of
the Fund,
and/or
a
joint
repurchase
agreement
in
the
Statement
of
Assets
and
Liabilities.
The
Fund
may
receive
income
from
the
investment
of
cash
collateral,
in
addition
to
lending
fees
and
rebates
paid
by
the
borrower.
Income
from
securities
loaned,
net
of
fees
paid
to
the
securities
lending
agent
and/or
third-party
vendor,
is
reported
separately
in
the
Statement
of
Operations.
The
Fund
bears
the
market
risk
with
respect
to any
cash collateral
investment,
securities
loaned,
and
the
risk
that
the
agent
may
default
on
its
obligations
to
the
Fund.
If
the
borrower
defaults
on
its
obligation
to
return
the
securities
loaned,
the
Fund
has
the
right
to
repurchase
the
securities
in
the
open
market
using
the
collateral
received.
The
securities
lending
agent
has
agreed
to
indemnify
the
Fund
in
the
event
of
default
by
a
third
party
borrower.
f.
Marketplace
Lending
The
Fund
invests
in
loans
obtained
through
marketplace
lending.
Marketplace
lending,
sometimes
referred
to
as
peer-to-peer
lending,
is
a
method
of
financing
in
which
a
platform
facilitates
the
borrowing
and
lending
of
money.
It
is
considered
an
alternative
to
more
traditional
forms
of
debt
financing.
Prospective
borrowers
are
required
to
provide
certain
financial
information
to
the
platform,
including,
but
not
limited
to,
the
intended
purpose
of
the
loan,
income,
employment
information,
credit
score,
debt-to-income
ratio,
credit
history
(including
defaults
and
delinquencies)
and
home
ownership
status.
Based
on
this
and
other
information,
the
platform
assigns
its
own
credit
rating
to
the
borrower
and
sets
the
interest
rate
for
the
requested
loan.
The
platform
then
posts
the
borrowing
requests
online,
giving
investors
the
opportunity
to
purchase
the
loans
based
on
factors
such
as
the
interest
rates
and
expected
yields
of
the
loans,
the
borrower
background
data,
and
the
credit
rating
assigned
by
the
platform.
When
the
Fund
invests
in
these
loans,
it
usually
purchases
all
rights,
title
and
interest
in
the
loans
pursuant
to
a
loan
purchase
agreement
directly
from
the
platform.
The
platform
or
a
third-party
servicer
typically
continues
to
service
the
loans,
collecting
payments
and
distributing
them
to
the
Fund,
less
any
servicing
fees
assessed.
The
servicer
is
typically
responsible
for
taking
actions
against
a
borrower
in
the
event
of
a
default
on
the
loan.
Servicing
fees,
along
with
other
administration
fees,
are
included
in
marketplace
lending
fees
in
the
Statement
of
Operations.
The Fund,
as
an
investor
in
a
loan,
would
be
entitled
to
receive
payment
only
from
the
borrower
and
would
not
be
able
to
recover
any
deficiency
from
the
platform,
except
under
very
narrow
circumstances.
The
loans
in
which
the
Fund
may
invest
are
unsecured.
g.
Income
and
Deferred
Taxes
It
is the
Fund's
policy
to
qualify
as
a
regulated
investment
company
under
the
Internal
Revenue
Code. The
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.
The Fund
may
be
subject
to
foreign
taxation
related
to
income
received,
capital
gains
on
the
sale
of
securities
and
certain
foreign
currency
transactions
in
the
foreign
jurisdictions
in
which
it
invests.
Foreign
taxes,
if
any,
are
recorded
based
on
the
tax
regulations
and
rates
that
exist
in
the
foreign
markets
in
which
the
Fund
invests.
When
a
capital
gain
tax
is
determined
to
apply,
the
Fund
records
an
estimated
deferred
tax
liability
in
an
amount
that
would
be
payable
if
the
securities
were
disposed
of
on
the
valuation
date.
The
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
August
31,
2021,
the
Fund
has
1.
Organization
and
Significant
Accounting
Policies
(continued)
d.
Joint
Repurchase
Agreement
(continued)
Franklin
Universal
Trust
Notes
to
Financial
Statements
29
franklintempleton.com
Annual
Report
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
the
statute
of
limitations
in
each
jurisdiction
in
which
the
Fund
invests.
h.
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.
Interest
income
and
estimated
expenses
are
accrued
daily.
Amortization
of
premium
and
accretion
of
discount
on
debt
securities
are
included
in
interest
income.
Dividend
income
is
recorded
on
the
ex-dividend
date
except
for
certain
dividends
from
securities
where
the
dividend
rate
is
not
available.
In
such
cases,
the
dividend
is
recorded
as
soon
as
the
information
is
received
by
the
Fund.
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.
i.
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.
j.
Guarantees
and
Indemnifications
Under
the
Fund’s
organizational
documents,
its
officers
and
trustees
are
indemnified
by
the
Fund
against
certain
liabilities
arising
out
of
the
performance
of
their
duties
to
the
Fund.
Additionally,
in
the
normal
course
of
business,
the
Fund
enters
into
contracts
with
service
providers
that
contain
general
indemnification
clauses.
The
Fund’s
maximum
exposure
under
these
arrangements
is
unknown
as
this
would
involve
future
claims
that
may
be
made
against
the
Fund
that
have
not
yet
occurred.
Currently,
the
Fund
expects
the
risk
of
loss
to
be
remote.
2.
Shares
of
Beneficial
Interest
At
August
31,
2021,
there
were
an
unlimited
number
of
shares
authorized
($0.01
par
value).
During
the
years ended
August
31,
2021
and
August
31,
2020
there
were
no
shares
issued;
all
reinvested
distributions
were
satisfied
with
previously
issued
shares
purchased
in
the
open
market.
Under
the
Board
approved
open-market
share
repurchase
program,
the
Fund
may
purchase,
from
time
to
time,
Fund
shares
in
open-market
transactions,
at
the
discretion
of
management.
During
the
years ended
August
31,
2021
and
August
31,
2020,
there
were
no
shares
repurchased.
3.
Senior
Fixed
Rate
Notes
On
August
28,
2018,
the
Fund
issued
$65
million
principal
amount
of
a
new
class
of
five-year
senior
fixed
rate
notes
(Notes).
The
Notes
bear
interest,
payable
semi-annually,
at
a
rate
of
3.91%
per
year,
to
maturity
on
September
15,
2023.
The
Notes
are
general
unsecured
obligations
of
the
Fund
and
rank
senior
to
trust
shares
and
all
existing
or
future
unsecured
indebtedness
of
the
Fund.
For
the
year
ended
August
31,
2021,
total
interest
paid
by
the
Fund
on
the
Notes
was
$2,541,500.
The
Fund
is
required
to
maintain
on
a
monthly
basis
a
specified
discounted
asset
value
for
its
portfolio
in
compliance
with
guidelines
established
in
the
Notes
Agreement,
and
is
required
under
the
1940
Act
to
maintain
asset
coverage
for
the
Notes
of
at
least
300%.
The
Fund
has
met
these
requirements
during
the
year
ended
August
31,
2021.
The
issuance
costs
of
$114,819
incurred
by
the
Fund
are
deferred
and
amortized
on
an
interest
method
basis
over
the
term
of
the
Notes.
For
the
year
ended
1.
Organization
and
Significant
Accounting
Policies
(continued)
g.
Income
and
Deferred
Taxes
(continued)
Franklin
Universal
Trust
Notes
to
Financial
Statements
30
franklintempleton.com
Annual
Report
August
31,
2021,
the
Fund
amortized
$17,168
of
Notes
issuance
costs.
Subject
to
certain
restrictions
and
make
whole
premiums,
the
Fund
may
prepay
the
Notes
at
any
time.
At
August
31,
2021,
if
the
Notes
were
fully
prepaid,
the
make
whole
premium
related
to
the
current
balance
of
the
Notes
would
have
been
approximately
$4,222,309.
The
Fund
employs
an
income-based
approach
to
determine
the
fair
value
of
the
Notes,
which
uses
the
Notes’
current
credit
rating,
remaining
time
to
maturity,
stated
coupon
rates,
the
current
yield
of
a
comparable
asset,
and
a
liquidity
premium.
At
August
31,
2021,
the
estimated
fair
value
of
the
Notes
was
approximately
$68,730,000.
The
inputs
used
in
determining
the
fair
value
of
the
Notes
represent
Level
3
in
the
fair
value
hierarchy.
See
Note
11
regarding
fair
value
measurements
for
additional
information
about
fair
value
hierarchy
and
Level
3
inputs.
4.
Transactions
with
Affiliates
Franklin
Resources,
Inc.
is
the
holding
company
for
various
subsidiaries
that
together
are
referred
to
as
Franklin
Templeton.
Certain
officers
and
trustees
of
the
Fund
are
also
officers
and/or
directors
of
the
following
subsidiaries:
a.
Management
Fees
The
Fund
pays
an
investment
management
fee
to
Advisers
of
0.75%
per
year
of
the
average
weekly
managed
assets.
Managed
assets
are
defined
as
the
Fund’s
gross
asset
value
minus
the
sum
of
accrued
liabilities,
other
than
the
principal
amount
of
the
Notes.
b.
Administrative
Fees
Under
an
agreement
with
Advisers,
FT
Services
provides
administrative
services
to
the
Fund.
The
fee
is
paid
by
Advisers
based
on
the
Fund's
average
daily
net
assets,
and
is
not
an
additional
expense
of
the
Fund.
c.
Investments
in
Affiliated
Management
Investment
Companies
The
Fund
invests
in
one
or
more
affiliated
management
investment
companies.
As
defined
in
the
1940
Act,
an
investment
is
deemed
to
be
a
“Controlled
Affiliate”
of
a
fund
when
a
fund
owns,
either
directly
or
indirectly,
25%
or
more
of
the
affiliated
fund’s
outstanding
shares
or
has
the
power
to
exercise
control
over
management
or
policies
of
such
fund.
The
Fund
does
not
invest
for
purposes
of
exercising
a
controlling
influence
over
the
management
or
policies.
Management
fees
paid
by
the
Fund
are
waived
on
assets
invested
in
the
affiliated
management
investment
companies,
as
noted
in
the
Statement
of
Operations,
in
an
amount
not
to
exceed
the
management
and
administrative
fees
paid
directly
or
indirectly
by
each
affiliate.
During
the
year
ended
August
31,
2021,
the
Fund
held
investments
in
affiliated
management
investment
companies
as
follows:
Subsidiary
Affiliation
Franklin
Advisers,
Inc.
(Advisers)
Investment
manager
Franklin
Templeton
Services,
LLC
(FT
Services)
Administrative
manager
aa
Value
at
Beginning
of
Year
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Year
Number
of
Shares
Held
at
End
of
Year
Investment
Income
a
a
a
a
a
a
a
a
Franklin
Universal
Trust
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
..
$5,235,951
$74,309,320
$(72,869,693)
$—
$—
$6,675,578
6,675,578
$354
3.
Senior
Fixed
Rate
Notes
(continued)
Franklin
Universal
Trust
Notes
to
Financial
Statements
31
franklintempleton.com
Annual
Report
5.
Expense
Offset
Arrangement
The Fund has
entered
into
an
arrangement
with
its
custodian
whereby
credits
realized
as
a
result
of
uninvested
cash
balances
are
used
to
reduce
a
portion
of
the
Fund's
custodian
expenses.
During
the
year
ended
August
31,
2021,
the
custodian
fees
were
reduced
as
noted
in
the
Statement
of
Operations.
6.
Income
Taxes
During
the
year
ended
August
31,
2021,
the
Fund
utilized
$1,888,428
of
capital
loss
carryforwards.
The
tax
character
of
distributions
paid
during
the
years
ended
August
31,
2021
and
2020,
was
as
follows:
At
August
31,
2021,
the
cost
of
investments,
net
unrealized
appreciation
(depreciation)
and
undistributed
ordinary
income
for
income
tax
purposes
were
as
follows:
Differences
between
income
and/or
capital
gains
as
determined
on
a
book
basis
and
a
tax
basis
are
primarily
due
to
differing
treatment
s
of
paydown
losses
and
bond
discounts
and
premiums
.
aa
Value
at
Beginning
of
Year
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Year
Number
of
Shares
Held
at
End
of
Year
Investment
Income
a
a
a
a
a
a
a
a
Franklin
Universal
Trust
(continued)
Non-Controlled
Affiliates
Income
from
securities
loaned
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
..
$—
$6,381,000
$(6,335,000)
$
—
$
—
$46,000
46,000
$25
Total
Affiliated
Securities
....
$5,235,951
$80,690,320
$(79,204,693)
$—
$—
$6,721,578
$379
2021
2020
Distributions
paid
from:
Ordinary
income
..........................................................
$10,706,188
$9,683,318
$10,706,188
$9,683,318
Cost
of
investments
..........................................................................
$229,605,345
Unrealized
appreciation
........................................................................
$67,310,752
Unrealized
depreciation
........................................................................
(9,407,675)
Net
unrealized
appreciation
(depreciation)
..........................................................
$57,903,077
Distributable
earnings:
Undistributed
ordinary
income
...................................................................
$3,181,144
4.
Transactions
with
Affiliates
(continued)
c.
Investments
in
Affiliated
Management
Investment
Companies
(continued)
Franklin
Universal
Trust
Notes
to
Financial
Statements
32
franklintempleton.com
Annual
Report
7.
Investment
Transactions
Purchases
and
sales
of
investments
(excluding
short
term
securities)
for
the
year
ended
August
31,
2021,
aggregated
$99,959,203
and
$101,961,343,
respectively.
At
August
31,
2021,
in
connection
with
securities
lending
transactions,
the
Fund
loaned
equity
investments
and
received
$58,148
of
cash
collateral.
The
gross
amount
of
recognized
liability
for
such
transactions
is
included
in
payable
upon
return
of
securities
loaned
in
the
Statement
of
Assets
and
Liabilities.
The
agreements
can
be
terminated
at
any
time.
8.
Credit Risk
and
Defaulted
Securities
At
August
31,
2021,
the
Fund
had
59.7%
of
its
portfolio
invested
in
high
yield
or
other
securities
rated
below
investment
grade
and
unrated
securities.
These
securities
may
be
more
sensitive
to
economic
conditions
causing
greater
price
volatility
and
are
potentially
subject
to
a
greater
risk
of
loss
due
to
default
than
higher
rated
securities.
The
Fund
held
defaulted
securities
and/or
other
securities
for
which
the
income
has
been
deemed
uncollectible.
At
August
31,
2021,
the
aggregate
value
of
these
securities
represents
less
than
0.1%
of
the
Fund's
net
assets.
The
Fund
discontinues
accruing
income
on
securities
for
which
income
has
been
deemed
uncollectible
and
provides
an
estimate
for
losses
on
interest
receivable.
The
securities
have
been
identified
in
the
accompanying
Statement
of
Investments.
9.
Novel
Coronavirus
Pandemic
The
global
outbreak
of
the
novel
coronavirus
disease,
known
as
COVID-19, has
caused
adverse
effects
on
many
companies,
sectors,
nations,
regions
and
the
markets
in
general, and
may
continue for
an unpredictable duration.
The
effects
of
this
pandemic
may
materially
impact
the
value
and
performance
of
the Fund, its ability
to
buy
and
sell
fund
investments
at
appropriate
valuations
and its ability
to
achieve its investment
objectives.
10.
Restricted
Securities
The
Fund
invests
in
securities
that
are
restricted
under
the
Securities
Act
of
1933
(1933
Act).
Restricted
securities
are
often
purchased
in
private
placement
transactions,
and
cannot
be
sold
without
prior
registration
unless
the
sale
is
pursuant
to
an
exemption
under
the
1933
Act.
Disposal
of
these
securities
may
require
greater
effort
and
expense,
and
prompt
sale
at
an
acceptable
price
may
be
difficult.
The Fund
may
have
registration
rights
for
restricted
securities.
The
issuer
generally
incurs
all
registration
costs.
At
August
31,
2021,
investments
in
restricted
securities,
excluding
securities
exempt
from
registration
under
the
1933
Act,
were
as
follows:
Principal
Amount
*
Issuer
Acquisition
Date
Cost
Value
Franklin
Universal
Trust
1,571,558
a
Goodrich
Petroleum
Corp.,
144A,
PIK,
13.5%,
5/31/23
3/09/21
-
7/15/21
$
1,571,558
$
1,624,844
Total
Restricted
Securities
(Value
is
0.7%
of
Net
Assets)
..............
$1,571,558
$1,624,844
*
In
U.S.
dollars
unless
otherwise
indicated.
a
The
Fund
also
invests
in
unrestricted
securities
of
the
issuer,
valued
at
$314,909
as
of
August
31,
2021.
Franklin
Universal
Trust
Notes
to
Financial
Statements
33
franklintempleton.com
Annual
Report
11.
Fair
Value
Measurements
The
Fund
follows
a
fair
value
hierarchy
that
distinguishes
between
market
data
obtained
from
independent
sources
(observable
inputs)
and
the Fund's
own
market
assumptions
(unobservable
inputs).
These
inputs
are
used
in
determining
the
value
of
the
Fund's 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
Fund's
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.
A
summary
of
inputs
used
as
of
August
31,
2021,
in
valuing
the
Fund's
assets
carried
at
fair
value,
is
as
follows:
Level
1
Level
2
Level
3
Total
Franklin
Universal
Trust
Assets:
Investments
in
Securities:
Common
Stocks
:
Electric
Utilities
........................
$
53,032,510
$
—
$
—
$
53,032,510
Machinery
............................
—
483,750
—
483,750
Metals
&
Mining
.......................
4,618,468
—
—
4,618,468
Multi-Utilities
..........................
34,331,100
—
—
34,331,100
Oil,
Gas
&
Consumable
Fuels
.............
3,316,928
—
1,302
3,318,230
Preferred
Stocks
........................
687,775
—
—
687,775
Warrants
:
Oil,
Gas
&
Consumable
Fuels
.............
26,637
—
125
26,762
Paper
&
Forest
Products
.................
1,400
—
—
1,400
Convertible
Bonds
.......................
—
18,510
—
18,510
Corporate
Bonds
:
Airlines
..............................
—
2,269,959
—
2,269,959
Auto
Components
......................
—
5,506,907
—
5,506,907
Automobiles
..........................
—
1,288,040
—
1,288,040
Banks
...............................
—
956,363
—
956,363
Beverages
...........................
—
707,532
—
707,532
Biotechnology
.........................
—
878,684
—
878,684
Building
Products
......................
—
2,914,520
—
2,914,520
Chemicals
...........................
—
7,087,477
—
7,087,477
Commercial
Services
&
Supplies
...........
—
4,918,212
—
4,918,212
Communications
Equipment
..............
—
1,680,000
—
1,680,000
Construction
&
Engineering
...............
—
3,919,142
—
3,919,142
Consumer
Finance
.....................
—
2,979,399
—
2,979,399
Containers
&
Packaging
.................
—
9,368,198
—
9,368,198
Diversified
Financial
Services
.............
—
1,210,608
—
1,210,608
Diversified
Telecommunication
Services
.....
—
7,191,993
—
7,191,993
Electric
Utilities
........................
—
1,449,060
—
1,449,060
Electrical
Equipment
....................
—
1,036,300
—
1,036,300
Electronic
Equipment,
Instruments
&
Components
........................
—
506,875
—
506,875
Energy
Equipment
&
Services
.............
—
3,220,651
—
3,220,651
Entertainment
.........................
—
2,544,283
—
2,544,283
Equity
Real
Estate
Investment
Trusts
(REITs)
.
—
3,409,043
—
3,409,043
Food
Products
........................
—
3,087,870
—
3,087,870
Health
Care
Equipment
&
Supplies
.........
—
191,025
—
191,025
Franklin
Universal
Trust
Notes
to
Financial
Statements
34
franklintempleton.com
Annual
Report
A
reconciliation
in
which
Level
3
inputs
are
used
in
determining
fair
value
is
presented
when
there
are
significant
Level
3
assets
and/or
liabilities
at
the
beginning
and/or
end
of
the year.
At
August
31,
2021,
the
reconciliation is
as follows:
Level
1
Level
2
Level
3
Total
Franklin
Universal
Trust
(continued)
Assets:
(continued)
Investments
in
Securities:
Corporate
Bonds:
Health
Care
Providers
&
Services
..........
$
—
$
8,882,494
$
—
$
8,882,494
Hotels,
Restaurants
&
Leisure
.............
—
16,059,012
—
16,059,012
Household
Durables
....................
—
2,420,960
—
2,420,960
Independent
Power
and
Renewable
Electricity
Producers
..........................
—
7,512,192
—
7,512,192
Insurance
............................
—
1,145,375
—
1,145,375
Internet
&
Direct
Marketing
Retail
..........
—
522,725
—
522,725
IT
Services
...........................
—
4,131,392
—
4,131,392
Life
Sciences
Tools
&
Services
............
—
206,426
—
206,426
Machinery
............................
—
3,373,749
—
3,373,749
Media
...............................
—
9,830,933
—
9,830,933
Metals
&
Mining
.......................
—
4,374,929
—
4,374,929
Mortgage
Real
Estate
Investment
Trusts
(REITs)
............................
—
975,220
—
975,220
Oil,
Gas
&
Consumable
Fuels
.............
—
20,530,053
1,624,844
22,154,897
Personal
Products
.....................
—
296,636
—
296,636
Pharmaceuticals
.......................
—
6,607,296
—
6,607,296
Real
Estate
Management
&
Development
....
—
1,238,008
—
1,238,008
Road
&
Rail
..........................
—
1,413,587
—
1,413,587
Semiconductors
&
Semiconductor
Equipment
.
—
—
746,920
Software
.............................
—
4,065,454
—
4,065,454
Specialty
Retail
........................
—
3,953,833
—
3,953,833
Textiles,
Apparel
&
Luxury
Goods
..........
—
1,062,500
—
1,062,500
Thrifts
&
Mortgage
Finance
...............
—
1,935,316
—
1,935,316
Trading
Companies
&
Distributors
..........
—
1,048,646
—
1,048,646
Wireless
Telecommunication
Services
.......
—
3,489,654
—
3,489,654
Marketplace
Loans
......................
—
—
3,297,986
3,297,986
Asset-Backed
Securities
..................
—
5,146,660
—
5,146,660
Escrows
and
Litigation
Trusts
...............
—
41,250
—
41,250
Short
Term
Investments
...................
6,721,578
12,148
—
6,733,726
Total
Investments
in
Securities
...........
$102,736,396
$179,847,769
$4,924,257
$287,508,422
Balance
at
Beginning
of
Year
Purchases
a
Sales
b
Transfer
Into
Level
3
c
Transfer
Out
of
Level
3
d
Net
Accretion
(
Amortiza
-
tion
)
Net
Realized
Gain
(Loss)
Net
Unr
ealized
Appreciatio
n
(
Depreciation
)
Balance
at
End
of
Year
Net
Change
in
Unrealized
Appreciation
(Depreciation)
on
Assets
Held
at
Year
End
a
a
a
a
a
a
a
a
a
a
a
Franklin
Universal
Trust
Assets:
Investments
in
Securities:
Common
Stocks
:
Machinery
.........
$
158,851
$
—
$
—
$
—
$
(158,851)
$
—
$
—
$
—
$
—
$
—
Oil,
Gas
&
Consumable
Fuels
..........
—
—
—
1,302
—
—
—
—
1,302
—
Warrants
:
Oil,
Gas
&
Consumable
Fuels
..........
90
—
—
—
—
—
—
35
125
35
11.
Fair
Value
Measurements
(continued)
Franklin
Universal
Trust
Notes
to
Financial
Statements
35
franklintempleton.com
Annual
Report
Significant
unobservable
valuation
inputs
for
material
Level
3 assets
and/or
liabilities and
impact
to
fair
value
as
a
result
of
changes
in
unobservable
valuation
inputs
as
of
August
31,
2021,
are
as
follows:
Balance
at
Beginning
of
Year
Purchases
a
Sales
b
Transfer
Into
Level
3
c
Transfer
Out
of
Level
3
d
Net
Accretion
(Amortiza-
tion)
Net
Realized
Gain
(Loss)
Net
Unrealized
Appreciation
(Depreciation)
Balance
at
End
of
Year
Net
Change
in
Unrealized
Appreciation
(Depreciation)
on
Assets
Held
at
Year
End
a
a
a
a
a
a
a
a
a
a
a
Franklin
Universal
Trust
(continued)
Assets:
Investments
in
Securities:
Corporate
Bonds
:
Hotels,
Restaurants
&
Leisure
.........
$
5,625
$
—
$
—
$
—
$
(540)
$
(1,893)
$
—
$
(3,192)
$
—
$
—
Oil,
Gas
&
Consumable
Fuels
..........
481
1,571,558
—
—
(3,864)
—
—
56,669
1,624,844
56,669
Marketplace
Loans
:
Diversified
Financial
Services
........
4,023,963
1,400,200
(2,259,108)
—
—
—
(319,554)
452,485
3,297,986
104,786
Escrows
and
Litigation
Trusts
...........
14
—
(1,066)
—
—
—
(17,280)
18,332
—
—
Total
Investments
in
Securities
............
$4,189,024
$2,971,758
$(2,260,174)
$1,302
$(163,255)
$(1,893)
$(336,834)
$524,329
$4,924,257
$161,490
a
Purchases
include
all
purchases
of
securities
and
securities
received
in
corporate
actions.
b
Sales
include
all
sales
of
securities,
maturities,
paydowns
and
securities
tendered
in
corporate
actions.
c
Transferred
into
level
3
as
a
result
of
the
unavailability
of
a
quoted
market
price
in
an
active
market
for
identical
securities
or
as
a
result
of
the
unreliability
of
the
foreign
exchange
rate
and
other
significant
observable
valuation
inputs.
May
include
amounts
related
to
a
corporate
action.
d
Transferred
out
of
Level
3
as
a
result
of
the
availability
of
a
quoted
price
in
an
active
market
for
identical
securities/
and
other
significant
observable
valuation
inputs.
May
include
amounts
related
to
a
corporate
action.
11.
Fair
Value
Measurements
(continued)
Franklin
Universal
Trust
Notes
to
Financial
Statements
36
franklintempleton.com
Annual
Report
12.
New
Accounting
Pronouncements
In
March
2020,
the
Financial
Accounting
Standards
Board
(FASB)
issued
Accounting
Standards
Update
(ASU)
No.
2020-04,
Reference
Rate
Reform
(Topic
848)
–
Facilitation
of
the
Effects
of
Reference
Rate
Reform
on
Financial
Reporting.
In
January
2021,
the
FASB
issued
ASU
No.
2021-01,
with
further
amendments
to
Topic
848.
The
amendments
in
the
ASUs
provide
optional
temporary
accounting
recognition
and financial
reporting
relief
from
the
effect
of
certain
types
of
contract
modifications
due
to
the
planned
discontinuation
of
the
London
Interbank
Offered
Rate
(LIBOR)
and
other
interbank-offered
based
reference
rates
as
of
the
end
of
2021
and
2023. The
ASUs
are
effective
for
certain
reference
rate-related
contract
modifications
that
occur
during
the
period
March
12,
2020
through
December
31,
2022.
Management
has
reviewed
the
requirements
and
believes
the
adoption
of
these
ASUs
will
not
have
a
material
impact
on
the
financial
statements.
Description
Fair
Value
at
End
of
Year
Valuation
Technique
Unobservable
Inputs
Amount
(Weighted
Average)
a
Impact
to
Fair
Value
if
Input
Increases
b
Franklin
Universal
Trust
Assets:
Investments
in
Securities:
Corporate
Bonds:
Oil,
Gas
&
Consumable
Fuels
...
$1,624,844
Discounted
cash
flow
Discount
rate
15.5%
Decrease
c
Free
cash
flow
$2.0
mil
Increase
Marketplace
Loans:
Diversified
Financial
Services
...
$2,999,228
Discounted
cash
flow
Loss-adjusted
discount
rate
2.9%-7.2%
(6.2%)
Decrease
d
Projected
loss
rate
14.8%-19.5%
(16.2%)
Decrease
d
All
Other
....................
300,185
e
Total
$4,924,257
a
Weighted
based
on
the
relative
fair
value
of
the
financial
instruments.
b
Represents
the
directional
change
in
the
fair
value
of
the
Level
3
financial
instruments
that
would
result
from
a
significant
and
reasonable
increase
in
the
corresponding
input.
A
significant
and
reasonable
decrease
in
the
input
would
have
the
opposite
effect.
Significant
impacts,
if
any,
to
fair
value
and/or
net
assets
have
been
indicated.
c
Represents
a
significant
impact
to
fair
value
but
not
net
assets.
d
Represents
a
significant
impact
to
fair
value
and
net
assets.
e
Includes
financial
instruments
with
values
derived
using
private
transaction
prices
or
non-public
third
party
pricing
information
which
is
unobservable.
May
also
include
fair
value
of
immaterial
financial
instruments
and
developed
using
various
valuation
techniques
and
unobservable
inputs.
11.
Fair
Value
Measurements
(continued)
Franklin
Universal
Trust
Notes
to
Financial
Statements
37
franklintempleton.com
Annual
Report
13.
Subsequent
Events
The
Fund
has
evaluated
subsequent
even
ts
through
the
issuance
of
the
financial
statements
and
determined
that
no
events
have
occurred
that
require
disclosure
.
Abbreviations
Currency
USD
United
States
Dollar
Selected
Portfolio
ADR
American
Depositary
Receipt
FRN
Floating
Rate
Note
LIBOR
London
Inter-Bank
Offered
Rate
PIK
Payment-In-Kind
Franklin
Universal
Trust
Report
of
Independent
Registered
Public
Accounting
Firm
38
franklintempleton.com
Annual
Report
To
the
Board
of
Trustees
and
Shareholders
of
Franklin
Universal
Trust
Opinion
on
the
Financial
Statements
We
have
audited
the
accompanying
statement
of
assets
and
liabilities,
including
the
statement
of
investments,
of
Franklin
Universal
Trust
(the
"Fund")
as
of
August
31,
2021,
the
related
statements
of
operations
and
cash
flows
for
the
year
ended
August
31,
2021,
the
statements
of
changes
in
net
assets
for
each
of
the
two
years
in
the
period
ended
August
31,
2021,
including
the
related
notes,
and
the
financial
highlights
for
each
of
the
five
years
in
the
period
ended
August
31,
2021
(collectively
referred
to
as
the
“financial
statements”).
In
our
opinion,
the
financial
statements
present
fairly,
in
all
material
respects,
the
financial
position
of
the
Fund
as
of
August
31,
2021,
the
results
of
its
operations
and
its
cash
flows
for
the
year
then
ended,
the
changes
in
its
net
assets
for
each
of
the
two
years
in
the
period
ended
August
31,
2021
and
the
financial
highlights
for
each
of
the
five
years
in
the
period
ended
August
31,
2021
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America.
Basis
for
Opinion
These
financial
statements
are
the
responsibility
of
the
Fund’s
management.
Our
responsibility
is
to
express
an
opinion
on
the
Fund’s
financial
statements
based
on
our
audits.
We
are
a
public
accounting
firm
registered
with
the
Public
Company
Accounting
Oversight
Board
(United
States)
(PCAOB)
and
are
required
to
be
independent
with
respect
to
the
Fund
in
accordance
with
the
U.S.
federal
securities
laws
and
the
applicable
rules
and
regulations
of
the
Securities
and
Exchange
Commission
and
the
PCAOB.
We
conducted
our
audits
of
these
financial
statements
in
accordance
with
the
standards
of
the
PCAOB.
Those
standards
require
that
we
plan
and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
the
financial
statements
are
free
of
material
misstatement,
whether
due
to
error
or
fraud.
Our
audits
included
performing
procedures
to
assess
the
risks
of
material
misstatement
of
the
financial
statements,
whether
due
to
error
or
fraud,
and
performing
procedures
that
respond
to
those
risks.
Such
procedures
included
examining,
on
a
test
basis,
evidence
regarding
the
amounts
and
disclosures
in
the
financial
statements.
Our
audits
also
included
evaluating
the
accounting
principles
used
and
significant
estimates
made
by
management,
as
well
as
evaluating
the
overall
presentation
of
the
financial
statements.
Our
procedures
included
confirmation
of
securities
owned
as
of
August
31,
2021
by
correspondence
with
the
custodian,
transfer
agent
and
brokers;
when
replies
were
not
received
from
brokers,
we
performed
other
auditing
procedures.
We
believe
that
our
audits
provide
a
reasonable
basis
for
our
opinion.
PricewaterhouseCoopers
LLP
San
Francisco,
California
October
19,
2021
We
have
served
as
the
auditor
of
one
or
more
investment
companies
in
the
Franklin
Templeton
Group
of
Funds
since
1948.
Franklin
Universal
Trust
Tax
Information
(unaudited)
39
franklintempleton.com
Annual
Report
By
mid-February,
tax
information
related
to
a
shareholder's
proportionate
share
of
distributions
paid
during
the
preceding
calendar
year
will
be
received,
if
applicable.
Please
also
refer
to
www.franklintempleton.com
for
per
share
tax
information
related
to
any
distributions
paid
during
the
preceding
calendar
year.
Shareholders
are
advised
to
consult
with
their
tax
advisors
for
further
information
on
the
treatment
of
these
amounts
on
their
tax
returns.
The
following
tax
information
for
the
Fund
is
required
to
be
furnished
to
shareholders
with
respect
to
income
earned
and
distributions
paid
during
its
fiscal
year.
The
Fund
hereby
reports
the
following
amounts,
or
if
subsequently
determined
to
be
different,
the
maximum
allowable
amounts,
for
the
fiscal
year
ended
August
31,
2021:
Pursuant
to:
Amount
Dividends
Received
Deduction
(DRD)
§854(b)(1)(A)
$2,820,948
Qualified
Dividend
Income
(QDI)
§854(b)(1)(B)
$3,005,230
Interest-Related
Dividends
§871(k)(1)(C)
$6,795,270
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Trust
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Share
Repurchase
Program
The
Fund’s
Board
previously
authorized
an
open-market
share
repurchase
program,
pursuant
to
which
the
Fund
may
purchase
Fund
shares,
from
time
to
time,
up
to
10%
of
the
Fund’s
common
shares
in
open-market
transactions,
at
the
discretion
of
management.
This
authorization
remains
in
effect.
Information
About
the
Fund’s
Goal
and
Main
Investments,
Principal
Investment
Strategy,
and
Principal
Risks
Your
Fund’s
Goal
and
Main
Investments
The
Fund’s
primary
investment
objective
is
to
provide
high,
current
income
consistent
with
preservation
of
capital.
Its
secondary
objective
is
growth
of
income
through
dividend
increases
and
capital
appreciation.
Principal
Investment
Strategy
We
invest
primarily
in
two
asset
classes:
high-yield
bonds
and
utility
stocks.
Within
the
high-yield
portion
of
the
portfolio,
we
use
fundamental
research
to
invest
in
a
diversified
portfolio
of
bonds.
Within
the
utility
portion
of
the
portfolio,
we
focus
on
companies
with
attractive
dividend
yields
and
with
a
history
of
increasing
their
dividends.
In
seeking
to
obtain
higher
income,
the
Fund
may
invest
in
a
significant
portion
of
its
portfolio
in
lower-rated
U.S.
debt
securities
that
have
high
income
producing
characteristics,
including
obligations
of
corporations
and
other
business
organizations.
Lower-rated
securities
generally
pay
higher
yields
than
more
highly
rated
securities
to
compensate
investors
for
the
higher
risk.
The
Fund
may
also
invest
in
income
producing
debt
obligations
of
the
U.S.
Government,
its
agencies
and
instrumentalities,
and
foreign
governments
and
supranational
organizations.
Under
normal
market
conditions,
the
Fund
generally
will
invest
between
60%
and
80%
of
its
total
assets
in
high
income
producing
debt
securities
of
U.S.
and
foreign
issuers,
allocated
among
issuers,
geographic
regions,
and
currency
denominations
in
a
manner
that
is
consistent
with
its
objectives
based
upon
relative
interest
rates
among
various
instruments
denominated
in
different
currencies,
the
outlook
for
changes
in
these
interest
rates,
and
anticipated
changes
in
currency
exchange
rates.
Under
normal
market
conditions,
the
Fund
will
invest
approximately
20%
to
40%
of
its
assets
in
dividend-paying
common
and
preferred
stocks.
The
Fund
will
emphasize
investment
in
common
stocks
paying
high
current
dividends
with
a
focus
on
public
utility
companies.
The
Fund
may
also
invest
in
the
equity
and
convertible
securities
of
companies
engaged
in
the
business
of
extracting
and
processing
precious
metals
and
natural
resources,
such
as
gold
mining
stocks.
The
Fund
may
also
invest
a
small
portion
of
its
total
assets
in
loans
originated
through
on-line
marketplace
lending
platforms
that
provide
a
marketplace
for
lending
through
the
purchase
of
loans
(either
individually
or
in
aggregations)
and
other
types
of
marketplace
lending
instruments
(See
the
Notes
to
Financial
Statements
for
further
information).
Securities
may
be
purchased
by
the
Fund
on
a
“when
issued”
or
on
a
“forward
delivery”
basis,
which
means
that
the
obligations
will
be
delivered
at
a
future
date
beyond
customary
settlement
time.
The
Fund
employs
leverage
through
the
issuance
of
senior
fixed
rate
notes
(See
the
Notes
to
Financial
Statements
for
further
information).
The
Fund
may
also
invest
in
short-term
U.S.
government
securities
and
other
money
market
instruments
(including
certificates
of
deposit,
commercial
paper,
bankers’
acceptances,
short-term
foreign
government
securities,
and
repurchase
agreements)
although
it
typically
will
not
invest
more
than
5%
of
its
total
assets
in
such
securities
except
for
temporary
defensive
purposes.
Principal
Investment
Risks
You
could
lose
money
by
investing
in
the
Fund.
Closed-end
fund
shares
are
not
deposits
or
obligations
of,
or
guaranteed
or
endorsed
by,
any
bank,
and
are
not
insured
by
the
Federal
Deposit
Insurance
Corporation,
the
Federal
Reserve
Board,
or
any
other
agency
of
the
U.S.
government.
High-Yield
Debt
Securities
Issuers
of
lower-rated
or
“high-yield”
debt
securities
(also
known
as
“junk
bonds”)
are
not
as
strong
financially
as
those
issuing
higher
credit
quality
debt
securities.
High-yield
debt
securities
are
generally
considered
predominantly
speculative
by
the
applicable
rating
agencies
as
their
issuers
are
more
likely
to
encounter
financial
difficulties
because
they
may
be
more
highly
leveraged,
or
because
of
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Trust
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other
considerations.
In
addition,
high
yield
debt
securities
generally
are
more
vulnerable
to
changes
in
the
relevant
economy,
such
as
a
recession
or
a
sustained
period
of
rising
interest
rates,
that
could
affect
their
ability
to
make
interest
and
principal
payments
when
due.
The
prices
of
high-yield
debt
securities
generally
fluctuate
more
than
those
of
higher
credit
quality.
High-yield
debt
securities
are
generally
more
illiquid
(harder
to
sell)
and
harder
to
value.
Interest
Rate
When
interest
rates
rise,
debt
security
prices
generally
fall.
The
opposite
is
also
generally
true:
debt
security
prices
rise
when
interest
rates
fall.
Interest
rate
changes
are
influenced
by
a
number
of
factors,
including
government
policy,
monetary
policy,
inflation
expectations,
perceptions
of
risk,
and
supply
of
and
demand
for
bonds.
In
general,
securities
with
longer
maturities
or
durations
are
more
sensitive
to
interest
rate
changes.
Credit
An
issuer
of
debt
securities
may
fail
to
make
interest
payments
or
repay
principal
when
due,
in
whole
or
in
part.
Changes
in
an
issuer’s
financial
strength
or
in
a
security’s
or
government’s
credit
rating
may
affect
a
security’s
value.
Utilities
Industry
Utility
company
equity
securities
historically
have
been
sensitive
to
interest
rate
movements:
when
interest
rates
have
risen,
the
stock
prices
of
these
companies
have
tended
to
fall.
Regulatory
changes
in
certain
states
have
led
to
greater
competition
in
the
industry
and
the
emergence
of
non-regulated
providers
as
a
significant
part
of
the
industry,
and
could
impact
the
operations
of
regulated
providers
and
increase
the
cost
of
compliance.
These
trends
have
also
made
shares
of
some
utility
companies
less
sensitive
to
interest
rate
changes
but
more
sensitive
to
changes
in
revenue
and
earnings
and
caused
them
to
reduce
the
ratio
of
their
earnings
they
pay
out
as
dividends.
In
addition,
the
industry
is
subject
to
a
variety
of
risks
specific
to
this
industry:
utilities
may
find
it
difficult
to
obtain
adequate
returns
on
invested
capital
in
spite
of
rate
increases
or
because
rate
increases
become
increasingly
difficult
to
obtain;
they
may
face
difficulty
in
financing
large
construction
programs
during
inflationary
and
rising
interest
rate
periods;
utilities
are
subject
to
many
restrictions
on
operations
and
increased
costs
due
to
environmental
and
safety
regulations;
utilities
may
face
difficulties
in
obtaining
fuel
sources,
such
as
coal,
for
electric
generation
at
reasonable
prices;
utilities
may
face
risks
associated
with
the
operation
of
nuclear
power
plants
(including
litigation,
issues
associated
with
the
use
of
radioactive
materials
and
the
effects
of
natural
or
man-made
disasters);
utilities
may
face
greater
demands
in
providing
reliable
service
with
the
increasing
complexity
of
the
power
grid;
utilities
also
may
be
subject
to
adverse
effects
of
the
results
of
energy
conservation
programs
as
well
as
other
factors
affecting
the
level
of
demand
for
services.
Market
The
market
values
of
securities
or
other
investments
owned
by
the
Fund
will
go
up
or
down,
sometimes
rapidly
or
unpredictably.
The
market
value
of
a
security
or
other
investment
may
be
reduced
by
market
activity
or
other
results
of
supply
and
demand
unrelated
to
the
issuer.
This
is
a
basic
risk
associated
with
all
investments.
When
there
are
more
sellers
than
buyers,
prices
tend
to
fall.
Likewise,
when
there
are
more
buyers
than
sellers,
prices
tend
to
rise.
Leverage
The
Fund
employs
leverage
through
the
issuance
of
senior
fixed
rate
notes
which
creates
an
opportunity
for
increased
income,
but,
at
the
same
time,
creates
special
risks
(including
the
likelihood
of
greater
volatility
of
net
asset
value
and
market
price
of
common
shares).
The
cost
of
leverage
rises
and
falls
with
changes
in
short-term
interest
rates.
The
costs
of
using
leverage
may
be
greater
than
the
proceeds
of
the
leverage.
The
Fund’s
leveraging
strategy
may
not
be
successful.
Foreign
Securities
(non-U.S.)
Investing
in
foreign
securities
typically
involves
more
risks
than
investing
in
U.S.
securities,
and
includes
risks
associated
with:
(i)
internal
and
external
political
and
economic
developments
–
e.g.,
the
political,
economic
and
social
policies
and
structures
of
some
foreign
countries
may
be
less
stable
and
more
volatile
than
those
in
the
U.S.
or
some
foreign
countries
may
be
subject
to
trading
restrictions
or
economic
sanctions;
(ii)
trading
practices
–
e.g.,
government
supervision
and
regulation
of
foreign
securities
and
currency
markets,
trading
systems
and
brokers
may
be
less
than
in
the
U.S.;
(iii)
availability
of
information
–
e.g.,
foreign
issuers
may
not
be
subject
to
the
same
disclosure,
accounting
and
financial
reporting
standards
and
practices
as
U.S.
issuers;
(iv)
limited
markets
–
e.g.,
the
securities
of
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certain
foreign
issuers
may
be
less
liquid
(harder
to
sell)
and
more
volatile;
and
(v)
currency
exchange
rate
fluctuations
and
policies.
The
risks
of
foreign
investments
may
be
greater
in
developing
or
emerging
market
countries.
Management
The
Fund
is
subject
to
management
risk
because
it
is
an
actively
managed
investment
portfolio.
The
Fund’s
investment
manager
applies
investment
techniques
and
risk
analyses
in
making
investment
decisions
for
the
Fund,
but
there
can
be
no
guarantee
that
these
decisions
will
produce
the
desired
results.
The
following
information
is
a
summary
of
certain
changes
since
the
last
fiscal
year.
This
information
may
not
reflect
all
of
the
changes
that
have
occurred
since
you
purchased
the
Fund.
Agreement
and
Declaration
of
Trust
and
By-Laws
On
April
20,
2021,
the
Fund’s
Board
approved
changes
to
the
Fund’s
Agreement
and
Declaration
of
Trust
(the
“Declaration
of
Trust”)
and
the
Fund’s
By-Laws
(the
“By-
Laws”),
which
were
immediately
effective
.
The
Declaration
of
Trust
was
amended
to
provide
as
follows:
-
A
Majority
Trustee
Vote
is
required
on
all
Board
actions,
including
amendments
to
the
Declaration
of
Trust,
unless
the
Declaration
of
Trust
or
applicable
law
requires
otherwise.
“Majority
Trustee
Vote”
means
(a)
with
respect
to
a
vote
of
the
Board,
a
vote
of
the
majority
of
the
Trustees
then
in
office,
and
a
separate
vote
of
a
majority
of
the
Continuing
Trustees;
and
(b)
with
respect
to
a
vote
of
a
committee
or
sub-committee
of
the
Board,
a
vote
of
the
majority
of
the
members
of
such
committee
or
sub-committee,
and
a
separate
vote
of
a
majority
of
the
Continuing
Trustees
that
are
members
of
such
committee
or
sub-committee.
“Continuing
Trustee”
means
a
Trustee
who
either
(a)
has
been
a
member
of
the
Board
for
a
period
of
at
least
thirty-
six
months
or
(b)
was
nominated
to
serve
as
a
member
of
the
Board
by
a
majority
of
the
Continuing
Trustees
then
members
of
the
Board.
-
To
qualify
for
nomination
and
service
as
a
Trustee,
individuals
must
meet
certain
additional
qualifications,
including
that
individuals
may
be
disqualified
if
they
engaged
in
disabling
conduct
outlined
in
the
Declaration
of
Trust.
-
Individuals
that
are
associated
with
other
investment
vehicles
and
investment
advisers
may
not
be
eligible
for
nomination
and
service
as
a
Trustee
if
the
Board
finds
that
such
associations
have
conflicts
of
interest
with
the
long-
term
best
interests
of
the
Fund,
impede
the
ability
of
the
nominee
to
perform,
or
impede
the
free-flow
of
information
from
management.
-
Individuals
that
are
acting
in
concert
with
control
persons
of
investment
companies
in
violation
of
Section
12(d)(1)
of
the
1940
Act
shall
be
disqualified
from
nomination
and
service
as
a
Trustee.
-
The
Board
shall
be
divided
into
three
classes
of
Trustees
to
implement
a
staggered
Board
and
Trustees
may
only
be
removed
for
cause,
where
“cause”
includes
only
(i)
conviction
of
a
felony,
(ii)
court
declaration
of
unsound
mind,
(iii)
gross
dereliction
of
duty,
(iv)
commission
involving
moral
turpitude,
or
(v)
an
action
that
constitutes
intentional
misconduct
or
a
knowing
violation
of
law
that
results
in
an
improper
substantial
personal
benefit
and
a
material
injury
to
the
Fund.
-
Trustees
shall
be
elected
by
not
less
than
a
majority
of
all
of
the
votes
entitled
to
be
cast
in
the
election
of
Trustees.
-
In
the
event
of
a
vacancy
on
the
Board,
the
size
of
the
Board
and
the
size
of
the
class
of
Trustees
in
which
the
vacancy
arose
is
automatically
reduced
by
the
number
of
vacancies
(but
the
size
of
the
Board
will
not
be
reduced
to
less
than
three)
until
the
Board
increases
the
size
of
the
Board
and
the
class
of
Trustees.
-
The
Trustees
shall
be
subject
to
the
fiduciary
duties
and
the
business
judgment
rule
under
Massachusetts
Corporate
Law
and
the
appointment,
designation
or
identification
of
a
Trustee
as
the
Chair
of
the
Board,
a
member
or
chair
of
a
committee
of
the
Trustees,
an
expert
on
any
topic
or
in
any
area
(including
an
audit
committee
financial
expert),
or
the
lead
independent
Trustee,
or
any
other
special
appointment,
designation
or
identification
of
a
Trustee
does
not
affect
this
standard.
-
Unless
otherwise
expressly
provided
in
the
Declaration
of
Trust
or
required
by
federal
law,
the
Trustees
shall
act
in
their
sole
discretion
and
may
take
any
action
or
exercise
any
power
without
any
vote
or
consent
of
the
shareholders.
Franklin
Universal
Trust
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43
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-
Claims
based
on
alleged
injury
to
Fund
property,
or
arising
out
of
actions,
inaction,
or
omissions
of
Trustees,
officers
or
Advisers
belong
to
the
Fund
and
not
to
the
shareholders
individually.
Accordingly,
all
shareholders
must
bring
any
such
claims
as
a
derivative
action
pursuant
to
the
Massachusetts
Business
Corporation
Act.
The
By-Laws
were
amended
to
provide
as
follows:
-
Special
meetings
of
shareholders
may
be
called
at
any
time
by
the
Board,
by
the
chairperson
of
the
Board
or
by
the
president
of
the
Fund
for
the
purpose
of
taking
action
upon
any
matter
deemed
by
the
Board
to
be
necessary
or
desirable.
Shareholders
shall
have
no
power
to
call
special
meetings
of
shareholders.
-
The
matters
to
be
considered
and
brought
before
any
meeting
of
shareholders
shall
be
limited
to
only
such
matters,
including
the
nomination
and
election
of
Trustees,
as
shall
be
properly
brought
before
such
meeting
in
compliance
with
the
procedures
set
forth
in
the
By-Laws.
For
any
matter
to
be
properly
brought
before
any
meeting
of
shareholders,
the
matter
must
be
(among
other
requirements
specified
in
the
By-Laws)
brought
before
the
meeting
in
the
manner
specified
in
the
By-Laws
by
a
shareholder
of
record
at
the
time
such
notice
is
received
by
the
secretary
of
the
Fund
with
proof
of
such
ownership
or
holding
reasonably
satisfactory
to
the
Fund
to
be
provided
by
such
record
owner
or
nominee
holder
at
such
time.
-
Any
shareholder
desiring
to
nominate
any
person(s)
for
election
as
a
Trustee
shall
deliver,
as
part
of
such
shareholder
notice,
a
statement
in
writing
with
respect
to
the
person(s)
to
be
nominated,
together
with
any
persons
designated
as
a
proposed
substitute
nominee
in
the
event
that
a
proposed
nominee
is
unwilling
or
unable
to
service,
including
by
reason
of
any
disqualification,
setting
forth
all
information
required
by
the
By-Laws.
In
addition,
a
Trustee
questionnaire
and
any
supplemental
information
reasonably
requested
by
the
Fund
must
be
completed,
executed
and
returned
to
the
Fund
within
five
business
days
of
receipt.
-
Any
shareholder
who
gives
a
shareholder
notice
of
any
matter
proposed
to
be
brought
before
an
annual
meeting
shall
deliver,
as
part
of
such
shareholder
notice,
all
statements
and
representations
required
by
the
By-
Laws,
including:
1)
a
statement
in
writing
with
respect
to
the
number
of
shares
which
are
beneficially
owned
by
the
shareholder,
if
any,
where
for
purposes
of
disclosing
the
number
of
shares
which
are
beneficially
owned
by
a
proponent
shareholder,
shares
“beneficially
owned”
shall
have
the
meaning
in
Rules
13d-3
and
13d-5
under
the
Securities
Exchange
Act
of
1934,
as
amended,
(i.e.,
possessing
investment
or
voting
discretion)
and
include
shares
the
shareholder
has
the
right
to
acquire
pursuant
to
any
agreement
or
upon
exercise
of
conversion
rights
or
warrants,
or
otherwise;
and
2)
an
agreement
to
return
to
the
Fund
within
five
business
of
delivery
such
other
information
as
the
Board
may
reasonably
request.
-
No
shareholder
proposal
may
be
brought
before
an
annual
meeting,
unless
shareholders
have
power
to
vote
on
the
subject
matter
of
the
shareholder
proposal,
whether
or
not
submitted
as
a
precatory
recommendation
to
the
Board.
-
If
a
meeting
is
postponed
or
adjourned
and
a
new
record
date
is
set,
any
proxy
received
from
a
shareholder
with
respect
to
the
original
record
date
will
remain
in
full
force
and
effect
with
respect
to
shares
held
by
the
shareholder
on
the
new
record
date,
unless
explicitly
revoked.
-
The
chairperson
of
the
Board,
or
in
the
absence
of
the
chairperson
of
the
Board,
the
president
of
the
Fund,
any
vice
president
or
other
authorized
officer
of
the
Fund,
may
adopt
rules
for
the
orderly
conduct
of
shareholder
meetings.
-
Every
act
or
decision
done
or
made
by
the
Board
shall
be
taken
by
Majority
Trustee
Vote
unless
the
Declaration
of
Trust
or
applicable
law
requires
otherwise
and
at
all
meetings
of
the
Board,
one-half
(50%)
of
the
Trustees
then
in
office,
including
one-half
(50%)
of
the
Continuing
Trustees
(but
in
no
event
fewer
than
two
Trustees),
shall
constitute
a
quorum
for
the
transaction
of
business.
At
all
meetings
of
any
committee
or
sub-committee,
one-half
(50%)
of
the
committee
members
or
sub-committee
members,
including
one-half
(50%)
of
the
committee
members
or
sub-committee
members
who
are
Continuing
Trustees
(but
in
no
event
fewer
than
two
Trustees),
shall
constitute
a
quorum
for
the
transaction
of
business.
-
The
Board
may
require
all
of
its
members
(including
nominees)
to
agree
in
writing
as
to
matters
of
corporate
governance,
business
ethics
and
confidentiality,
including
a
background
check.
-
The
Board
or
the
shareholders
may
ratify
any
act,
omission,
failure
to
act
or
determination
made
not
to
act
by
the
Fund
or
its
officers
to
the
extent
that
the
Board
or
the
shareholders
could
have
originally
authorized
the
act.
Franklin
Universal
Trust
Important
Information
to
Shareholders
44
franklintempleton.com
Annual
Report
-
Any
action
required
or
permitted
to
be
taken
by
the
Board
may
be
taken
without
a
meeting
by
the
same
vote
of
Trustees
as
would
be
required
at
an
in-person
meeting.
The
Declaration
of
Trust
and
the
By-Laws
may
be
inspected
in
their
entirety
upon
request
to
the
Franklin
Templeton
Companies,
LLC,
Attention:
Fund
Secretary,
300
S.E.
2nd
Street,
Fort
Lauderdale,
FL
33301.
Franklin
Universal
Trust
Annual
Meeting
of
Shareholders
45
franklintempleton.com
Annual
Report
An
annual
shareholders’
meeting
of
Franklin
Universal
Trust
(Fund)
was
held
on
March
11,
2021.
At
the
meeting,
the
holders
of
25,131,894
shares
of
the
Fund’s
common
stock
were
represented
in
person
or
by
proxy,
constituting
a
quorum.
At
the
Meeting,
shareholders
elected
all
of
the
Fund’s
nominees
for
the
Board
of
Trustees.
The
results
of
the
voting
were
as
follows:
Nominees
Shares
For
Shares
Withheld
Harris
J.
Ashton
18,988,066
691,768
Terrence
J.
Checki
18,991,366
688,468
Mary
C.Choksi
19,047,941
631,893
Edith
E.
Holiday
19,058,737
621,097
Gregory
E.
Johnson
19,017,376
662,458
Rupert
H.
Johnson,
Jr.
18,980,120
699,714
J.
Michael
Luttig
19,017,368
662,466
Larry
D.
Thompson
19,028,882
650,952
Franklin
Universal
Trust
Dividend
Reinvestment
and
Cash
Purchase
Plan
46
franklintempleton.com
Annual
Report
The
Fund’s
Dividend
Reinvestment
and
Cash
Purchase
Plan
(Plan)
offers
you
a
prompt
and
simple
way
to
reinvest
dividends
and
capital
gain
distributions
in
shares
of
the
Fund.
The
Plan
also
allows
you
to
purchase
additional
shares
of
the
Fund
by
making
voluntary
cash
payments.
American
Stock
Transfer
&
Trust
Company,
LLC
(Plan
Agent),
P.O.
Box
922,
Wall
Street
Station,
New
York,
NY
10269-0560,
acts
as
your
Plan
Agent
in
administering
the
Plan.
You
are
automatically
enrolled
in
the
Plan
unless
you
elect
to
receive
dividends
or
distributions
in
cash.
If
you
own
shares
in
your
own
name,
you
should
notify
the
Plan
Agent,
in
writing,
if
you
wish
to
receive
dividends
or
distributions
in
cash.
If
the
Fund
declares
a
dividend
or
capital
gain
distribution
payable
either
in
cash
or
in
stock
of
the
Fund
and
the
market
price
of
shares
on
the
valuation
date
equals
or
exceeds
the
net
asset
value,
the
Fund
will
issue
new
shares
to
you
at
the
higher
of
net
asset
value
or
95%
of
the
then
current
market
price.
Whenever
the
Fund
declares
a
distribution
from
capital
gains
or
an
income
dividend
payable
in
either
cash
or
shares,
if
the
net
asset
value
per
share
of
the
Fund’s
common
stock
exceeds
the
market
price
per
share
on
the
valuation
date,
the
Plan
Agent
shall
apply
the
amount
of
such
dividend
or
distribution
payable
to
participants
to
the
purchase
of
shares
(less
their
pro
rata
share
of
brokerage
commissions
incurred
with
respect
to
open
market
purchases
in
connection
with
the
reinvestment
of
such
dividend
or
distribution).
If
the
price
exceeds
the
net
asset
value
before
the
Plan
Agent
has
completed
its
purchases,
the
average
purchase
price
may
exceed
the
net
asset
value,
resulting
in
fewer
shares
being
acquired
than
if
the
Fund
had
issued
new
shares.
All
reinvestments
are
in
full
and
fractional
shares,
carried
to
three
decimal
places.
The
Fund
will
not
issue
shares
under
the
Plan
at
a
price
below
net
asset
value.
The
Plan
permits
you
on
a
voluntary
basis
to
submit
in
cash
payments
of
not
less
than
$100
each
up
to
a
total
of
$5,000
per
month
to
purchase
additional
shares
of
the
Fund.
It
is
entirely
up
to
you
whether
you
wish
to
buy
additional
shares
with
voluntary
cash
payments,
and
you
do
not
have
to
send
in
the
same
amount
each
time
if
you
do.
These
payments
should
be
made
by
check
or
money
order
payable
to
American
Stock
Transfer
&
Trust
Company,
LLC
and
sent
to
American
Stock
Transfer
&
Trust
Company,
LLC,
P.O.
Box
922,
Wall
Street
Station,
New
York,
NY
10269-0560,
Attn:
Franklin
Universal
Trust.
Your
cash
payment
will
be
aggregated
with
the
payments
of
other
participants
and
invested
on
your
behalf
by
the
Plan
Agent
in
shares
of
the
Fund
that
are
purchased
in
the
open
market.
The
Plan
Agent
will
invest
cash
payments
on
approximately
the
5th
of
each
month
in
which
no
dividend
or
distribution
is
payable
and,
during
each
month
in
which
a
dividend
or
distribution
is
payable,
will
invest
cash
payments
beginning
on
the
dividend
payment
date.
Under
no
circumstances
will
interest
be
paid
on
your
funds
held
by
the
Plan
Agent.
Accordingly,
you
should
send
any
voluntary
cash
payments
you
wish
to
make
shortly
before
an
investment
date
but
in
sufficient
time
to
ensure
that
your
payment
will
reach
the
Plan
Agent
not
less
than
two
business
days
before
an
investment
date.
Payments
received
less
than
two
business
days
before
an
investment
date
will
be
invested
during
the
next
month
or,
if
there
are
more
than
30
days
until
the
next
investment
date,
will
be
returned
to
you.
You
may
obtain
a
refund
of
any
cash
payment
by
written
notice,
if
the
Plan
Agent
receives
the
written
notice
not
less
than
48
hours
before
an
investment
date.
There
is
no
direct
charge
to
participants
for
reinvesting
dividends
and
capital
gain
distributions,
since
the
Plan
Agent’s
fees
are
paid
by
the
Fund.
However,
when
shares
are
purchased
in
the
open
market,
each
participant
will
pay
a
pro
rata
portion
of
any
brokerage
commissions
incurred.
The
Plan
Agent
will
deduct
a
$5.00
service
fee
from
each
of
your
voluntary
cash
payments.
The
automatic
reinvestment
of
dividends
and
capital
gain
distributions
does
not
relieve
you
of
any
taxes
which
may
be
payable
on
dividends
or
distributions.
In
connection
with
the
reinvestment
of
dividends
and
capital
gain
distributions,
if
the
Fund
issues
new
shares,
shareholders
receiving
such
shares
generally
will
be
treated
as
having
a
distribution
equal
to
the
market
value
of
the
shares
received,
and
if
shares
are
purchased
on
the
open
market,
shareholders
generally
will
be
treated
as
having
received
a
distribution
equal
to
the
cash
distribution
that
would
have
been
paid.
The
Fund
does
not
issue
new
shares
in
connection
with
voluntary
cash
payments.
All
investments
are
in
full
and
fractional
shares,
carried
to
three
decimal
places.
If
the
market
price
exceeds
the
net
asset
value
at
the
time
the
Plan
Agent
purchases
the
additional
shares,
you
will
receive
shares
at
a
price
greater
than
the
net
asset
value.
Franklin
Universal
Trust
Dividend
Reinvestment
and
Cash
Purchase
Plan
47
franklintempleton.com
Annual
Report
You
will
receive
a
monthly
account
statement
from
the
Plan
Agent
showing
total
dividends
and
capital
gain
distributions,
date
of
investment,
shares
acquired
and
price
per
share,
and
total
shares
of
record
held
by
you
and
by
the
Plan
Agent
for
you.
You
are
entitled
to
vote
all
shares
of
record,
including
shares
purchased
for
you
by
the
Plan
Agent,
and,
if
you
vote
by
proxy,
your
proxy
will
include
all
such
shares.
As
long
as
you
participate
in
the
Plan,
the
Plan
Agent
will
hold
the
shares
it
has
acquired
for
you
in
safekeeping,
in
its
name
or
in
the
name
of
its
nominee.
This
convenience
provides
added
protection
against
loss,
theft
or
inadvertent
destruction
of
certificates.
However,
you
may
request
that
a
certificate
representing
your
Plan
shares
be
issued
to
you.
You
may
withdraw
from
the
Plan
without
penalty
at
any
time
by
notifying
the
Plan
Agent,
in
writing,
at
the
address
above.
If
you
withdraw,
you
will
receive,
without
charge,
stock
certificates
issued
in
your
name
for
all
full
shares.
The
Plan
Agent
will
convert
any
fractional
shares
you
hold
at
the
time
of
your
withdrawal
to
cash
at
current
market
price
and
send
you
a
check
for
the
proceeds.
If
you
hold
shares
in
your
own
name,
please
address
all
notices,
correspondence,
questions,
or
other
communications
regarding
the
Plan
to
the
Plan
Agent
at
the
address
noted
above.
If
your
shares
are
not
held
in
your
name,
you
should
contact
your
brokerage
firm,
bank,
or
other
nominee
for
more
information
and
to
determine
if
our
nominee
will
participate
in
the
Plan
on
your
behalf.
The
Fund
or
the
Plan
Agent
may
amend
or
terminate
the
Plan.
You
will
receive
written
notice
at
least
90
days
before
the
effective
date
of
termination
or
of
any
amendment.
In
the
case
of
termination,
you
will
receive
written
notice
at
least
90
days
before
the
record
date
of
any
dividend
or
capital
gain
distribution
by
the
Fund.
Franklin
Universal
Trust
Board
Members
and
Officers
48
franklintempleton.com
Annual
Report
The
name,
year
of
birth
and
address
of
the
officers
and
board
members,
as
well
as
their
affiliations,
positions
held
with
the
Trust,
principal
occupations
during
at
least
the
past
five
years
and
number
of
U.S.
registered
portfolios
overseen
in
the
Franklin
Templeton
fund
complex,
are
shown
below.
Generally,
each
board
member
serves
until
that
person’s
successor
is
elected
and
qualified.
Independent
Board
Members
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Harris
J.
Ashton
(1932)
Trustee
Since
1998
122
Bar-S
Foods
(meat
packing
company)
(1981-2010).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Director,
RBC
Holdings,
Inc.
(bank
holding
company)
(until
2002);
and
President,
Chief
Executive
Officer
and
Chairman
of
the
Board,
General
Host
Corporation
(nursery
and
craft
centers)
(until
1998).
Terrence
J.
Checki
(1945)
Trustee
Since
2018
104
Hess
Corporation
(exploration
of
oil
and
gas)
(2014-present).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Member
of
the
Council
on
Foreign
Relations
(1996-present);
Member
of
the
National
Committee
on
U.S.-China
Relations
(1999-present);
member
of
the
board
of
trustees
of
the
Economic
Club
of
New
York
(2013-present);
member
of
the
board
of
trustees
of
the
Foreign
Policy
Association
(2005-present);
member
of
the
board
of
directors
of
Council
of
the
Americas
(2007-present)
and
the
Tallberg
Foundation
(2018-present);
and
formerly
,
Executive
Vice
President
of
the
Federal
Reserve
Bank
of
New
York
and
Head
of
its
Emerging
Markets
and
Internal
Affairs
Group
and
Member
of
Management
Committee
(1995-2014);
and
Visiting
Fellow
at
the
Council
on
Foreign
Relations
(2014).
Mary
C.
Choksi
(1950)
Trustee
Since
2014
123
Omnicom
Group
Inc.
(advertising
and
marketing
communications
services)
(2011-present)
and
White
Mountains
Insurance
Group,
Ltd.
(holding
company)
(2017-present);
and
formerly
,
Avis
Budget
Group
Inc.
(car
rental)
(2007-2020).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Founder
and
Senior
Advisor,
Strategic
Investment
Group
(investment
management
group)
(2015-2017);
Founding
Partner
and
Senior
Managing
Director,
Strategic
Investment
Group
(1987-2015);
Founding
Partner
and
Managing
Director,
Emerging
Markets
Management
LLC
(investment
management
firm)
(1987-2011);
and
Loan
Officer/Senior
Loan
Officer/Senior
Pension
Investment
Officer,
World
Bank
Group
(international
financial
institution)
(1977-1987).
Franklin
Universal
Trust
49
franklintempleton.com
Annual
Report
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Edith
E.
Holiday
(1952)
Lead
Independent
Trustee
Trustee
since
2004
and
Lead
Independent
Trustee
since
2019
123
Hess
Corporation
(exploration
of
oil
and
gas)
(1993-present),
Santander
Consumer
USA
Holdings,
Inc.
(consumer
finance)
(2016-present);
Santander
Holdings
USA
(holding
company)
(2019-present);
and
formerly
,
Canadian
National
Railway
(railroad)
(2001-April
2021),
White
Mountains
Insurance
Group,
Ltd.
(holding
company)
(2004-May
2021),RTI
International
Metals,
Inc.
(manufacture
and
distribution
of
titanium)
(1999-2015)
and
H.J.
Heinz
Company
(processed
foods
and
allied
products)
(1994-2013).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
or
Trustee
of
various
companies
and
trusts;
and
formerly
,
Assistant
to
the
President
of
the
United
States
and
Secretary
of
the
Cabinet
(1990-1993);
General
Counsel
to
the
United
States
Treasury
Department
(1989-1990);
and
Counselor
to
the
Secretary
and
Assistant
Secretary
for
Public
Affairs
and
Public
Liaison-United
States
Treasury
Department
(1988-1989).
J.
Michael
Luttig
(1954)
Trustee
Since
2009
123
Boeing
Capital
Corporation
(aircraft
financing)
(2006-2010).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Private
investor;
and
formerly
,
Counselor
and
Senior
Advisor
to
the
Chairman,
CEO,
and
Board
of
Directors,
of
The
Boeing
Company
(aerospace
company),
and
member
of
the
Executive
Council
(May
2019-January
1,
2020);
Executive
Vice
President,
General
Counsel
and
member
of
the
Executive
Council,
The
Boeing
Company
(2006-2019);
and
Federal
Appeals
Court
Judge,
United
States
Court
of
Appeals
for
the
Fourth
Circuit
(1991-2006).
Larry
D.
Thompson
(1945)
Trustee
Since
2007
123
Formerly,
Graham
Holdings
Company
(education
and
media
organization)
(2011-May
2021);
The
Southern
Company
(energy
company)
(2014-2020;
previously
2010-2012)
and
Cbeyond,
Inc.
(business
communications
provider)
(2010-2012).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
Counsel,
Finch
McCranie,
LLP
(law
firm)
(2015-present);
John
A.
Sibley
Professor
of
Corporate
and
Business
Law,
University
of
Georgia
School
of
Law
(2015-present;
previously
2011-2012);
and
formerly
,
Independent
Compliance
Monitor
and
Auditor,
Volkswagen
AG
(manufacturer
of
automobiles
and
commercial
vehicles)
(2017-2020);
Executive
Vice
President
-
Government
Affairs,
General
Counsel
and
Corporate
Secretary,
PepsiCo,
Inc.
(consumer
products)
(2012-2014);
Senior
Vice
President
-
Government
Affairs,
General
Counsel
and
Secretary,
PepsiCo,
Inc.
(2004-2011);
Senior
Fellow
of
The
Brookings
Institution
(2003-2004);
Visiting
Professor,
University
of
Georgia
School
of
Law
(2004);
and
Deputy
Attorney
General,
U.S.
Department
of
Justice
(2001-2003).
Independent
Board
Members
(continued)
Franklin
Universal
Trust
50
franklintempleton.com
Annual
Report
Interested
Board
Members
and
Officers
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Valerie
M.
Williams
(1956)
Trustee
Since
May
2021
104
Omnicom
Group,
Inc.
(advertising
and
marketing
communications
services)
(2016-present),
DTE
Energy
Co.
(gas
and
electric
utility)
(2018-present),
Devon
Energy
Corporation
(exploration
and
production
of
oil
and
gas)
(January
2021-present);
and
formerly
,
WPX
Energy,
Inc.
(exploration
and
production
of
oil
and
gas)
(2018-January
2021).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Regional
Assurance
Managing
Partner,
Ernst
&
Young
LLP
(public
accounting)
(2005-2016),
various
roles
of
increasing
responsibility
at
Ernst
&
Young
(1981-2005).
**Gregory
E.
Johnson
(1961)
Trustee
Since
2013
134
None
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Executive
Chairman,
Chairman
of
the
Board
and
Director,
Franklin
Resources,
Inc.;
officer
and/or
director
or
trustee,
as
the
case
may
be,
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
39
of
the
investment
companies
in
Franklin
Templeton;
Vice
Chairman,
Investment
Company
Institute;
and
formerly
,
Chief
Executive
Officer
(2013-2020)
and
President
(1994-2015),
Franklin
Resources,
Inc.
**Rupert
H.
Johnson,
Jr.
(1940)
Chairman
of
the
Board,
Trustee
and
Senior
Vice
President
Chairman
of
the
Board
since
2013,
Trustee
and
Senior
Vice
President
since
1988
123
None
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
(Vice
Chairman),
Franklin
Resources,
Inc.;
Director,
Franklin
Advisers,
Inc.;
and
officer
and/or
director
or
trustee,
as
the
case
may
be,
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
37
of
the
investment
companies
in
Franklin
Templeton.
Alison
E.
Baur
(1964)
Vice
President
Since
2012
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Deputy
General
Counsel,
Franklin
Templeton;
and
officer
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
44
of
the
investment
companies
in
Franklin
Templeton.
Breda
M.
Beckerle
(1958)
Chief
Compliance
Officer
Since
2020
Not
Applicable
Not
Applicable
280
Park
Avenue
New
York,
NY
10017
Principal
Occupation
During
at
Least
the
Past
5
Years:
Chief
Compliance
Officer,
Fiduciary
Investment
Management
International,
Inc.,
Franklin
Advisers,
Inc.,
Franklin
Mutual
Advisers,
LLC,
Franklin
Templeton
Institutional,
LLC;
and
officer
of
39
of
the
investment
companies
in
Franklin
Templeton.
Independent
Board
Members
(continued)
Franklin
Universal
Trust
51
franklintempleton.com
Annual
Report
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Sonal
Desai,
Ph.D.
(1963)
President
and
Chief
Executive
Officer
–
Investment
Management
Since
2018
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
and
Executive
Vice
President,
Franklin
Advisers,
Inc.;
Executive
Vice
President,
Franklin
Templeton
Institutional,
LLC;
and
officer
of
17
of
the
investment
companies
in
Franklin
Templeton.
Steven
J.
Gray
(1955)
Vice
President
and
Co-Secretary
Vice
President
since
2009
and
Co-Secretary
since
2019
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
Vice
President,
FASA,
LLC;
Assistant
Secretary,
Franklin
Distributors,
LLC;
and
officer
of
44
of
the
investment
companies
in
Franklin
Templeton.
Matthew
T.
Hinkle
(1971)
Chief
Executive
Officer
–
Finance
and
Administration
Since
2017
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Vice
President,
Franklin
Templeton
Services,
LLC;
officer
of
44
of
the
investment
companies
in
Franklin
Templeton;
and
formerly
,
Vice
President,
Global
Tax
(2012-April
2017)
and
Treasurer/Assistant
Treasurer,
Franklin
Templeton
(2009-2017).
Susan
Kerr
(1949)
Vice
President
–
AML
Compliance
Since
July
2021
Not
Applicable
Not
Applicable
620
Eighth
Avenue
New
York,
NY
10018
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Compliance
Analyst,
Global
Compliance,
Franklin
Templeton;
Chief
Anti-Money
Laundering
Compliance
Officer,
Legg
Mason
&
Co.
or
its
affiliates;
Anti
Money
Laundering
Compliance
Officer;
Senior
Compliance
Officer,
LMIS;
and
officer
of
41
of
the
investment
companies
in
Franklin
Templeton
Navid
J.
Tofigh
(1972)
Vice
President
Since
2015
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Associate
General
Counsel
and
officer
of
44
of
the
investment
companies
in
Franklin
Templeton.
Craig
S.
Tyle
(1960)
Vice
President
Since
2005
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
General
Counsel
and
Executive
Vice
President,
Franklin
Resources,
Inc.;
and
officer
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
44
of
the
investment
companies
in
Franklin
Templeton.
Lori
A.
Weber
(1964)
Vice
President
and
Co-Secretary
Vice
President
since
2011
and
Co-Secretary
since
2019
Not
Applicable
Not
Applicable
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
Assistant
Secretary,
Franklin
Resources,
Inc.;
Vice
President
and
Secretary,
Templeton
Investment
Counsel,
LLC;
and
officer
of
44
of
the
investment
companies
in
Franklin
Templeton.
Interested
Board
Members
and
Officers
(continued)
Franklin
Universal
Trust
52
franklintempleton.com
Annual
Report
*We
base
the
number
of
portfolios
on
each
separate
series
of
the
U.S.
registered
investment
companies
within
the
Franklin
Templeton
fund
complex.
These
portfolios
have
a
common
investment
manager
or
affiliated
investment
managers.
**Gregory
E.
Johnson
is
considered
to
be
an
interested
person
of
the
Fund
under
the
federal
securities
laws
due
to
his
position
as
an
officer
and
director
of
Franklin
Resources,
Inc.
(Resources),
which
is
the
parent
company
of
the
Fund’s
investment
manager
and
distributor.
Rupert
H.
Johnson,
Jr.
is
considered
to
be
an
interested
person
of
the
Fund
under
the
federal
securities
laws
due
to
his
position
as
an
officer
and
director
and
major
shareholder
of
Resources.
Note
1:
Rupert
H.
Johnson,
Jr.
is
the
uncle
of
Gregory
E.
Johnson.
Note
2:
Officer
information
is
current
as
of
the
date
of
this
report.
It
is
possible
that
after
this
date,
information
about
officers
may
change.
The
Sarbanes-Oxley
Act
of
2002
and
Rules
adopted
by
the
Securities
and
Exchange
Commission
require
the
Fund
to
disclose
whether
the
Fund’s
Audit
Committee
includes
at
least
one
member
who
is
an
audit
committee
financial
expert
within
the
meaning
of
such
Act
and
Rules.
The
Fund’s
Board
has
determined
that
there
is
at
least
one
such
financial
expert
on
the
Audit
Committee
and
has
designated
Mary
C.
Choksi
as
its
audit
committee
financial
expert.
The
Board
believes
that
Ms.
Choksi
qualifies
as
such
an
expert
in
view
of
her
extensive
business
background
and
experience.
She
served
as
a
director
of
Avis
Budget
Group,
Inc.
(2007-2020)
and
formerly,
Founder
and
Senior
Advisor,
Strategic
Investment
Group
(1987
to
2017).
Ms.
Choksi
has
been
a
Member
of
the
Fund’s
Audit
Committee
since
2014.
As
a
result
of
such
background
and
experience,
the
Board
believes
that
Ms.
Choksi
has
acquired
an
understanding
of
generally
accepted
accounting
principles
and
financial
statements,
the
general
application
of
such
principles
in
connection
with
the
accounting
estimates,
accruals
and
reserves,
and
analyzing
and
evaluating
financial
statements
that
present
a
breadth
and
level
of
complexity
of
accounting
issues
generally
comparable
to
those
of
the
Fund,
as
well
as
an
understanding
of
internal
controls
and
procedures
for
financial
reporting
and
an
understanding
of
audit
committee
functions.
Ms.
Choksi
is
an
independent
Board
member
as
that
term
is
defined
under
the
relevant
Securities
and
Exchange
Commission
Rules
and
Releases.
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Jeffery
W.
White
(1971)
Interim
Chief
Financial
Officer,
Chief
Accounting
Officer
and
Treasurer
Since
October
2021
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director,
Fund
Administration
&
Reporting;
officer
of
24
of
the
investment
companies
in
Franklin
Templeton;
and
formerly
,
Manager,
Fund
Administration
&
Report
(2009-2017).
Interested
Board
Members
and
Officers
(continued)
Franklin
Universal
Trust
Shareholder
Information
53
franklintempleton.com
Annual
Report
Proxy
Voting
Policies
and
Procedures
The
Fund’s
investment
manager
has
established
Proxy
Voting
Policies
and
Procedures
(Policies)
that
the
Fund
uses
to
determine
how
to
vote
proxies
relating
to
portfolio
securities.
Shareholders
may
view
the
Fund’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
Fund’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
Fund
files
a
complete
statement
of
investments
with
the
U.S.
Securities
and
Exchange
Commission
for
the
first
and
third
quarters
for
each
fiscal
year
as
an
exhibit
to
its
report
on
Form
N-PORT.
Shareholders
may
view
the
filed
Form
N-PORT
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.
FUT
A
10/21
©
2021
Franklin
Templeton
Investments.
All
rights
reserved.
To
help
ensure
we
provide
you
with
quality
service,
all
calls
to
and
from
our
service
areas
are
monitored
and/or
recorded.
Annual
Report
Franklin
Universal
Trust
Investment
Manager
Transfer
Agent
Franklin
Advisers,
Inc.
(800)
DIAL
BEN
®
/
342-5236
American
Stock
Transfer
&
Trust
Co.,
LLC
6201
15th
Avenue
Brooklyn,
NY
11219
www.astfinancial.com
Item 2. Code of Ethics.
(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 13(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 Mary C. Choksi and she is "independent" as defined under the relevant Securities and Exchange Commission Rules and Releases.
Item 4.Principal Accountant Fees and Services.
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or for services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements were $53,527 for the fiscal year ended August 31, 2021 and $62,420 for the fiscal year ended August 31, 2020.
(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of Item 4.
There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant's investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant that are reasonably related to the performance of the audit of their financial statements.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant for tax compliance, tax advice and tax planning.
There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant for tax compliance, tax advice and tax planning.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant not reported in paragraphs (a)-(c) of Item 4were $88 for the fiscal year ended August 31, 2021 and $0 for the fiscal year ended August 31, 2020. The services for which these fees were paid included review of materials provided to the fund Board in connection with the investment management contract renewal process.
The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant not reported in paragraphs (a)-(c) of Item 4 were $12,000 for the fiscal year ended August 31, 2021 and $175,744 for the fiscal year ended August 31, 2020. The services for which these fees were paid included the issuance of an Auditors’ Certificate for South Korean regulatory shareholder disclosures, professional fees in connection with determining the feasibility of a U.S. direct lending structure, valuation services related to a fair value engagement, and assets under management certification.
(e) (1) The registrant’s audit committee is directly responsible for approving the services to be provided by the auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided to the Fund by the auditors;
(iii) pre-approval of all non-audit related services to be provided to the registrant by the auditors to the registrant’s investment adviser or to any entity that controls, is controlled by or is under common control with the registrant’s investment adviser and that provides ongoing services to the registrant where the non-audit services relate directly to the operations or financial reporting of the registrant; and
(iv) establishment by the audit committee, if deemed necessary or appropriate, as an alternative to committee pre-approval of services to be provided by the auditors, as required by paragraphs (ii) and (iii) above, of policies and procedures to permit such services to be pre-approved by other means, such as through establishment of guidelines or by action of a designated member or members of the committee; provided the policies and procedures are detailed as to the particular service and the committee is informed of each service and such policies and procedures do not include delegation of audit committee responsibilities, as contemplated under the Securities Exchange Act of 1934, to management; subject, in the case of (ii) through (iv), to any waivers, exceptions or exemptions that may be available under applicable law or rules.
(e) (2) None of the services provided to the registrant described in paragraphs (b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) The aggregate non-audit fees paid to the principal accountant for services rendered by the principal accountant to the registrant and the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant were $12,088 for the fiscal year ended August 31, 2021 and $175,744 for the fiscal year ended August 31, 2020.
(h) The registrant’s audit committee of the board has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
Item 5. Audit Committee
of Listed Registrants.
Members of the Audit Committee are:
Terrence J. Checki,
Mary C. Choksi
,
Edith E. Holiday, J. Michael Luttig and Larry D. Thompson.
Item 6. Schedule of Investments. N/A
Item 7
. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
The board of trustees of the Fund has delegated the authority to vote proxies related to the portfolio securities held by the Fund to the Fund's investment manager, Franklin Advisers, Inc. in accordance with the Proxy Voting Policies and Procedures (Policies) adopted by the investment manager.
RESPONSIBILITY OF THE INVESTMENT MANAGER TO VOTE PROXIES
Franklin Advisers, Inc. (hereinafter the "Investment Manager") has delegated its administrative duties with respect to voting proxies for securities to the Proxy Group within Franklin Templeton Companies, LLC (the "Proxy Group"), a wholly-owned subsidiary of Franklin Resources, Inc. Franklin Templeton Companies, LLC provides a variety of general corporate services to its affiliates, including, but not limited to, legal and compliance activities. Proxy duties consist of analyzing proxy statements of issuers whose stock is owned by any client (including both investment companies and any separate accounts managed by the Investment Manager) that has either delegated proxy voting administrative responsibility to the Investment Manager or has asked for information and/or recommendations on the issues to be voted. The Investment Manager will inform Advisory Clients that have not delegated the voting responsibility but that have requested voting advice about the Investment Manager's views on such proxy votes. The Proxy Group also provides these services to other advisory affiliates of the Investment Manager.
The Proxy Group will process proxy votes on behalf of, and the Investment Manager votes proxies solely in the best interests of, separate account clients, the Investment Manager-managed investment company shareholders, or shareholders of funds that have appointed Franklin Templeton International Services S.à.r.l. (“FTIS S.à.r.l.”) as the Management Company, provided such funds or clients have properly delegated such responsibility in writing, or, where employee benefit plan assets subject to the Employee Retirement Income Security Act of 1974, as amended, are involved (“ERISA accounts”), in the best interests of the plan participants and beneficiaries (collectively, "Advisory Clients"), unless (i) the power to vote has been specifically retained by the named fiduciary in the documents in which the named fiduciary appointed the Investment Manager or (ii) the documents otherwise expressly prohibit the Investment Manager from voting proxies. The Investment Manager recognizes that the exercise of voting rights on securities held by ERISA plans for which the Investment Manager has voting responsibility is a fiduciary duty that must be exercised with care, skill, prudence and diligence.
In certain circumstances, Advisory Clients are permitted to direct their votes in a solicitation pursuant to the Investment Management Agreement. An Advisory Client that wishes to direct its vote shall give reasonable prior written notice to the Investment Manager indicating such intention and provide written instructions directing the Investment Manager or the Proxy Group to vote regarding the solicitation. Where such prior written notice is received, the Proxy Group will vote proxies in accordance with such written notification received from the Advisory Client.
The Investment Manager has adopted and implemented Proxy Voting Policies and Procedures (“Proxy Policies”) that it believes are reasonably designed to ensure that proxies are voted in the best interest of Advisory Clients in accordance with its fiduciary duties and rule 206(4)-6 under the Investment Advisers Act of 1940. To the extent that the Investment Manager has a subadvisory agreement with an affiliated investment manager (the “Affiliated Subadviser”) with respect to a particular Advisory Client, the Investment Manager may delegate proxy voting responsibility to the Affiliated Subadviser. The Investment Manager may also delegate proxy voting responsibility to a subadviser that is not an Affiliated Subadviser in certain limited situations as disclosed to fund shareholders (e.g., where an Investment Manager to a pooled investment vehicle has engaged a subadviser that is not an Affiliated Subadviser to manage all or a portion of the assets).
*
Rule 38a-1 under the Investment Company Act of 1940 (“1940 Act”) and Rule 206(4)-7 under the Investment Advisers Act of 1940 (“Advisers Act”) (together the “Compliance Rule”) require registered investment companies and registered investment advisers to, among other things, adopt and implement written policies and procedures reasonably designed to prevent violations of the federal securities laws (“Compliance Rule Policies and Procedures”).
HOW THE INVESTMENT MANAGER VOTES PROXIES
Fiduciary Considerations
All proxies received by the Proxy Group will be voted based upon the Investment Manager's instructions and/or policies. To assist it in analyzing proxies of equity securities, the Investment Manager subscribes to Institutional Shareholder Services Inc. ("ISS"), an unaffiliated third-party corporate governance research service that provides in-depth analyses of shareholder meeting agendas and vote recommendations. In addition, the Investment Manager subscribes to ISS’s Proxy Voting Service and Vote Disclosure Service. These services include receipt of proxy ballots, custodian bank relations, account maintenance, vote execution, ballot reconciliation, vote record maintenance, comprehensive reporting capabilities, and vote disclosure services. Also, the Investment Manager subscribes to Glass, Lewis & Co., LLC ("Glass Lewis"), an unaffiliated third-party analytical research firm, to receive analyses and vote recommendations on the shareholder meetings of publicly held U.S. companies, as well as a limited subscription to its international research. Although analyses provided by ISS, Glass Lewis, and/or another independent third-party proxy service provider (each a “Proxy Service”) are thoroughly reviewed and considered in making a final voting decision, the Investment Manager does not consider recommendations from a Proxy Service or any third-party to be determinative of the Investment Manager's ultimate decision. Rather, the Investment Manager exercises its independent judgment in making voting decisions. As a matter of policy, the officers, directors and employees of the Investment Manager and the Proxy Group will not be influenced by outside sources whose interests conflict with the interests of Advisory Clients.
For ease of reference, the Proxy Policies often refer to all Advisory Clients. However, our processes and practices seek to ensure that proxy voting decisions are suitable for individual Advisory Clients. In some cases, the investment manager’s evaluation may result in an individual Advisory Client or Investment Manager voting differently, depending upon the nature and objective of the fund or account, the composition of its portfolio, whether the Investment Manager has adopted a specialty or custom voting policy, and other factors.
Circumstances Where the Investment Manager May Generally Rely on the Recommendations of a Proxy Service
Certain of the Investment Manager’s clients’ accounts are separate accounts or funds (or a portion thereof) that follow a smart beta strategy, are passively managed to track a particular securities index, or employ a quantitative strategy. These accounts include certain client accounts managed by Franklin Templeton Investment Solutions (“FTIS”), a business unit of the Investment Manager that are managed systematically to either (i) track a specified securities index (including but not limited to exchange traded funds (“ETFs”)) or (ii) seek to achieve other stated investment objectives.
In the case of accounts managed to track an index, the primary criteria for determining whether a security should be included (or continue to be included) in an investment portfolio is whether such security is a representative component of the securities index that the account is seeking to track. For other systematically-managed accounts that do not track a specific index, FTIS’s proprietary methodologies rely on a combination of quantitative, qualitative, and behavioral analysis rather than fundamental security research and analyst coverage that an actively-managed portfolio would ordinarily employ. Accordingly, absent client direction, in light of the high number of positions held by such accounts and the considerable time and effort that would be required to review proxy statements and ISS or Glass Lewis recommendations, the Investment Manager may review ISS’s non-US Benchmark guidelines, ISS’s specialty guidelines (in particular, ISS’s Sustainability guidelines), or Glass Lewis’s US guidelines ( the “the ISS and Glass Lewis Proxy Voting Guidelines”) and determine, consistent with the best interest of its clients, to provide standing instructions to the Proxy Group to vote proxies according to the recommendations of ISS or Glass Lewis.
The Investment Manager, however, retains the ability to vote a proxy differently than ISS or Glass Lewis recommends if the Investment Manager determines that it would be in the best interests of Advisory Clients (for example, where an issuer files additional solicitation materials after a Proxy Service has issued its voting recommendations but sufficiently before the vote submission deadline and these materials would reasonably be expected to affect the Investment Manager’s voting determination).
Conflicts of Interest
All conflicts of interest will be resolved in the best interests of the Advisory Clients. The Investment Manager is an affiliate of a large, diverse financial services firm with many affiliates and makes its best efforts to mitigate conflicts of interest. However, as a general matter, the Investment Manager takes the position that relationships between certain affiliates acquired as a result of the Legg Mason transaction that do not use the “Franklin Templeton” name (“Legg Mason Affiliates”) and an issuer (e.g., an investment management relationship between an issuer and a Legg Mason Affiliate) do not present a conflict of interest for the Investment Manager in voting proxies with respect to such issuer because: (i) the Investment Manager operates as an independent business unit from the Legg Mason Affiliate business units, and (ii) informational barriers exist between the Investment Manager and the Legg Mason Affiliate business units. Franklin Templeton employees are under an obligation to bring any conflicts of interest, including conflicts of interest which may arise because of an attempt by a Legg Mason Affiliate business unit or officer or employee to influence proxy voting by the Investment Manager to the attention of Franklin Templeton’s Compliance.
Material conflicts of interest could arise in a variety of situations, including as a result of the Investment Manager’s or an affiliate’s (other than a Legg Mason Affiliate as described above): (i) material business relationship with an issuer or proponent, (ii) direct or indirect pecuniary interest in an issuer or proponent; or (iii) significant personal or family relationship with an issuer or proponent.
Material conflicts of interest are identified by the Proxy Group based upon analyses of client, distributor, broker dealer, and vendor lists, information periodically gathered from directors and officers, and information derived from other sources, including public filings. The Proxy Group gathers and analyzes this information on a best efforts basis, as much of this information is provided directly by individuals and groups other than the Proxy Group, and the Proxy Group relies on the accuracy of the information it receives from such parties.
Nonetheless, even though a potential conflict of interest between the Investment Manager or an affiliate (other than a Legg Mason Affiliate as described above) and an issuer may exist: (1) the Investment Manager may vote in opposition to the recommendations of an issuer’s management even if contrary to the recommendations of a third-party proxy voting research provider; (2) if management has made no recommendations, the Proxy Group may defer to the voting instructions of the Investment Manager; and (3) with respect to shares held by Franklin Resources, Inc. or its affiliates for their own corporate accounts, such shares may be voted without regard to these conflict procedures.
Otherwise, in
situations where a material conflict of interest is identified between the Investment Manager or one of its affiliates (other than Legg Mason Affiliates) and an issuer, the Proxy Group may vote consistent with the voting recommendation of a Proxy Service or send the proxy directly to the relevant Advisory Clients with the Investment Manager’s recommendation regarding the vote for approval.
Where the Proxy Group refers a matter to an Advisory Client, it may rely upon the instructions of a representative of the Advisory Client, such as the board of directors or trustees, a committee of the board, or an appointed delegate in the case of a U.S. registered investment company, a conducting officer in the case of a fund that has appointed FTIS S.à.r.l as its Management Company, the Independent Review Committee for Canadian investment funds, or a plan administrator in the case of an employee benefit plan. A quorum of the board of directors or trustees or of a committee of the board can be reached by a majority of members, or a majority of non-recused members. The Proxy Group may determine to vote all shares held by Advisory Clients of the Investment Manager and affiliated Investment Managers (other than Legg Mason Affiliates) in accordance with the instructions of one or more of the Advisory Clients.
The Investment Manager may also decide whether to vote proxies for securities deemed to present conflicts of interest that are sold following a record date, but before a shareholder meeting date. The Investment Manager may consider various factors in deciding whether to vote such proxies, including the Investment Manager’s long-term view of the issuer’s securities for investment, or it may defer the decision to vote to the applicable Advisory Client. The Investment Manager also may be unable to vote, or choose not to vote, a proxy for securities deemed to present a conflict of interest for any of the reasons outlined in the first paragraph of the section of these policies entitled “Proxy Procedures.”
Where a material conflict of interest has been identified, but the items on which the Investment Manager’s vote recommendations differ from a Proxy Service relate specifically to (1) shareholder proposals regarding social or environmental issues, (2) “Other Business” without describing the matters that might be considered, or (3) items the Investment Manager wishes to vote in opposition to the recommendations of an issuer’s management, the Proxy Group may defer to the vote recommendations of the Investment Manager rather than sending the proxy directly to the relevant Advisory Clients for approval.
To avoid certain potential conflicts of interest, the Investment Manager will employ echo voting or pass-through voting, if possible, in the following instances: (1) when a Franklin Templeton U.S. registered investment company invests in an underlying fund in reliance on any one of Sections 12(d)(1)(F), or (G) of the Investment Company Act of 1940, as amended, (“1940 Act”), the rules thereunder, or pursuant to a U.S. Securities and Exchange Commission (“SEC”) exemptive order thereunder; (2) when a Franklin Templeton U.S. registered investment company invests uninvested cash in affiliated money market funds pursuant to the rules under the 1940 Act or any exemptive orders thereunder (“cash sweep arrangement”); or (3) when required pursuant to the fund’s governing documents or applicable law. Echo voting means that the Investment Manager will vote the shares in the same proportion as the vote of all other holders of the fund’s shares. With respect to instances when a Franklin Templeton U.S. registered investment company invests in an underlying fund in reliance on any one of Sections 12(d)(1)(F) or (G) of the 1940 Act, the rules thereunder, or pursuant to an SEC exemptive order thereunder, and there are no other unaffiliated shareholders also invested in the underlying fund, the Investment Manager will vote in accordance with the recommendation of such investment company’s board of trustees or directors. In addition, to avoid certain potential conflicts of interest, and where required under a fund’s governing documents or applicable law, the Investment Manager will employ pass-through voting when a Franklin Templeton U.S. registered investment company invests in an underlying fund in reliance on Section 12(d)(1)(E) of the 1940 Act, the rules thereunder, or pursuant to an SEC exemptive order thereunder. In “pass-through voting,” a feeder fund will solicit voting instructions from its shareholders as to how to vote on the master fund’s proposals. If a Franklin Templeton investment company becomes a holder of more than 25% of the shares on a non-affiliated fund, as a result of a decrease in the outstanding shares of the non-affiliated fund, then the Investment Manager will vote the shares in the same proportion as the vote of all other holders of the non-affiliated fund.
In addition, with respect to an open-ended collective investment scheme formed as a Société d'Investissement à capital variable (SICAV), in accordance with Luxembourg law, if one sub-fund (the “Acquirer”) has invested in another sub-fund of the SICAV (the “Target”), then the voting rights attached to the shares of the Target will be suspended for voting purposes as long as they are held by the Acquirer. Similarly, in accordance with Canadian law, Canadian mutual funds that are invested in another proprietary mutual fund are prohibited from voting the units of the underlying fund.
Weight Given Management Recommendations
One of the primary factors the Investment Manager considers when determining the desirability of investing in a particular company is the quality and depth of that company's management. Accordingly, the recommendation of management on any issue is a factor that the Investment Manager considers in determining how proxies should be voted. However, the Investment Manager does not consider recommendations from management to be determinative of the Investment Manager's ultimate decision. Each issue is considered on its own merits, and the Investment Manager will not support the position of a company's management in any situation where it determines that the ratification of management's position would adversely affect the investment merits of owning that company's shares.
Engagement with Issuers
The Investment Manager believes that engagement with issuers is important to good corporate governance and to assist in making proxy voting decisions. The Investment Manager may engage with issuers to discuss specific ballot items to be voted on in advance of an annual or special meeting to obtain further information or clarification on the proposals. The Investment Manager may also engage with management on a range of environmental, social or corporate governance issues throughout the year.
THE PROXY GROUP
The Proxy Group is part of the Franklin Templeton Companies, LLC Legal Department and is overseen by legal counsel. Full- time staff members and support staff (which includes individuals that are employees of affiliates of Franklin Templeton Companies, LLC) are devoted to proxy voting administration and oversight and providing support and assistance where needed. On a daily basis, the Proxy Group will review each proxy upon receipt as well as any agendas, materials and recommendations that they receive from a Proxy Service or other sources. The Proxy Group maintains a record of all shareholder meetings that are scheduled for companies whose securities are held by the Investment Manager's managed funds and accounts. For each shareholder meeting, a member of the Proxy Group will consult with the research analyst that follows the security and provide the analyst with the agenda, analyses of one or more Proxy Services, recommendations and any other information provided to the Proxy Group. Except in situations identified as presenting material conflicts of interest, the Investment Manager's research analyst and relevant portfolio manager(s) are responsible for making the final voting decision based on their review of the agenda, analyses of one or more Proxy Services, proxy statements, their knowledge of the company and any other information publicly available.
In situations where the Investment Manager has not responded with vote recommendations to the Proxy Group by the deadline date, the Proxy Group may vote consistent with the vote recommendations of a Proxy Service. Except in cases where the Proxy Group is voting consistent with the voting recommendation of a Proxy Service, the Proxy Group must obtain voting instructions from the Investment Manager's research analyst, relevant portfolio manager(s), legal counsel and/or the Advisory Client prior to submitting the vote. In the event that an account holds a security that the Investment Manager did not purchase on its behalf, and the Investment Manager does not normally consider the security as a potential investment for other accounts, the Proxy Group may vote consistent with the voting recommendations of a Proxy Service or take no action on the meeting.
PROXY PROCEDURES
The Proxy Group is fully cognizant of its responsibility to process proxies and maintain proxy records as may be required by relevant rules and regulations. In addition, the Investment Manager understands its fiduciary duty to vote proxies and that proxy voting decisions may affect the value of shareholdings. Therefore, the Investment Manager will generally attempt to process every proxy it receives for all domestic and foreign securities. However, there may be situations in which the Investment Manager may be unable to successfully vote a proxy, or may choose not to vote a proxy, such as where: (i) a proxy ballot was not received from the custodian bank; (ii) a meeting notice was received too late; (iii) there are fees imposed upon the exercise of a vote and it is determined that such fees outweigh the benefit of voting; (iv) there are legal encumbrances to voting, including blocking restrictions in certain markets that preclude the ability to dispose of a security if the Investment Manager votes a proxy or where the Investment Manager is prohibited from voting by applicable law, economic or other sanctions, or other regulatory or market requirements, including but not limited to, effective Powers of Attorney; (v) additional documentation or the disclosure of beneficial owner details is required; (vi) the Investment Manager held shares on the record date but has sold them prior to the meeting date; (vii) the Advisory Client held shares on the record date, but the Advisory Client closed the account prior to the meeting date; (viii) a proxy voting service is not offered by the custodian in the market; (ix) due to either system error or human error, the Investment Manager’s intended vote is not correctly submitted; (x) the Investment Manager believes it is not in the best interest of the Advisory Client to vote the proxy for any other reason not enumerated herein; or (xi) a security is subject to a securities lending or similar program that has transferred legal title to the security to another person.
Even if the Investment Manager uses reasonable efforts to vote a proxy on behalf of its Advisory Clients, such vote or proxy may be rejected because of (a) operational or procedural issues experienced by one or more third parties involved in voting proxies in such jurisdictions; (b) changes in the process or agenda for the meeting by the issuer for which the Investment Manager does not have sufficient notice; or (c) the exercise by the issuer of its discretion to reject the vote of the Investment Manager. In addition, despite the best efforts of the Proxy Group and its agents, there may be situations where the Investment Manager’s votes are not received, or properly tabulated, by an issuer or the issuer’s agent.
The Investment Manager or its affiliates may, on behalf of one or more of the proprietary registered investment companies advised by the Investment Manager or its affiliates, determine to use its best efforts to recall any security on loan where the Investment Manager or its affiliates (a) learn of a vote on a material event that may affect a security on loan and (b) determine that it is in the best interests of such proprietary registered investment companies to recall the security for voting purposes. The Investment Manager will not generally make such efforts on behalf of other Advisory Clients or notify such Advisory Clients or their custodians that the Investment Manager or its affiliates has learned of such a vote.
There may be instances in certain non-U.S. markets where split voting is not allowed. Split voting occurs when a position held within an account is voted in accordance with two differing instructions. Some markets and/or issuers only allow voting on an entire position and do not accept split voting. In certain cases, when more than one Franklin Templeton Investment Manager has accounts holding shares of an issuer that are held in an omnibus structure, the Proxy Group will seek direction from an appropriate representative of the Advisory Client with multiple Investment Managers (such as a conducting officer of the Management Company in the case of a SICAV), or the Proxy Group will submit the vote based on the voting instructions provided by the Investment Manager with accounts holding the greatest number of shares of the security within the omnibus structure.
The Investment Manager may vote against an agenda item where no further information is provided, particularly in non-U.S. markets. For example, if "Other Business" is listed on the agenda with no further information included in the proxy materials, the Investment Manager may vote against the item as no information has been provided prior to the meeting in order to make an informed decision. The Investment Manager may also enter a "withhold" vote on the election of certain directors from time to time based on individual situations, particularly where the Investment Manager is not in favor of electing a director and there is no provision for voting against such director.
If several issues are bundled together in a single voting item, the Investment Manager will assess the total benefit to shareholders and the extent that such issues should be subject to separate voting proposals.
The following describes the standard procedures that are to be followed with respect to carrying out the Investment Manager's proxy policy:
1. The Proxy Group will identify all Advisory Clients, maintain a list of those clients, and indicate those Advisory Clients who have delegated proxy voting authority in writing to the Investment Manager. The Proxy Group will periodically review and update this list. If the agreement with an Advisory Client permits the Advisory Client to provide instructions to the Investment Manager regarding how to vote the client’s shares, the Investment Manager will make a best-efforts attempt to vote per the Advisory Client’s instructions.
2. All relevant information in the proxy materials received (e.g., the record date of the meeting) will be recorded promptly by the Proxy Group to maintain control over such materials.
3. The Proxy Group will review and compile information on each proxy upon receipt of any agendas, materials, reports, recommendations from a Proxy Service, or other information. The Proxy Group will then forward (or otherwise make available) this information to the appropriate research analyst for review and voting instructions.
4. In determining how to vote, the Investment Manager's analysts and relevant portfolio manager(s) will consider their in-depth knowledge of the company, any readily available information and research about the company and its agenda items, and the recommendations of a Proxy Service.
5. The Proxy Group is responsible for maintaining the documentation that supports the Investment Manager’s voting decision. Such documentation may include, but is not limited to, any information provided by a Proxy Service and, with respect to an issuer that presents a potential conflict of interest, any board or audit committee memoranda describing the position it has taken. Additionally, the Proxy Group may include documentation obtained from the research analyst, portfolio manager and/or legal counsel; however, the relevant research analyst may, but is not required to, maintain additional documentation that was used or created as part of the analysis to reach a voting decision, such as certain financial statements of an issuer, press releases, or notes from discussions with an issuer’s management.
6. After the proxy is completed but before it is returned to the issuer and/or its agent, the Proxy Group may review those situations including special or unique documentation to determine that the appropriate documentation has been created, including conflict of interest screening. If the Proxy Group learns that an issuer has filed additional solicitation materials sufficiently prior to the submission deadline, the Proxy Group will disseminate this information to the Investment Manager so that the Investment Manager may consider this information and determine whether it is material to its voting decision.
7. The Proxy Group will make every effort to submit the Investment Manager's vote on all proxies to ISS by the cut-off date. However, in certain foreign jurisdictions or instances where the Proxy Group did not receive sufficient notice of the meeting, the Proxy Group will use its best efforts to send the voting instructions to ISS in time for the vote to be processed.
8. With respect to proprietary products, the Proxy Group will file Powers of Attorney in all jurisdictions that require such documentation on a best efforts basis; the Proxy Group does not have authority to file Powers of Attorney on behalf of other Advisory Clients. On occasion, the Investment Manager may wish to attend and vote at a shareholder meeting in person. In such cases, the Proxy Group will use its best efforts to facilitate the attendance of the designated Franklin Templeton employee by coordinating with the relevant custodian bank.
9. The Proxy Group prepares reports for each separate account client that has requested a record of votes cast. The report specifies the proxy issues that have been voted for the Advisory Client during the requested period and the position taken with respect to each issue. The Proxy Group sends one copy to the Advisory Client, retains a copy in the Proxy Group’s files and forwards a copy to either the appropriate portfolio manager or the client service representative. While many Advisory Clients prefer quarterly or annual reports, the Proxy Group will provide reports for any timeframe requested by an Advisory Client.
10. If the Franklin Templeton Services, LLC Global Trade Services learns of a vote that may affect a security on loan from a proprietary registered investment company, Global Trade Services will notify the Investment Manager. If the Investment Manager decides that the vote is material and it would be in the best interests of shareholders to recall the security, the Investment Manager will advise Global Trade Services to contact the lending agent in an effort to retrieve the security. If so requested by the Investment Manager, Global Trade Services shall use its best efforts to recall any security on loan and will use other practicable and legally enforceable means to ensure that the Investment Manager is able to vote proxies for proprietary registered investment companies with respect to such loaned securities. However, there can be no guarantee that the securities can be retrieved for such purposes. Global Trade Services will advise the Proxy Group of all recalled securities. Many Advisory Clients have entered into securities lending arrangements with agent lenders to generate additional revenue. Under normal circumstances, the Investment Manager will not make efforts to recall any security on loan for voting purposes on behalf of other Advisory Clients or notify such clients or their custodians that the Investment Manager or its affiliates have learned of such a vote.
11. The Proxy Group participates in Franklin Templeton Investment’s Business Continuity and Disaster Preparedness programs. The Proxy Group will conduct disaster recovery testing on a periodic basis in an effort to ensure continued operations of the Proxy Group in the event of a disaster. Should the Proxy Group not be fully operational, then the Proxy Group may instruct ISS to vote all meetings immediately due per the recommendations of the appropriate third-party proxy voting service provider.
12. The Proxy Group, in conjunction with legal staff responsible for coordinating Fund disclosure, on a timely basis, will file all required Form N-PXs, with respect to proprietary U.S. registered investment companies, disclose that each U.S.-registered fund’s proxy voting record is available on the Franklin Templeton web site, and will make available the information disclosed in each fund’s Form N-PX as soon as is reasonably practicable after filing Form N-PX with the SEC. The Proxy Group will work with legal staff in other jurisdictions, as needed, to help support required proxy voting disclosure in such markets.
13. The Proxy Group, in conjunction with legal staff responsible for coordinating Fund disclosure, will ensure that all required disclosure about proxy voting of the proprietary U.S. registered investment companies is made in such clients’ disclosure documents.
14. The Proxy Group is subject to periodic review by Internal Audit and compliance groups.
15. The Investment Manager will review the guidelines of each Proxy Service, with special emphasis on the factors they use with respect to proxy voting recommendations.
16. The Proxy Group will update the proxy voting policies and procedures as necessary for review and approval by legal, compliance, investment officers, and/or other relevant staff.
17. The Proxy Group will familiarize itself with the procedures of ISS that govern the transmission of proxy voting information from the Proxy Group to ISS and periodically review how well this process is functioning. The Proxy Group, in conjunction with the compliance department, will conduct periodic due diligence reviews of each Proxy Service via on-site visits or by written questionnaires. As part of the periodic due diligence process, the Investment Manager assesses the adequacy and quality of each Proxy Service’s staffing and personnel to ensure each Proxy Service has the capacity and competency to adequately analyze proxy issues and the ability to make proxy voting recommendations based on materially accurate information. In the event the Investment Manager discovers an error in the research or voting recommendations provided by a Proxy Service, it will take reasonable steps to investigate the error and seek to determine whether the Proxy Service is taking reasonable steps to reduce similar errors in the future. In addition, the Investment Manager assesses the robustness of Proxy Service’s policies regarding (1) ensuring proxy voting recommendations are based on current and accurate information, and (2) identifying and addressing any conflicts of interest. The Investment Manager also considers the independence of each Proxy Service on an on-going basis.
18. The Proxy Group will investigate, or cause others to investigate, any and all instances where these Procedures have been violated or there is evidence that they are not being followed. Based upon the findings of these investigations, the Proxy Group, if practicable, will recommend amendments to these Procedures to minimize the likelihood of the reoccurrence of non-compliance.
19. At least annually, the Proxy Group will verify that:
a. A sampling of proxies received by Franklin Templeton Investments has been voted in a manner consistent with the Proxy Voting Policies and Procedures;
b. A sampling of proxies received by Franklin Templeton Investments has been voted in accordance with the instructions of the Investment Manager;
c. Adequate disclosure has been made to clients and fund shareholders about the procedures and how proxies were voted in markets where such disclosures are required by law or regulation; and
d. Timely filings were made with applicable regulators, as required by law or regulation, related to proxy voting.
The Proxy Group is responsible for maintaining appropriate proxy voting records. Such records will include, but are not limited to, a copy of all materials returned to the issuer and/or its agent, the documentation described above, listings of proxies voted by issuer and by client, each written client request for proxy voting policies/records and the Investment Manager’s written response to any client request for such records, and any other relevant information. The Proxy Group may use an outside service such as ISS to support this recordkeeping function. All records will be retained in either hard copy or electronic format for at least five years, the first two of which will be on-site. Advisory Clients may request copies of their proxy voting records by calling the Proxy Group collect at 1-954-527-7678, or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. The Investment Manager does not disclose to third parties (other than ISS) the proxy voting records of its Advisory Clients, except to the extent such disclosure is required by applicable law or regulation or court order. Advisory Clients may review the Investment Manager's proxy voting policies and procedures on-line at www.franklintempleton.com and may request additional copies by calling the number above. For U.S. proprietary registered investment companies, an annual proxy voting record for the period ending June 30 of each year will be posted to www.franklintempleton.com no later than August 31 of each year. For proprietary Canadian mutual fund products, an annual proxy voting record for the period ending June 30 of each year will be posted to www.franklintempleton.ca no later than August 31 of each year. For proprietary Australian mutual fund products, an annual proxy voting record for the period ending June 30 of each year will be posted to www.franklintempleton.com.au no later than September 30 of each year. The Proxy Group will periodically review the web site posting and update the posting when necessary. In addition, the Proxy Group is responsible for ensuring that the proxy voting policies, procedures and records of the Investment Manager are available as required by law and is responsible for overseeing the filing of such U.S. registered investment company voting records with the SEC.
PROCEDURES FOR MEETINGS INVOLVING FIXED INCOME SECURITIES & PRIVATELY HELD ISSUERS
From time to time, certain custodians may process events for fixed income securities through their proxy voting channels rather than corporate action channels for administrative convenience. In such cases, the Proxy Group will receive ballots for such events on the ISS voting platform. The Proxy Group will solicit voting instructions from the Investment Manager for each account or fund involved. If the Proxy Group does not receive voting instructions from the Investment Manager, the Proxy Group will take no action on the event. The Investment Manager may be unable to vote a proxy for a fixed income security, or may choose not to vote a proxy, for the reasons described under the section entitled “Proxy Procedures.”
In the rare instance where there is a vote for a privately held issuer, the decision will generally be made by the relevant portfolio managers or research analysts.
The Proxy Group will monitor such meetings involving fixed income securities or privately held issuers for conflicts of interest in accordance with these procedures. If a fixed income or privately held issuer is flagged as a potential conflict of interest, the Investment Manager may nonetheless vote as it deems in the best interests of its Advisory Clients. The Investment Manager will report such decisions on an annual basis to Advisory Clients as may be required.
The ISS proxy voting guidelines can be found at: https://www.issgovernance.com/policy-gateway/voting-policies/.
The Glass Lewis proxy voting guidelines can be found at: https://www.glasslewis.com/voting-policies-current/.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
(a)(1) As of October 28, 2021, the portfolio managers of the Fund is as follows:
GLENN I. VOYLES CFA
, Senior Vice President of Advisers
Mr. Voyles has been a manager of the Fund since 1999, providing research and advice on the purchases and sales of individual securities, and portfolio risk assessment for the global income component of the Fund. He joined Franklin Templeton Investments in 1993.
JONATHAN G. BELK CFA
, Portfolio Manager of Advisers
Mr. Belk has been a portfolio manager of the Fund since August 2020. He joined Franklin Templeton in 2004.
CFA and Chartered Financial Analyst are trademarks owned by CFA Institute.
(a)(2) This section reflects information about the portfolio managers as of the fiscal year ended August 31, 2021.
The following table shows the number of other accounts managed by each portfolio manager and the total assets in the accounts managed within each category:
Name | Number of Other Registered Investment Companies Managed1 | Assets of Other Registered Investment Companies Managed (x $1 million)1 | Number of Other Pooled Investment Vehicles Managed1 | Assets of Other Pooled Investment Vehicles Managed (x $1 million)1 | Number of Other Accounts Managed1 | Assets of Other Accounts Managed (x $1 million)1 | ||
Glenn I. Voyles | 4 | 4,146.3 | 5 | 1,441.6 | 6 | 69.8 | ||
Jonathan G. Belk | 2 | 639.1 | - | - | - | - | ||
1.
The various pooled investment vehicles and accounts listed are managed by a team of investment professionals. Accordingly, the individual managers listed would not be solely responsible for managing such listed amounts.
Portfolio managers that provide investment services to the Fund may also provide services to a variety of other investment products, including other funds, institutional accounts and private accounts. The advisory fees for some of such other products and accounts may be different than that charged to the Fund and may include performance based compensation (as noted, in the chart above, if any). This may result in fees that are higher (or lower) than the advisory fees paid by the Fund. As a matter of policy, each fund or account is managed solely for the benefit of the beneficial owners thereof. As discussed below, the separation of the trading execution function from the portfolio management function and the application of objectively based trade allocation procedures help to mitigate potential conflicts of interest that may arise as a result of the portfolio managers managing accounts with different advisory fees.
Conflicts.
The management of multiple funds, including the Fund, and accounts may also give rise to potential conflicts of interest if the funds and other accounts have different objectives, benchmarks, time horizons, and fees as the portfolio manager must allocate his or her time and investment ideas across multiple funds and accounts. The investment manager seeks to manage such competing interests for the time and attention of portfolio managers by having portfolio managers focus on a particular investment discipline. Most other accounts managed by a portfolio manager are managed using the same investment strategies that are used in connection with the management of the Fund. Accordingly, portfolio holdings, position sizes, and industry and sector exposures tend to be similar across similar portfolios, which may minimize the potential for conflicts of interest. As noted above, the separate management of the trade execution and valuation functions from the portfolio management process also helps to reduce potential conflicts of interest. However, securities selected for funds or accounts other than the Fund may outperform the securities selected for the Fund. Moreover, if a portfolio manager identifies a limited investment opportunity that may be suitable for more than one fund or other account, the Fund may not be able to take full advantage of that opportunity due to an allocation of that opportunity across all eligible funds and other accounts. The investment manager seeks to manage such potential conflicts by using procedures intended to provide a fair allocation of buy and sell opportunities among funds and other accounts.
The structure of a portfolio manager’s compensation may give rise to potential conflicts of interest. A portfolio manager’s base pay and bonus tend to increase with additional and more complex responsibilities that include increased assets under management. As such, there may be an indirect relationship between a portfolio manager’s marketing or sales efforts and his or her bonus.
Finally, the management of personal accounts by a portfolio manager may give rise to potential conflicts of interest. While the funds and the manager have adopted a code of ethics which they believe contains provisions reasonably necessary to prevent a wide range of prohibited activities by portfolio managers and others with respect to their personal trading activities, there can be no assurance that the code of ethics addresses all individual conduct that could result in conflicts of interest.
The manager and the Fund have adopted certain compliance procedures that are designed to address these, and other, types of conflicts. However, there is no guarantee that such procedures will detect each and every situation where a conflict arises.
Compensation.
The investment manager seeks to maintain a compensation program that is competitively positioned to attract, retain and motivate top-quality investment professionals. Portfolio managers receive a base salary, a cash incentive bonus opportunity, an equity compensation opportunity, and a benefits package. Portfolio manager compensation is reviewed annually and the level of compensation is based on individual performance, the salary range for a portfolio manager’s level of responsibility and Franklin Templeton guidelines. Portfolio managers are provided no financial incentive to favor one fund or account over another. Each portfolio manager’s compensation consists of the following three elements:
Base salary
Each portfolio manager is paid a base salary.
Annual bonus
Annual bonuses are structured to align the interests of the portfolio manager with those of the Fund’s shareholders. Each portfolio manager is eligible to receive an annual bonus. Bonuses generally are split between cash (50% to 65%) and restricted shares of Resources stock (17.5% to 25%) and mutual fund shares (17.5% to 25%). The deferred equity-based compensation is intended to build a vested interest of the portfolio manager in the financial performance of both Resources and mutual funds advised by the investment manager. The bonus plan is intended to provide a competitive level of annual bonus compensation that is tied to the portfolio manager achieving consistently strong investment performance, which aligns the financial incentives of the portfolio manager and Fund shareholders. The Chief Investment Officer of the investment manager and/or other officers of the investment manager, with responsibility for the Fund, have discretion in the granting of annual bonuses to portfolio managers in accordance with Franklin Templeton guidelines. The following factors are generally used in determining bonuses under the plan:
- Investment performance.Primary consideration is given to the historic investment performance over the 1, 3 and 5 preceding years of all accounts managed by the portfolio manager. The pre-tax performance of each fund managed is measured relative to a relevant peer group and/or applicable benchmark as appropriate.
- Non-investment performance.The more qualitative contributions of the portfolio manager to the investment manager’s business and the investment management team, including professional knowledge, productivity, responsiveness to client needs and communication, are evaluated in determining the amount of any bonus award.
- Responsibilities.The characteristics and complexity of funds managed by the portfolio manager are factored in the investment manager’s appraisal.
Additional long-term equity-based compensation
Portfolio managers may also be awarded restricted shares or units of Resources stock or restricted shares or units of one or more mutual funds. Awards of such deferred equity-based compensation typically vest over time, so as to create incentives to retain key talent.
Benefits
Portfolio managers also participate in benefit plans and programs available generally to all employees of the investment manager.
Ownership of Fund shares.
The investment manager has a policy of encouraging portfolio managers to invest in the funds they manage. Exceptions arise when, for example, a fund is closed to new investors or when tax considerations or jurisdictional constraints cause such an investment to be inappropriate for the portfolio manager. The following is the dollar range of Fund shares beneficially owned by the portfolio manager (such amounts may change from time to time):
Portfolio Manager | Dollar Range of Fund Shares Beneficially Owned |
Glenn I. Voyles | None |
Johnathan G. Belk | None |
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 provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended, 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 control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect the internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Company.
Securities lending agent
The board of trustees has approved the Fund’s participation in a securities lending program. Under the securities lending program, Bank of New York Mellon serves as the Fund’s securities lending agent.
For the fiscal year ended August 31, 2021, the income earned by the Fund as well as the fees and/or compensation paid by the Fund in dollars pursuant to a securities lending agreement between the Trust with respect to the Fund and the Securities Lending Agent were as follows (figures may differ from those shown in shareholder reports due to time of availability and use of estimates):
Gross income earned by the Fund from securities lending activities | $3,055 |
Fees and/or compensation paid by the Fund for securities lending activities and related services | |
Fees paid to Securities Lending Agent from revenue split | $267 |
Fees paid for any cash collateral management service (including fees deducted from a pooled cash collateral reinvestment vehicle) not included in a revenue split | - |
Administrative fees not included in a revenue split | - |
Indemnification fees not included in a revenue split | - |
Rebate (paid to borrower) | - |
Other fees not included above | - |
Aggregate fees/compensation paid by the Fund for securities lending activities | $267 |
Net income from securities lending activities | $2,788 |
Item 13. Exhibits.
(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 Jeffrey W. White, Interim Chief Financial Officer, Chief Accounting Officer and Treasurer
(b)
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Jeffrey W. White, Interim Chief Financial Officer, Chief Accounting Officer and Treasurer
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.
FRANKLIN
UNIVERSAL TRUST
By S\MATTHEW T. HINKLE_______________________
Matthew T. Hinkle
Chief Executive Officer – Finance and Administration
Date October 28, 2021
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.
By S\MATTHEW T. HINKLE_______________________
Matthew T. Hinkle
Chief Executive Officer – Finance and Administration
Date October 28, 2021
By S\Jeffrey W. White______________________
Jeffrey W. White
Interim Chief Financial Officer, Chief Accounting Officer and Treasurer
Date October 28, 2021