Uniting strengths.
Expanding opportunities.

Franklin Resources, Inc.
2020 Annual Report Highlights


Dear fellow stockholders,

I have been eager to write my first letter to you as Chief Executive Officer. Like you, we did not expect this past year to unfold the way it did. The outbreak of a global pandemic tested people and governments, businesses and industries, economies and markets. It’s still testing all of us. But for Franklin Templeton, 2020 was also a year of major accomplishments that we are excited to share with you.

To start, we could not be prouder of how our employees repeatedly rose to the challenges of the COVID-19 pandemic, embodying our commitment to always put clients first. At the same time, we succeeded in advancing our long-term strategic plans—most importantly, the completion of our landmark acquisition of Legg Mason on July 31, 2020. With the addition of Legg Mason, Franklin Templeton embarks on a new chapter in our global growth story by uniting the complementary strengths of two world-class companies, providing new opportunities for our investors and clients while creating additional value for stockholders. Our progress highlights why we are more confident than ever about our future.

  • As the threat of COVID-19 became apparent, we rapidly transitioned 98% of our global employees to work from home. Decades of experience running a global business, combined with our investments in collaborative technology, allowed us to maintain organizational stability and the high-quality service that our clients expect and deserve. During the extreme market volatility in March and April, we proactively reached out to help financial professionals and clients make sense of the complex market circumstances via video meetings and thought-leadership content.

    Over and above our response to the unique challenges of the pandemic, we made meaningful progress on multiple fronts in fiscal year 2020 designed to increase value for our investors and stockholders.

  • Our decision to acquire Legg Mason and its recognized specialist investment managers represents the largest and most significant transaction in our firm’s history. This is a growth story. Our combined organization further solidifies Franklin Templeton as one of the world’s largest global investment managers with over $1.4 trillion in assets under management (AUM) as of fiscal year-end. Moreover, we now have an organization that is well balanced between institutional and individual investors.

    With the acquisition, we strengthen our company by having one of the most highly regarded and skilled investment teams with approximately 1,300 research and investment professionals offering differentiated insights and an “ear to the ground” in more than two dozen countries.

    The acquisition augments our autonomous investment teams, which focus on specialized asset classes. It brings competitive advantages in global active fixed income with the additions of Western Asset and Brandywine Global; active equity management with ClearBridge, Martin Currie, Royce and Brandywine Global; and alternatives with Clarion Partners’ strong presence in real estate investing. We further accelerated our progress in environmental, social and governance (ESG), in particular with the addition of ClearBridge’s specialized ESG expertise, proprietary fundamental research and company engagement that dates back to 1987.

    With Legg Mason, we also expand our multi-asset solutions capabilities as we continue to see high demand from individual and institutional investors alike. Franklin Templeton Multi-Asset Solutions and QS Investors combined their capabilities to form Franklin Templeton Investment Solutions. This compelling platform brings together Franklin Templeton’s active fundamental capabilities with QS Investors’ quantitative skills to customize multi-asset portfolios to help our clients achieve their financial goals.

    The acquisition deepens our presence in key locations around the world, including Australia, Japan and the UK. With our expanded reach and increased scale, we are better positioned to grow our business in these important regions.

    We also made several other key acquisitions in fiscal year 2020, including wealth management organizations Athena Capital and Pennsylvania Trust. Together, they add approximately $10 billion to our AUM and position us to grow our Fiduciary Trust high-net-worth business by expanding our capabilities in areas such as socially responsible investing and special needs trusts.

    We are pleased to welcome many exceptionally talented new leaders and employees to our firm. With the addition of unique investment teams, investors will now have a broader range of choices to pursue their long-term investment goals.

    As of September 30, 2020

  • Amid extreme market volatility, our investment teams continue to manage their portfolios effectively, often by seizing opportunities. Approximately half of Franklin Templeton’s mutual fund assets outperformed their peers over the standard time periods, including more than 100 funds rated 4 or 5 stars by Morningstar.1 We also have strong institutional performance with 63%, 69%, 73% and 84% of assets beating the applicable benchmark for the one-, three-, five- and 10-year periods, respectively.

    Our tax-free fixed income performance excelled this year with 85% of assets ahead of peers for the one-year period. On a combined basis across the firm, our tax-free AUM has increased to almost $85 billion. Notably, the newly acquired Western Asset was recognized by Barron’s as having “a terrific record in fixed income,” propelling them to a #1 ranking in the taxable fixed income category in Barron’s annual review of U.S.-registered mutual fund families.2 Western Asset continues to deliver outstanding investment performance and reached $410 billion in long-term assets and $478 billion in total assets as of September 30, 2020—its highest level on both fronts in over a decade.

    On the equity side, Franklin Equity Group continues to achieve strong performance and attract significant inflows. The Morningstar1 5-star rated Franklin DynaTech Fund generated $4.4 billion in net inflows for the year, more than doubling its AUM to over $18 billion. Combined with Franklin Growth and Franklin Rising Dividends funds, the Franklin Equity Group now has three funds near or above $20 billion of assets under management.

  • Today, we serve investors in over 165 countries. Our expanded global presence has been a catalyst for us to introduce a new global distribution structure that provides greater autonomy to each region, increases our responsiveness and better positions us to deliver the full breadth of our investment capabilities. At the same time, each of our specialist investment managers retains its own strong institutional distribution capabilities.

    Our acquisitions in fiscal year 2020 build on our strengths in delivering investment expertise through our clients’ investment vehicles of choice. This is particularly true in retail separately managed accounts, where we are now a leading franchise with $103 billion in assets compared to just $6 billion a year ago.

    Our expanded exchange-traded fund offerings have doubled to over $10 billion in AUM this year, and plans are in motion to increase our closed-end fund capabilities.

  • Technology is rapidly reshaping how financial solutions are delivered. We continue to innovate and make strategic investments and acquisitions in digital wealth to serve our clients in powerful, market-leading ways.

    A recent example is our acquisition of AdvisorEngine, a platform for technology and consulting services. AdvisorEngine enables us to create new proprietary solutions to help financial professionals, including goals-based planning tools, digital portfolio construction analytics and research-enabled practice management services. Another example is our investment in Embark, a fast-growing, diversified financial services business and one of the largest retirement solutions providers in the UK.

    One of the ways we remain at the forefront of innovation is through our Silicon Valley fintech incubator, which we opened in late 2019 in collaboration with EvoNexus at Franklin Templeton’s San Mateo headquarters. So far, we have selected 11 fintech startups to be part of this hub for disruptive innovations. The technologies these companies are developing relate to cybersecurity, data science, artificial intelligence and deep learning, along with wealth management and pension-like insurance products.

  • We firmly believe that the inclusion of colleagues with diverse backgrounds, perspectives and identities leads to better decision-making and problem-solving across our business. And while we recognize that our company—and our industry as a whole—have more work to do, we continue to make important strides to keep our diversity and inclusion (D&I) efforts at the forefront.

    One of my first acts as CEO was to sign (as my predecessor had) the CEO Action for Diversity & Inclusion pledge to cultivate a welcoming, trusting and empowered workplace environment. We are also proud to say that Franklin Templeton has been included for the fourth year in a row in the 2020 Bloomberg Gender-Equality Index, which distinguishes companies committed to transparency in gender reporting and advancing women’s equality.

    This year, we hired our firm’s first Chief Diversity Officer, Regina Curry, reporting directly to the CEO. This appointment elevates our existing D&I focus and leads our work in this important area with strong support from our Board of Directors, Executive Committee and Human Resources leadership.

  • While market conditions have improved considerably since earlier in the year, fiscal year 2020 adjusted operating income3 of $1.5 billion declined from $1.7 billion in the prior year. Adjusted diluted earnings per share3 fell slightly from $2.62 last year to $2.61 for the year ended September 30, 2020. We remain committed to maintaining the financial strength that is a hallmark of our firm. As of September 30, 2020, we have over $5 billion in cash and investments,4 an important foundation of our company.

    It will come as no surprise that global events and pressures on our industry place a spotlight on expense management and the need to look closely at how we resource the business. In February, in connection with our announcement of the Legg Mason acquisition, we indicated our plan to identify $300 million in gross cost savings. Because our goal is to drive long-term growth, we focused on reorganizing and streamlining our corporate functions where there was overlap of roles, workflows and systems. Our transaction-related expense management efforts do not involve our investment management teams or specialist investment managers.

  • We are proud of what we have been able to achieve in this truly unique year and are excited to seize the opportunities that lie ahead. Our global presence has expanded in key growth markets around the world with a greater range of specialized, high-quality investment capabilities—all with an eye toward delivering exceptional client outcomes. Reaction to our acquisition of Legg Mason has been consistently positive, and we believe we are well-positioned to meet the needs of clients, financial professionals and our stockholders for many years to come.

    As an organization, we would not have been able to achieve all that we have without our amazing employees around the globe, who now number more than 11,000 and who work hard every day on behalf of our clients and firm. I thank each of them for their efforts and dedication.

    In addition, I would like to extend my gratitude to Executive Chairman Greg Johnson, whose steady hand guided this firm during his tenure as CEO from 2004 until February of this year. Greg has had a profound impact on the success of our company and in his new role continues to provide me with valuable counsel as we work to deliver on our strategic vision.

    As we build on our firm’s strong reputation to reach new heights of client-centered excellence and growth, we look forward to the years ahead with energy and enthusiasm.

    Thank you for your continued trust in Franklin Templeton.


    Jennifer M. Johnson
    Chief Executive Officer
    Franklin Resources, Inc.

We’re now one of the world’s largest independent asset managers.

Growth based on strength

In this Q&A, Chief Financial Officer Matthew Nicholls discusses the strategic considerations behind our decision to acquire Legg Mason and the benefits it brings to our clients and stockholders. He also outlines our financial strength, touching on expense management initiatives and how they balance with our growth initiatives and any future acquisition opportunities.

  • Q: What convinced you that the Legg Mason acquisition was the right fit?

    A: This was an exciting opportunity to build upon our existing strengths to create a truly industry-leading firm. Following a thorough analysis of our options to expand our investment capabilities and deepen our presence in key markets and channels, we determined that Legg Mason represented the best route for Franklin Templeton to realize its potential.

    The transaction was the equivalent of acquiring multiple companies at once, thereby achieving several strategic objectives both expeditiously and at an attractive price versus a series of private transactions. Each specialist investment manager we acquired through the transaction has world-class leadership and investment talent in the key areas that Franklin Templeton was looking to add, including a much larger institutional business, alternative assets, scaled fixed income and a leading separately managed account (SMA) franchise. Importantly, the overlap with Franklin Templeton was modest in terms of both investment strategies and distribution relationships, resulting in a highly complementary combination.

    We also felt the structure of Legg Mason would reduce the execution risks associated with M&A. Disruption is being kept to a minimum because there are no changes to investment teams, specialist investment managers or institutional distribution teams. The merger work is focused on holding company functions and centralized distribution resources, and is designed to maximize continuity and stability, as well as further enhance client content and service. In addition, our expense synergy targets are limited to the holding company functions.

    Prior to the acquisition, we spent significant time with all of the major areas of Legg Mason and felt that there was a strong cultural fit and alignment of interests. Since announcing and closing the transaction—all while working through the COVID-19 crisis—this view has only strengthened and it is tremendous to see leaders from across the firm working and collaborating together in a way that develops all aspects of the company.

    Q: The close of the transaction with Legg Mason used a portion of Franklin Templeton’s balance sheet cash. Can you comment on the financial strength and flexibility of the firm going forward?

    A: We have always viewed our strong balance sheet as a strategic advantage and a source of confidence to invest the majority of our net income each year. Our cash flow generation and earnings allow us to invest in our enlarged business, maintain our dividend, manage our debt and opportunistically repurchase shares. For the fiscal year, we returned $761 million to shareholders through dividends and repurchases, in addition to funding the purchase of Legg Mason, Athena Capital, Pennsylvania Trust and AdvisorEngine, as well as several important strategic investments. We ended the fiscal year with over $5 billion of cash and investments.4

    In addition to our cash, we have approximately $1.8 billion of seed capital and co-investments. We plan to continue to grow and recirculate these investments in new ways designed to create growth opportunities for the company.

    In October 2020, we were pleased to raise $750 million of new 10-year senior notes at a coupon of 1.6%. Our intention is to call higher coupon debt in 2021, which would result in annual savings of over $30 million in interest expense from fiscal year 2022.5 This was a net leverage neutral transaction and our ratings were confirmed at A/A2 with stable outlooks.

    Q: The need to effectively manage expenses was a focus before the Legg Mason transaction, and has continued to be a key initiative. What steps did the company take to manage expenses in fiscal year 2020?

    A: While we have realized notable cost savings, our primary focus with the acquisition was to position the company for growth, provide stability for clients and employees, and preserve our financial strength and ability to invest in our business.

    As it relates to the Legg Mason transaction, $300 million of gross annual expense savings target redundancies in the holding company operating functions and centralized distribution group. Aside from transaction-related expense synergies, we view prudent expense management as a hallmark of our firm—in any environment. On a standalone Franklin Templeton basis, the company reduced its adjusted operating expenses by over 5% in 2020.6 In the event of unexpected or unusual market volatility, such as that experienced at the start of the COVID-19 crisis, we are positioned to respond given the extent of our variable expenses. We remain focused on balancing our growth initiatives with careful management of expenses.

    Q: How does the company intend to deploy capital for future acquisition activity?

    A: In fiscal year 2020, we deployed capital across multiple investments and acquisitions, with Legg Mason being by far the largest. A focus of our efforts has been on expanding our wealth management business, which we grew by over 50% in the past year through the acquisitions of Pennsylvania Trust and Athena Capital.

    We will continue to closely monitor strategic activity in the sector and participate where we see further opportunities to accelerate our progress.

Opportunities through acquisition is a cornerstone of our strategy.

Investment excellence and scale

For decades, Franklin Templeton has offered clients a broad choice of investment solutions rooted in the capabilities and expertise of our diverse investment teams. With the acquisition of Legg Mason, we’ve taken that strategy further. We can connect clients to an unmatched collection of specialist investment managers and approximately 1,300 investment professionals within the combined organization. And, while operating independently, each specialist investment manager benefits from the large-scale data, infrastructure and research of our larger firm.

Our Specialist Investment Managers

Our Investment Capabilities

Our acquisition of Legg Mason brings key, differentiated capabilities to complement Franklin Templeton’s existing range of investment strategies. It increases our strength across all major asset classes: core fixed income, active equities, alternatives and multi-asset solutions. Together, our combined strengths let us offer clients a complete lineup of investment capabilities and high-quality investment options.



Deep Value

Core Value







Smart Beta


Fixed Income



Corporate Credit

Bank Loans







Real Return


Total Return

Target Date/Risk

Absolute Return

Tactical Asset Allocation

Managed Volatility


Private Debt

Hedge Funds

Private Equity

Real Estate


We’ve brought together more expertise, capabilities and solutions.

Directors and officers



Jennifer M. Johnson
Chief Executive Officer

Craig S. Tyle
Executive Vice President
General Counsel

Alok Sethi
Executive Officer

Gregory E. Johnson
Executive Chairman
Chairman of the Board

Jed A. Plafker
Executive Vice President

Rupert H. Johnson, Jr.
Vice Chairman

Adam B. Spector
Executive Vice President
Global Advisory Services

Matthew Nicholls
Executive Vice President
Chief Financial Officer

Gwen L. Shaneyfelt
Chief Accounting Officer


Leslie M. Kratter
Senior Vice President

Mark L. Constant
Vice President

Aliya S. Gordon
Vice President

We invest in our business, people and communities.

Global citizenship

We believe that being a good corporate citizen is good business. That's why we've embedded corporate citizenship in our values and integrated it within our culture. Integrity, trust and responsibility are essential to our continued success as a premier global investment management organization.

Franklin Templeton has embraced six dimensions of corporate social responsibility both to illustrate the work we're doing in this critical space and to outline a framework for ongoing growth as responsible corporate citizens:

  • ESG investing
  • Diversity & inclusion
  • Employee experience
  • Environment
  • Community engagement
  • Responsible corporate practices

Read more about what we're doing to build a sustainable company and contribute to a sustainable future for all.


Top: Green roof atop our Poznan offices in Poland. Left: Employee volunteers beautify a school in Chennai in partnership with the Environmentalist Foundation of India. Right: Pride BRG booth at our Rancho Cordova campus in the U.S. Bottom: Employee volunteers create appreciation cards for first responders amid the pandemic.

We believe better outcomes come to those with the ambition to seek them.

Read our full report

Download our full annual report in PDF format.