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
811-07851
Franklin Fund Allocator Series
(Exact name of registrant as specified in charter)
One Franklin Parkway, San Mateo, CA 94403-1906
(Address of principal executive offices) (Zip code)
Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906
(Name and address of agent for service)
Registrant's telephone number, including area code: 650 312-2000
Date of fiscal year end: 5/31
Date of reporting period: 5/31/21
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
Fund
Allocator
Series
May
31,
2021
Franklin
Payout
2021
Fund
Franklin
Payout
2022
Fund
Not
FDIC
Insured
May
Lose
Value
No
Bank
Guarantee
franklintempleton.com
Annual
report
1
Contents
Annual
Report
Economic
and
Market
Overview
2
Franklin
Payout
2021
Fund
3
Franklin
Payout
2022
Fund
9
Financial
Highlights
and
Statements
of
Investments
15
Financial
Statements
25
Notes
to
Financial
Statements
28
Report
of
Independent
Registered
Public
Accounting
Firm
35
Tax
Information
36
Board
Members
and
Officers
37
Shareholder
Information
42
2
franklintempleton.com
Annual
Report
ANNUAL
REPORT
Economic
and
Market
Overview
The
U.S.
bond
market,
as
measured
by
the
Bloomberg
Barclays
U.S.
Aggregate
Bond
Index,
posted
marginally
negative
total
returns
during
the
12
months
ended
May
31,
2021.
As
the
U.S.
economy
adapted
to
the
novel
coronavirus
(COVID-19)
pandemic,
investor
appetite
for
risk
increased
and
inflation
concerns
rose
during
the
reporting
period.
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.
In
early
2021,
strong
economic
growth
and
surging
commodities
prices
drove
both
the
realized
inflation
rate
for
consumers
and
investors’
inflation
expectations
higher
than
in
over
a
decade.
The
U.S.
Federal
Reserve
(Fed)
maintained
the
federal
funds
target
rate
at
a
range
of
0.00%–0.25%
and
continued
its
program
of
open-ended
purchasing
of
government-
backed
and
corporate
bonds
as
necessary
to
provide
liquidity
to
bond
markets.
Furthermore,
the
Fed
signaled
that
interest
rates
would
potentially
remain
low,
even
if
inflation
moderately
exceeded
the
Fed’s
2%
target
for
some
time.
U.S.
Treasury
bonds,
as
measured
by
the
Bloomberg
Barclays
U.S.
Treasury
Index,
posted
negative
total
returns
during
the
period.
The
10-year
U.S.
Treasury
yield
(which
moves
inversely
to
price)
was
at
or
near
all-time
lows
for
much
of
the
reporting
period’s
first
half.
However,
yields
rose
thereafter,
as
renewed
economic
strength
prompted
many
investors
to
increase
their
inflation
expectations.
Short-term
U.S.
Treasuries
posted
modest
gains
due
to
steady
Fed
policy,
while
longer-term
Treasuries
declined
sharply
due
to
rising
inflation
expectations.
Mortgage-backed
securities
(MBS),
as
measured
by
the
Bloomberg
Barclays
MBS
Index,
posted
marginally
negative
total
returns
for
the
period
despite
Fed
support,
as
low
interest
rates
accelerated
prepayments
from
mortgage
refinancing,
which
weighed
on
MBS
returns.
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.
Consequently,
high-yield
corporate
bonds,
as
represented
by
the
Bloomberg
Barclays
U.S.
Corporate
High
Yield
Bond
Index,
posted
strong
total
returns,
outpacing
investment-
grade
corporate
bonds,
as
represented
by
the
Bloomberg
Barclays
U.S.
Corporate
Bond
Index,
which
nevertheless
posted
positive
total
returns.
The
foregoing
information
reflects
our
analysis
and
opinions
as
of
May
31,
2021
.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
fund.
Statements
of
fact
are
from
sources
considered
reliable.
3
franklintempleton.com
Annual
Report
Franklin
Payout
2021
Fund
This
annual
report
for
Franklin
Payout
2021
Fund
covers
the
fiscal
year
ended
May
3
1,
2021
.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
capital
preservation
and
income
with
a
predetermined
maturity
date.
Under
normal
market
conditions,
the
Fund
invests
predominantly
in
U.S.
dollar-
denominated
investment-grade
debt
securities
and
investments,
including
government
and
corporate
debt
securities
and
asset-backed
securities
and
municipal
securities.
Performance
Overview
The
Fund’s
Advisor
Class
shares
posted
a
+0.38%
cumulative
total
return
for
the
12
months
under
review.
In
comparison,
the
Fund’s
benchmark,
the
Bloomberg
Barclays
U.S.
Government/Credit
2021
Maturity
Index,
posted
a
+0.43%
total
return.
1
The
index
includes
investment-grade,
U.S.
dollar-denominated,
fixed-rate
Treasuries,
government
related
and
corporate
securities
and
foreign
debt
maturing
in
2021.
You
can
find
more
of
the
Fund’s
performance
data
in
the
Performance
Summary
beginning
on
page
5
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
call
a
Franklin
Templeton
Institutional
Services
representative
at
(800)
321-8563
.
Investment
Strategy
We
focus
on
investment-grade
securities
and
investments
or
in
unrated
securities
and
investments
we
determine
are
of
comparable
quality.
Our
focus
on
the
portfolio’s
credit
quality
is
intended
to
reduce
credit
risk
and
help
to
preserve
capital.
We
may
invest
a
significant
portion
of
the
Fund’s
assets
in
U.S.
dollar-denominated
foreign
securities,
including
debt
issued
by
supranational
entities.
In
choosing
investments,
we
select
securities
in
various
market
sectors
based
on
our
assessment
of
changing
economic,
market,
industry
and
issuer
conditions.
We
use
a
top-down
analysis
of
macroeconomic
trends,
combined
with
a
bottom-up
fundamental
analysis
of
market
sectors,
industries
and
issuers,
to
try
to
take
advantage
of
varying
sector
reactions
to
economic
events.
Although
the
Fund
may
invest
in
individual
securities
of
any
maturity,
the
Fund
is
a
term
fund
and
is
managed
to
mature
in
2021.
Over
time,
the
Fund’s
duration
and
weighted
average
maturity
will
decline
as
2021
approaches.
In
the
later
months
of
operation,
when
the
debt
securities
held
by
the
Fund
mature,
the
proceeds
from
such
securities
will
be
held
in
cash,
cash
equivalents
and
money
market
instruments,
including
affiliated
money
market
funds,
or
invested
in
short-term
bonds.
In
early
December
2021,
the
Fund
is
expected
to
consist
almost
entirely
of
cash,
cash
equivalents
and
money
market
instruments.
The
Fund
is
not
designed
for
long-term
capital
appreciation
and
does
not
provide
a
complete
solution
for
a
shareholder’s
retirement
income
needs.
The
Fund
does
not
guarantee
a
level
of
dividends,
income
or
principal
at
or
before
its
target
maturity
date.
Manager’s
Discussion
During
the
period
under
review,
exposure
to
investment-
grade
corporate
securities
was
the
Fund’s
main
contributor
to
relative
performance,
followed
by
an
allocation
to
the
high-
yield
sector.
Exposure
to
taxable
municipal
bonds
was
also
slightly
beneficial.
However,
the
Fund’s
security
selection
within
the
high-yield
sector
detracted
from
performance.
Security
selection
within
the
investment-grade
corporate
sector
also
hampered
returns,
while
selection
in
developed-
market
sovereign
debt
contributed
marginally.
The
Funds’
slight
overweight
duration
positioning
benefited
results.
Portfolio
Composition
5/31/21
%
of
Total
Net
Assets
Corporate
Bonds
60.0%
U.S.
Government
and
Agency
Securities
17.7%
Foreign
Government
and
Agency
Securities
4.9%
Municipal
Bonds
2.5%
Short-Term
Investments
&
Other
Net
Assets
14.9%
1.
Source:
FactSet.
The
index
is
unmanaged
and
includes
reinvestment
of
any
income
or
distributions.
It
does
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
17
.
Franklin
Payout
2021
Fund
4
franklintempleton.com
Annual
Report
*Securities
are
listed
by
issuer,
which
may
appear
by
another
name
in
the
SOI.
At
period-end,
we
remained
overweighted
and
focused
on
investment-grade
corporate
credit
securities.
This
focus
is
based
on
our
belief
that
valuations
remained
relatively
attractive
at
period-end
on
a
longer-term
basis
as
well
as
the
increased
earnings
potential
available
from
this
sector.
Conversely,
we
maintained
an
underweighted
allocation
to
the
U.S.
Treasury
sector
as
its
valuations
and
income
levels
remained
unattractive,
in
our
view.
Additionally,
we
maintained
a
small
overweight
duration
positioning
in
the
portfolio
driven
largely
by
our
focus
on
final
maturity
dates
closer
to
year-end
2021
as
compared
with
the
index.
Thank
you
for
your
participation
in
Franklin
Payout
2021
Fund.
We
look
forward
to
serving
your
future
investment
needs.
David
Yuen,
CFS,
FRM
Tina
Chou
Thomas
Runkel,
CFA
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
May
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.
Top
10
Holdings*
5/31/21
Issuer
%
of
Total
Net
Assets
a
a
U.S.
Treasury
Notes
7.8%
FHLB
4.9%
FFCB
4.9%
Total
Capital
SA
2.5%
State
of
California
2.5%
Telstra
Corp.
Ltd.
2.5%
General
Electric
Co.
2.5%
Philip
Morris
International,
Inc.
2.5%
Air
Products
and
Chemicals,
Inc.
2.5%
John
Deere
Capital
Corp.
2.5%
CFA
®
is
a
trademark
owned
by
CFA
Institute.
Performance
Summary
as
of
May
31,
2021
Franklin
Payout
2021
Fund
5
franklintempleton.com
Annual
Report
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.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses
of
each
class.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
5
/3
1
/2
1
1
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
The
maximum
and
minimum
is
0%.
Advisor
Class:
no
sales
charges.
For
other
share
classes,
call
a
Franklin
Templeton
Institutional
Services
representative
at
(800)
321-8563
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
call
a
Franklin
Templeton
Institutional
Services
representative
at
(800)
321-8563
.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
Advisor
1-Year
+0.38%
+0.38%
5-Year
+9.85%
+1.90%
Since
Inception
(6/1/15)
+14.84%
+2.33%
See
page
7
for
Performance
Summary
footnotes.
Franklin
Payout
2021
Fund
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
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
index
includes
reinvestment
of
any
income
or
distributions.
It
differs
from
the
Fund
in
composition
and
does
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
Advisor
Class
(6/1/15–5/31/21)
Franklin
Payout
2021
Fund
Performance
Summary
7
franklintempleton.com
Annual
Report
Each
class
of
shares
is
available
to
certain
eligible
investors
and
has
different
annual
fees
and
expenses,
as
described
in
the
prospectus.
All
investments
involve
risks,
including
possible
loss
of
principal.
Changes
in
the
financial
strength
of
a
bond
issuer
or
in
a
bond’s
credit
rating
may
affect
its
value.
Interest
rate
movements
will
affect
the
Fund’s
share
price
and
yield.
Bond
prices
generally
move
in
the
opposite
direction
of
interest
rates.
As
the
prices
of
bonds
in
the
Fund
adjust
to
a
rise
in
interest
rates,
the
Fund’s
share
price
may
decline.
Because
the
Fund
can
only
distribute
what
it
earns,
the
Fund’s
distri-
butions
to
shareholders
may
decline
when
prevailing
interest
rates
fall
or
when
the
Fund
experiences
defaults
on
debt
securities
it
holds.
Interest
earned
on
floating
rate
loans
varies
with
changes
in
prevailing
interest
rates.
Therefore,
while
floating
rate
loans
offer
higher
interest
income
when
interest
rates
rise,
they
will
also
generate
less
income
when
interest
rates
decline.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
1.
The
Fund
has
an
expense
reduction
and
a
fee
waiver
associated
with
any
investments
it
makes
in
a
Franklin
Templeton
money
fund
and/or
other
Franklin
Templeton
fund,
contractually
guaranteed
through
9/30/21.
Fund
investment
results
reflect
the
expense
reduction
and
fee
waiver;
without
these
reductions,
the
results
would
have
been
lower.
2.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
3.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
4.
Source:
FactSet.
The
Bloomberg
Barclays
U.S.
Government/Credit
2021
Maturity
Index
includes
investment-grade,
U.S.
dollar-denominated,
fixed-rate
Treasuries,
govern-
ment-related
and
corporate
securities
and
foreign
debt
maturing
in
2021.
5.
Figures
are
as
stated
in
the
Fund’s
current
prospectus
and
may
differ
from
the
expense
ratios
disclosed
in
the
Your
Fund’s
Expenses
and
Financial
Highlights
sections
in
this
report.
In
periods
of
market
volatility,
assets
may
decline
significantly,
causing
total
annual
Fund
operating
expenses
to
become
higher
than
the
figures
shown.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Distributions
(6/1/20–5/31/21)
Share
Class
Net
Investment
Income
Short-Term
Capital
Gain
Long-Term
Capital
Gain
Total
R6
$0.1950
$0.0034
$0.0105
$0.2089
Advisor
$0.1950
$0.0034
$0.0105
$0.2089
Total
Annual
Operating
Expenses
5
Share
Class
With
Fee
Waiver
Without
Fee
Waiver
Advisor
0.47%
3.53%
Your
Fund’s
Expenses
Franklin
Payout
2021
Fund
8
franklintempleton.com
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value”
for
each
class
of
shares.
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
182/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
12/1/20
Ending
Account
Value
5/31/21
Expenses
Paid
During
Period
12/1/20–5/31/21
1,2
Ending
Account
Value
5/31/21
Expenses
Paid
During
Period
12/1/20–5/31/21
1,2
a
Net
Annualized
Expense
Ratio
2
R6
$1,000
$998.90
$1.45
$1,023.48
$1.47
0.29%
Advisor
$1,000
$998.90
$1.49
$1,023.45
$1.50
0.30%
9
franklintempleton.com
Annual
Report
Franklin
Payout
2022
Fund
This
annual
report
for
Franklin
Payout
2022
Fund
covers
the
fiscal
year
ended
May
31,
2021
.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
capital
preservation
and
income
with
a
predetermined
maturity
date.
Under
normal
market
conditions,
the
Fund
invests
predominantly
in
U.S.
dollar-
denominated
investment-grade
debt
securities
and
investments,
including
government
and
corporate
debt
securities
and
asset-backed
securities
and
municipal
securities.
Performance
Overview
The
Fund’s
Advisor
Class
shares
posted
a
+0.93%
cumulative
total
return
for
the
12
months
under
review.
In
comparison,
the
Fund’s
benchmark,
the
Bloomberg
Barclays
U.S.
Government/Credit
2022
Maturity
Index,
posted
a
+0.71%
total
return.
1
The
index
includes
investment-grade,
U.S.
dollar-denominated,
fixed-rate
Treasuries,
government
related
and
corporate
securities
and
foreign
debt
maturing
in
2022.
You
can
find
more
of
the
Fund’s
performance
data
in
the
Performance
Summary
beginning
on
page
11.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
call
a
Franklin
Templeton
Institutional
Services
representative
at
(800)
321-8563
.
Investment
Strategy
We
focus
on
investment-grade
securities
and
investments
or
in
unrated
securities
and
investments
we
determine
are
of
comparable
quality.
Our
focus
on
the
portfolio’s
credit
quality
is
intended
to
reduce
credit
risk
and
help
to
preserve
capital.
We
may
invest
a
significant
portion
of
the
Fund’s
assets
in
U.S.
dollar-denominated
foreign
securities,
including
debt
issued
by
supranational
entities.
In
choosing
investments,
we
select
securities
in
various
market
sectors
based
on
our
assessment
of
changing
economic,
market,
industry
and
issuer
conditions.
We
use
a
top-down
analysis
of
macroeconomic
trends,
combined
with
a
bottom-up
fundamental
analysis
of
market
sectors,
industries
and
issuers,
to
try
to
take
advantage
of
varying
sector
reactions
to
economic
events.
Although
the
Fund
may
invest
in
individual
securities
of
any
maturity,
the
Fund
is
a
term
fund
and
is
managed
to
mature
in
2022.
Over
time,
the
Fund’s
duration
and
weighted
average
maturity
will
decline
as
2022
approaches.
In
the
later
months
of
operation,
when
the
debt
securities
held
by
the
Fund
mature,
the
proceeds
from
such
securities
will
be
held
in
cash,
cash
equivalents
and
money
market
instruments,
including
affiliated
money
market
funds,
or
invested
in
short-term
bonds.
In
early
December
2022,
the
Fund
is
expected
to
consist
almost
entirely
of
cash,
cash
equivalents
and
money
market
instruments.
The
Fund
is
not
designed
for
long-term
capital
appreciation
and
does
not
provide
a
complete
solution
for
a
shareholder’s
retirement
income
needs.
The
Fund
does
not
guarantee
a
level
of
dividends,
income
or
principal
at
or
before
its
target
maturity
date.
Manager’s
Discussion
During
the
period
under
review,
the
Fund’s
exposure
to
investment-grade
corporate
securities
was
the
main
contributor
to
relative
performance.
There
was
also
a
small
contribution
from
an
allocation
to
the
asset-backed
security
sector,
while
exposure
to
developed-market
sovereign
debt
hindered
returns
slightly.
Security
selection
within
the
investment-grade
corporate
security
sector
detracted
the
most.
Selection
within
developed-market
sovereign
debt
detracted
slightly,
while
U.S.
Agency
debt
provided
a
marginal
benefit
to
performance.
The
Fund’s
slight
overweight
duration
positioning
added
to
results.
Portfolio
Composition
5/31/21
%
of
Total
Net
Assets
Corporate
Bonds
63.7%
U.S.
Government
and
Agency
Securities
18.0%
Foreign
Government
and
Agency
Securities
5.6%
Asset-Backed
Securities
4.2%
Short-Term
Investments
&
Other
Net
Assets
8.5%
1.
Source:
FactSet.
The
index
is
unmanaged
and
includes
reinvestment
of
any
income
or
distributions.
It
does
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
22
.
Franklin
Payout
2022
Fund
10
franklintempleton.com
Annual
Report
*Securities
are
listed
by
issuer,
which
may
appear
by
another
name
in
the
SOI.
At
period-end,
we
remained
overweighted
and
focused
on
investment-grade
corporate
credit
securities.
This
focus
is
based
on
our
belief
that
valuations
remained
relatively
attractive
at
period-end
on
a
longer-term
basis
as
well
as
the
increased
earnings
potential
available
from
this
sector.
Conversely,
we
maintained
an
underweighted
allocation
to
the
U.S.
Treasury
sector
as
its
valuations
and
income
levels
remained
unattractive,
in
our
view.
Additionally,
we
maintained
a
small
overweight
duration
positioning
in
the
portfolio
driven
largely
by
our
focus
on
final
maturity
dates
closer
to
year-end
2022
as
compared
with
the
index.
Thank
you
for
your
participation
in
Franklin
Payout
2022
Fund.
We
look
forward
to
serving
your
future
investment
needs.
David
Yuen,
CFS,
FRM
Tina
Chou
Thomas
Runkel,
CFA
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
May
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.
Top
10
Holdings*
5/31/21
Issuer
%
of
Total
Net
Assets
a
a
U.S.
Treasury
Notes
9.5%
FHLB
8.5%
MetLife,
Inc.
2.9%
JPMorgan
Chase
&
Co.
2.8%
International
Business
Machines
Corp.
2.8%
American
Express
Co.
2.8%
Caterpillar
Financial
Services
Corp.
2.8%
Swiss
Re
Treasury
US
Corp.
2.8%
Bank
of
Montreal
2.8%
MassMutual
Global
Funding
II
2.8%
Performance
Summary
as
of
May
31,
2021
Franklin
Payout
2022
Fund
11
franklintempleton.com
Annual
Report
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.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses
of
each
class.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
5
/3
1
/2
1
1
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
The
maximum
and
minimum
is
0%.
Advisor
Class:
no
sales
charges.
For
other
share
classes,
call
a
Franklin
Templeton
Institutional
Services
representative
at
(800)
321-8563
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
call
a
Franklin
Templeton
Institutional
Services
representative
at
(800)
321-8563
.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
Advisor
1-Year
+0.93%
+0.93%
3-Year
+12.80%
+4.10%
Since
Inception
(1/23/18)
+12.12%
+3.47%
See
page
13
for
Performance
Summary
footnotes.
Franklin
Payout
2022
Fund
Performance
Summary
12
franklintempleton.com
Annual
Report
See
page
13
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
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
index
includes
reinvestment
of
any
income
or
distributions.
It
differs
from
the
Fund
in
composition
and
does
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
Advisor
Class
(1/23/18–5/31/21)
Franklin
Payout
2022
Fund
Performance
Summary
13
franklintempleton.com
Annual
Report
Each
class
of
shares
is
available
to
certain
eligible
investors
and
has
different
annual
fees
and
expenses,
as
described
in
the
prospectus.
All
investments
involve
risks,
including
possible
loss
of
principal.
Changes
in
the
financial
strength
of
a
bond
issuer
or
in
a
bond’s
credit
rating
may
affect
its
value.
Interest
rate
movements
will
affect
the
Fund’s
share
price
and
yield.
Bond
prices
generally
move
in
the
opposite
direction
of
interest
rates.
As
the
prices
of
bonds
in
the
Fund
adjust
to
a
rise
in
interest
rates,
the
Fund’s
share
price
may
decline.
Because
the
Fund
can
only
distribute
what
it
earns,
the
Fund’s
distri-
butions
to
shareholders
may
decline
when
prevailing
interest
rates
fall
or
when
the
Fund
experiences
defaults
on
debt
securities
it
holds.
Interest
earned
on
floating
rate
loans
varies
with
changes
in
prevailing
interest
rates.
Therefore,
while
floating
rate
loans
offer
higher
interest
income
when
interest
rates
rise,
they
will
also
generate
less
income
when
interest
rates
decline.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
1.
The
Fund
has
an
expense
reduction
and
a
fee
waiver
associated
with
any
investments
it
makes
in
a
Franklin
Templeton
money
fund
and/or
other
Franklin
Templeton
fund,
contractually
guaranteed
through
9/30/21.
Fund
investment
results
reflect
the
expense
5eduction
and
fee
waiver;
without
these
reductions,
the
results
would
have
been
lower.
2.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
3.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
4.
Source:
FactSet.
The
Bloomberg
Barclays
U.S.
Government/Credit
2022
Maturity
Index
includes
investment-grade,
U.S.
dollar-denominated,
fixed-rate
Treasuries,
govern-
ment-related
and
corporate
securities
and
foreign
debt
maturing
in
2022.
5.
Figures
are
as
stated
in
the
Fund’s
current
prospectus
and
may
differ
from
the
expense
ratios
disclosed
in
the
Your
Fund’s
Expenses
and
Financial
Highlights
sections
in
this
report.
In
periods
of
market
volatility,
assets
may
decline
significantly,
causing
total
annual
Fund
operating
expenses
to
become
higher
than
the
figures
shown.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Distributions
(6/1/20–5/31/21)
Share
Class
Net
Investment
Income
Long-Term
Capital
Gain
Total
R6
$0.2309
$0.0275
$0.2584
Advisor
$0.2308
$0.0275
$0.2583
Total
Annual
Operating
Expenses
5
Share
Class
With
Fee
Waiver
Without
Fee
Waiver
Advisor
0.45%
3.90%
Your
Fund’s
Expenses
Franklin
Payout
2022
Fund
14
franklintempleton.com
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value”
for
each
class
of
shares.
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
182/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
12/1/20
Ending
Account
Value
5/31/21
Expenses
Paid
During
Period
12/1/20–5/31/21
1,2
Ending
Account
Value
5/31/21
Expenses
Paid
During
Period
12/1/20–5/31/21
1,2
a
Net
Annualized
Expense
Ratio
2
R6
$1,000
$1,001.80
$1.47
$1,023.48
$1.47
0.29%
Advisor
$1,000
$1,001.80
$1.50
$1,023.45
$1.50
0.30%
Franklin
Fund
Allocator
Series
Financial
Highlights
Franklin
Payout
2021
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
15
a
Year
Ended
May
31,
2021
2020
2019
2018
2017
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$10.31
$10.12
$9.96
$10.25
$10.30
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.19
0.22
0.23
0.23
0.23
Net
realized
and
unrealized
gains
(losses)
...........
(0.14)
0.19
0.17
(0.29)
(0.06)
Total
from
investment
operations
....................
0.05
0.41
0.40
(0.06)
0.17
Less
distributions
from:
Net
investment
income
..........................
(0.20)
(0.22)
(0.23)
(0.23)
(0.22)
Net
realized
gains
.............................
(0.01)
—
(0.01)
—
—
Total
distributions
...............................
(0.21)
(0.22)
(0.24)
(0.23)
(0.22)
Net
asset
value,
end
of
year
.......................
$10.15
$10.31
$10.12
$9.96
$10.25
Total
return
....................................
0.38%
4.15%
4.04%
(0.65)%
1.68%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
3.03%
3.50%
3.05%
2.50%
2.85%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.29%
c
0.29%
c
0.29%
0.30%
0.30%
Net
investment
income
...........................
1.84%
2.12%
2.32%
2.25%
2.22%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$2,060
$2,093
$2,054
$2,022
$2,081
Portfolio
turnover
rate
............................
—%
5.31%
7.67%
—%
—%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Franklin
Fund
Allocator
Series
Financial
Highlights
Franklin
Payout
2021
Fund
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
16
a
Year
Ended
May
31,
2021
2020
2019
2018
2017
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$10.31
$10.12
$9.96
$10.25
$10.30
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.19
0.22
0.23
0.23
0.23
Net
realized
and
unrealized
gains
(losses)
...........
(0.14)
0.19
0.17
(0.29)
(0.06)
Total
from
investment
operations
....................
0.05
0.41
0.40
(0.06)
0.17
Less
distributions
from:
Net
investment
income
..........................
(0.20)
(0.22)
(0.23)
(0.23)
(0.22)
Net
realized
gains
.............................
(0.01)
—
(0.01)
—
—
Total
distributions
...............................
(0.21)
(0.22)
(0.24)
(0.23)
(0.22)
Net
asset
value,
end
of
year
.......................
$10.15
$10.31
$10.12
$9.96
$10.25
Total
return
....................................
0.38%
4.15%
4.02%
(0.65)%
1.69%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
3.03%
3.50%
3.05%
2.50%
2.85%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.29%
c
0.29%
c
0.30%
0.31%
0.30%
Net
investment
income
...........................
1.83%
2.12%
2.31%
2.23%
2.22%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$2,060
$2,093
$2,054
$2,022
$2,081
Portfolio
turnover
rate
............................
—%
5.31%
7.67%
—%
—%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchas-
es
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Franklin
Fund
Allocator
Series
Statement
of
Investments,
May
31,
2021
Franklin
Payout
2021
Fund
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
60.0%
Aerospace
&
Defense
2.4%
Boeing
Co.
(The)
,
Senior
Note
,
2.35
%
,
10/30/21
..............
United
States
100,000
$
100,798
Beverages
2.4%
PepsiCo,
Inc.
,
Senior
Note
,
1.7
%
,
10/06/21
..................
United
States
100,000
100,401
Biotechnology
3.7%
AbbVie,
Inc.
,
Senior
Note
,
3.375
%
,
11/14/21
.................
United
States
50,000
50,727
Gilead
Sciences,
Inc.
,
Senior
Note
,
4.4
%
,
12/01/21
............
United
States
100,000
101,031
151,758
Capital
Markets
2.4%
Bank
of
New
York
Mellon
Corp.
(The)
,
Senior
Note
,
3.55
%
,
9/23/21
United
States
100,000
100,776
Chemicals
2.5%
Air
Products
and
Chemicals,
Inc.
,
Senior
Note
,
3
%
,
11/03/21
....
United
States
100,000
101,144
Consumer
Finance
4.9%
Caterpillar
Financial
Services
Corp.
,
Senior
Note
,
1.931
%
,
10/01/21
United
States
100,000
100,610
John
Deere
Capital
Corp.
,
Senior
Note
,
3.15
%
,
10/15/21
.......
United
States
100,000
101,134
201,744
Diversified
Financial
Services
2.4%
Berkshire
Hathaway,
Inc.
,
Senior
Note
,
3.75
%
,
8/15/21
.........
United
States
100,000
100,731
Diversified
Telecommunication
Services
2.5%
a
Telstra
Corp.
Ltd.
,
Senior
Bond
,
144A,
4.8
%
,
10/12/21
..........
Australia
100,000
101,642
Electric
Utilities
3.7%
Baltimore
Gas
and
Electric
Co.
,
Senior
Note
,
3.5
%
,
11/15/21
....
United
States
50,000
50,339
Duke
Energy
Corp.
,
Senior
Note
,
1.8
%
,
9/01/21
..............
United
States
100,000
100,241
150,580
Electrical
Equipment
2.5%
Emerson
Electric
Co.
,
Senior
Note
,
2.625
%
,
12/01/21
..........
United
States
100,000
101,021
Energy
Equipment
&
Services
2.4%
Halliburton
Co.
,
Senior
Note
,
3.25
%
,
11/15/21
...............
United
States
100,000
100,615
Food
&
Staples
Retailing
2.4%
Kroger
Co.
(The)
,
Senior
Note
,
2.95
%
,
11/01/21
..............
United
States
50,000
50,461
Walgreens
Boots
Alliance,
Inc.
,
Senior
Note
,
3.3
%
,
11/18/21
.....
United
States
50,000
50,431
100,892
Food
Products
1.2%
General
Mills,
Inc.
,
Senior
Bond
,
3.15
%
,
12/15/21
.............
United
States
50,000
50,422
Health
Care
Providers
&
Services
2.4%
UnitedHealth
Group,
Inc.
,
Senior
Note
,
3.375
%
,
11/15/21
.......
United
States
100,000
100,654
Hotels,
Restaurants
&
Leisure
2.4%
Marriott
International,
Inc.
,
N
,
Senior
Note
,
3.125
%
,
10/15/21
.....
United
States
50,000
50,163
Yum!
Brands,
Inc.
,
Senior
Bond
,
3.75
%
,
11/01/21
.............
United
States
50,000
50,308
100,471
Household
Products
1.2%
Clorox
Co.
(The)
,
Senior
Bond
,
3.8
%
,
11/15/21
...............
United
States
50,000
50,787
Industrial
Conglomerates
2.5%
General
Electric
Co.
,
Senior
Note
,
4.65
%
,
10/17/21
...........
United
States
100,000
101,588
Franklin
Fund
Allocator
Series
Statement
of
Investments
Franklin
Payout
2021
Fund
(continued)
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)
Insurance
3.7%
a
New
York
Life
Global
Funding
,
Secured
Note
,
144A,
1.7
%
,
9/14/21
United
States
100,000
$
100,445
Prudential
Financial,
Inc.
,
Senior
Note
,
4.5
%
,
11/16/21
.........
United
States
50,000
50,977
151,422
Oil,
Gas
&
Consumable
Fuels
3.7%
Total
Capital
SA
,
Senior
Bond
,
4.25
%
,
12/15/21
...............
France
100,000
102,187
Williams
Cos.,
Inc.
(The)
,
Senior
Note
,
4
%
,
11/15/21
..........
United
States
50,000
50,368
152,555
Pharmaceuticals
2.5%
Johnson
&
Johnson
,
Senior
Note
,
2.45
%
,
12/05/21
............
United
States
100,000
101,124
Road
&
Rail
1.2%
Norfolk
Southern
Corp.
,
Senior
Bond
,
3.25
%
,
12/01/21
.........
United
States
50,000
50,377
Semiconductors
&
Semiconductor
Equipment
2.5%
Intel
Corp.
,
Senior
Bond
,
3.3
%
,
10/01/21
....................
United
States
100,000
101,025
Tobacco
2.5%
Philip
Morris
International,
Inc.
,
Senior
Note
,
2.9
%
,
11/15/21
.....
United
States
100,000
101,261
Total
Corporate
Bonds
(Cost
$2,455,382)
.......................................
2,473,788
a
Foreign
Government
and
Agency
Securities
4.9%
Equinor
ASA,
Senior
Note,
2.75%,
11/10/21
..................
Norway
100,000
101,121
European
Investment
Bank,
Senior
Note,
2.125%,
10/15/21
.....
Supranational
b
100,000
100,757
Total
Foreign
Government
and
Agency
Securities
(Cost
$200,017)
................
201,878
U.S.
Government
and
Agency
Securities
17.7%
FFCB,
2%,
12/01/21
...................................
United
States
200,000
201,936
FHLB,
2.625%,
12/10/21
................................
United
States
200,000
202,708
U.S.
Treasury
Notes
,
1.875%,
11/30/21
....................................
United
States
160,000
161,454
2.125%,
12/31/21
....................................
United
States
160,000
161,930
Total
U.S.
Government
and
Agency
Securities
(Cost
$720,374)
....................
728,028
Municipal
Bonds
2.5%
California
2.5%
State
of
California,
GO,
5.7%,
11/01/21
.....................
United
States
100,000
102,132
Total
Municipal
Bonds
(Cost
$101,249)
.........................................
102,132
Total
Long
Term
Investments
(Cost
$3,477,022)
.................................
3,505,826
a
Franklin
Fund
Allocator
Series
Statement
of
Investments
Franklin
Payout
2021
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
19
Short
Term
Investments
14.4%
a
a
Country
Shares
a
Value
a
Money
Market
Funds
14.4%
c,d
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.....
United
States
593,455
$
593,455
Total
Money
Market
Funds
(Cost
$593,455)
.....................................
593,455
Total
Short
Term
Investments
(Cost
$593,455
)
..................................
593,455
a
Total
Investments
(Cost
$4,070,477)
99.5%
.....................................
$4,099,281
Other
Assets,
less
Liabilities
0.5%
.............................................
20,669
Net
Assets
100.0%
...........................................................
$4,119,950
See
Abbreviations
on
page
34
.
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
a
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
May
31,
2021,
the
aggregate
value
of
these
securities
was
$202,087,
representing
4.9%
of
net
assets.
b
A
supranational
organization
is
an
entity
formed
by
two
or
more
central
governments
through
international
treaties.
c
See
Note
3(d)
regarding
investments
in
affiliated
management
investment
companies.
d
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
Franklin
Fund
Allocator
Series
Financial
Highlights
Franklin
2022
Payout
Fund
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
20
a
Year
Ended
May
31,
Year
Ended
May
31,
2018
a
2021
2020
2019
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
................................
$10.59
$10.24
$9.94
$10.00
Income
from
investment
operations
b
:
Net
investment
income
c
......................................
0.23
0.25
0.25
0.08
Net
realized
and
unrealized
gains
(losses)
........................
(0.13)
0.35
0.29
(0.14)
Total
from
investment
operations
.................................
0.10
0.60
0.54
(0.06)
Less
distributions
from:
Net
investment
income
.......................................
(0.23)
(0.25)
(0.24)
—
Net
realized
gains
..........................................
(0.03)
—
—
—
Total
distributions
............................................
(0.26)
(0.25)
(0.24)
—
Net
asset
value,
end
of
year
....................................
$10.43
$10.59
$10.24
$9.94
Total
return
d
................................................
0.93%
5.94%
5.51%
(0.60)%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
...................
3.52%
3.89%
4.62%
4.58%
Expenses
net
of
waiver
and
payments
by
affiliates
....................
0.29%
f
0.29%
f
0.29%
f
0.30%
Net
investment
income
........................................
2.19%
2.39%
2.50%
2.36%
Supplemental
data
Net
assets,
end
of
year
(000’s)
..................................
$1,826
$1,853
$1,792
$1,739
Portfolio
turnover
rate
.........................................
3.12%
—%
—%
—%
a
For
the
period
January
23,
2018
(commencement
of
operations)
to
May
31,
2018.
b
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year,
except
for
non-recurring
expenses,
if
any.
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Franklin
Fund
Allocator
Series
Financial
Highlights
Franklin
2022
Payout
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
21
a
Year
Ended
May
31,
Year
Ended
May
31,
2018
a
2021
2020
2019
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
................................
$10.59
$10.24
$9.94
$10.00
Income
from
investment
operations
b
:
Net
investment
income
c
......................................
0.23
0.25
0.25
0.08
Net
realized
and
unrealized
gains
(losses)
........................
(0.13)
0.35
0.28
(0.14)
Total
from
investment
operations
.................................
0.10
0.60
0.53
(0.06)
Less
distributions
from:
Net
investment
income
.......................................
(0.23)
(0.25)
(0.23)
—
Net
realized
gains
..........................................
(0.03)
—
—
—
Total
distributions
............................................
(0.26)
(0.25)
(0.23)
—
Net
asset
value,
end
of
year
....................................
$10.43
$10.59
$10.24
$9.94
Total
return
d
................................................
0.93%
5.95%
5.48%
(0.60)%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
...................
3.52%
3.89%
4.62%
4.58%
Expenses
net
of
waiver
and
payments
by
affiliates
....................
0.30%
f
0.29%
f
0.30%
f
0.33%
Net
investment
income
........................................
2.18%
2.39%
2.49%
2.33%
Supplemental
data
Net
assets,
end
of
year
(000’s)
..................................
$1,826
$1,853
$1,792
$1,739
Portfolio
turnover
rate
.........................................
3.12%
—%
—%
—%
a
For
the
period
January
23,
2018
(commencement
of
operations)
to
May
31,
2018.
b
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchas-
es
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year,
except
for
non-recurring
expenses,
if
any.
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Franklin
Fund
Allocator
Series
Statement
of
Investments,
May
31,
2021
Franklin
Payout
2022
Fund
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
22
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
63.7%
Aerospace
&
Defense
4.2%
General
Dynamics
Corp.
,
Senior
Bond
,
2.25
%
,
11/15/22
........
United
States
100,000
$
102,482
Raytheon
Co.
,
Senior
Bond
,
2.5
%
,
12/15/22
.................
United
States
50,000
51,449
153,931
Air
Freight
&
Logistics
2.8%
United
Parcel
Service,
Inc.
,
Senior
Note
,
2.45
%
,
10/01/22
......
United
States
100,000
103,004
Banks
9.9%
Bank
of
America
Corp.
,
Senior
Note
,
2.503
%
,
10/21/22
.........
United
States
100,000
100,888
Bank
of
Montreal
,
Senior
Note
,
2.55
%
,
11/06/22
..............
Canada
100,000
103,198
Citigroup,
Inc.
,
Senior
Note
,
2.7
%
,
10/27/22
.................
United
States
50,000
51,601
JPMorgan
Chase
&
Co.
,
Senior
Note
,
3.25
%
,
9/23/22
..........
United
States
100,000
103,939
359,626
Biotechnology
1.4%
AbbVie,
Inc.
,
Senior
Note
,
2.9
%
,
11/06/22
...................
United
States
50,000
51,819
Capital
Markets
1.5%
Morgan
Stanley
,
Sub.
Bond
,
4.875
%
,
11/01/22
...............
United
States
50,000
53,110
Consumer
Finance
5.7%
American
Express
Co.
,
Senior
Note
,
2.65
%
,
12/02/22
..........
United
States
100,000
103,657
Caterpillar
Financial
Services
Corp.
,
Senior
Note
,
2.55
%
,
11/29/22
United
States
100,000
103,565
207,222
Electric
Utilities
1.4%
AEP
Texas,
Inc.
,
Senior
Note
,
2.4
%
,
10/01/22
................
United
States
50,000
51,253
Energy
Equipment
&
Services
2.8%
a
Schlumberger
Finance
Canada
Ltd.
,
Senior
Note
,
144A,
2.65
%
,
11/20/22
..........................................
United
States
100,000
102,992
Entertainment
2.9%
TWDC
Enterprises
18
Corp.
,
Senior
Note
,
2.35
%
,
12/01/22
.....
United
States
100,000
103,141
Food
&
Staples
Retailing
2.8%
Walmart,
Inc.
,
Senior
Note
,
2.35
%
,
12/15/22
.................
United
States
100,000
103,108
Health
Care
Providers
&
Services
4.3%
CVS
Health
Corp.
,
Senior
Note
,
4.75
%
,
12/01/22
.............
United
States
50,000
52,639
UnitedHealth
Group,
Inc.
,
Senior
Note
,
2.375
%
,
10/15/22
.......
United
States
100,000
103,026
155,665
Household
Products
2.8%
Colgate-Palmolive
Co.
,
Senior
Note
,
2.25
%
,
11/15/22
..........
United
States
100,000
103,034
Insurance
8.5%
a
MassMutual
Global
Funding
II
,
Senior
Secured
Note
,
144A,
2.5
%
,
10/17/22
..........................................
United
States
100,000
103,141
MetLife,
Inc.
,
Senior
Bond
,
1.564
%
,
12/15/22
................
United
States
100,000
104,088
a
Swiss
Re
Treasury
US
Corp.
,
Senior
Note
,
144A,
2.875
%
,
12/06/22
Switzerland
100,000
103,268
310,497
IT
Services
4.3%
Fiserv,
Inc.
,
Senior
Note
,
3.5
%
,
10/01/22
...................
United
States
50,000
51,720
International
Business
Machines
Corp.
,
Senior
Note
,
2.875
%
,
11/09/22
..........................................
United
States
100,000
103,788
155,508
Franklin
Fund
Allocator
Series
Statement
of
Investments
Franklin
Payout
2022
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
23
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Multi-Utilities
1.4%
Public
Service
Enterprise
Group,
Inc.
,
Senior
Note
,
2.65
%
,
11/15/22
United
States
50,000
$
51,682
Oil,
Gas
&
Consumable
Fuels
1.4%
ONEOK
Partners
LP
,
Senior
Bond
,
3.375
%
,
10/01/22
..........
United
States
50,000
51,561
Professional
Services
1.4%
Equifax,
Inc.
,
Senior
Note
,
3.3
%
,
12/15/22
...................
United
States
50,000
51,874
Technology
Hardware,
Storage
&
Peripherals
1.4%
NetApp,
Inc.
,
Senior
Note
,
3.25
%
,
12/15/22
.................
United
States
50,000
51,688
Tobacco
2.8%
Philip
Morris
International,
Inc.
,
Senior
Note
,
2.5
%
,
11/02/22
.....
United
States
100,000
103,077
Total
Corporate
Bonds
(Cost
$2,249,095)
.......................................
2,323,792
a
Foreign
Government
and
Agency
Securities
5.6%
International
Bank
for
Reconstruction
&
Development,
Senior
Note,
1.875%,
10/07/22
....................................
Supranational
b
100,000
102,288
International
Finance
Corp.,
Senior
Note,
2%,
10/24/22
.........
Supranational
b
100,000
102,614
Total
Foreign
Government
and
Agency
Securities
(Cost
$198,277)
................
204,902
U.S.
Government
and
Agency
Securities
18.0%
FHLB
,
1.875%,
12/09/22
....................................
United
States
150,000
154,029
2.5%,
12/09/22
.....................................
United
States
150,000
155,417
U.S.
Treasury
Notes
,
1.625%,
11/15/22
....................................
United
States
170,000
173,772
2%,
11/30/22
.......................................
United
States
170,000
174,834
Total
U.S.
Government
and
Agency
Securities
(Cost
$634,247)
....................
658,052
Asset-Backed
Securities
4.2%
Banks
1.4%
Capital
One
Multi-Asset
Execution
Trust
,
2017-A6
,
A6
,
2.29
%
,
7/15/25
...........................................
United
States
50,000
51,361
Consumer
Finance
2.8%
American
Express
Credit
Account
Master
Trust
,
2017-7
,
A
,
2.35
%
,
5/15/25
...........................................
United
States
100,000
102,990
Total
Asset-Backed
Securities
(Cost
$147,176)
..................................
154,351
Total
Long
Term
Investments
(Cost
$3,228,795)
.................................
3,341,097
a
Franklin
Fund
Allocator
Series
Statement
of
Investments
Franklin
Payout
2022
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
24
Short
Term
Investments
8.0%
a
a
Country
Shares
a
Value
a
Money
Market
Funds
8.0%
c,d
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.....
United
States
290,824
$
290,824
Total
Money
Market
Funds
(Cost
$290,824)
.....................................
290,824
Total
Short
Term
Investments
(Cost
$290,824
)
..................................
290,824
a
Total
Investments
(Cost
$3,519,619)
99.5%
.....................................
$3,631,921
Other
Assets,
less
Liabilities
0.5%
.............................................
19,619
Net
Assets
100.0%
...........................................................
$3,651,540
See
Abbreviations
on
page
34
.
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
a
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
May
31,
2021,
the
aggregate
value
of
these
securities
was
$309,401,
representing
8.5%
of
net
assets.
b
A
supranational
organization
is
an
entity
formed
by
two
or
more
central
governments
through
international
treaties.
c
See
Note
3(d)
regarding
investments
in
affiliated
management
investment
companies.
d
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
Franklin
Fund
Allocator
Series
Financial
Statements
Statements
of
Assets
and
Liabilities
May
31,
2021
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
25
Franklin
Payout
2021
Fund
Franklin
Payout
2022
Fund
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
..................................................
$3,477,022
$3,228,795
Cost
-
Non-controlled
affiliates
(Note
3
d
)
.......................................
593,455
290,824
Value
-
Unaffiliated
issuers
.................................................
$3,505,826
$3,341,097
Value
-
Non-controlled
affiliates
(Note
3
d
)
......................................
593,455
290,824
Cash
...................................................................
1,500
1,202
Receivables:
Interest
................................................................
22,211
19,802
Affiliates
...............................................................
34,342
44,194
Other
assets
.............................................................
5,511
—
Total
assets
.........................................................
4,162,845
3,697,119
Liabilities:
Payables:
Transfer
agent
fees
.......................................................
139
177
Reports
to
shareholders
...................................................
4,825
4,746
Professional
fees
........................................................
31,925
34,608
Pricing
fees
............................................................
4,975
4,948
Accrued
expenses
and
other
liabilities
..........................................
1,031
1,100
Total
liabilities
........................................................
42,895
45,579
Net
assets,
at
value
................................................
$4,119,950
$3,651,540
Net
assets
consist
of:
Paid-in
capital
............................................................
$4,054,606
$3,496,135
Total
distributable
earnings
(losses)
............................................
65,344
155,405
Net
assets,
at
value
................................................
$4,119,950
$3,651,540
Franklin
Payout
2021
Fund
Franklin
Payout
2022
Fund
Class
R6:
Net
assets,
at
value
......................................................
$2,060,027
$1,825,829
Shares
outstanding
.......................................................
203,001
175,000
Net
asset
value
and
maximum
offering
price
per
share
............................
$10.15
$10.43
Advisor
Class:
Net
assets,
at
value
......................................................
$2,059,923
$1,825,711
Shares
outstanding
.......................................................
203,001
175,000
Net
asset
value
and
maximum
offering
price
per
share
............................
$10.15
$10.43
Franklin
Fund
Allocator
Series
Financial
Statements
Statements
of
Operations
for
the
year
ended
May
31,
2021
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
26
Franklin
Payout
2021
Fund
Franklin
Payout
2022
Fund
Investment
income:
Dividends:
Non-controlled
affiliates
(Note
3
d
)
............................................
$15
$5
Interest:
Unaffiliated
issuers
.......................................................
88,459
91,342
Total
investment
inco
me
..................................................
88,474
91,347
Expenses:
Management
fees
(Note
3
a
)
..................................................
12,480
11,062
Transfer
agent
fees:
(Note
3c
)
Class
R6
..............................................................
435
366
Advisor
Class
...........................................................
487
483
Custodian
fees
(Note
4
)
.....................................................
386
18
Reports
to
shareholders
.....................................................
7,575
7,596
Registration
and
filing
fees
...................................................
32,656
35,501
Professional
fees
..........................................................
60,726
62,612
Trustees'
fees
and
expenses
.................................................
1,185
1,184
Pricing
fees
..............................................................
8,203
8,337
Other
...................................................................
2,061
2,649
Total
expenses
........................................................
126,194
129,808
Expense
reductions
(Note
4
)
..............................................
(7)
(6)
Expenses
waived/paid
by
affiliates
(Note
3
d
and
3
e
)
............................
(114,052)
(118,993)
Net
expenses
........................................................
12,135
10,809
Net
investment
income
...............................................
76,339
80,538
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
.....................................................
3,301
9,210
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
.....................................................
(60,620)
(54,390)
Net
realized
and
unrealized
gain
(loss)
...........................................
(57,319)
(45,180)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
.........................
$19,020
$35,358
Franklin
Fund
Allocator
Series
Financial
Statements
Statements
of
Changes
in
Net
Assets
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
27
Franklin
Payout
2021
Fund
Franklin
Payout
2022
Fund
Year
Ended
May
31,
2021
Year
Ended
May
31,
2020
Year
Ended
May
31,
2021
Year
Ended
May
31,
2020
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
............
$76,339
$87,692
$80,538
$86,750
Net
realized
gain
(loss)
............
3,301
10,611
9,210
6,793
Net
change
in
unrealized
appreciation
(depreciation)
.................
(60,620)
70,114
(54,390)
117,437
Net
increase
(decrease)
in
net
assets
resulting
from
operations
.
19,020
168,417
35,358
210,980
Distributions
to
shareholders:
Class
R6
.......................
(42,407)
(45,594)
(45,219)
(43,697)
Advisor
Class
...................
(42,407)
(45,594)
(45,203)
(43,750)
Total
distributions
to
shareholders
.....
(84,814)
(91,188)
(90,422)
(87,447)
Net
increase
(decrease)
in
net
assets
.....................
(65,794)
77,229
(55,064)
123,533
Net
assets:
Beginning
of
year
..................
4,185,744
4,108,515
3,706,604
3,583,071
End
of
year
......................
$4,119,950
$4,185,744
$3,651,540
$3,706,604
Franklin
Fund
Allocator
Series
Notes
to
Financial
Statements
28
franklintempleton.com
Annual
Report
1.
Organization
and
Significant
Accounting
Policies
Franklin
Fund
Allocator
Series (Trust)
is
registered
under
the
Investment
Company
Act
of
1940
(1940
Act)
as
an
open-end
management
investment
company,
consisting
of
twenty-
one
separate
funds, two
of
which
are
included
in
this
report
(Funds)
and
applies
the
specialized
accounting
and
reporting
guidance
in
U.S.
Generally
Accepted
Accounting
Principles
(U.S.
GAAP).
The
Funds
offer two classes
of
shares: Class
R6
and
Advisor
Class.
Each
class
of
shares
may
differ
by
its voting
rights
on
matters
affecting
a
single
class
and
fees
due
to
differing
arrangements
for
distribution
and
transfer
agent
fees.
The
following
summarizes
the
Funds’
significant
accounting
policies.
a.
Financial
Instrument
Valuation
The Funds'
investments
in
financial
instruments
are
carried
at
fair
value
daily.
Fair
value
is
the
price
that
would
be
received
to
sell
an
asset
or
paid
to
transfer
a
liability
in
an
orderly
transaction
between
market
participants
on
the
measurement
date.
The Funds calculate the
net
asset
value
(NAV)
per
share
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.
Under
compliance
policies
and
procedures
approved
by
the
Trust's
Board
of
Trustees
(the
Board),
the
Funds' administrator
has
responsibility
for
oversight
of
valuation,
including
leading
the
cross-functional
Valuation
Committee
(VC).
The
Funds
may
utilize
independent
pricing
services,
quotations
from
securities
and
financial
instrument
dealers,
and
other
market
sources
to
determine
fair
value.
Debt
securities
generally
trade
in
the
over-the-counter
market
rather
than
on
a
securities
exchange.
The
Funds'
pricing
services
use
multiple
valuation
techniques
to
determine
fair
value.
In
instances
where
sufficient
market
activity
exists,
the
pricing
services
may
utilize
a
market-
based
approach
through
which
quotes
from
market
makers
are
used
to
determine
fair
value.
In
instances
where
sufficient
market
activity
may
not
exist
or
is
limited,
the
pricing
services
also
utilize
proprietary
valuation
models
which
may
consider
market
characteristics
such
as
benchmark
yield
curves,
credit
spreads,
estimated
default
rates,
anticipated
market
interest
rate
volatility,
coupon
rates,
anticipated
timing
of
principal
repayments,
underlying
collateral,
and
other
unique
security
features
in
order
to
estimate
the
relevant
cash
flows,
which
are
then
discounted
to
calculate
the
fair
value.
Investments
in open-end mutual
funds
are
valued
at
the
closing
NAV.
The
Funds
have
procedures
to
determine
the
fair
value
of
financial
instruments
for
which
market
prices
are
not
reliable
or
readily
available.
Under
these
procedures,
the
Funds
primarily
employ
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.
b.
Income
and
Deferred
Taxes
It
is each
Fund's
policy
to
qualify
as
a
regulated
investment
company
under
the
Internal
Revenue
Code. Each
Fund
intends
to
distribute
to
shareholders
substantially
all
of
its
taxable
income
and
net
realized
gains
to
relieve
it
from
federal
income
and
excise
taxes.
As
a
result,
no
provision
for
U.S.
federal
income
taxes
is
required.
The
Funds
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
the
Funds
invest.
Foreign
taxes,
if
any,
are
recorded
based
on
the
tax
regulations
and
rates
that
exist
in
the
foreign
markets
in
which
the
Funds
invest.
When
a
capital
gain
tax
is
determined
to
apply,
certain
or
all
Funds
record
an
estimated
deferred
tax
liability
in
an
amount
that
would
be
payable
if
the
securities
were
disposed
of
on
the
valuation
date.
Each
Fund
may
recognize
an
income
tax
liability
related
to
its
uncertain
tax
positions
under
U.S.
GAAP
when
the
uncertain
tax
position
has
a
less
than
50%
probability
that
it
will
be
sustained
upon
examination
by
the
tax
authorities
based
on
its
technical
merits.
As
of
May
31,
2021, each
Fund
has
determined
that
no
tax
liability
is
required
in
its
financial
Franklin
Fund
Allocator
Series
Notes
to
Financial
Statements
29
franklintempleton.com
Annual
Report
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.
c.
Security
Transactions,
Investment
Income,
Expenses
and
Distributions
Security
transactions
are
accounted
for
on
trade
date.
Realized
gains
and
losses
on
security
transactions
are
determined
on
a
specific
identification
basis.
Interest
income
and
estimated
expenses
are
accrued
daily.
Amortization
of
premium
and
accretion
of
discount
on
debt
securities
are
included
in
interest
income.
Distributions
to
shareholders
are
recorded
on
the
ex-dividend
date.
Distributable
earnings
are
determined
according
to
income
tax
regulations
(tax
basis)
and
may
differ
from
earnings
recorded
in
accordance
with
U.S.
GAAP.
These
differences
may
be
permanent
or
temporary.
Permanent
differences
are
reclassified
among
capital
accounts
to
reflect
their
tax
character.
These
reclassifications
have
no
impact
on
net
assets
or
the
results
of
operations.
Temporary
differences
are
not
reclassified,
as
they
may
reverse
in
subsequent
periods.
Common
expenses
incurred
by
the
Trust
are
allocated
among
the
Funds
based
on
the
ratio
of
net
assets
of
each
Fund
to
the
combined
net
assets
of
the
Trust
or
based
on
the
ratio
of
number
of
shareholders
of
each
Fund
to
the
combined
number
of
shareholders
of
the
Trust.
Fund
specific
expenses
are
charged
directly
to
the
Fund
that
incurred
the
expense.
Realized
and
unrealized
gains
and
losses
and
net
investment
income,
excluding
class
specific
expenses,
are
allocated
daily
to
each
class
of
shares
based
upon
the
relative
proportion
of
net
assets
of
each
class.
Differences
in
per
share
distributions
by
class
are
generally
due
to
differences
in
class
specific
expenses.
d.
Accounting
Estimates
The
preparation
of
financial
statements
in
accordance
with
U.S.
GAAP
requires
management
to
make
estimates
and
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities
at
the
date
of
the
financial
statements
and
the
amounts
of
income
and
expenses
during
the
reporting
period.
Actual
results
could
differ
from
those
estimates.
e.
Guarantees
and
Indemnifications
Under
the
Trust's
organizational
documents,
its
officers
and
trustees
are
indemnified
by
the
Trust
against
certain
liabilities
arising
out
of
the
performance
of
their
duties
to
the
Trust.
Additionally,
in
the
normal
course
of
business,
the
Trust,
on
behalf
of
the
Funds,
enters
into
contracts
with
service
providers
that
contain
general
indemnification
clauses.
The
Trust's
maximum
exposure
under
these
arrangements
is
unknown
as
this
would
involve
future
claims
that
may
be
made
against
the
Trust
that
have
not
yet
occurred.
Currently,
the
Trust
expects
the
risk
of
loss
to
be
remote.
2.
Shares
of
Beneficial
Interest
At
May
31,
2021,
there
were
an
unlimited
number
of
shares
authorized
(without
par
value).
During
the
years
ended
May
31,
2021
and
2020,
there
were
no
transactions
of
the
Fund’s
shares.
3.
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
Funds
are
also
officers
and/or
directors
of
the
following
subsidiaries:
Subsidiary
Affiliation
Franklin
Advisers,
Inc.
(Advisers)
Investment
manager
Franklin
Templeton
Services,
LLC
(FT
Services)
Administrative
manager
Franklin
Templeton
Distributors,
Inc.
(Distributors)
Principal
underwriter
Franklin
Templeton
Investor
Services,
LLC
(Investor
Services)
Transfer
agent
1.
Organization
and
Significant
Accounting
Policies
(continued)
b.
Income
and
Deferred
Taxes
(continued)
Franklin
Fund
Allocator
Series
Notes
to
Financial
Statements
30
franklintempleton.com
Annual
Report
a.
Management
Fees
The
Funds
pay
an
investment
management
fee
to
Advisers
of
0.30%
per
year
of
the
average
daily
net
assets
of
each
of
the
Funds.
b.
Administrative
Fees
Under
an
agreement
with
Advisers,
FT
Services
provides
administrative
services
to
the
Funds.
The
fee
is
paid
by
Advisers
based
on
each
of
the
Fund's
average
daily
net
assets,
and
is
not
an
additional
expense
of
the
Funds.
c.
Transfer
Agent
Fees
Each
class
of
shares
pays
transfer
agent
fees
to
Investor
Services
for
its
performance
of
shareholder
servicing
obligations.
The
fees
are
based
on
an
annualized
asset
based
fee
of
0.02%
plus
a
transaction
based
fee.
In
addition,
each
class
reimburses
Investor
Services
for
out
of
pocket
expenses
incurred
and,
except
for
Class
R6,
reimburses
shareholder
servicing
fees
paid
to
third
parties.
Class
R6
pays
Investor
Services
transfer
agent
fees
specific
to
that
class.
For
the
year
ended
May
31,
2021,
the
Funds
paid
transfer
agent
fees
as
noted
in
the
Statements
of
Operations
of
which
the
following
amounts
were
retained
by
Investor
Services:
d.
Investments
in
Affiliated
Management
Investment
Companies
Certain
or
all
Funds
invest
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
Funds
do
not
invest
for
purposes
of
exercising
a
controlling
influence
over
the
management
or
policies.
Management
fees
paid
by
the
Funds
are
waived
on
assets
invested
in
the
affiliated
management
investment
companies,
as
noted
in
the
Statements
of
Operations,
in
an
amount
not
to
exceed
the
management
and
administrative
fees
paid
directly
or
indirectly
by
each
affiliate.
During
the
year
ended
May
31,
2021,
investments
in
affiliated
management
investment
companies
were
as
follows:
Franklin
Payout
2021
Fund
Franklin
Payout
2022
Fund
Transfer
agent
fees
........................
$841
$743
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
Payout
2021
Fund
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.......
$512,564
$394,162
$(313,271)
$—
$—
$593,455
593,455
$15
Total
Affiliated
Securities
....
$512,564
$394,162
$(313,271)
$—
$—
$593,455
$15
3.
Transactions
with
Affiliates
(continued)
Franklin
Fund
Allocator
Series
Notes
to
Financial
Statements
31
franklintempleton.com
Annual
Report
e.
Waiver
and
Expense
Reimbursements
Advisers
have
contractually
agreed
in
advance
to
waive
or
limit
its
fees
and
to
assume
as
its
own
expense
certain
expenses
otherwise
payable
by
the
Funds
so
that
the
operating
expenses
(excluding
acquired
fund
fees
and
expenses
and
certain
non-routine
expenses
or
costs,
including
those
relating
to
litigation,
indemnification,
reorganizations,
and
liquidations)
for
each
class
of
the
Funds
do
not
exceed
0.44%
based
on
the
average
net
assets
of
each
class
until
September
30,
2021.
Total
expenses
waived
or
paid
are
not
subject
to
recapture
subsequent
to
the
Funds'
fiscal
year
end.
Investor
Services
has
contractually
agreed
in
advance
to
waive
or
limit
its
fees
so
that
the
Class
R6
transfer
agent
fees
do
not
exceed
0.02%
based
on
the
average
net
assets
of
the
class
until
September
30,
2021.
f.
Other
Affiliated
Transactions
At
May
31,
2021,
Advisers
owned
100%
of
the
Funds’
outstanding
shares.
Investment
activities
of
this
shareholder
could
have
a
material
impact
on
the
Funds.
4.
Expense
Offset
Arrangement
The
Funds
have entered
into
an
arrangement
with
their
custodian
whereby
credits
realized
as
a
result
of
uninvested
cash
balances
are
used
to
reduce
a
portion
of
the
Funds'
custodian
expenses.
During
the year
ended
May
31,
2021 the
custodian
fees
were
reduced
as
noted
in
the
Statements
of
Operations.
5.
Income
Taxes
The
tax
character
of
distributions
paid
during
the
years
ended
May
31,
2021
and
2020,
was
as
follows:
At
May
31,
2021,
the
cost
of
investments,
net
unrealized
appreciation
(depreciation)
and
undistributed
ordinary
income
for
income
tax
purposes
were
as
follows:
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
Franklin
Payout
2022
Fund
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.......
$182,752
$419,995
$(311,923)
$—
$—
$290,824
290,824
$5
Total
Affiliated
Securities
....
$182,752
$419,995
$(311,923)
$—
$—
$290,824
$5
Franklin
Payout
2021
Fund
Franklin
Payout
2022
Fund
2021
2020
2021
2020
Distributions
paid
from:
Ordinary
income
........................
$80,551
$91,188
$80,797
$87,447
Long
term
capital
gain
....................
4,263
—
9,625
—
$84,814
$91,188
$90,422
$87,447
3.
Transactions
with
Affiliates
(continued)
d.
Investments
in
Affiliated
Management
Investment
Companies
(continued)
Franklin
Fund
Allocator
Series
Notes
to
Financial
Statements
32
franklintempleton.com
Annual
Report
Differences
between
income
and/or
capital
gains
as
determined
on
a
book
basis
and
a
tax
basis
are
primarily
due
to
differing
treatment
of
bond
discounts
and
premiums.
6.
Investment
Transactions
Purchases
and
sales
of
investments
(excluding
short
term
securities)
for
the
year
ended
May
31,
2021,
were
as
follows:
7. 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
Funds, their ability
to
buy
and
sell
fund
investments
at
appropriate
valuations
and their ability
to
achieve their investment
objectives.
8.
Credit
Facility
The
Funds,
together
with
other
U.S.
registered
and
foreign
investment
funds
(collectively,
Borrowers),
managed
by
Franklin
Templeton,
are
borrowers
in
a
joint
syndicated
senior
unsecured
credit
facility
totaling
$2.675
billion
(Global
Credit
Facility)
which
matures
on
February
4,
2022.
This
Global
Credit
Facility
provides
a
source
of
funds
to
the
Borrowers
for
temporary
and
emergency
purposes,
including
the
ability
to
meet
future
unanticipated
or
unusually
large
redemption
requests.
Under
the
terms
of
the
Global
Credit
Facility,
the
Funds
shall,
in
addition
to
interest
charged
on
any
borrowings
made
by
the
Funds
and
other
costs
incurred
by
the
Funds,
pay
their
share
of
fees
and
expenses
incurred
in
connection
with
the
implementation
and
maintenance
of
the
Global
Credit
Facility,
based
upon
their
relative
share
of
the
aggregate
net
assets
of
all
of
the
Borrowers,
including
an
annual
commitment
fee
of
0.15%
based
upon
the
unused
portion
of
the
Global
Credit
Facility.
These
fees
are
reflected
in
other
expenses
in
the
Statements
of
Operations.
During
the
year
ended
May
31,
2021,
the
Funds
did
not
use
the
Global
Credit
Facility.
Franklin
Payout
2021
Fund
Franklin
Payout
2022
Fund
a
a
a
Cost
of
investments
.......................
$4,067,456
$3,515,262
Unrealized
appreciation
.....................
$31,841
$116,721
Unrealized
depreciation
.....................
(16)
(62)
Net
unrealized
appreciation
(depreciation)
.......
$31,825
$116,659
Distributable
earnings:
Undistributed
ordinary
income
................
$31,490
$32,354
Undistributed
long
term
capital
gains
...........
2,034
6,390
Total
distributable
earnings
..................
$33,524
$38,744
Franklin
Payout
2021
Fund
Franklin
Payout
2022
Fund
Purchases
..............................
$—
$107,064
Sales
..................................
$144,426
$209,081
5.
Income
Taxes
(continued)
Franklin
Fund
Allocator
Series
Notes
to
Financial
Statements
33
franklintempleton.com
Annual
Report
9.
Fair
Value
Measurements
The Funds
follow
a
fair
value
hierarchy
that
distinguishes
between
market
data
obtained
from
independent
sources
(observable
inputs)
and
the Funds'
own
market
assumptions
(unobservable
inputs).
These
inputs
are
used
in
determining
the
value
of
the Funds' financial
instruments
and
are
summarized
in
the
following
fair
value
hierarchy:
Level
1
–
quoted
prices
in
active
markets
for
identical
financial
instruments
Level
2
–
other
significant
observable
inputs
(including
quoted
prices
for
similar
financial
instruments,
interest
rates,
prepayment
speed,
credit
risk,
etc.)
Level
3
–
significant
unobservable
inputs
(including
the Funds'
own
assumptions
in
determining
the
fair
value
of
financial
instruments)
The
input
levels
are
not
necessarily
an
indication
of
the
risk
or
liquidity
associated
with
financial
instruments
at
that
level.
A
summary
of
inputs
used
as
of
May
31,
2021,
in
valuing
the
Funds'
assets
carried
at
fair
value,
is
as
follows:
10.
New
Accounting
Pronouncements
In
March
2020,
the
Financial
Accounting
Standards
Board
issued
an
Accounting
Standards
Update
(ASU)
No.
2020-04,
Reference
Rate
Reform
(Topic
848)
–
Facilitation
of
the
Effects
of
Reference
Rate
Reform
on
Financial
Reporting.
The
amendments
in
the
ASU
provides
optional
temporary
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.
The
ASU
is
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
this
ASU
will
not
have
a
material
impact
on
the
financial
statements.
11.
Subsequent
Events
The
Funds
have
evaluated
subsequent
events
through
the
issuance
of
the
financial
statements
and
determined
that
no
events
have
occurred
that
require
disclosure,
except
for
the
following:
Level
1
Level
2
Level
3
Total
Franklin
Payout
2021
Fund
Assets:
Investments
in
Securities:
a
Corporate
Bonds
........................
$
—
$
2,473,788
$
—
$
2,473,788
Foreign
Government
and
Agency
Securities
....
—
201,878
—
201,878
U.S.
Government
and
Agency
Securities
.......
—
728,028
—
728,028
Municipal
Bonds
.........................
—
102,132
—
102,132
Short
Term
Investments
...................
593,455
—
—
593,455
Total
Investments
in
Securities
...........
$593,455
$3,505,826
$—
$4,099,281
Franklin
Payout
2022
Fund
Assets:
Investments
in
Securities:
a
Corporate
Bonds
........................
—
2,323,792
—
2,323,792
Foreign
Government
and
Agency
Securities
....
—
204,902
—
204,902
U.S.
Government
and
Agency
Securities
.......
—
658,052
—
658,052
Asset-Backed
Securities
..................
—
154,351
—
154,351
Short
Term
Investments
...................
290,824
—
—
290,824
Total
Investments
in
Securities
...........
$290,824
$3,341,097
$—
$3,631,921
a
For
detailed
categories,
see
the
accompanying
Statement
of
Investments.
Franklin
Fund
Allocator
Series
Notes
to
Financial
Statements
34
franklintempleton.com
Annual
Report
On
July
14,
2021,
the
Board
approved
a
proposal
to
liquidate
the
Funds.
The
Funds
are
scheduled
to
liquidate
on
or
about
September
28,
2021.
Abbreviations
Selected
Portfolio
FFCB
Federal
Farm
Credit
Banks
Funding
Corp.
FHLB
Federal
Home
Loan
Banks
GO
General
Obligation
11.
Subsequent
Events
(continued)
Franklin
Fund
Allocator
Series
Report
of
Independent
Registered
Public
Accounting
Firm
35
franklintempleton.com
Annual
Report
To
the
Board
of
Trustees
of
Franklin
Fund
Allocator
Series
and
Shareholders
of
Franklin
Payout
2021
Fund
and
Franklin
Payout
2022
Fund
Opinions
on
the
Financial
Statements
We
have
audited
the
accompanying
statements
of
assets
and
liabilities,
including
the
schedules
of
investments,
of
Franklin
Payout
2021
Fund
and
Franklin
Payout
2022
Fund
(two
of
the
funds
constituting
Franklin
Fund
Allocator
Series,
hereafter
collectively
referred
to
as
the
"Funds")
as
of
May
31,
2021,
the
related
statements
of
operations
for
the
year
ended
May
31,
2021,
the
statements
of
changes
in
net
assets
for
each
of
the
two
years
in
the
period
ended
May
31,
2021,
including
the
related
notes,
and
the
financial
highlights
for
each
of
the
periods
indicated
therein
(collectively
referred
to
as
the
“financial
statements”).
In
our
opinion,
the
financial
statements
present
fairly,
in
all
material
respects,
the
financial
position
of
each
of
the
Funds
as
of
May
31,
2021,
the
results
of
each
of
their
operations
for
the
year
then
ended,
the
changes
in
each
of
their
net
assets
for
each
of
the
two
years
in
the
period
ended
May
31,
2021
and
each
of
the
financial
highlights
for
each
of
the
periods
indicated
therein
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America.
Basis
for
Opinions
These
financial
statements
are
the
responsibility
of
the
Funds’
management.
Our
responsibility
is
to
express
an
opinion
on
the
Funds’
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
Funds
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
May
31,
2021
by
correspondence
with
the
custodian
and
transfer
agent.
We
believe
that
our
audits
provide
a
reasonable
basis
for
our
opinions.
PricewaterhouseCoopers
LLP
San
Francisco,
California
July
22,
2021
We
have
served
as
the
auditor
of
one
or
more
investment
companies
in
the
Franklin
Templeton
Group
of
Funds
since
1948.
Franklin
Fund
Allocator
Series
Tax
Information
(unaudited)
36
franklintempleton.com
Annual
Report
Under
Section
852(b)(3)(C)
of
the
Internal
Revenue
Code,
the
Funds
hereby
report
the
maximum
amount
allowable
but
no
less
than
the
following
amounts
as
long
term
capital
gain
dividends
for
the
fiscal
year
ended
May
31,
2021:
Under
Section
871(k)(2)(C)
of
the
Internal
Revenue
Code,
the
Funds
hereby
report
the
maximum
amount
allowable
but
no
less
than
the
following
amounts
as
short
term
capital
gain
dividends
for
purposes
of
the
tax
imposed
under
Section
871(a)(1)
(A)
of
the
Internal
Revenue
Code
for
the
fiscal
year
ended
May
31,
2021:
Franklin
Payout
2021
Fund
Franklin
Payout
2022
Fund
$4,263
$9,625
Franklin
Payout
2021
Fund
Franklin
Payout
2022
Fund
$1,380
$—
Franklin
Fund
Allocator
Series
Board
Members
and
Officers
37
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
1995
125
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
2017
107
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
126
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-May
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
Fund
Allocator
Series
38
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
1998
and
Lead
Independent
Trustee
since
2019
126
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
126
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
126
Graham
Holdings
Company
(education
and
media
organization)
(2011-present);
and
formerly
,
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
Fund
Allocator
Series
39
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
107
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-
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).
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
**Gregory
E.
Johnson
(1961)
Trustee
Since
2007
137
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
and
Trustee
Since
2013
126
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
October
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
Advisory
Services,
LLC,
Franklin
Mutual
Advisers,
LLC,
Franklin
Templeton
Institutional,
LLC;
and
officer
of
40
of
the
investment
companies
in
Franklin
Templeton.
Independent
Board
Members
(continued)
Franklin
Fund
Allocator
Series
40
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
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,
Franklin
Templeton
Distributors,
Inc.
and
FASA,
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).
Robert
G.
Kubilis
(1973)
Chief
Financial
Officer,
Chief
Accounting
Officer
and
Treasurer
Since
December
2020
Not
Applicable
Not
Applicable
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Treasurer,
U.S.
Fund
Administration
&
Reporting
and
officer
of
39
of
the
investment
companies
in
Franklin
Templeton.
Robert
Lim
(1948)
Vice
President
–
AML
Compliance
Since
2016
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Vice
President,
Franklin
Templeton
Companies,
LLC;
Chief
Compliance
Officer,
Franklin
Templeton
Distributors,
Inc.
and
Franklin
Templeton
Investor
Services,
LLC;
and
officer
of
44
of
the
investment
companies
in
Franklin
Templeton.
Edward
D.
Perks
(1970)
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:
President
and
Director,
Franklin
Advisers,
Inc.;
and
officer
of
eight
of
the
investment
companies
in
Franklin
Templeton
(since
December
2018).
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.
Interested
Board
Members
and
Officers
(continued)
Franklin
Fund
Allocator
Series
41
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-May
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.
The
Statement
of
Additional
Information
(SAI)
includes
additional
information
about
the
board
members
and
is
available,
without
charge,
upon
request.
Shareholders
may
call
(800)
DIAL
BEN/342-5236
to
request
the
SAI.
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
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
Fund
Allocator
Series
Shareholder
Information
42
franklintempleton.com
Annual
Report
Board
Approval
of
Investment
Management
Agreements
FRANKLIN
FUND
ALLOCATOR
SERIES
Franklin
Payout
2021
Fund
Franklin
Payout
2022
Fund
Franklin
Payout
2023
Fund
(each
a
Fund)
At
a
meeting
held
on
February
23,
2021
(Meeting),
the
Board
of
Trustees
(Board)
of
Franklin
Fund
Allocator
Series
(Trust),
including
a
majority
of
the
trustees
who
are
not
“interested
persons”
as
defined
in
the
Investment
Company
Act
of
1940
(Independent
Trustees),
reviewed
and
approved
the
continuance
of
the
investment
management
agreement
between
Franklin
Advisers,
Inc.
(Manager)
and
the
Trust,
on
behalf
of
each
Fund
(each
a
Management
Agreement)
for
an
additional
one-year
period.
The
Independent
Trustees
received
advice
from
and
met
separately
with
Independent
Trustee
counsel
in
considering
whether
to
approve
the
continuation
of
each
Management
Agreement.
Although
the
Management
Agreements
for
the
Funds
were
considered
at
the
same
Board
meeting,
the
Board
considered
the
information
provided
to
it
about
the
Funds
together
and
with
respect
to
each
Fund
separately
as
the
Board
deemed
appropriate.
In
considering
the
continuation
of
each
Management
Agreement,
the
Board
reviewed
and
considered
information
provided
by
the
Manager
at
the
Meeting
and
throughout
the
year
at
meetings
of
the
Board
and
its
committees.
The
Board
also
reviewed
and
considered
information
provided
in
response
to
a
detailed
set
of
requests
for
information
submitted
to
the
Manager
by
Independent
Trustee
counsel
on
behalf
of
the
Independent
Trustees
in
connection
with
the
annual
contract
renewal
process.
In
addition,
prior
to
the
Meeting,
the
Independent
Trustees
held
a
telephonic
contract
renewal
meeting
at
which
the
Independent
Trustees
conferred
amongst
themselves
and
Independent
Trustee
counsel
about
contract
renewal
matters
and,
in
some
cases,
requested
additional
information
from
the
Manager
relating
to
the
contract.
The
Board
reviewed
and
considered
all
of
the
factors
it
deemed
relevant
in
approving
the
continuance
of
each
Management
Agreement,
including,
but
not
limited
to:
(i)
the
nature,
extent
and
quality
of
the
services
provided
by
the
Manager;
(ii)
the
investment
performance
of
each
Fund;
(iii)
the
costs
of
the
services
provided
and
profits
realized
by
the
Manager
and
its
affiliates
from
the
relationship
with
each
Fund;
(iv)
the
extent
to
which
economies
of
scale
are
realized
as
each
Fund
grows;
and
(v)
whether
fee
levels
reflect
these
economies
of
scale
for
the
benefit
of
Fund
investors.
In
approving
the
continuance
of
each
Management
Agreement,
the
Board,
including
a
majority
of
the
Independent
Trustees,
determined
that
the
terms
of
the
Management
Agreement
are
fair
and
reasonable
and
that
the
continuance
of
such
Management
Agreement
is
in
the
best
interests
of
the
applicable
Fund
and
its
shareholders.
While
attention
was
given
to
all
information
furnished,
the
following
discusses
some
primary
factors
relevant
to
the
Board’s
determination.
Nature,
Extent
and
Quality
of
Services
The
Board
reviewed
and
considered
information
regarding
the
nature,
extent
and
quality
of
investment
management
services
provided
by
the
Manager
and
its
affiliates
to
the
Funds
and
their
shareholders.
This
information
included,
among
other
things,
the
qualifications,
background
and
experience
of
the
senior
management
and
investment
personnel
of
the
Manager,
as
well
as
information
on
succession
planning
where
appropriate;
the
structure
of
investment
personnel
compensation;
oversight
of
third-
party
service
providers;
investment
performance
reports
and
related
financial
information
for
each
Fund;
reports
on
expenses
and
shareholder
services;
legal
and
compliance
matters;
risk
controls;
pricing
and
other
services
provided
by
the
Manager
and
its
affiliates;
and
management
fees
charged
by
the
Manager
and
its
affiliates
to
U.S.
funds
and
other
accounts,
including
management’s
explanation
of
differences
among
accounts
where
relevant.
The
Board
also
reviewed
and
considered
an
annual
report
on
payments
made
by
Franklin
Templeton
(FT)
or
the
Funds
to
financial
intermediaries,
as
well
as
a
memorandum
relating
to
third-
party
servicing
arrangements,
which
included
discussion
of
the
changing
distribution
landscape
for
the
Funds.
The
Board
noted
management’s
continuing
efforts
and
expenditures
in
establishing
effective
business
continuity
plans
and
developing
strategies
to
address
areas
of
heightened
concern
in
the
mutual
fund
industry,
such
as
cybersecurity
in
the
current
work-from-home
environment
and
liquidity
risk
management.
The
Board
also
reviewed
and
considered
the
benefits
provided
to
Fund
shareholders
of
investing
in
a
fund
that
is
part
of
the
FT
family
of
funds.
The
Board
noted
the
financial
position
of
Franklin
Resources,
Inc.
(FRI),
the
Manager’s
parent,
and
its
commitment
to
the
mutual
fund
Franklin
Fund
Allocator
Series
Shareholder
Information
43
franklintempleton.com
Annual
Report
business
as
evidenced
by
its
reassessment
of
the
fund
offerings
in
response
to
the
market
environment
and
project
initiatives
and
capital
investments
relating
to
the
services
provided
to
the
Funds
by
the
FT
organization.
The
Board
specifically
noted
FT’s
commitment
to
enhancing
services
and
controlling
costs,
as
reflected
in
its
outsourcing
of
certain
administrative
functions,
and
growth
opportunities,
as
evidenced
by
its
recent
acquisition
of
the
Legg
Mason
companies.
The
Board
also
noted
FT’s
attention
focused
on
expanding
the
distribution
opportunities
for
all
funds
in
the
FT
family
of
funds.
Following
consideration
of
such
information,
the
Board
was
satisfied
with
the
nature,
extent
and
quality
of
services
provided
by
the
Manager
and
its
affiliates
to
the
Funds
and
their
shareholders.
Fund
Performance
The
Board
reviewed
and
considered
the
performance
results
of
each
Fund
over
various
time
periods
ended
November
30,
2020.
The
Board
considered
the
performance
returns
for
each
Fund
in
comparison
to
the
performance
returns
of
mutual
funds
deemed
comparable
to
the
Fund
included
in
a
universe
(Performance
Universe)
selected
by
Broadridge
Financial
Solutions,
Inc.
(Broadridge),
an
independent
provider
of
investment
company
data.
The
Board
received
a
description
of
the
methodology
used
by
Broadridge
to
select
the
mutual
funds
included
in
a
Performance
Universe.
The
Board
also
reviewed
and
considered
Fund
performance
reports
provided
and
discussions
that
occurred
with
portfolio
managers
at
Board
meetings
throughout
the
year.
A
summary
of
each
Fund’s
performance
results
is
below.
Franklin
Payout
2021
Fund
–
The
Performance
Universe
for
the
Fund
included
the
Fund
and
all
retail
and
institutional
short
investment-grade
debt
funds.
The
Fund
commenced
operations
on
June
1,
2015,
and
thus
has
been
in
operation
for
less
than
10
years.
The
Board
noted
that
the
Fund’s
annualized
income
return
for
the
three-year
period
was
below
the
median
of
its
Performance
Universe,
but
for
the
one-
and
five-year
periods
was
above
the
median
of
its
Performance
Universe.
The
Board
further
noted
that
the
Fund’s
annualized
total
return
for
the
one-
and
three-year
periods
was
below
the
median
of
its
Performance
Universe,
but
for
the
five-year
period
was
above
the
median
of
its
Performance
Universe.
The
Board
considered
that
the
income-oriented
investment
objective
of
the
Fund
is
the
primary
focus
for
the
Fund’s
portfolio
management
team
and
that
the
evaluation
of
the
Fund’s
performance
relative
to
the
Fund’s
peers
on
an
annualized
income
return
basis
is
consistent
with
investor
expectations
and
the
Fund’s
investment
goals.
The
Board
concluded
that
the
Fund’s
performance
was
satisfactory.
Franklin
Payout
2022
Fund
–
The
Performance
Universe
for
the
Fund
included
the
Fund
and
all
retail
and
institutional
short-intermediate
investment-grade
debt
funds.
The
Fund
commenced
operations
on
January
23,
2018,
and
thus
has
been
in
operation
for
less
than
three
years.
The
Board
noted
that
the
Fund’s
annualized
income
return
for
the
one-year
period
was
above
the
median
and
in
the
first
quintile
(best)
of
its
Performance
Universe.
The
Board
also
noted
that
the
Fund’s
4.73%
annualized
total
return
for
the
one-year
period
was
0.33%
below
the
median
of
its
Performance
Universe.
The
Board
concluded
that
the
Fund’s
performance
was
satisfactory.
Franklin
Payout
2023
Fund
–
The
Board
noted
that
Broadridge
did
not
provide
performance
information
for
the
Fund
because
the
Fund
has
not
commenced
operations.
Comparative
Fees
and
Expenses
The
Board
reviewed
and
considered
information
regarding
each
Fund’s
actual
total
expense
ratio
and
its
various
components,
including,
as
applicable,
management
fees;
transfer
agent
expenses;
underlying
fund
expenses;
Rule
12b-1
and
non-Rule
12b-1
service
fees;
and
other
non-
management
fees.
The
Board
also
noted
the
quarterly
and
annual
reports
it
receives
on
all
marketing
support
payments
made
by
FT
to
financial
intermediaries.
The
Board
considered
the
actual
total
expense
ratio
and,
separately,
the
contractual
management
fee
rate,
without
the
effect
of
fee
waivers,
if
any
(Management
Rate)
of
each
Fund
in
comparison
to
the
median
expense
ratio
and
median
Management
Rate,
respectively,
of
other
mutual
funds
deemed
comparable
to
and
with
a
similar
expense
structure
to
the
Fund
selected
by
Broadridge
(Expense
Group).
Broadridge
fee
and
expense
data
is
based
upon
information
taken
from
each
fund’s
most
recent
annual
report,
which
reflects
historical
asset
levels
that
may
be
quite
different
from
those
currently
existing,
particularly
in
a
period
of
market
volatility.
While
recognizing
such
inherent
limitation
and
the
fact
that
expense
ratios
and
Management
Rates
generally
increase
as
assets
decline
and
decrease
as
assets
grow,
the
Board
believed
the
independent
analysis
conducted
by
Broadridge
to
be
an
appropriate
measure
of
comparative
fees
and
expenses.
The
Broadridge
Management
Rate
includes
administrative
charges,
and
the
actual
total
expense
ratio,
for
comparative
consistency,
was
shown
for
(i)
Advisor
Class
shares
for
the
Franklin
Payout
2021
Fund
and
for
Advisor
Class,
Institutional
Class,
Class
I,
Class
P,
Class
F3
and
Class
NAV
shares
for
certain
other
funds
in
the
Fund’s
Expense
Group;
(ii)
Advisor
Class
shares
for
the
Franklin
Payout
2022
Fund
and
for
Institutional
Class,
Class
I,
Class
I+
and
Servicing
Class
shares
for
certain
other
funds
in
the
Fund’s
Expense
Group;
and
(iii)
Advisor
Class
shares
for
the
Franklin
Fund
Allocator
Series
Shareholder
Information
44
franklintempleton.com
Annual
Report
Franklin
Payout
2023
Fund
and
for
Institutional
Class,
Class
I,
Class
IS,
and
Class
Y
shares
for
certain
other
funds
in
the
Fund’s
Expense
Group.
The
Board
received
a
description
of
the
methodology
used
by
Broadridge
to
select
the
mutual
funds
included
in
an
Expense
Group.
Franklin
Payout
2021
Fund
–
The
Expense
Group
for
the
Fund
included
the
Fund
and
13
other
short
investment-grade
debt
funds.
The
Board
noted
that
the
Management
Rate
for
the
Fund
was
equal
to
the
median
of
its
Expense
Group.
The
Board
also
noted
that
the
actual
total
expense
ratio
for
the
Fund
was
below
the
median
of
its
Expense
Group.
The
Board
further
noted
that
the
actual
total
expense
ratio
for
the
Fund
reflected
a
fee
waiver
from
management.
The
Board
concluded
that
the
Management
Rate
charged
to
the
Fund
is
reasonable.
Franklin
Payout
2022
Fund
and
Franklin
Payout
2023
Fund
–
The
Expense
Group
for
the
Franklin
Payout
2022
Fund
included
the
Fund
and
nine
other
short-intermediate
investment-grade
debt
funds.
The
Expense
Group
for
the
Franklin
Payout
2023
Fund
included
the
Fund
and
10
other
core
bond
funds.
The
Board
noted
that
the
Management
Rates
and
actual
total
expense
ratios
for
the
Funds
were
below
the
medians
and
in
the
first
quintile
(best)
of
their
respective
Expense
Groups.
The
Board
noted
that
the
actual
total
expense
ratio
for
each
Fund
reflected
a
fee
waiver
from
management.
The
Board
concluded
that
the
Management
Rates
charged
to
the
Funds
are
reasonable.
Profitability
The
Board
reviewed
and
considered
information
regarding
the
profits
realized
by
the
Manager
and
its
affiliates
in
connection
with
the
operation
of
each
Fund.
In
this
respect,
the
Board
considered
the
Fund
profitability
analysis
provided
by
the
Manager
that
addresses
the
overall
profitability
of
FT’s
US
fund
business,
as
well
as
its
profits
in
providing
investment
management
and
other
services
to
each
of
the
individual
funds
during
the
12-month
period
ended
September
30,
2020,
being
the
most
recent
fiscal
year-
end
for
FRI.
The
Board
noted
that
although
management
continually
makes
refinements
to
its
methodologies
used
in
calculating
profitability
in
response
to
organizational
and
product-related
changes,
the
overall
methodology
has
remained
consistent
with
that
used
in
the
Funds’
profitability
report
presentations
from
prior
years.
The
Board
further
noted
management’s
representation
that
the
profitability
analysis
excluded
the
impact
of
the
recent
acquisition
of
the
Legg
Mason
companies
and
that
management
expects
to
incorporate
the
legacy
Legg
Mason
companies
into
the
profitability
analysis
beginning
next
year.
The
Board
also
noted
that
PricewaterhouseCoopers
LLP,
auditor
to
FRI
and
certain
FT
funds,
has
been
engaged
by
the
Manager
to
periodically
review
and
assess
the
allocation
methodologies
to
be
used
solely
by
the
Funds’
Board
with
respect
to
the
profitability
analysis.
The
Board
noted
management’s
belief
that
costs
incurred
in
establishing
the
infrastructure
necessary
for
the
type
of
mutual
fund
operations
conducted
by
the
Manager
and
its
affiliates
may
not
be
fully
reflected
in
the
expenses
allocated
to
each
Fund
in
determining
its
profitability,
as
well
as
the
fact
that
the
level
of
profits,
to
a
certain
extent,
reflected
operational
cost
savings
and
efficiencies
initiated
by
management.
As
part
of
this
evaluation,
the
Board
considered
management’s
outsourcing
of
certain
operations,
which
effort
has
required
considerable
upfront
expenditures
by
the
Manager
but,
over
the
long
run
is
expected
to
result
in
greater
efficiencies.
The
Board
also
noted
management’s
expenditures
in
improving
shareholder
services
provided
to
the
Funds,
as
well
as
the
need
to
implement
systems
and
meet
additional
regulatory
and
compliance
requirements
resulting
from
recent
US
Securities
and
Exchange
Commission
and
other
regulatory
requirements.
The
Board
also
considered
the
extent
to
which
the
Manager
and
its
affiliates
might
derive
ancillary
benefits
from
fund
operations,
including
revenues
generated
from
transfer
agent
services,
potential
benefits
resulting
from
personnel
and
systems
enhancements
necessitated
by
fund
growth,
as
well
as
increased
leverage
with
service
providers
and
counterparties.
Based
upon
its
consideration
of
all
these
factors,
the
Board
concluded
that
the
level
of
profits
realized
by
the
Manager
and
its
affiliates
from
providing
services
to
each
Fund
was
not
excessive
in
view
of
the
nature,
extent
and
quality
of
services
provided
to
each
Fund.
Economies
of
Scale
The
Board
reviewed
and
considered
the
extent
to
which
the
Manager
may
realize
economies
of
scale,
if
any,
as
each
Fund
grows
larger
and
whether
each
Fund’s
management
fee
structure
reflects
any
economies
of
scale
for
the
benefit
of
shareholders.
The
Board
considered
the
Manager’s
view
that
any
analyses
of
potential
economies
of
scale
in
managing
a
particular
fund
are
inherently
limited
in
light
of
the
joint
and
common
costs
and
investments
the
Manager
incurs
across
the
FT
family
of
funds
as
a
whole.
The
Board
noted
that
at
the
end
of
2020,
the
Franklin
Payout
2021
Fund
and
Franklin
Payout
2022
Fund
had
approximately
$4
million
or
less
in
net
assets
and
that
the
Franklin
Payout
2023
Fund
had
not
commenced
operations.
The
Board
recognized
that
there
would
not
likely
be
any
economies
of
scale
until
the
Funds’
assets
grow.
Franklin
Fund
Allocator
Series
Shareholder
Information
45
franklintempleton.com
Annual
Report
Conclusion
Based
on
its
review,
consideration
and
evaluation
of
all
factors
it
believed
relevant,
including
the
above-described
factors
and
conclusions,
the
Board
unanimously
approved
the
continuation
of
each
Management
Agreement
for
an
additional
one-year
period.
Liquidity
Risk
Management
Program-
Funds
no
HLIM
Each
Fund
has
adopted
and
implemented
a
written
Liquidity
Risk
Management
Program
(the
“LRMP”)
as
required
by
Rule
22e-4
under
the
Investment
Company
Act
of
1940
(the
“Liquidity
Rule”).
The
LRMP
is
designed
to
assess
and
manage
each
Fund’s
liquidity
risk,
which
is
defined
as
the
risk
that
the
Fund
could
not
meet
requests
to
redeem
shares
issued
by
the
Fund
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
In
accordance
with
the
Liquidity
Rule,
the
LRMP
includes
policies
and
procedures
that
provide
for:
(1)
assessment,
management,
and
review
(no
less
frequently
than
annually)
of
each
Fund’s
liquidity
risk;
(2)
classification
of
each
Fund’s
portfolio
holdings
into
one
of
four
liquidity
categories
(Highly
Liquid,
Moderately
Liquid,
Less
Liquid,
and
Illiquid);
(3)
for
Funds
that
do
not
primarily
hold
assets
that
are
Highly
Liquid,
establishing
and
maintaining
a
minimum
percentage
of
the
Fund’s
net
assets
in
Highly
Liquid
investments
(called
a
“Highly
Liquid
Investment
Minimum”
or
“HLIM”);
and
(4)
prohibiting
the
Fund’s
acquisition
of
Illiquid
investments
that
would
result
in
the
Fund
holding
more
than
15%
of
its
net
assets
in
Illiquid
assets.
The
LRMP
also
requires
reporting
to
the
Securities
and
Exchange
Commission
(“SEC”)
(on
a
non-public
basis)
and
to
the
Board
if
the
Fund’s
holdings
of
Illiquid
assets
exceed
15%
of
the
Fund’s
net
assets.
Funds
with
HLIMs
must
have
procedures
for
addressing
HLIM
shortfalls,
including
reporting
to
the
Board
and,
with
respect
to
HLIM
shortfalls
lasting
more
than
seven
consecutive
calendar
days,
reporting
to
the
SEC
(on
a
non-public
basis).
The
Director
of
Liquidity
Risk
within
the
Investment
Risk
Management
Group
(the
“IRMG”)
is
the
appointed
Administrator
of
the
LRMP.
The
IRMG
maintains
the
Investment
Liquidity
Committee
(the
“ILC”)
to
provide
oversight
and
administration
of
policies
and
procedures
governing
liquidity
risk
management
for
FT
products
and
portfolios.
The
ILC
includes
representatives
from
Franklin
Templeton’s
Risk,
Trading,
Global
Compliance,
Investment
Compliance,
Investment
Operations,
Valuation
Committee,
Product
Management
and
Global
Product
Strategy.
In
assessing
and
managing
each
Fund’s
liquidity
risk,
the
ILC
considers,
as
relevant,
a
variety
of
factors,
including
the
Fund’s
investment
strategy
and
the
liquidity
of
its
portfolio
investments
during
both
normal
and
reasonably
foreseeable
stressed
conditions;
its
short
and
long-term
cash
flow
projections;
and
its
cash
holdings
and
access
to
other
funding
sources
including
the
Funds’
interfund
lending
facility
and
line
of
credit.
Classification
of
the
Fund’s
portfolio
holdings
in
the
four
liquidity
categories
is
based
on
the
number
of
days
it
is
reasonably
expected
to
take
to
convert
the
investment
to
cash
(for
Highly
Liquid
and
Moderately
Liquid
holdings)
or
sell
or
dispose
of
the
investment
(for
Less
Liquid
and
Illiquid
investments),
in
current
market
conditions
without
significantly
changing
the
investment’s
market
value.
Each
Fund
primarily
holds
liquid
assets
that
are
defined
under
the
Liquidity
Rule
as
"Highly
Liquid
Investments,"
and
therefore
is
not
required
to
establish
an
HLIM.
Highly
Liquid
Investments
are
defined
as
cash
and
any
investment
reasonably
expected
to
be
convertible
to
cash
in
current
market
conditions
in
three
business
days
or
less
without
the
conversion
to
cash
significantly
changing
the
market
value
of
the
investment.
At
meetings
of
the
Funds’
Board
of
Trustees
held
in
May
2021,
the
Program
Administrator
provided
a
written
report
to
the
Board
addressing
the
adequacy
and
effectiveness
of
the
program
for
the
year
ended
December
31,
2020.
The
Program
Administrator
report
concluded
that
(i.)
the
LRMP,
as
adopted
and
implemented,
remains
reasonably
designed
to
assess
and
manage
each
Fund’s
liquidity
risk;
(ii.)
the
LRMP,
including
the
Highly
Liquid
Investment
Minimum
(“HLIM”)
where
applicable,
was
implemented
and
operated
effectively
to
achieve
the
goal
of
assessing
and
managing
each
Fund’s
liquidity
risk;
and
(iii.)
each
Fund
was
able
to
meet
requests
for
redemption
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
Proxy
Voting
Policies
and
Procedures
The
Trust’s
investment
manager
has
established
Proxy
Voting
Policies
and
Procedures
(Policies)
that
the
Trust
uses
to
determine
how
to
vote
proxies
relating
to
portfolio
securities.
Shareholders
may
view
the
Trust’s
complete
Policies
online
at
franklintempleton.com.
Alternatively,
shareholders
may
request
copies
of
the
Policies
free
of
charge
by
calling
the
Proxy
Group
collect
at
(954)
527-
7678
or
by
sending
a
written
request
to:
Franklin
Templeton
Companies,
LLC,
300
S.E.
2nd
Street,
Fort
Lauderdale,
FL
33301,
Attention:
Proxy
Group.
Copies
of
the
Trust’s
Franklin
Fund
Allocator
Series
Shareholder
Information
46
franklintempleton.com
Annual
Report
proxy
voting
records
are
also
made
available
online
at
franklintempleton.com
and
posted
on
the
U.S.
Securities
and
Exchange
Commission’s
website
at
sec.gov
and
reflect
the
most
recent
12-month
period
ended
June
30.
Quarterly
Statement
of
Investments
The
Trust
files
a
complete
statement
of
investments
with
the
U.S.
Securities
and
Exchange
Commission
for
the
first
and
third
quarters
for
each
fiscal
year
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.
Householding
of
Reports
and
Prospectuses
You
will
receive,
or
receive
notice
of
the
availability
of,
each
Fund’s
financial
reports
every
six
months.
In
addition,
you
will
receive
an
annual
updated
summary
prospectus
(detail
prospectus
available
upon
request).
To
reduce
Fund
expenses,
we
try
to
identify
related
shareholders
in
a
household
and
send
only
one
copy
of
the
financial
reports
(to
the
extent
received
by
mail)
and
summary
prospectus.
This
process,
called
“householding,”
will
continue
indefinitely
unless
you
instruct
us
otherwise.
If
you
prefer
not
to
have
these
documents
householded,
please
call
us
at
(800)
632-2301.
At
any
time
you
may
view
current
prospectuses/
summary
prospectuses
and
financial
reports
on
our
website.
If
you
choose,
you
may
receive
these
documents
through
electronic
delivery.
FAS3
A
07/21
©
2021
Franklin
Templeton
Investments.
All
rights
reserved.
Authorized
for
distribution
only
when
accompanied
or
preceded
by
a
summary
prospectus
and/or
prospectus.
Investors
should
carefully
consider
a
fund’s
investment
goals,
risks,
charges
and
expenses
before
investing.
A
prospectus
contains
this
and
other
information;
please
read
it
carefully
before
investing.
To
help
ensure
we
provide
you
with
quality
service,
all
calls
to
and
from
our
service
areas
are
monitored
and/or
recorded.
Annual
Report
Franklin
Fund
Allocator
Series
Investment
Manager
Distributor
Shareholder
Services
Franklin
Advisers,
Inc.
Franklin
Templeton
Distributors,
Inc.
(800)
321-8563
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 $62,520 for the fiscal year ended May 31, 2021 and $197,302 for the fiscal year ended May 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 4 were $0 for the fiscal year ended May 31, 2021 and $14 for the fiscal year ended May 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 $29,000 for the fiscal year ended May 31, 2021 and $213,444 for the fiscal year ended May 31, 2020. The services for which these fees were paid included the issuance of an Auditor’s Certificate for South Korean regulatory shareholders disclosures, professional fees in connection with determining the feasibility of a U.S. direct lending structure, valuation services related to a fair value engagement, assets under management certification, and benchmarking services in connection with the ICI TA survey.
(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 $29,000 for the fiscal year ended May 31, 2021 and $213,458 for the fiscal year ended May 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. N/A
Item 6. Schedule of Investments. N/A
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-
End Management Investment Companies. N/A
Item 8. Portfolio Managers of Closed-End Management Investment
Companies. N/A
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and
Affiliated Purchasers. N/A
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that would require disclosure herein.
Item 11. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures.
The Registrant maintains disclosure controls and procedures that are designed to 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. N/A
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 Robert G. Kubilis, Chief Financial Officer and Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Robert G. Kubilis, Chief Financial Officer and Chief Accounting Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FRANKLIN FUND ALLOCATOR SERIES
By S\MATTHEW T. HINKLE_________________________
Matthew T. Hinkle
Chief Executive Officer - Finance and Administration
Date July 27, 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 July 27, 2021
By S\Robert G. Kubilis__________________________
Robert G. Kubilis
Chief Financial Officer and Chief Accounting Officer
Date July 27, 2021