N-CSR 1 primary-document.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM N-CSR
 
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
 
Investment Company Act file number: 811-05569
 
Franklin Universal Trust
(Exact name of registrant as specified in charter)
 
One Franklin Parkway, San Mateo, Ca 94403-1906

(Address of principal executive offices) (Zip code)
 
Craig S. Tyle, One Franklin Parkway, San Mateo, Ca 94403-1906

(Name and address of agent for service)
 
Registrant's telephone number, including area code:  (650) 312-2000
 
Date of fiscal year end:  8/31
 
Date of reporting period: 8/31/20
 
 
Item 1. Reports to Stockholders.
 
 
 
Annual
Report
Franklin
Universal
Trust
August
31,
2020
Internet
Delivery
of
Fund
Reports
Unless
You
Request
Paper
Copies
:
Effective
January
1,
2021,
as
permitted
by
the
SEC,
paper
copies
of
the
Fund’s
shareholder
reports
will
no
longer
be
sent
by
mail,
unless
you
specifically
request
them
from
the
Fund
or
your
financial
intermediary.
Instead,
the
reports
will
be
made
available
on
a
website,
and
you
will
be
notified
by
mail
each
time
a
report
is
posted
and
provided
with
a
website
link
to
access
the
report.
If
you
already
elected
to
receive
shareholder
reports
electronically,
you
will
not
be
affected
by
this
change
and
you
need
not
take
any
action.
If
you
have
not
signed
up
for
electronic
delivery,
we
would
encourage
you
to
join
fellow
shareholders
who
have.
You
may
elect
to
receive
shareholder
reports
and
other
communications
electronically
from
the
Fund
by
calling
(800)
416-5585
or
by
contacting
your
financial
intermediary.
You
may
elect
to
continue
to
receive
paper
copies
of
all
your
future
shareholder
reports
free
of
charge
by
contacting
your
financial
intermediary
or,
if
you
invest
directly
with
a
Fund,
calling
(800)
416-5585
to
let
the
Fund
know
of
your
request.
Your
election
to
receive
reports
in
paper
will
apply
to
all
funds
held
in
your
account.
Not
FDIC
Insured
May
Lose
Value
No
Bank
Guarantee
franklintempleton.com
Annual
Report
1
Contents
Annual
Report
Franklin
Universal
Trust
...........................
2
Performance
Summary
...........................
5
Financial
Highlights
and
Statement
of
Investments
....
6
Financial
Statements
.............................
19
Notes
to
Financial
Statements
.....................
23
Report
of
Independent
Registered
Public
Accounting
Firm
............................
34
Tax
Information
..................................
35
Important
Information
to
Shareholders
...............
36
Annual
Meeting
of
Shareholders
....................
39
Dividend
Reinvestment
and
Cash
Purchase
Plan
......
40
Board
Members
and
Officers
.......................
42
Shareholder
Information
..........................
47
Visit
@
franklintempleton.com/investor/
investments-and-solutions/investment-
options/closed-end-funds/
@
for
fund
updates,
to
access
your
account,
or
to
find
helpful
financial
financial
planning
tools.
2
franklintempleton.com
Annual
Report
ANNUAL
REPORT
Franklin
Universal
Trust
Dear
Shareholder:
This
annual
report
for
Franklin
Universal
Trust
covers
the
fiscal
year
ended
August
31,
2020
.
Your
Fund’s
Goal
and
Main
Investments
The
Fund’s
primary
investment
objective
is
to
provide
high,
current
income
consistent
with
preservation
of
capital.
Its
secondary
objective
is
growth
of
income
through
dividend
increases
and
capital
appreciation.
Performance
Overview
For
the
12
months
under
review,
the
Fund’s
cumulative
total
returns
were
-0.67%
based
on
net
asset
value
and
+0.25%
based
on
market
price,
as
shown
in
the
Performance
Summary
on
page
5
.
For
comparison,
the
Credit
Suisse
(CS)
High
Yield
Index,
which
is
designed
to
mirror
the
investable
universe
of
the
U.S.
dollar-denominated
high-yield
debt
market,
posted
a
+3.02%
total
return,
1
and
utilities
stocks,
as
measured
by
the
Standard
&
Poor’s
®
(S&P
®
)
500
Utilities
Index,
which
tracks
all
electric
utility
stocks
in
the
broad
S&P
500
®
Index,
posted
a
-2.03%
total
return
for
the
same
period.
2
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
Economic
and
Market
Overview
The
U.S.
bond
market,
as
measured
by
the
Bloomberg
Barclays
U.S.
Aggregate
Bond
Index,
advanced
during
the
12-month
period.
Before
the
acceleration
of
the
novel
coronavirus
(COVID-19)
outbreak
in
February
2020,
prices
for
most
U.S.
bonds
rose,
and
their
yields
declined,
driven
by
low
inflation,
interest-rate
cuts
and
strong
demand
for
yield.
In
late
February,
the
U.S.
bond
market
began
to
anticipate
the
adverse
economic
impact
of
shutdowns
and
social
distancing
measures.
Higher-quality,
longer-term
bonds
rallied,
while
riskier,
lower-rated
corporate
bonds
declined
sharply,
reflecting
a
reversal
in
many
investors’
appetite
for
risk.
Aggressive
U.S.
Federal
Reserve
(Fed)
action
along
with
phased
business
re-openings
led
to
a
recovery
in
the
corporate
bond
market
beginning
at
the
end
of
March.
However,
yields
on
most
bonds
rose
in
August,
fueled
by
a
change
in
long-standing
inflation
policy
at
the
Fed.
After
reducing
the
federal
funds
target
rate
in
late
2019
to
a
range
of
1.50%–1.75%,
the
Fed
enacted
two
emergency
rate
cuts
in
response
to
the
COVID-19
pandemic
in
March
2020,
further
lowering
the
federal
funds
target
rate
to
a
range
of
0.00%–0.25%.
In
addition,
the
Fed
announced
unlimited,
open-ended
purchasing
of
government-backed
and
corporate
bonds
to
help
keep
markets
functioning.
In
August
2020,
the
Fed
announced
that
future
interest
rates
would
remain
low,
even
if
inflation
persistently
exceeded
the
Fed’s
2%
target.
The
announcement
was
a
major
change
in
inflation
policy
that
affirmed
the
Fed’s
commitment
to
providing
economic
stimulus
until
the
economy
establishes
a
strong
growth
trend.
U.S.
Treasury
bonds,
as
measured
by
the
Bloomberg
Barclays
U.S.
Treasury
Index,
rose
during
the
reporting
period.
Bond
purchasing
by
the
Fed
and
robust
demand
for
investments
perceived
as
safe
drove
the
U.S.
Treasury
market
higher
despite
the
widening
U.S.
federal
budget
deficit
and
a
massive
increase
in
issuance.
U.S.
corporate
bond
performance
varied
based
on
credit
rating,
as
investors
became
concerned
about
the
potential
credit
downgrades
of
many
companies.
Investment-grade
corporate
bonds,
as
represented
by
the
Bloomberg
Barclays
U.S.
Corporate
Bond
Index,
posted
higher
returns
than
high-
yield
corporate
bonds,
as
represented
by
the
Bloomberg
Barclays
U.S.
Corporate
High
Yield
Bond
Index.
Investment
Strategy
We
invest
primarily
in
two
asset
classes:
high-yield
bonds
and
utility
stocks.
Within
the
high-yield
portion
of
the
portfolio,
we
use
fundamental
research
to
invest
in
a
diversified
portfolio
of
bonds.
Within
the
utility
portion
of
the
portfolio,
we
focus
on
companies
with
attractive
dividend
yields
and
with
a
history
of
increasing
their
dividends.
1.
Source:
Credit
Suisse
Group.
2.
Source:
Morningstar.
The
indexes
are
unmanaged
and
include
reinvestment
of
any
income
or
distributions.
They
do
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
The
dollar
value,
number
of
shares
or
principal
amount,
and
names
of
all
portfolio
holdings
are
listed
in
the
Fund’s
Statement
of
Investments
(SOI).
The
SOI
begins
on
page
7
.
Franklin
Universal
Trust
3
franklintempleton.com
Annual
Report
Manager’s
Discussion
Against
the
backdrop
of
the
COVID-19
pandemic,
the
Fund
posted
cumulative
total
returns
of
+0.25%
in
market
price
terms
and
-0.67%
in
net
asset
value
terms
for
12-month
period
under
review.
The
Fund
achieved
these
mixed
results
amid
the
pandemic,
which
materially
impacted
returns
for
the
months
of
February
and
March
2020,
with
high-yield
(HY)
corporate
bonds,
as
measured
by
the
CS
High
Yield
Index,
posting
-1.92%
and
-12.28%
total
returns,
1
respectively,
and
utility
stocks,
as
measured
by
the
S&P
500
Utilities
Index,
posting
-9.88%
and
-10.01%
total
returns,
respectively.
2
*
Percentage
of
total
investments
of
the
Fund.
Total
investments
of
the
Fund
include
long-term
and
short-term
investments
and
other
net
assets,
excluding
long-term
debt
issued
by
the
Fund.
Prior
to
February
2020,
both
asset
classes
benefited
from
persistent
strength
in
corporate
and
economic
fundamentals
as
U.S.
economic
growth
was
supported
by
an
accommodative
central
bank
policy
and
an
announced
phase
one
trade
deal
between
the
US
and
China.
Favorable
returns
gave
way
to
a
notable
increase
in
volatility
in
February
as
COVID-19
began
to
spread
rapidly
across
the
globe.
As
many
governments
took
aggressive
actions
to
try
to
contain
the
virus
and
its
economic
impact,
the
short-term
outlook
for
the
global
economy
deteriorated
significantly.
Ultimately,
markets
spent
most
of
February
and
all
of
March
trying
to
price
in
an
event
for
which
there
is
no
readily
known
precedent.
After
a
historic
decline
from
late
February
through
late
March,
financial
markets
began
to
recover
in
April
amid
unprecedented
fiscal
and
monetary
measures
by
central
banks
and
governments.
Governments
around
the
world
acted
with
seldom-seen
speed
to
provide
trillions
of
U.S.
dollars
in
overall
fiscal
spending
to
buffer
the
impact
of
mandated
shutdowns
of
economic
activity.
The
Fed
provided
significant
support
through
lowering
rates
to
the
zero
lower
bound
in
March.
Declining
U.S.
Treasury
yields
generally
across
the
curve,
along
with
lower
government
bond
yields
globally,
helped
to
support
demand
for
both
HY
corporate
bonds
and
dividend-paying
stocks.
Furthermore,
direct
and
indirect
purchases
of
investment-grade
and
HY
corporate
securities
lowered
the
cost
of
capital
for
companies
and
provided
additional
liquidity
to
financial
market
participants.
These
combined
actions
helped
improve
investor
sentiment.
Although
the
economic
fallout
from
the
COVID-19
pandemic
still
presents
major
unknowns,
the
recovery
in
financial
markets
persisted
throughout
the
remainder
of
the
Fund’s
fiscal
year.
High-Yield
Corporate
Bonds
For
the
12-month
period
under
review,
the
CS
High
Yield
Index
posted
a
+3.02%
total
return.
1
As
noted
previously,
HY
bonds
performed
relatively
well
for
most
of
the
period,
with
the
exception
of
the
pandemic-impacted
months
of
February
and
March
2020.
The
index
posted
a
+2.97%
total
return
from
September
2019
through
January
2020
before
giving
back
much
of
the
gain
in
February
with
a
-1.92%
total
return.
1
The
index’s
+16.28%
total
return
from
April
to
August
more
than
offset
the
negative
total
return
of
-12.28%
during
the
month
of
March,
the
height
of
pandemic
volatility.
1
We
continued
to
observe
a
bifurcation
in
terms
of
quality
as
higher-rated
segments
of
the
HY
corporate
bond
market
generally
outperformed
during
the
Fund’s
fiscal
year.
From
a
sector/industry
standpoint,
issuers
in
the
food
and
drug
industry,
manufacturing
industry
and
health
care
sector
were
notable
outperformers.
Meanwhile,
the
energy
sector
was
the
most
notable
detractor,
as
oil
prices
generally
weighed
on
investor
sentiment
for
this
segment
of
the
market
as
government-mandated
shutdowns
led
to
significant
declines
in
demand
for
transportation
and
fuel,
which
negatively
impacted
the
energy
sector.
From
April
2020
through
period-end,
the
technical
environment
remained
generally
supportive
overall
amid
the
Fed’s
unprecedented,
albeit
limited,
involvement
in
the
HY
market.
Demand
has
been
buoyed
by
investors’
continuing
reach
for
yield,
which
has
helped
to
maintain
sizable
year-to-
Portfolio
Composition
8/31/20
%
of
Total
Investment
s
*
Corporate
Bonds
61.6%
Common
Stocks
30.2%
Asset-Backed
Securities
3.3%
Marketplace
Loans
1.5%
Preferred
Stocks
0.5%
Short-Term
Investments
&
Other
Net
Assets
2.9%
Top
10
Holdings
8/31/20
Issuer
%
of
Total
Net
Assets
a
a
NextEra
Energy
Inc
4.1%
CMS
Energy
Corp
2.7%
Sempra
Energy
2.7%
Dominion
Energy
Inc
2.6%
American
Electric
Power
Co
Inc
2.5%
Evergy
Inc
2.1%
Alliant
Energy
Corp
2.1%
Xcel
Energy
Inc
2.0%
CCO
Holdings
LLC
/
CCO
Holdings
Capital
Corp
1.8%
Duke
Energy
Corp
1.8%
Franklin
Universal
Trust
4
franklintempleton.com
Annual
Report
date
2020
inflows
into
the
HY
market.
In
general,
we
remain
defensively
positioned
with
a
slight
bias
toward
relatively
higher-quality
HY
bond
issuers
given
challenged
economic
fundamentals.
However,
we
continue
to
find
pockets
of
value
in
both
select
new
issues
and
in
the
secondary
market.
With
central
bank
policies
driving
money
into
the
HY
asset
class,
we
continue
to
believe
rigorous
fundamental
analysis
and
astute
credit
selection
will
add
value
going
forward.
Utility
Stocks
In
terms
of
utilities,
the
sector
significantly
underperformed
the
S&P
500
over
the
12-month
period,
posting
a
-2.03%
total
return
compared
to
+21.94%
for
the
broader
index.
2
The
underperformance
primarily
occurred
over
the
final
four
months
of
the
period
as
many
investors
sought
to
position
themselves
in
sectors
within
the
economy
most
poised
to
gain
from
a
sharp
economic
rebound
post-pandemic.
Fundamentally,
we
believe
utilities
continue
to
be
well-
positioned
in
2020
and
beyond
for
mid-single
digit
percentage
growth
in
earnings
and
dividends.
Driven
by
societal
demands
of
cleaner
and
more
reliable
energy,
levels
of
investment
capital
remain
significantly
higher
than
they
have
been
in
the
recent
past.
Companies
such
as
NextEra
Energy,
Xcel
Energy
and
WEC
Energy
Group
are
among
those
companies
spending
record
levels
of
capital,
and
their
consistent
performance
has
transpired
into
strong
relative
performance
over
the
past
year
compared
to
other
holdings
in
our
portfolio.
Many
investors
are
asking
companies
to
take
greater
responsibility
relating
to
ESG
(environmental,
social
and
governance)
themes,
and
those
utilities
that
have
been
early
adapters
in
the
transition
toward
a
lower
carbon
footprint
have
been
rewarded
with
above-average
equity
performance
over
the
past
year.
Two
examples
of
early
ESG
adapters
include
NextEra
Energy,
the
world’s
largest
developer
of
renewable
energy,
and
Xcel
Energy,
which
has
transitioned
its
power
generation
fleet
toward
wind
and
away
from
coal.
On
the
opposite
side
of
the
utilities
spectrum,
those
utilities
that
had
subsidiary
pieces
of
their
business
invested
in
natural
gas
infrastructure
were
significant
negative
contributors
to
performance
as
energy
prices
continued
to
disappoint
in
2020.
CenterPoint
Energy
and
DTE
Energy
were
two
holdings
that
suffered
along
with
the
decline
in
oil
and
gas
prices.
Evergy
suffered
a
share
price
setback
late
in
the
12-month
period
despite
announcing
a
solid
corporate
strategy,
as
many
investors
expected
company
management
to
announce
the
sale
of
the
business
to
a
competitor.
We
remain
positive
on
Evergy’s
prospects,
as
well
as
the
entire
utilities
sector’s
prospects
from
a
fundamental
perspective.
We
believe
the
sector’s
defensive
characteristics
will
become
more
appreciated
as
economic
circumstances
continue
to
develop
over
these
uncertain
times.
Thank
you
for
your
continued
participation
in
Franklin
Universal
Trust.
We
look
forward
to
serving
your
future
investment
needs.
Sincerely,
Glenn
I.
Voyles,
CFA
Jonathan
G.
Belk,
CFA
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
August
31,
2020,
the
end
of
the
reporting
period.
The
way
we
implement
our
main
investment
strategies
and
the
resulting
portfolio
holdings
may
change
depending
on
factors
such
as
market
and
economic
conditions.
These
opinions
may
not
be
relied
upon
as
investment
advice
or
an
offer
for
a
particular
security.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
the
Fund.
Statements
of
fact
are
from
sources
considered
reliable,
but
the
investment
manager
makes
no
representation
or
warranty
as
to
their
completeness
or
accuracy.
Although
historical
performance
is
no
guarantee
of
future
results,
these
insights
may
help
you
understand
our
investment
management
philosophy.
CFA
®
is
a
trademark
owned
by
CFA
Institute.
Performance
Summary
as
of
August
31,
2020
Franklin
Universal
Trust
5
franklintempleton.com
Annual
Report
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Total
returns
do
not
reflect
any
sales
charges
paid
at
inception
or
brokerage
commissions
paid
on
secondary
market
purchases.
The
performance
table
does
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
8/31/20
1
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
Shares
Prices
1
All
investments
involve
risks,
including
possible
loss
of
principal.
Bond
prices
generally
move
in
the
opposite
direction
of
interest
rates.
As
prices
of
bonds
in
a
fund
adjust
to
a
rise
in
interest
rates,
the
fund’s
share
price
may
decline.
Investments
in
lower-rated
bonds
include
higher
risk
of
default
and
loss
of
principal.
Stock
prices
fluctuate,
sometimes
rapidly
and
dramatically,
due
to
factors
affecting
individual
companies,
particular
industries
or
sectors,
or
general
market
conditions.
In
addition
to
having
sensitivity
to
other
factors,
securities
issued
by
utility
companies
have
historically
been
sensitive
to
interest
rate
changes.
When
interest
rates
fall,
utility
securities
prices,
and
thus
a
utilities
fund’s
share
price,
tend
to
rise;
when
interest
rates
rise,
their
prices
generally
fall.
For
stocks
paying
dividends,
dividends
are
not
guaranteed,
and
can
increase,
decrease
or
be
totally
eliminated
without
notice.
Unexpected
events
and
their
aftermaths,
such
as
the
spread
of
deadly
diseases;
natural,
environmental
or
man-made
disasters;
financial,
political
or
social
disruptions;
terrorism
and
war;
and
other
tragedies
or
catastrophes,
can
cause
investor
fear
and
panic,
which
can
adversely
affect
the
economies
of
many
companies,
sectors,
nations,
regions
and
the
market
in
gen-
eral,
in
ways
that
cannot
necessarily
be
foreseen. The
Fund
is
actively
managed
but
there
is
no
guarantee
that
the
manager’s
investment
decisions
will
produce
the
desire
results.
1.
The
Fund
has
a
fee
waiver
associated
with
any
investment
it
makes
in
a
Franklin
Templeton
money
fund
and/or
other
Franklin
Templeton
fund,
contractually
guaranteed
through
10/31/21.
Fund
investment
results
reflect
the
fee
waiver;
without
this
waiver,
the
results
would
have
been
lower.
2.
Total
return
calculations
represent
the
cumulative
and
average
annual
changes
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
3.
Assumes
reinvestment
of
distributions
based
on
net
asset
value.
4.
Assumes
reinvestment
of
distributions
based
on
the
dividend
reinvestment
and
cash
purchase
plan.
Cumulative
Total
Return
2
Average
Annual
Total
Return
2
Based
on
NAV
3
Based
on
market
price
4
Based
on
NAV
3
Based
on
market
price
4
1-Year
-0.67%
+0.25%
-0.67%
+0.25%
5-Year
+47.48%
+53.84%
+8.08%
+9.00%
10-Year
+116.61%
+110.14%
+8.04%
+7.71%
Symbol:
FT
8/31/20
8/31/19
Change
Net
Asset
Value
(NAV)
$8.12
$8.57
-$0.45
Market
Price
(NYSE)
$7.00
$7.37
-$0.37
Distributions
(9/1/19–8/31/20)
Net
Investment
Income
Short-Term
Capital
Gain
Total
$0.3840
$0.0013
$0.3853
Franklin
Universal
Trust
Financial
Highlights
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
6
a
Year
Ended
August
31,
2020
2019
2018
2017
2016
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$8.57
$7.99
$8.24
$7.67
$7.11
Income
from
investment
operations:
Net
investment
income
a
.........................
0.41
0.38
0.39
0.38
0.39
Net
realized
and
unrealized
gains
(losses)
...........
(0.48)
0.58
(0.26)
0.57
0.64
Total
from
investment
operations
....................
(0.07)
0.96
0.13
0.95
1.03
Less
distributions
from:
Net
investment
income
..........................
(0.38)
(0.38)
(0.38)
(0.38)
(0.47)
Net
realized
gains
.............................
(—)
b
—
—
—
—
Total
distributions
...............................
(0.38)
(0.38)
(0.38)
(0.38)
(0.47)
Net
asset
value,
end
of
year
.......................
$8.12
$8.57
$7.99
$8.24
$7.67
Market
value,
end
of
year
c
.........................
$7.00
$7.37
$6.77
$7.24
$6.84
Total
return
(based
on
market
value
per
share)
.........
0.25%
15.02%
(1.18)%
11.81%
20.76%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
2.49%
2.45%
1.98%
2.00%
2.13%
Expenses
net
of
waiver
and
payments
by
affiliates
d
......
2.49%
e
2.44%
1.98%
e
1.99%
2.12%
Net
investment
income
...........................
5.01%
4.69%
4.91%
4.81%
5.48%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$204,094
$215,292
$200,796
$206,965
$192,682
Portfolio
turnover
rate
............................
35.26
%
21.70%
22.96%
23.25%
21.13%
Total
debt
outstanding
at
end
of
year
(000's)
...........
$65,000
$65,000
$65,000
$60,000
$60,000
Asset
coverage
per
$1,000
of
debt
..................
$4,140
$4,312
$4,089
$4,449
$4,211
Average
amount
of
senior
rate
fixed
Notes
per
share
during
the
year
......................................
$2.59
$2.59
$2.39
$2.39
$2.39
a
Based
on
average
daily
shares
outstanding.
b
Amount
rounds
to
less
than
$0.01
per
share.
c
Based
on
the
last
sale
on
the
New
York
Stock
Exchange.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
e
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Universal
Trust
Statement
of
Investments,
August
31,
2020
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
7
a
a
Country
Shares
a
Value
a
Common
Stocks
39.9%
Electric
Utilities
22.0%
Alliant
Energy
Corp.
...................................
United
States
80,000
$
4,332,000
American
Electric
Power
Co.,
Inc.
.........................
United
States
65,000
5,123,950
Duke
Energy
Corp.
....................................
United
States
46,060
3,700,460
Edison
International
...................................
United
States
36,000
1,889,280
Entergy
Corp.
........................................
United
States
30,000
2,974,200
Evergy
,
Inc.
..........................................
United
States
80,000
4,257,600
Exelon
Corp.
.........................................
United
States
80,000
2,952,800
FirstEnergy
Corp.
.....................................
United
States
40,000
1,143,600
NextEra
Energy,
Inc.
...................................
United
States
30,000
8,375,100
Pinnacle
West
Capital
Corp.
.............................
United
States
30,000
2,200,500
PPL
Corp.
...........................................
United
States
24,500
676,935
Southern
Co.
(The)
....................................
United
States
60,000
3,130,800
Xcel
Energy,
Inc.
......................................
United
States
60,000
4,168,500
44,925,725
Energy
Equipment
&
Services
0.0%
†
a
Weatherford
International
plc
.............................
United
States
16,874
51,128
a
Machinery
0.1%
a,b
Birch
Permian
Holdings,
Inc.
.............................
United
States
3,694
18,470
a,b
Birch
Permian
Holdings,
Inc.
.............................
United
States
28,796
140,381
158,851
Metals
&
Mining
1.2%
BHP
Group
plc,
ADR
...................................
Australia
25,185
1,136,599
Freeport-McMoRan,
Inc.
................................
United
States
80,380
1,254,732
South32
Ltd.,
ADR
....................................
Australia
10,074
76,462
2,467,793
Multi-Utilities
15.8%
CenterPoint
Energy,
Inc.
................................
United
States
122,800
2,464,596
CMS
Energy
Corp.
....................................
United
States
90,000
5,444,100
Consolidated
Edison,
Inc.
...............................
United
States
40,000
2,853,600
Dominion
Energy,
Inc.
..................................
United
States
67,200
5,271,168
DTE
Energy
Co.
......................................
United
States
30,000
3,560,100
NiSource,
Inc.
........................................
United
States
60,000
1,329,600
Public
Service
Enterprise
Group,
Inc.
......................
United
States
45,000
2,350,800
Sempra
Energy
.......................................
United
States
45,000
5,564,250
WEC
Energy
Group,
Inc.
................................
United
States
35,000
3,292,800
32,131,014
Oil,
Gas
&
Consumable
Fuels
0.7%
c
Amplify
Energy
Corp.
..................................
United
States
245
299
a,d
Chaparral
Energy,
Inc.,
A,
144A
...........................
United
States
214
7
Enbridge,
Inc.
........................................
Canada
39,360
1,260,307
a
Goodrich
Petroleum
Corp.
...............................
United
States
19,379
159,877
Riviera
Resources,
Inc.
.................................
United
States
5,042
8,899
1,429,389
Paper
&
Forest
Products
0.0%
†
Verso
Corp.,
A
........................................
United
States
3,330
43,656
Specialty
Retail
0.1%
a
Party
City
Holdings,
Inc.
................................
United
States
37,652
103,166
a
Total
Common
Stocks
(Cost
$37,814,415)
......................................
81,310,722
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
8
a
a
Country
Shares
a
Value
a
Preferred
Stocks
0.6%
Electric
Utilities
0.6%
SCE
Trust
II,
5.1%
....................................
United
States
50,000
$
1,234,000
Total
Preferred
Stocks
(Cost
$1,087,500)
.......................................
1,234,000
Warrants
a
a
a
a
a
Warrants
0.0%
†
Oil,
Gas
&
Consumable
Fuels
0.0%
†
a,b
Battalion
Oil
Corp.,
A,
10/08/22
...........................
United
States
583
43
a,b
Battalion
Oil
Corp.,
B,
10/08/22
...........................
United
States
728
30
a,b
Battalion
Oil
Corp.,
C,
10/08/22
...........................
United
States
937
17
90
Paper
&
Forest
Products
0.0%
†
a
Verso
Corp.,
7/25/23
...................................
United
States
350
299
Total
Warrants
(Cost
$—)
.....................................................
389
Principal
Amount
*
Convertible
Bonds
0.0%
†
Wireless
Telecommunication
Services
0.0%
†
d,e,f
Digicel
Group
0.5
Ltd.
,
Sub.
Bond
,
144A
,
PIK,
7
%
,
Perpetual
.....
Bermuda
23,161
2,696
Total
Convertible
Bonds
(Cost
$4,044)
.........................................
2,696
Corporate
Bonds
81.2%
Aerospace
&
Defense
0.6%
d
BWX
Technologies,
Inc.
,
Senior
Note
,
144A
,
5.375
%
,
7/15/26
....
United
States
600,000
630,636
d
Signature
Aviation
US
Holdings,
Inc.
,
Senior
Note
,
144A
,
5.375
%
,
5/01/26
...........................................
United
States
500,000
516,452
1,147,088
Airlines
0.3%
d
Mileage
Plus
Holdings
LLC
/
Mileage
Plus
Intellectual
Property
Assets
Ltd.
,
Senior
Secured
Note
,
144A
,
6.5
%
,
6/20/27
.......
United
States
500,000
522,500
Auto
Components
2.6%
d
Adient
US
LLC
,
Senior
Secured
Note
,
144A
,
7
%
,
5/15/26
.......
United
States
1,900,000
2,044,143
d
Allison
Transmission,
Inc.
,
Senior
Note
,
144A
,
4.75
%
,
10/01/27
...
United
States
600,000
629,136
Dana,
Inc.
,
Senior
Note
,
5.625
%
,
6/15/28
...................
United
States
1,400,000
1,479,289
Goodyear
Tire
&
Rubber
Co.
(The)
,
Senior
Note
,
9.5
%
,
5/31/25
...
United
States
1,000,000
1,124,595
5,277,163
Banks
1.0%
f
JPMorgan
Chase
&
Co.
,
R,
Junior
Sub.
Bond,
6%
to
8/01/23,
FRN
thereafter,
Perpetual
.
United
States
900,000
949,735
g
V,
Junior
Sub.
Bond,
FRN,
3.616%,
(3-month
USD
LIBOR
+
3.32%),
Perpetual
...................................
United
States
1,100,000
1,045,784
1,995,519
Biotechnology
0.4%
d
Emergent
BioSolutions
,
Inc.
,
Senior
Note
,
144A
,
3.875
%
,
8/15/28
.
United
States
900,000
915,930
Building
Products
1.4%
d
Cornerstone
Building
Brands,
Inc.
,
Senior
Note
,
144A
,
8
%
,
4/15/26
United
States
900,000
952,285
d
JELD-WEN,
Inc.
,
Senior
Bond,
144A,
4.875%,
12/15/27
....................
United
States
300,000
313,068
Senior
Note,
144A,
4.625%,
12/15/25
....................
United
States
300,000
302,594
Senior
Secured
Note,
144A,
6.25%,
5/15/25
...............
United
States
200,000
215,720
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
9
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
a
Corporate
Bonds
(continued)
Building
Products
(continued)
d
Standard
Industries,
Inc.
,
Senior
Note
,
144A
,
5
%
,
2/15/27
.......
United
States
300,000
$
314,128
d
Summit
Materials
LLC
/
Summit
Materials
Finance
Corp.
,
Senior
Note
,
144A
,
5.25
%
,
1/15/29
............................
United
States
800,000
841,064
2,938,859
Chemicals
2.7%
d,e
Anagram
International,
Inc.
/
Anagram
Holdings
LLC
,
Secured
Note
,
144A
,
PIK,
10
%
,
8/15/26
..............................
United
States
200,005
169,060
d
Element
Solutions,
Inc.
,
Senior
Note,
144A,
5.875%,
12/01/25
....................
United
States
600,000
624,750
Senior
Note,
144A,
3.875%,
9/01/28
.....................
United
States
700,000
716,240
d
Illuminate
Buyer
LLC
/
Illuminate
Holdings
IV,
Inc.
,
Senior
Note
,
144A
,
9
%
,
7/01/28
...................................
United
States
1,000,000
1,078,750
d
Neon
Holdings,
Inc.
,
Senior
Secured
Note
,
144A
,
10.125
%
,
4/01/26
United
States
1,500,000
1,597,500
d
Olin
Corp.
,
Senior
Note
,
144A
,
9.5
%
,
6/01/25
................
United
States
200,000
231,781
d
Rain
CII
Carbon
LLC
/
CII
Carbon
Corp.
,
Secured
Note
,
144A
,
7.25
%
,
4/01/25
.....................................
United
States
600,000
594,369
d
TPC
Group,
Inc.
,
Senior
Secured
Note
,
144A
,
10.5
%
,
8/01/24
....
United
States
600,000
508,938
5,521,388
Commercial
Services
&
Supplies
1.1%
d
Harsco
Corp.
,
Senior
Note
,
144A
,
5.75
%
,
7/31/27
.............
United
States
1,500,000
1,571,205
d
Prime
Security
Services
Borrower
LLC
/
Prime
Finance,
Inc.
,
Senior
Secured
Note
,
144A
,
3.375
%
,
8/31/27
....................
United
States
600,000
599,346
2,170,551
Communications
Equipment
0.8%
d
CommScope
Technologies
LLC
,
Senior
Note
,
144A
,
6
%
,
6/15/25
..
United
States
1,586,000
1,628,124
Construction
&
Engineering
0.5%
d
New
Enterprise
Stone
&
Lime
Co.,
Inc.
,
Senior
Secured
Note
,
144A
,
6.25
%
,
3/15/26
.....................................
United
States
900,000
940,671
Consumer
Finance
2.6%
d
FirstCash
,
Inc.
,
Senior
Note,
144A,
5.375%,
6/01/24
.....................
United
States
1,100,000
1,130,184
Senior
Note,
144A,
4.625%,
9/01/28
.....................
United
States
700,000
720,695
Navient
Corp.
,
Senior
Note,
6.625%,
7/26/21
..........................
United
States
400,000
411,000
Senior
Note,
6.5%,
6/15/22
............................
United
States
500,000
522,500
Senior
Note,
7.25%,
9/25/23
...........................
United
States
600,000
635,445
OneMain
Finance
Corp.
,
Senior
Bond,
5.375%,
11/15/29
.........................
United
States
1,000,000
1,067,500
Senior
Note,
6.625%,
1/15/28
..........................
United
States
700,000
800,240
5,287,564
Containers
&
Packaging
5.1%
d
Ardagh
Packaging
Finance
plc
/
Ardagh
Holdings
USA,
Inc.
,
Senior
Note,
144A,
5.25%,
8/15/27
......................
United
States
600,000
624,828
Senior
Secured
Note,
144A,
5.25%,
4/30/25
...............
United
States
800,000
850,000
Crown
Americas
LLC
/
Crown
Americas
Capital
Corp.
VI
,
Senior
Note
,
4.75
%
,
2/01/26
.................................
United
States
700,000
732,207
d
Mauser
Packaging
Solutions
Holding
Co.
,
Senior
Note,
144A,
7.25%,
4/15/25
......................
United
States
1,800,000
1,752,228
Senior
Secured
Note,
144A,
8.5%,
4/15/24
................
United
States
500,000
525,000
d
Owens-Brockway
Glass
Container,
Inc.
,
Senior
Note,
144A,
5.875%,
8/15/23
.....................
United
States
500,000
533,177
Senior
Note,
144A,
6.625%,
5/13/27
.....................
United
States
500,000
550,938
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
10
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
a
Corporate
Bonds
(continued)
Containers
&
Packaging
(continued)
d
Plastipak
Holdings,
Inc.
,
Senior
Note
,
144A
,
6.25
%
,
10/15/25
....
United
States
1,700,000
$
1,726,477
d
Reynolds
Group
Issuer,
Inc.
/
Reynolds
Group
Issuer
LLC
/
Reynolds
Group
Issuer
Luxembourg
SA
,
Senior
Note,
144A,
7%,
7/15/24
........................
United
States
164,000
168,407
Senior
Secured
Note,
144A,
5.125%,
7/15/23
..............
United
States
1,000,000
1,015,950
d
Sealed
Air
Corp.
,
Senior
Bond,
144A,
5.5%,
9/15/25
.......................
United
States
200,000
224,729
Senior
Note,
144A,
4%,
12/01/27
.......................
United
States
600,000
642,000
d
Trivium
Packaging
Finance
BV
,
Senior
Note
,
144A
,
8.5
%
,
8/15/27
.
Netherlands
1,000,000
1,101,775
10,447,716
Diversified
Financial
Services
0.6%
d
MPH
Acquisition
Holdings
LLC
,
Senior
Note
,
144A
,
7.125
%
,
6/01/24
United
States
1,300,000
1,321,515
Diversified
Telecommunication
Services
4.8%
d
Altice
France
Holding
SA
,
Senior
Secured
Note
,
144A
,
10.5
%
,
5/15/27
...........................................
Luxembourg
2,000,000
2,296,250
d
CCO
Holdings
LLC
/
CCO
Holdings
Capital
Corp.
,
Senior
Bond,
144A,
5.75%,
2/15/26
......................
United
States
700,000
734,517
Senior
Bond,
144A,
5.375%,
6/01/29
.....................
United
States
800,000
880,088
Senior
Bond,
144A,
4.5%,
8/15/30
.......................
United
States
1,700,000
1,806,259
Senior
Bond,
144A,
4.25%,
2/01/31
......................
United
States
200,000
209,221
d
DKT
Finance
ApS
,
Senior
Secured
Note
,
144A
,
9.375
%
,
6/17/23
..
Denmark
1,500,000
1,516,875
d
Virgin
Media
Secured
Finance
plc
,
Senior
Secured
Bond,
144A,
5.5%,
8/15/26
................
United
Kingdom
200,000
211,250
Senior
Secured
Bond,
144A,
4.5%,
8/15/30
................
United
Kingdom
1,100,000
1,159,125
d
Zayo
Group
Holdings,
Inc.
,
Senior
Note,
144A,
6.125%,
3/01/28
.....................
United
States
500,000
517,110
Senior
Secured
Note,
144A,
4%,
3/01/27
..................
United
States
500,000
495,027
9,825,722
Electric
Utilities
0.8%
d
Vistra
Operations
Co.
LLC
,
Senior
Note
,
144A
,
5.625
%
,
2/15/27
..
United
States
1,500,000
1,588,440
Electronic
Equipment,
Instruments
&
Components
0.7%
CDW
LLC
/
CDW
Finance
Corp.
,
Senior
Note,
4.125%,
5/01/25
..........................
United
States
600,000
626,784
Senior
Note,
5%,
9/01/25
.............................
United
States
700,000
727,129
1,353,913
Energy
Equipment
&
Services
1.2%
d
Archrock
Partners
LP
/
Archrock
Partners
Finance
Corp.
,
Senior
Note
,
144A
,
6.25
%
,
4/01/28
............................
United
States
300,000
302,190
d
CSI
Compressco
LP
/
CSI
Compressco
Finance,
Inc.
,
e
Secured
Note,
144A,
PIK,
10%,
4/01/26
..................
United
States
939,000
682,771
Senior
Secured
Note,
144A,
7.5%,
4/01/25
................
United
States
402,000
359,245
d
Nabors
Industries
Ltd.
,
Senior
Note,
144A,
7.25%,
1/15/26
......................
United
States
600,000
276,000
Senior
Note,
144A,
7.5%,
1/15/28
.......................
United
States
400,000
177,250
Nabors
Industries,
Inc.
,
Senior
Note
,
5.75
%
,
2/01/25
...........
United
States
500,000
145,572
d
Weatherford
International
Ltd.
,
Senior
Note
,
144A
,
11
%
,
12/01/24
.
United
States
917,000
616,683
2,559,711
Entertainment
1.1%
d
Banijay
Entertainment
SASU
,
Senior
Secured
Note
,
144A
,
5.375
%
,
3/01/25
...........................................
France
1,000,000
1,014,375
Netflix,
Inc.
,
Senior
Bond,
5.875%,
2/15/25
..........................
United
States
800,000
926,084
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
11
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
a
Corporate
Bonds
(continued)
Entertainment
(continued)
Netflix,
Inc.,
(continued)
d
Senior
Note,
144A,
3.625%,
6/15/25
.....................
United
States
300,000
$
317,220
2,257,679
Equity
Real
Estate
Investment
Trusts
(REITs)
1.2%
d
HAT
Holdings
I
LLC
/
HAT
Holdings
II
LLC
,
Senior
Note,
144A,
5.25%,
7/15/24
......................
United
States
800,000
839,344
Senior
Note,
144A,
6%,
4/15/25
........................
United
States
600,000
644,250
MPT
Operating
Partnership
LP
/
MPT
Finance
Corp.
,
Senior
Bond
,
5.25
%
,
8/01/26
.....................................
United
States
300,000
315,871
d
VICI
Properties
LP
/
VICI
Note
Co.,
Inc.
,
Senior
Note
,
144A
,
3.75
%
,
2/15/27
...........................................
United
States
700,000
699,454
2,498,919
Food
Products
2.1%
B&G
Foods,
Inc.
,
Senior
Note
,
5.25
%
,
4/01/25
...............
United
States
1,700,000
1,760,707
d
Kraft
Heinz
Foods
Co.
,
Senior
Bond
,
144A
,
4.25
%
,
3/01/31
......
United
States
800,000
885,393
d
Post
Holdings,
Inc.
,
Senior
Bond,
144A,
5%,
8/15/26
........................
United
States
700,000
727,674
Senior
Bond,
144A,
5.625%,
1/15/28
.....................
United
States
300,000
321,278
Senior
Bond,
144A,
4.625%,
4/15/30
.....................
United
States
500,000
522,500
4,217,552
Health
Care
Equipment
&
Supplies
0.1%
d
Ortho-Clinical
Diagnostics,
Inc.
/
Ortho-Clinical
Diagnostics
SA
,
Senior
Note
,
144A
,
7.375
%
,
6/01/25
......................
United
States
300,000
312,563
Health
Care
Providers
&
Services
3.6%
d
Centene
Corp.
,
Senior
Note,
144A,
5.25%,
4/01/25
......................
United
States
600,000
623,250
Senior
Note,
144A,
5.375%,
8/15/26
.....................
United
States
500,000
531,408
CHS/Community
Health
Systems,
Inc.
,
d
Secured
Note,
144A,
8.125%,
6/30/24
....................
United
States
718,000
501,246
Senior
Note,
6.875%,
2/01/22
..........................
United
States
175,000
152,797
Senior
Secured
Note,
6.25%,
3/31/23
....................
United
States
600,000
602,250
d
Senior
Secured
Note,
144A,
6.625%,
2/15/25
..............
United
States
500,000
511,200
HCA,
Inc.
,
Senior
Bond,
5.875%,
2/15/26
..........................
United
States
1,400,000
1,604,750
Senior
Bond,
3.5%,
9/01/30
............................
United
States
1,200,000
1,260,000
d
MEDNAX,
Inc.
,
Senior
Note
,
144A
,
6.25
%
,
1/15/27
............
United
States
400,000
424,508
Tenet
Healthcare
Corp.
,
Senior
Note
,
8.125
%
,
4/01/22
.........
United
States
1,000,000
1,080,750
7,292,159
Hotels,
Restaurants
&
Leisure
5.7%
b,d,h
24
Hour
Fitness
Worldwide,
Inc.
,
Senior
Note
,
144A
,
8
%
,
6/01/22
.
United
States
1,800,000
5,625
d
Boyd
Gaming
Corp.
,
Senior
Note
,
144A
,
8.625
%
,
6/01/25
.......
United
States
1,300,000
1,434,875
d
Boyne
USA,
Inc.
,
Secured
Note
,
144A
,
7.25
%
,
5/01/25
.........
United
States
1,500,000
1,595,468
d
Colt
Merger
Sub,
Inc.
,
Senior
Secured
Note,
144A,
5.75%,
7/01/25
...............
United
States
400,000
419,500
Senior
Secured
Note,
144A,
6.25%,
7/01/25
...............
United
States
900,000
953,734
d
Downstream
Development
Authority
of
the
Quapaw
Tribe
of
Oklahoma
,
Senior
Secured
Note
,
144A
,
10.5
%
,
2/15/23
.......
United
States
1,500,000
1,370,468
d
Golden
Nugget,
Inc.
,
Senior
Note,
144A,
6.75%,
10/15/24
.....................
United
States
700,000
599,375
Senior
Note,
144A,
8.75%,
10/01/25
.....................
United
States
600,000
448,440
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
12
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
a
Corporate
Bonds
(continued)
Hotels,
Restaurants
&
Leisure
(continued)
d
International
Game
Technology
plc
,
Senior
Secured
Note
,
144A
,
5.25
%
,
1/15/29
.....................................
United
States
400,000
$
410,642
d
KFC
Holding
Co./Pizza
Hut
Holdings
LLC/Taco
Bell
of
America
LLC
,
Senior
Note
,
144A
,
5
%
,
6/01/24
.........................
United
States
600,000
620,631
d
Six
Flags
Theme
Parks,
Inc.
,
Senior
Secured
Note
,
144A
,
7
%
,
7/01/25
...........................................
United
States
400,000
433,678
d
Studio
City
Finance
Ltd.
,
Senior
Note
,
144A
,
7.25
%
,
2/11/24
.....
Macau
1,300,000
1,364,785
d
Vail
Resorts,
Inc.
,
Senior
Note
,
144A
,
6.25
%
,
5/15/25
..........
United
States
700,000
750,750
d
Wynn
Resorts
Finance
LLC
/
Wynn
Resorts
Capital
Corp.
,
Senior
Note
,
144A
,
7.75
%
,
4/15/25
............................
United
States
1,200,000
1,261,458
11,669,429
Household
Durables
1.7%
d
Ashton
Woods
USA
LLC
/
Ashton
Woods
Finance
Co.
,
Senior
Note,
144A,
6.75%,
8/01/25
......................
United
States
1,500,000
1,527,967
Senior
Note,
144A,
9.875%,
4/01/27
.....................
United
States
400,000
442,424
d
Taylor
Morrison
Communities,
Inc.
/
Taylor
Morrison
Holdings
II,
Inc.
,
Senior
Note
,
144A
,
5.625
%
,
3/01/24
......................
United
States
400,000
428,458
Toll
Brothers
Finance
Corp.
,
Senior
Bond
,
5.625
%
,
1/15/24
......
United
States
700,000
770,802
d
Williams
Scotsman
International,
Inc.
,
Senior
Secured
Note
,
144A
,
4.625
%
,
8/15/28
.....................................
United
States
300,000
303,750
3,473,401
Independent
Power
and
Renewable
Electricity
Producers
3.1%
d
Calpine
Corp.
,
Senior
Bond,
144A,
5%,
2/01/31
........................
United
States
900,000
942,386
Senior
Note,
144A,
4.625%,
2/01/29
.....................
United
States
700,000
717,444
Clearway
Energy
Operating
LLC
,
Senior
Note,
5.75%,
10/15/25
..........................
United
States
400,000
425,042
Senior
Note,
5%,
9/15/26
.............................
United
States
700,000
737,114
d
Senior
Note,
144A,
4.75%,
3/15/28
......................
United
States
600,000
629,064
d
InterGen
NV
,
Senior
Secured
Bond
,
144A
,
7
%
,
6/30/23
.........
Netherlands
1,400,000
1,365,000
Talen
Energy
Supply
LLC
,
Senior
Note
,
6.5
%
,
6/01/25
..........
United
States
2,100,000
1,469,779
6,285,829
Insurance
0.8%
d
Alliant
Holdings
Intermediate
LLC
/
Alliant
Holdings
Co-Issuer
,
Senior
Note
,
144A
,
6.75
%
,
10/15/27
...........................
United
States
1,600,000
1,698,704
Internet
&
Direct
Marketing
Retail
0.3%
d
Match
Group
Holdings
II
LLC
,
Senior
Note
,
144A
,
4.625
%
,
6/01/28
United
States
500,000
527,703
IT
Services
1.5%
d
Gartner,
Inc.
,
Senior
Note
,
144A
,
4.5
%
,
7/01/28
...............
United
States
500,000
523,125
d
Presidio
Holdings,
Inc.
,
Senior
Note
,
144A
,
8.25
%
,
2/01/28
......
United
States
900,000
943,313
d
Tempo
Acquisition
LLC
/
Tempo
Acquisition
Finance
Corp.
,
Senior
Note
,
144A
,
6.75
%
,
6/01/25
............................
United
States
1,600,000
1,639,016
3,105,454
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
13
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
a
Corporate
Bonds
(continued)
Machinery
2.2%
d
Manitowoc
Co.,
Inc.
(The)
,
Secured
Note
,
144A
,
9
%
,
4/01/26
....
United
States
1,000,000
$
1,042,965
d
Maxim
Crane
Works
Holdings
Capital
LLC
,
Secured
Note
,
144A
,
10.125
%
,
8/01/24
....................................
United
States
300,000
301,261
d
Navistar
International
Corp.
,
Senior
Note
,
144A
,
6.625
%
,
11/01/25
United
States
600,000
613,983
Tennant
Co.
,
Senior
Note
,
5.625
%
,
5/01/25
..................
United
States
1,600,000
1,667,832
d
Vertical
Holdco
GmbH
,
Senior
Note
,
144A
,
7.625
%
,
7/15/28
.....
Germany
300,000
317,063
d
Vertical
US
Newco,
Inc.
,
Senior
Secured
Note
,
144A
,
5.25
%
,
7/15/27
Germany
600,000
626,250
4,569,354
Media
5.7%
d
Clear
Channel
International
BV
,
Senior
Secured
Note
,
144A
,
6.625
%
,
8/01/25
.....................................
United
States
400,000
415,500
Clear
Channel
Worldwide
Holdings,
Inc.
,
Senior
Note,
9.25%,
2/15/24
...........................
United
States
510,000
501,129
d
Senior
Secured
Note,
144A,
5.125%,
8/15/27
..............
United
States
500,000
505,775
CSC
Holdings
LLC
,
Senior
Bond,
5.25%,
6/01/24
...........................
United
States
700,000
759,430
Senior
Note,
6.75%,
11/15/21
..........................
United
States
700,000
736,970
d
Senior
Note,
144A,
7.5%,
4/01/28
.......................
United
States
300,000
337,166
d
Diamond
Sports
Group
LLC
/
Diamond
Sports
Finance
Co.
,
Senior
Note,
144A,
6.625%,
8/15/27
.....................
United
States
700,000
394,625
Senior
Secured
Note,
144A,
5.375%,
8/15/26
..............
United
States
400,000
312,966
DISH
DBS
Corp.
,
Senior
Note,
5.875%,
7/15/22
..........................
United
States
400,000
422,600
d
Senior
Note,
144A,
7.375%,
7/01/28
.....................
United
States
800,000
849,740
d
Gray
Television,
Inc.
,
Senior
Note
,
144A
,
7
%
,
5/15/27
..........
United
States
500,000
543,775
d
LCPR
Senior
Secured
Financing
DAC
,
Senior
Secured
Note
,
144A
,
6.75
%
,
10/15/27
.....................................
United
States
700,000
751,625
d
Nexstar
Broadcasting,
Inc.
,
Senior
Note,
144A,
5.625%,
8/01/24
.....................
United
States
900,000
925,690
Senior
Note,
144A,
5.625%,
7/15/27
.....................
United
States
1,000,000
1,056,565
d
Scripps
Escrow,
Inc.
,
Senior
Note
,
144A
,
5.875
%
,
7/15/27
.......
United
States
600,000
600,750
d
Sirius
XM
Radio,
Inc.
,
Senior
Note
,
144A
,
4.625
%
,
7/15/24
......
United
States
600,000
624,750
d
Univision
Communications,
Inc.
,
Senior
Secured
Note,
144A,
9.5%,
5/01/25
................
United
States
1,200,000
1,320,000
Senior
Secured
Note,
144A,
6.625%,
6/01/27
..............
United
States
500,000
503,790
11,562,846
Metals
&
Mining
2.1%
d
Cleveland-Cliffs,
Inc.
,
Senior
Secured
Note
,
144A
,
6.75
%
,
3/15/26
.
United
States
400,000
409,000
d
FMG
Resources
August
2006
Pty.
Ltd.
,
Senior
Note
,
144A
,
4.75
%
,
5/15/22
...........................................
Australia
800,000
828,780
d
Joseph
T
Ryerson
&
Son,
Inc.
,
Senior
Secured
Note
,
144A
,
8.5
%
,
8/01/28
...........................................
United
States
1,200,000
1,314,000
d
Novelis
Corp.
,
Senior
Bond
,
144A
,
5.875
%
,
9/30/26
...........
United
States
500,000
523,025
d
SunCoke
Energy
Partners
LP
/
SunCoke
Energy
Partners
Finance
Corp.
,
Senior
Note
,
144A
,
7.5
%
,
6/15/25
..................
United
States
1,400,000
1,259,111
4,333,916
Oil,
Gas
&
Consumable
Fuels
9.6%
d
Aker
BP
ASA
,
Senior
Note,
144A,
4.75%,
6/15/24
......................
Norway
500,000
515,712
Senior
Note,
144A,
5.875%,
3/31/25
.....................
Norway
500,000
523,963
Apache
Corp.
,
Senior
Note
,
4.875
%
,
11/15/27
................
United
States
300,000
307,302
h
California
Resources
Corp.
,
Senior
Note,
5.5%,
9/15/21
............................
United
States
10,000
255
Senior
Note,
6%,
11/15/24
.............................
United
States
15,000
371
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
14
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
a
Corporate
Bonds
(continued)
Oil,
Gas
&
Consumable
Fuels
(continued)
Calumet
Specialty
Products
Partners
LP
/
Calumet
Finance
Corp.
,
Senior
Note
,
7.75
%
,
4/15/23
...........................
United
States
800,000
$
746,916
Cenovus
Energy,
Inc.
,
Senior
Bond,
6.75%,
11/15/39
..........................
Canada
400,000
414,863
Senior
Bond,
5.4%,
6/15/47
............................
Canada
300,000
268,386
Senior
Note,
5.375%,
7/15/25
..........................
Canada
700,000
713,003
Cheniere
Corpus
Christi
Holdings
LLC
,
Senior
Secured
Note,
7%,
6/30/24
.......................
United
States
600,000
699,604
Senior
Secured
Note,
5.875%,
3/31/25
...................
United
States
1,000,000
1,154,745
Cheniere
Energy
Partners
LP
,
Senior
Note,
5.625%,
10/01/26
.........................
United
States
700,000
734,923
Senior
Note,
4.5%,
10/01/29
...........................
United
States
1,200,000
1,249,272
Senior
Secured
Note,
5.25%,
10/01/25
...................
United
States
1,200,000
1,229,088
h
Chesapeake
Energy
Corp.
,
Senior
Note
,
7.5
%
,
10/01/26
........
United
States
1,500,000
71,250
Comstock
Resources,
Inc.
,
Senior
Note
,
9.75
%
,
8/15/26
........
United
States
600,000
643,260
Crestwood
Midstream
Partners
LP
/
Crestwood
Midstream
Finance
Corp.
,
Senior
Note,
6.75%,
4/01/23
...........................
United
States
500,000
493,698
Senior
Note,
5.75%,
4/01/25
...........................
United
States
800,000
767,832
d
Endeavor
Energy
Resources
LP
/
EER
Finance,
Inc.
,
Senior
Bond,
144A,
5.75%,
1/30/28
......................
United
States
1,000,000
1,024,815
Senior
Note,
144A,
6.625%,
7/15/25
.....................
United
States
500,000
522,345
d,e,i
EnQuest
plc
,
Senior
Note
,
144A
,
Reg
S,
PIK,
7
%
,
10/15/23
......
United
Kingdom
609,269
333,862
HighPoint
Operating
Corp.
,
Senior
Note
,
8.75
%
,
6/15/25
........
United
States
1,253,000
319,515
d
Martin
Midstream
Partners
LP
/
Martin
Midstream
Finance
Corp.
,
Secured
Note,
144A,
11.5%,
2/28/25
.....................
United
States
776,232
700,549
Senior
Secured
Note,
144A,
10%,
2/29/24
.................
United
States
170,928
177,936
b,d,e,h
Murray
Energy
Corp.
,
Secured
Note
,
144A
,
PIK,
12
%
,
4/15/24
...
United
States
757,734
481
Occidental
Petroleum
Corp.
,
Senior
Bond,
6.45%,
9/15/36
...........................
United
States
700,000
687,760
g
Senior
Note,
FRN,
1.73%,
(3-month
USD
LIBOR
+
1.45%),
8/15/22
...........................................
United
States
400,000
378,243
Senior
Note,
8.875%,
7/15/30
..........................
United
States
1,100,000
1,245,750
Senior
Note,
6.625%,
9/01/30
..........................
United
States
200,000
206,000
QEP
Resources,
Inc.
,
Senior
Bond
,
5.25
%
,
5/01/23
............
United
States
700,000
575,750
d
Seven
Generations
Energy
Ltd.
,
Senior
Note
,
144A
,
5.375
%
,
9/30/25
Canada
800,000
771,492
Sunoco
LP
/
Sunoco
Finance
Corp.
,
Senior
Note,
4.875%,
1/15/23
..........................
United
States
700,000
713,969
Senior
Note,
6%,
4/15/27
.............................
United
States
1,000,000
1,066,770
d
Viper
Energy
Partners
LP
,
Senior
Note
,
144A
,
5.375
%
,
11/01/27
..
United
States
400,000
412,676
19,672,356
Personal
Products
0.2%
d
Prestige
Brands,
Inc.
,
Senior
Note
,
144A
,
5.125
%
,
1/15/28
......
United
States
300,000
315,414
Pharmaceuticals
2.3%
d
Bausch
Health
Americas,
Inc.
,
Senior
Note
,
144A
,
9.25
%
,
4/01/26
.
United
States
1,400,000
1,554,042
d
Bausch
Health
Cos.,
Inc.
,
Senior
Bond,
144A,
6.125%,
4/15/25
.....................
United
States
400,000
411,900
Senior
Secured
Note,
144A,
7%,
3/15/24
..................
United
States
200,000
207,992
d
Catalent
Pharma
Solutions,
Inc.
,
Senior
Note
,
144A
,
4.875
%
,
1/15/26
...........................................
United
States
700,000
716,492
d
Endo
Dac
/
Endo
Finance
LLC
/
Endo
Finco
,
Inc.
,
Secured
Note,
144A,
9.5%,
7/31/27
......................
United
States
502,000
544,356
Senior
Note,
144A,
6%,
6/30/28
........................
United
States
689,000
534,458
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
15
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
a
Corporate
Bonds
(continued)
Pharmaceuticals
(continued)
d
Par
Pharmaceutical,
Inc.
,
Senior
Secured
Note
,
144A
,
7.5
%
,
4/01/27
United
States
225,000
$
240,482
d
Teva
Pharmaceutical
Finance
Netherlands
III
BV
,
Senior
Note
,
144A
,
7.125
%
,
1/31/25
.....................................
Israel
500,000
542,095
4,751,817
Real
Estate
Management
&
Development
0.7%
d
Five
Point
Operating
Co.
LP
/
Five
Point
Capital
Corp.
,
Senior
Note
,
144A
,
7.875
%
,
11/15/25
...............................
United
States
1,000,000
1,008,115
d
Howard
Hughes
Corp.
(The)
,
Senior
Note
,
144A
,
5.375
%
,
8/01/28
.
United
States
500,000
509,093
1,517,208
Road
&
Rail
0.7%
d
DAE
Funding
LLC
,
Senior
Note,
144A,
4.5%,
8/01/22
.......................
United
Arab
Emirates
700,000
693,430
Senior
Note,
144A,
5%,
8/01/24
........................
United
Arab
Emirates
700,000
688,181
1,381,611
Semiconductors
&
Semiconductor
Equipment
0.7%
d
Amkor
Technology,
Inc.
,
Senior
Note
,
144A
,
6.625
%
,
9/15/27
.....
United
States
1,000,000
1,089,815
d
ON
Semiconductor
Corp.
,
Senior
Note
,
144A
,
3.875
%
,
9/01/28
...
United
States
300,000
314,169
1,403,984
Software
1.2%
d
Blackboard,
Inc.
,
Secured
Note
,
144A
,
10.375
%
,
11/15/24
.......
United
States
1,600,000
1,627,000
d
Camelot
Finance
SA
,
Senior
Secured
Note
,
144A
,
4.5
%
,
11/01/26
.
United
States
900,000
933,354
2,560,354
Specialty
Retail
1.0%
d
Lithia
Motors,
Inc.
,
Senior
Note
,
144A
,
4.625
%
,
12/15/27
........
United
States
400,000
423,000
Murphy
Oil
USA,
Inc.
,
Senior
Note
,
4.75
%
,
9/15/29
............
United
States
1,200,000
1,300,074
d,g
Party
City
Holdings,
Inc.
,
Senior
Secured
Note
,
144A
,
FRN
,
5.75
%
,
(
6-month
USD
LIBOR
+
5
%
),
7/15/25
.....................
United
States
370,005
235,878
1,958,952
Technology
Hardware,
Storage
&
Peripherals
0.2%
d
Dell
International
LLC
/
EMC
Corp.
,
Senior
Note,
144A,
5.875%,
6/15/21
.....................
United
States
132,000
132,371
Senior
Note,
144A,
7.125%,
6/15/24
.....................
United
States
200,000
207,858
340,229
Textiles,
Apparel
&
Luxury
Goods
0.5%
d
Hanesbrands,
Inc.
,
Senior
Note
,
144A
,
4.625
%
,
5/15/24
........
United
States
1,000,000
1,052,605
Thrifts
&
Mortgage
Finance
1.4%
MGIC
Investment
Corp.
,
Senior
Note
,
5.25
%
,
8/15/28
..........
United
States
500,000
525,735
d
NMI
Holdings,
Inc.
,
Senior
Secured
Note
,
144A
,
7.375
%
,
6/01/25
.
United
States
1,200,000
1,297,266
Radian
Group,
Inc.
,
Senior
Note
,
6.625
%
,
3/15/25
.............
United
States
900,000
969,188
2,792,189
Trading
Companies
&
Distributors
1.8%
d
Beacon
Roofing
Supply,
Inc.
,
Senior
Note
,
144A
,
4.875
%
,
11/01/25
United
States
1,000,000
993,185
H&E
Equipment
Services,
Inc.
,
Senior
Note
,
5.625
%
,
9/01/25
....
United
States
800,000
831,000
d
HD
Supply,
Inc.
,
Senior
Note
,
144A
,
5.375
%
,
10/15/26
.........
United
States
300,000
316,317
United
Rentals
North
America,
Inc.
,
Senior
Bond
,
5.25
%
,
1/15/30
.
United
States
500,000
556,235
d
WESCO
Distribution,
Inc.
,
Senior
Note,
144A,
7.125%,
6/15/25
.....................
United
States
500,000
550,127
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
16
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
a
Corporate
Bonds
(continued)
Trading
Companies
&
Distributors
(continued)
d
WESCO
Distribution,
Inc.,
(continued)
Senior
Note,
144A,
7.25%,
6/15/28
......................
United
States
400,000
$
446,842
3,693,706
Wireless
Telecommunication
Services
2.5%
e
Digicel
Group
0.5
Ltd.
,
d
Senior
Note,
144A,
PIK,
8%,
4/01/25
.....................
Bermuda
139,840
48,167
Senior
Secured
Note,
PIK,
10%,
4/01/24
..................
Bermuda
435,683
312,603
Hughes
Satellite
Systems
Corp.
,
Senior
Note
,
6.625
%
,
8/01/26
...
United
States
1,300,000
1,476,878
Sprint
Corp.
,
Senior
Note,
7.875%,
9/15/23
..........................
United
States
1,200,000
1,398,000
Senior
Note,
7.125%,
6/15/24
..........................
United
States
500,000
581,735
Senior
Note,
7.625%,
3/01/26
..........................
United
States
500,000
615,665
T-Mobile
USA,
Inc.
,
Senior
Note
,
4.75
%
,
2/01/28
..............
United
States
600,000
647,250
5,080,298
Total
Corporate
Bonds
(Cost
$167,153,100)
.....................................
165,768,605
j
Marketplace
Loans
2.0%
Diversified
Financial
Services
2.0%
b
Lending
Club
-
LCX,
13.08%
-
25.65%,
8/26/22
-
2/07/25
........
United
States
295,622
268,724
b
Lending
Club,
10.33%
-
25.65%,
6/14/22
-
3/19/25
............
United
States
4,246,850
3,658,403
b
Upgrade,
16.89%
-
30.17%,
11/14/22
-
2/25/25
...............
United
States
126,574
96,836
4,023,963
a
a
a
a
a
a
Total
Marketplace
Loans
(Cost
$4,669,045)
.....................................
4,023,963
g
Asset-Backed
Securities
4.3%
Diversified
Financial
Services
4.3%
d,g,k
Consumer
Loan
Underlying
Bond
Certificate
Issuer
Trust
I
,
2019-26,
PT,
144A,
FRN,
20.192%,
8/15/44
................
United
States
731,749
608,512
2019-31,
PT,
144A,
FRN,
19.97%,
9/15/44
.................
United
States
666,018
553,281
2019-37,
PT,
144A,
FRN,
20.52%,
10/17/44
................
United
States
708,544
603,166
2019-42,
PT,
144A,
FRN,
20.496%,
11/15/44
...............
United
States
680,699
570,369
2019-51,
PT,
144A,
FRN,
17.515%,
1/15/45
................
United
States
836,514
712,801
2019-52,
PT,
144A,
FRN,
17.785%,
1/15/45
................
United
States
705,447
606,784
2019-S3,
PT,
144A,
FRN,
15.079%,
6/15/44
................
United
States
198,977
163,512
2019-S4,
PT,
144A,
FRN,
12.758%,
8/15/44
................
United
States
644,337
538,464
2019-S5,
PT,
144A,
FRN,
13.746%,
9/15/44
................
United
States
640,187
543,931
2019-S6,
PT,
144A,
FRN,
11.691%,
10/17/44
...............
United
States
627,404
533,047
2019-S7,
PT,
144A,
FRN,
11.169%,
12/15/44
...............
United
States
542,739
463,675
2019-S8,
PT,
144A,
FRN,
11.002%,
1/15/45
................
United
States
626,486
536,228
2020-2,
PT,
144A,
FRN,
17.63%,
3/15/45
..................
United
States
679,216
586,399
2020-7,
PT,
144A,
FRN,
17.69%,
4/17/45
..................
United
States
406,208
355,496
d,g,k
Prosper
Pass-Thru
Trust
III
,
2020-PT1,
A,
144A,
FRN,
8.796%,
3/15/26
.................
United
States
432,876
422,633
2020-PT2,
A,
144A,
FRN,
9.444%,
4/15/26
.................
United
States
482,404
473,080
2020-PT3,
A,
144A,
FRN,
7.183%,
5/15/26
.................
United
States
89,209
91,056
d
Upgrade
Master
Pass-Thru
Trust
,
2019-PT2
,
A
,
144A
,
7.727
%
,
2/15/26
...........................................
United
States
474,640
457,639
8,820,073
a
a
a
a
a
a
Total
Asset-Backed
Securities
(Cost
$9,846,401)
................................
8,820,073
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
17
See
Abbreviations
on
page
33
.
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Escrows
and
Litigation
Trusts
0.0%
†
a,b
Vistra
Energy
Corp.,
Escrow
Account
......................
United
States
700,000
$
14
Total
Escrows
and
Litigation
Trusts
(Cost
$18,347)
..............................
14
Total
Long
Term
Investments
(Cost
$220,592,852)
...............................
261,160,462
a
Short
Term
Investments
2.6%
a
a
Country
Shares
a
Value
a
Money
Market
Funds
2.6%
l,m
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0%
........
United
States
5,235,951
5,235,951
Total
Money
Market
Funds
(Cost
$5,235,951)
...................................
5,235,951
Principal
Amount
*
a
a
a
a
a
n
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
0.0%
†
Repurchase
Agreements
0.0%
†
o
Joint
Repurchase
Agreement,
BNP
Paribas
SA,
0.07%,
9/01/20
(Maturity
Value
$332)
Collateralized
by
U.S.
Treasury
Notes,
1.5%
-
2.25%,
1/31/22
-
1/31/24
(valued
at
$339)
..............................
332
332
Total
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
(Cost
$332)
.................................................................
332
Total
Short
Term
Investments
(Cost
$5,236,283
)
.................................
5,236,283
a
Total
Investments
(Cost
$225,829,135)
130.6%
..................................
$266,396,745
Notes
Payable
(31.8)%
.......................................................
(64,928,408)
Other
Assets,
less
Liabilities
1.2%
.............................................
2,625,796
Net
Assets
100.0%
...........................................................
$204,094,133
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
†
Rounds
to
less
than
0.1%
of
net
assets.
a
Non-income
producing.
b
Fair
valued
using
significant
unobservable
inputs.
See
Note
10
regarding
fair
value
measurements.
c
A
portion
or
all
of
the
security
is
on
loan
at
August
31,
2020.
See
Note
1(d).
d
Security
was
purchased
pursuant
to
Rule
144A
under
the
Securities
Act
of
1933
and
may
be
sold
in
transactions
exempt
from
registration
only
to
qualified
institutional
buyers
or
in
a
public
offering
registered
under
the
Securities
Act
of
1933.
At
August
31,
2020,
the
aggregate
value
of
these
securities
was
$125,226,806,
representing
61.4%
of
net
assets.
e
Income
may
be
received
in
additional
securities
and/or
cash.
f
Perpetual
security
with
no
stated
maturity
date.
g
The
coupon
rate
shown
represents
the
rate
at
period
end.
h
See
Note
8
regarding
defaulted
securities.
i
Security
was
purchased
pursuant
to
Regulation
S
under
the
Securities
Act
of
1933,
which
exempts
from
registration
securities
offered
and
sold
outside
of
the
United
States.
Such
a
security
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
August
31,
2020,
the
value
of
this
security
was
$333,862,
representing
0.2%
of
net
assets.
j
See
Note
1(e)
regarding
Marketplace
Lending.
k
Adjustable
rate
security
with
an
interest
rate
that
is
not
based
on
a
published
reference
index
and
spread.  The
rate
is
based
on
the
structure
of
the
agreement
and
current
market
conditions.
The
coupon
rate
shown
represents
the
rate
at
period
end.
l
See
Note
4(c)
regarding
investments
in
affiliated
management
investment
companies.
m
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
Franklin
Universal
Trust
Statement
of
Investments
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
18
n
See
Note
1(d)
regarding
securities
on
loan.
o
See
Note
1(c)
regarding
joint
repurchase
agreement.
Franklin
Universal
Trust
Financial
Statements
Statement
of
Assets
and
Liabilities
August
31,
2020
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
19
Franklin
Universal
Trust
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
...................................................................
$220,592,852
Cost
-
Non-controlled
affiliates
(Note
4c)
.......................................................
5,235,951
Cost
-
Unaffiliated
repurchase
agreements
......................................................
332
Value
-
Unaffiliated
issuers
(Includes
securities
loaned
$279)
........................................
$261,160,462
Value
-
Non-controlled
affiliates
(N
ote
4c)
.......................................................
5,235,951
Value
-
Unaffiliated
repurchase
agreements
......................................................
332
Cash
....................................................................................
1,033,523
Receivables:
Investment
securities
sold
...................................................................
838,625
Dividends
and
interest
.....................................................................
3,289,907
Total
assets
..........................................................................
271,558,800
Liabilities:
Payables:
Investment
securities
purchased
..............................................................
209,750
Management
fees
.........................................................................
169,192
Distributions
to
shareholders
.................................................................
804,221
Accrued
interest
(Note
3
)
...................................................................
1,173,266
Payable
upon
return
of
securities
loaned
.........................................................
332
Senior
fixed
rate
Notes,
at
par
value
of
$65,000,000
less
unamortized
Note
issuance
costs
of
$71,592
(Note
3
)
....
64,928,408
Accrued
expenses
and
other
liabilities
...........................................................
179,498
Total
liabilities
.........................................................................
67,464,667
Net
assets,
at
value
.................................................................
$204,094,133
Net
assets
consist
of:
Paid-in
capital
.............................................................................
$164,245,962
Total
distributable
earnings
(losses)
.............................................................
39,848,171
Net
assets,
at
value
.................................................................
$204,094,133
Shares
outstanding
.........................................................................
25,131,894
Net
asset
value
per
share
....................................................................
$8.12
Franklin
Universal
Trust
Financial
Statements
Statement
of
Operations
for
the
year
ended
August
31,
2020
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
20
Franklin
Universal
Trust
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$14,067)
Unaffiliated
issuers
........................................................................
$2,813,085
Non-controlled
affiliates
(Note
4c)
.............................................................
22,704
Interest:
Unaffiliated
issuers
........................................................................
12,645,670
Income
from
securities
loaned:
Unaffiliated
entities
(net
of
fees
and
rebates)
.....................................................
1,558
Non-controlled
affiliates
(Note
4
c
)
.............................................................
617
Total
investment
income
...................................................................
15,483,634
Expenses:
Management
fees
(Note
4
a
)
...................................................................
2,034,610
Interest
expense
(Note
3
)
.....................................................................
2,538,018
Transfer
agent
fees
.........................................................................
83,200
Custodian
fees
(Note
5
)
......................................................................
1,696
Reports
to
shareholders
......................................................................
33,982
Professional
fees
...........................................................................
83,920
Trustees'
fees
and
expenses
..................................................................
10,457
Amortization
of
note
issuance
costs
(
Note
3)
......................................................
21,827
Marketplace
lending
fees
(
Note
1e)
.............................................................
205,501
Other
....................................................................................
139,495
Total
expenses
.........................................................................
5,152,706
Expense
reductions
(Note
5
)
...............................................................
(284)
Expenses
waived/paid
by
affiliates
(Note
4c)
..................................................
(9,865)
Net
expenses
.........................................................................
5,142,557
Net
investment
income
................................................................
10,341,077
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
......................................................................
(1,265,786)
Foreign
currency
transactions
................................................................
531
Net
realized
gain
(loss)
..................................................................
(1,265,255)
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
......................................................................
(10,590,578)
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
..............................
279
Net
change
in
unrealized
appreciation
(depreciation)
............................................
(10,590,299)
Net
realized
and
unrealized
gain
(loss)
............................................................
(11,855,554)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
..........................................
$(1,514,477)
Franklin
Universal
Trust
Financial
Statements
Statements
of
Changes
in
Net
Assets
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
21
Franklin
Universal
Trust
Year
Ended
August
31,
2020
Year
Ended
August
31,
2019
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
.................................................
$10,341,077
$9,579,070
Net
realized
gain
(loss)
.................................................
(1,265,255)
397,071
Net
change
in
unrealized
appreciation
(depreciation)
...........................
(10,590,299)
14,170,452
Net
increase
(decrease)
in
net
assets
resulting
from
operations
................
(1,514,477)
24,146,593
Distributions
to
shareholders
..............................................
(9,683,318)
(9,650,646)
Net
increase
(decrease)
in
net
assets
...................................
(11,197,795)
14,495,947
Net
assets:
Beginning
of
year
.......................................................
215,291,928
200,795,981
End
of
year
...........................................................
$204,094,133
$215,291,928
Franklin
Universal
Trust
Financial
Statements
Statement
of
Cash
Flows
for
the
year
ended
August
31,
2020
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
22
Franklin
Universal
Trust
Cash
flow
from
operating
activities:
Dividends,
interest
and
other
income
received
.....................................................
$
15,
750,626
Operating
expenses
paid
.....................................................................
(2,510,964)
Interest
expense
paid
........................................................................
(2,541,501)
Purchases
of
long-term
investments
.............................................................
 (93,660,341)
Cash
collateral
received
for
securities
lo
aned
......................................................
332
Realized
gain
on
foreign
currency
transactions
.....................................................
531
Sales
and
maturities
of
long-term
investments
.....................................................
 92,655,314
Net
sales
of
short
-term
investments
.............................................................
54
6
,
926
Cash
provided
-
operating
activities
..........................................................
10,240,923
Cash
flow
from
financing
activities:
Cash
distributions
to
shareholders
..............................................................
(9,683,317)
Cash
used
-
financing
activities
.............................................................
(9,683,317)
Net
increase
(decrease)
in
cash
.................................................................
557,606
Cash
at
beginning
of
year
......................................................................
475,917
Cash
at
end
of
year
...........................................................................
$1,033,523
Reconciliation
of
Net
Increase
(Decrease)
in
Net
Assets
resulting
from
Operating
Activities
to
Net
Cash
Provided
by
Operating
Activities
for
the
year
ended
August
31,
2020
Net
increase
(decrease)
in
net
assets
resulting
from
operating
activities
....................................
$
(1,514,477)
Adjustments
to
reconcile
net
increase
(decrease)
in
net
assets
resulting
from
operating
activities
to
net
cash
provided
by
operating
activities:
Amortization
of
Note
issuance
costs
..........................................................
21,827
Net
amortization
income
..................................................................
135,068
Reinvested
dividends
from
non-controlled
affiliates
...............................................
(22,704)
Decrease
in
dividends
and
interest
receivable
and
other
assets
.....................................
154,628
Decrease
in
interest
payable
...............................................................
(3,483)
Increase
in
payable
to
affiliates,
accrued
expenses,
and
other
liabilities
...............................
71,748
Increase
in
receivable
for
investments
sold
.....................................................
(524,055)
Increase
in
payable
for
investments
purchased
.................................................
209,750
Increase
in
collateral
for
securities
loaned
.....................................................
332
De
crease
in
cost
of
investments
.............................................................
1,121,990
De
crease
in
unrealized
appreciation
on
investments.
.............................................
10,590,299
Net
cash
provided
by
operating
activities
...........................................................
$10,240,923
Franklin
Universal
Trust
23
franklintempleton.com
Annual
Report
Notes
to
Financial
Statements
1.
Organization
and
Significant
Accounting
Policies
Franklin
Universal
Trust (Fund)
is
registered under
the
Investment
Company
Act
of
1940
(1940
Act)
as
a
closed-
end
management
investment
company
and
applies
the
specialized
accounting
and
reporting
guidance
in
U.S.
Generally
Accepted
Accounting
Principles
(U.S.
GAAP).
The
following
summarizes
the
Fund's
significant
accounting
policies.
a.
Financial
Instrument
Valuation 
The
Fund's
investments
in
financial
instruments
are
carried
at
fair
value
daily.
Fair
value
is
the
price
that
would
be
received
to
sell
an
asset
or
paid
to
transfer
a
liability
in
an
orderly
transaction
between
market
participants
on
the
measurement
date.
The
Fund
calculates
the
net
asset
value
(NAV)
per
share
each business
day as
of
4
p.m.
Eastern
time
or
the
regularly
scheduled
close
of
the
New
York
Stock
Exchange
(NYSE),
whichever
is
earlier.
 Senior
Fixed
Rate
Notes
issued
by
the
Fund
are
carried
at
cost.
Under
compliance
policies
and
procedures
approved
by
the
Fund's
Board
of
Trustees
(the
Board),
the Fund's
administrator
has
responsibility
for
oversight
of
valuation,
including
leading
the
cross-functional
Valuation
Committee
(VC).
The
Fund
may
utilize
independent
pricing
services,
quotations
from
securities
and
financial
instrument
dealers,
and
other
market
sources
to
determine
fair
value. 
Equity
securities
listed
on
an
exchange
or
on
the
NASDAQ
National
Market
System
are
valued
at
the
last
quoted
sale
price
or
the
official
closing
price of
the
day,
respectively.
Foreign
equity
securities
are
valued
as
of
the
close
of
trading
on
the
foreign
stock
exchange
on
which
the
security
is
primarily
traded,
or
as
of
4
p.m.
Eastern
time.
The
value
is
then
converted
into
its
U.S.
dollar
equivalent
at
the
foreign
exchange
rate
in
effect
at
4
p.m.
Eastern
time
on
the
day
that
the
value
of
the
security
is
determined.
Over-the-counter
(OTC)
securities
are
valued
within
the
range
of
the
most
recent
quoted
bid
and
ask
prices.
Securities
that
trade
in
multiple
markets
or
on
multiple
exchanges
are
valued
according
to
the
broadest
and
most
representative
market.
Certain
equity
securities
are
valued
based
upon
fundamental
characteristics
or
relationships
to
similar
securities. 
Debt
securities
generally
trade
in
the
OTC
market
rather
than
on
a
securities
exchange.
The
Fund's
pricing
services
use
multiple
valuation
techniques
to
determine
fair
value.
In
instances
where
sufficient
market
activity
exists,
the
pricing
services
may
utilize
a
market-based
approach
through
which
quotes
from
market
makers
are
used
to
determine
fair
value.
In
instances
where
sufficient
market
activity
may
not
exist
or
is
limited,
the
pricing
services
also
utilize
proprietary
valuation
models
which
may
consider
market
characteristics
such
as
benchmark
yield
curves,
credit
spreads,
estimated
default
rates,
anticipated
market
interest
rate
volatility,
coupon
rates,
anticipated
timing
of
principal
repayments,
underlying
collateral,
and
other
unique
security
features
in
order
to
estimate
the
relevant
cash
flows,
which
are
then
discounted
to
calculate
the
fair
value.
Investments
in
open-end
mutual
funds
are
valued
at
the
closing
NAV.
Investments
in
repurchase
agreements
are
valued
at
cost,
which
approximates
fair
value.
The
Fund
has
procedures
to
determine
the
fair
value
of
financial
instruments
for
which
market
prices
are
not
reliable
or
readily
available.
Under
these
procedures,
the Fund
primarily
employs
a
market-based
approach
which
may
use
related
or
comparable
assets
or
liabilities,
recent
transactions,
market
multiples,
book
values,
and
other
relevant
information
for
the
investment
to
determine
the
fair
value
of
the
investment.
An
income-based
valuation
approach
may
also
be
used
in
which
the
anticipated
future
cash
flows
of
the
investment
are
discounted
to
calculate
fair
value.
Discounts
may
also
be
applied
due
to
the
nature
or
duration
of
any
restrictions
on
the
disposition
of
the
investments.
Due
to
the
inherent
uncertainty
of
valuations
of
such
investments,
the
fair
values
may
differ
significantly
from
the
values
that
would
have
been
used
had
an
active
market
existed.
Trading
in
securities
on
foreign
securities
stock
exchanges
and
OTC
markets
may
be
completed
before
4
p.m.
Eastern
time.
In
addition,
trading
in
certain
foreign
markets
may
not
take
place
on
every
Fund's
business
day.
Events
can occur
between
the
time
at
which
trading
in
a
foreign
security
is
completed
and
4
p.m.
Eastern
time
that
might
call
into
question
the
reliability
of
the
value
of
a
portfolio
security
held
by
the
Fund.
As
a
result,
differences
may
arise
between
the
value
of
the
Fund's
portfolio
securities
as
determined
at
the
foreign
market
close
and
the
latest
indications
of
value
at
4
p.m.
Eastern
time.
In
order
to
minimize
the
potential
for
these
differences,
an
independent
pricing
service
may
be
used
to
adjust
the
value
of
the
Fund's
portfolio
securities
to
the
latest
indications
of
fair
value
at 4
p.m.
Eastern
time.
At August
31,
2020,
certain
securities
may
have
been
fair
Franklin
Universal
Trust
Notes
to
Financial
Statements
24
franklintempleton.com
Annual
Report
valued
using
these
procedures,
in
which
case
the
securities
were
categorized
as
Level
2
inputs
within
the
fair
value
hierarchy.
See
the
Fair
Value
Measurements
note
for
more
information.
When
the
last
day
of
the
reporting
period
is
a
non-business
day,
certain
foreign
markets
may
be
open
on
those
days
that
the
Fund's
NAV
is
not
calculated,
which
could
result
in
differences
between
the
value
of
the
Fund's
portfolio
securities
on
the
last
business
day
and
the
last
calendar
day
of
the
reporting
period.
Any
security
valuation
changes
due
to
an
open
foreign
market
are
adjusted
and
reflected
by
the Fund
for
financial
reporting
purposes.
b.
Foreign
Currency
Translation 
Portfolio
securities
and
other
assets
and
liabilities
denominated
in
foreign
currencies
are
translated
into
U.S.
dollars
based
on
the
exchange
rate
of
such
currencies
against
U.S.
dollars
on
the
date
of
valuation.
The
Fund
may
enter
into
foreign
currency
exchange
contracts
to
facilitate
transactions
denominated
in
a
foreign
currency.
Purchases
and
sales
of
securities,
income
and
expense
items
denominated
in
foreign
currencies
are
translated
into
U.S.
dollars
at
the
exchange
rate
in
effect
on
the
transaction
date.
Portfolio
securities
and
assets
and
liabilities
denominated
in
foreign
currencies
contain
risks
that
those
currencies
will
decline
in
value
relative
to
the
U.S.
dollar.
Occasionally,
events
may
impact
the
availability
or
reliability
of
foreign
exchange
rates
used
to
convert
the
U.S.
dollar
equivalent
value.
If
such
an
event
occurs,
the
foreign
exchange
rate
will
be
valued
at
fair
value
using
procedures
established
and
approved
by
the
Board.
The
Fund
does
not
separately
report
the
effect
of
changes
in
foreign
exchange
rates
from
changes
in
market
prices
on
securities
held.
Such
changes
are
included
in
net
realized
and
unrealized
gain
or
loss
from
investments
in
the
Statement of
Operations.
Realized
foreign
exchange
gains
or
losses
arise
from
sales
of
foreign
currencies,
currency
gains
or
losses
realized
between
the
trade
and
settlement
dates
on
securities
transactions
and
the
difference
between
the
recorded
amounts
of
dividends,
interest,
and
foreign
withholding
taxes
and
the
U.S.
dollar
equivalent
of
the
amounts
actually
received
or
paid.
Net
unrealized
foreign
exchange
gains
and
losses
arise
from
changes
in
foreign
exchange
rates
on
foreign
denominated
assets
and
liabilities
other
than
investments
in
securities
held
at
the
end
of
the
reporting
period.
c.
Joint
Repurchase
Agreement
The
Fund
enters
into
a
joint
repurchase
agreement
whereby
its
uninvested
cash
balance
is
deposited
into
a
joint
cash
account
with
other
funds
managed
by
the
investment
manager
or
an
affiliate
of
the
investment
manager
and
is
used
to
invest
in
one
or
more
repurchase
agreements.
The
value
and
face
amount
of
the
joint
repurchase
agreement
are
allocated
to
the
funds
based
on
their
pro-rata
interest.
A
repurchase
agreement
is
accounted
for
as
a
loan
by
the
Fund
to
the
seller,
collateralized
by
securities
which
are
delivered
to
the
Fund's
custodian.
The
fair
value,
including
accrued
interest,
of
the
initial
collateralization
is
required
to
be
at
least
102%
of
the
dollar
amount
invested
by
the
funds,
with
the
value
of
the
underlying
securities
marked
to
market
daily
to
maintain
coverage
of
at
least
100%.
Repurchase
agreements
are
subject
to
the
terms
of
Master
Repurchase
Agreements
(MRAs)
with
approved
counterparties
(sellers).
The
MRAs
contain
various
provisions,
including
but
not
limited
to
events
of
default
and
maintenance
of
collateral
for
repurchase
agreements.
In
the
event
of
default
by
either
the
seller
or
the
Fund,
certain
MRAs
may
permit
the
non-
defaulting
party
to
net
and
close-out
all
transactions,
if
any,
traded
under
such
agreements.
The
Fund
may
sell
securities
it
holds
as
collateral
and
apply
the
proceeds
towards
the
repurchase
price
and
any
other
amounts
owed
by
the
seller
to
the
Fund
in
the
event
of
default
by
the
seller.
This
could
involve
costs
or
delays
in
addition
to
a
loss
on
the
securities
if
their
value
falls
below
the
repurchase
price
owed
by
the
seller.
The
joint
repurchase
agreement
held
by
the Fund
at
year
end,
as
indicated
in
the
Statement
of
Investments,
had
been
entered
into
on
August
31,
2020.
d.
Securities
Lending
The
Fund
participates
in
an
agency
based
securities
lending
program
to
earn
additional
income.
The
Fund
receives
collateral
in
the
form
of
cash
and/or
U.S.
Government
and
Agency
securities
against
the
loaned
securities
in
an
amount
equal
to
at
least
102%
of
the
fair
value
of
the
loaned
securities.
Collateral
is
maintained
over
the
life
of
the
loan
in
an
amount
not
less
than
100%
of
the
fair
value
of
loaned
securities,
as
determined
at
the
close
of
Fund
business
each
day;
any
additional
collateral
required
due
to
changes
in
1.
Organization
and
Significant
Accounting
Policies
(continued)
a.
Financial
Instrument
Valuation 
(continued)
Franklin
Universal
Trust
Notes
to
Financial
Statements
25
franklintempleton.com
Annual
Report
security
values
is
delivered
to
the
Fund
on
the
next
business
day.
Any
cash
collateral
received
is
deposited
into
a
joint
cash
account
with
other
funds
and
is
used
to
invest
in
a
money
market
fund
managed
by
Franklin
Advisers,
Inc.,
an
affiliate
of
the Fund,
and/or
a
joint
repurchase
agreement
in
the
Statement
of
Assets
and
Liabilities.
The
Fund
may
receive
income
from
the
investment
of
cash
collateral,
in
addition
to
lending
fees
and
rebates
paid
by
the
borrower.
Income
from
securities
loaned,
net
of
fees
paid
to
the
securities
lending
agent
and/or
third-party
vendor,
is
reported
separately
in
the
Statement
of
Operations.
The
Fund
bears
the
market
risk
with
respect
to any
cash collateral
investment,
securities
loaned,
and
the
risk
that
the
agent
may
default
on
its
obligations
to
the
Fund.
If
the
borrower
defaults
on
its
obligation
to
return
the
securities
loaned,
the
Fund
has
the
right
to
repurchase
the
securities
in
the
open
market
using
the
collateral
received.
The
securities
lending
agent
has
agreed
to
indemnify
the
Fund
in
the
event
of
default
by
a
third
party
borrower.
e.
Marketplace
Lending
The
Fund
invests
in
loans
obtained
through
marketplace
lending.
Marketplace
lending,
sometimes
referred
to
as
peer-to-peer
lending,
is
a
method
of
financing
in
which
a
platform
facilitates
the
borrowing
and
lending
of
money.
It
is
considered
an
alternative
to
more
traditional
forms
of
debt
financing.
Prospective
borrowers
are
required
to
provide
certain
financial
information
to
the
platform,
including,
but
not
limited
to,
the
intended
purpose
of
the
loan,
income,
employment
information,
credit
score,
debt-to-income
ratio,
credit
history
(including
defaults
and
delinquencies)
and
home
ownership
status.
Based
on
this
and
other
information,
the
platform
assigns
its
own
credit
rating
to
the
borrower
and
sets
the
interest
rate
for
the
requested
loan.
The
platform
then
posts
the
borrowing
requests
online,
giving
investors
the
opportunity
to
purchase
the
loans
based
on
factors
such
as
the
interest
rates
and
expected
yields
of
the
loans,
the
borrower
background
data,
and
the
credit
rating
assigned
by
the
platform.
 When
the
Fund
invests
in
these
loans,
it
usually
purchases
all
rights,
title
and
interest
in
the
loans
pursuant
to
a
loan
purchase
agreement
directly
from
the
platform.
The
platform
or
a
third-party
servicer
typically
continues
to
service
the
loans,
collecting
payments
and
distributing
them
to
the
Fund,
less
any
servicing
fees
assessed.
The
servicer
is
typically
responsible
for
taking
actions
against
a
borrower
in
the
event
of
a
default
on
the
loan.
Servicing
fees,
along
with
other
administration
fees,
are
included
in
marketplace
lending
fees
in
the
Statement
of
Operations.
The Fund,
as
an
investor
in
a
loan,
would
be
entitled
to
receive
payment
only
from
the
borrower
and
would
not
be
able
to
recover
any
deficiency
from
the
platform,
except
under
very
narrow
circumstances.
The
loans
in
which
the
Fund
may
invest
are
unsecured.
f.
Income
and
Deferred
Taxes
It
is the
Fund's
policy
to
qualify
as
a
regulated
investment
company
under
the
Internal
Revenue
Code. The
Fund
intends
to
distribute
to
shareholders
substantially
all
of
its
taxable
income
and
net
realized
gains
to
relieve
it
from
federal
income
and excise
taxes.
As
a
result,
no
provision
for
U.S.
federal
income
taxes
is
required.
The Fund
may
be
subject
to
foreign
taxation
related
to
income
received,
capital
gains
on
the
sale
of
securities
and
certain
foreign
currency
transactions
in
the
foreign
jurisdictions
in
which
it
invests.
Foreign
taxes,
if
any,
are
recorded
based
on
the
tax
regulations
and
rates
that
exist
in
the
foreign
markets
in
which
the
Fund
invests.
When
a
capital
gain
tax
is
determined
to
apply,
the
Fund
records
an
estimated
deferred
tax
liability
in
an
amount
that
would
be
payable
if
the
securities
were
disposed
of
on
the
valuation
date.
The
Fund
may
recognize
an
income
tax
liability
related
to
its
uncertain
tax
positions
under
U.S.
GAAP
when
the
uncertain
tax
position
has
a
less
than
50%
probability
that
it
will
be
sustained
upon
examination
by
the
tax
authorities
based
on
its
technical
merits.
As
of
August
31,
2020,
the
Fund
has
determined
that
no
tax
liability
is
required
in
its
financial
statements
related
to
uncertain
tax
positions
for
any
open
tax
years
(or
expected
to
be
taken
in
future
tax
years).
Open
tax
years
are
those
that
remain
subject
to
examination
and
are
based
on
the
statute
of
limitations
in
each
jurisdiction
in
which
the
Fund
invests. 
g.
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
1.
Organization
and
Significant
Accounting
Policies
(continued)
d.
Securities
Lending
(continued)
Franklin
Universal
Trust
Notes
to
Financial
Statements
26
franklintempleton.com
Annual
Report
premium
and
accretion
of
discount
on
debt
securities
are
included
in
interest
income.
Dividend
income
is
recorded
on
the
ex-dividend
date
except
for
certain
dividends
from
securities
where
the
dividend
rate
is
not
available.
In
such
cases,
the
dividend
is
recorded
as
soon
as
the
information
is
received
by
the
Fund.
Distributions
to shareholders
are
recorded
on
the
ex-dividend
date.
Distributable
earnings
are
determined
according
to
income
tax
regulations
(tax
basis)
and
may
differ
from
earnings
recorded
in
accordance
with
U.S.
GAAP.
These
differences
may
be
permanent
or
temporary.
Permanent
differences
are
reclassified
among
capital
accounts
to
reflect
their
tax
character.
These
reclassifications
have
no
impact
on
net
assets
or
the
results
of
operations.
Temporary
differences
are
not
reclassified,
as
they
may
reverse
in
subsequent
periods.
h.
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.
i.
Guarantees
and
Indemnifications
Under
the
Fund’s
organizational
documents,
its
officers
and
trustees
are
indemnified
by
the
Fund
against
certain
liabilities
arising
out
of
the
performance
of
their
duties
to
the
Fund.
Additionally,
in
the
normal
course
of
business,
the
Fund
enters
into
contracts
with
service
providers
that
contain
general
indemnification
clauses.
The
Fund’s
maximum
exposure
under
these
arrangements
is
unknown
as
this
would
involve
future
claims
that
may
be
made
against
the
Fund
that
have
not
yet
occurred.
Currently,
the
Fund
expects
the
risk
of
loss
to
be
remote.
2.
Shares
of
Beneficial
Interest
At
August
31,
2020,
there
were
an
unlimited
number
of
shares
authorized
($0.01
par
value).
During
the
years ended
August
31,
2020
and
2019
there
were
no
shares
issued;
all
reinvested
distributions
were
satisfied
with
previously
issued
shares
purchased
in
the
open
market.
Under
the
Board
approved
open-market
share
repurchase
program,
the
Fund
may
purchase,
from
time
to
time,
Fund
shares
in
open-market
transactions,
at
the
discretion
of
management.
During
the
years ended
August
31,
2020
and
2019,
there
were
no
shares
repurchased.
3.
Senior
Fixed
Rate
Notes
 On
August
28,
2018,
the
Fund
issued
$65
million
principal
amount
of
a
new
class
of
five-year
senior
fixed
rate
notes
(Notes).
The
Notes
bear
interest,
payable
semi-annually,
at
a
rate
of
3.91%
per
year,
to
maturity
on
September
15,
2023.
The
Notes
are
general
unsecured
obligations
of
the
Fund
and
rank
senior
to
trust
shares
and
all
existing
or
future
unsecured
indebtedness
of
the
Fund.
For
the
year
ended
August
31,
2020,
total
interest
paid
by
the
Fund
on
the
Notes
was
$2,541,501.
The
Fund
is
required
to
maintain
on
a
monthly
basis
a
specified
discounted
asset
value
for
its
portfolio
in
compliance
with
guidelines
established
in
the
Notes
Agreement,
and
is
required
under
the
1940
Act
to
maintain
asset
coverage
for
the
Notes
of
at
least
300%.
The
Fund
has
met
these
requirements
during
the
year
ended
August
31,
2020.
The
issuance
costs
of
$114,819
incurred
by
the
Fund
are
deferred
and
amortized
on
an
interest
method
basis
over
the
term
of
the
Notes.
For
the
year
ended
August
31,
2020,
the
Fund
amortized
$21,827
of
Notes
issuance
costs.
Subject
to
certain
restrictions
and
make
whole
premiums,
the
Fund
may
prepay
the
Notes
at
any
time.
At
August
31,
2020,
if
the
Notes
were
fully
prepaid,
the
make
whole
premium
related
to
the
current
balance
of
the
Notes
would
have
been
approximately
$6,375,882.
1.
Organization
and
Significant
Accounting
Policies
(continued)
g.
Security
Transactions,
Investment
Income,
Expenses
and
Distributions
(continued)
Franklin
Universal
Trust
Notes
to
Financial
Statements
27
franklintempleton.com
Annual
Report
The
Fund
employs
an
income-based
approach
to
determine
the
fair
value
of
the
Notes,
which
uses
the
Notes’
current
credit
rating,
remaining
time
to
maturity,
stated
coupon
rates,
the
current
yield
of
a
comparable
asset,
and
a
liquidity
premium.
At
August
31,
2020,
the
estimated
fair
value
of
the
Notes
was
approximately
$70,400,000.
The
inputs
used
in
determining
the
fair
value
of
the
Notes
represent
Level
3
in
the
fair
value
hierarchy.
See
Note 10
regarding
fair
value
measurements
for
additional
information
about
fair
value
hierarchy
and
Level
3
inputs.
4.
Transactions
with
Affiliates
Franklin
Resources,
Inc.
is
the
holding
company
for
various
subsidiaries
that
together
are
referred
to
as
Franklin
Templeton.
Certain
officers
and
trustees
of
the
Fund
are
also
officers
and/or
directors
of
the
following
subsidiaries:
a.
Management
Fees
The
Fund
pays
an
investment
management
fee
to
Advisers
of
0.75%
per
year
of
the
average
weekly
managed
assets.
Managed
assets
are
defined
as
the
Fund’s
gross
asset
value
minus
the
sum
of
accrued
liabilities,
other
than
the
principal
amount
of
the
Notes.
b.
Administrative
Fees
Under
an
agreement
with
Advisers,
FT
Services
provides
administrative
services
to
the
Fund.
The
fee
is
paid
by
Advisers
based
on
the
Fund's
average
daily
net
assets,
and
is
not
an
additional
expense
of
the
Fund.
c.
Investments
in
Affiliated
Management
Investment
Companies
The
Fund
invests
in
one
or
more
affiliated
management
investment
companies
for
purposes
other
than
exercising
a
controlling
influence
over
the
management
or
policies.
Management
fees
paid
by
the
Fund
are
waived
on
assets
invested
in
the
affiliated
management
investment
companies,
as
noted
in
the
Statement
of
Operations,
in
an
amount
not
to
exceed
the
management
and
administrative
fees
paid
directly
or
indirectly
by
each
affiliate.
During
the
year
ended
August
31,
2020,
the
Fund
held
investments
in
affiliated
management
investment
companies
as
follows:
Subsidiary
Affiliation
Franklin
Advisers,
Inc.
(Advisers)
Investment
manager
Franklin
Templeton
Services,
LLC
(FT
Services)
Administrative
manager
a
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
a
Franklin
Universal
Trust
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0%
.........
$4,760,505
$69,138,538
$(68,663,092)
$
—
$
—
$
5,235,951
5,235,951
$
22,704
Non-Controlled
Affiliates
Income
from
securities
loaned
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0%
.........
$—
$1,732,000
$(1,732,000)
$
—
$
—
$
—
—
$
617
Total
Affiliated
Securities
....
$4,760,505
$70,870,538
$(70,395,092)
$—
$—
$5,235,951
$23,321
3.
Senior
Fixed
Rate
Notes
(continued)
Franklin
Universal
Trust
Notes
to
Financial
Statements
28
franklintempleton.com
Annual
Report
5.
Expense
Offset
Arrangement
The
Fund
has
entered
into
an
arrangement
with
its
custodian
whereby
credits
realized
as
a
result
of
uninvested
cash
balances
are
used
to
reduce
a
portion
of
the
Fund's
custodian
expenses.
During
the
year
ended
August
31,
2020,
the
custodian
fees
were
reduced
as
noted
in
the
Statement
of
Operations. 
6.
Income
Taxes
For
tax
purposes,
capital
losses
may
be
carried
over
to
offset
future
capital
gains.
At
August
31,
2020,
the
capital
loss
carryforwards
were
as
follows:
The
tax
character
of
distributions
paid
during
the
years
ended
August
31,
2020
and
2019,
was
as
follows:
At
August
31,
2020,
the
cost
of
investments
and
net
unrealized
appreciation
(depreciation)
for
income
tax
purposes
were
as
follows:
Differences
between
income
and/or
capital
gains
as
determined
on
a
book
basis
and
a
tax
basis
are
primarily
due
to
differing
treatment
s
of
defaulted
securities,
bond
discounts
and
premiums
and
corporate
actions
.
7.
Investment
Transactions
Purchases
and
sales
(excluding
short
term
securities)
for
the
year
ended
August
31,
2020,
aggregated
$93,870,091
and
$93,728,742,
respectively.
At
August
31,
2020,
in
connection
with
securities
lending
transactions,
the
Fund
loaned
equity
investments
and
received
$332
of
cash
collateral.
The
gross
amount
of
recognized
liability
for
such
transactions
is
included
in
payable
upon
return
of
securities
loaned
in
the
Statement
of
Assets
and
Liabilities.
The
agreements
can
be
terminated
at
any
time.
8.
Credit Risk
and
Defaulted
Securities
At
August
31,
2020,
the
Fund
had
61.4%
of
its
portfolio
invested
in
high
yield
or
other
securities
rated
below
investment
grade
and
unrated
securities,
if
any.
These
securities
may
be
more
sensitive
to
economic
conditions
causing
greater
price
volatility
and
are
potentially
subject
to
a
greater
risk
of
loss
due
to
default
than
higher
rated
securities.
Capital
loss
carryforwards
not
subject
to
expiration:
Long
term
................................................................................
1,888,428
2020
2019
Distributions
paid
from:
Ordinary
income
..........................................................
$9,683,318
$9,650,646
Cost
of
investments
..........................................................................
$226,624,098
Unrealized
appreciation
........................................................................
$55,367,101
Unrealized
depreciation
........................................................................
(15,594,454)
Net
unrealized
appreciation
(depreciation)
..........................................................
$39,772,647
Distributable
earnings:
Undistributed
ordinary
income
...................................................................
$2,767,880
Franklin
Universal
Trust
Notes
to
Financial
Statements
29
franklintempleton.com
Annual
Report
The
Fund
held
defaulted
securities
and/or
other
securities
for
which
the
income
has
been
deemed
uncollectible.
At
August
31,
2020,
the
aggregate
value
of
these
securities
represents
less
than
0.1%
of
the
Fund's
net
assets.
The
Fund
discontinues
accruing
income
on
securities
for
which
income
has
been
deemed
uncollectible
and
provides
an
estimate
for
losses
on
interest
receivable.
The
securities
have
been
identified
in
the
accompanying
Statement
of
Investments.
9. Novel
Coronavirus
Pandemic
The
global
outbreak
of
the
novel
coronavirus
disease,
known
as
COVID-19, has
caused
adverse
effects
on
many
companies,
sectors,
nations,
regions
and
the
markets
in
general, and
may
continue for
an unpredictable duration.
The
effects
of
this
pandemic
may
materially
impact
the
value
and
performance
of
the Fund, its ability
to
buy
and
sell
fund
investments
at
appropriate
valuations
and its ability
to
achieve its investment
objectives.
10.
Fair
Value
Measurements
The
Fund
follows
a
fair
value
hierarchy
that
distinguishes
between
market
data
obtained
from
independent
sources
(observable
inputs)
and
the Fund's
own
market
assumptions
(unobservable
inputs).
These
inputs
are
used
in
determining
the
value
of
the
Fund's financial
instruments
and
are
summarized
in
the
following
fair
value
hierarchy:
Level
1
–
quoted
prices
in
active
markets
for
identical
financial
instruments
Level
2
–
other
significant
observable
inputs
(including
quoted
prices
for
similar
financial
instruments,
interest
rates,
prepayment
speed,
credit
risk,
etc.)
Level
3
–
significant
unobservable
inputs
(including
the
Fund's
own
assumptions
in
determining
the
fair
value
of
financial
instruments)
8.
Credit Risk
and
Defaulted
Securities
(continued)
Franklin
Universal
Trust
Notes
to
Financial
Statements
30
franklintempleton.com
Annual
Report
The
input
levels
are
not
necessarily
an
indication
of
the
risk
or
liquidity
associated
with
financial
instruments
at
that
level.
A
summary
of
inputs
used
as
of
August
31,
2020,
in
valuing
the
Fund's
assets
and
liabilities
carried
at
fair
value,
is
as
follows:
Level
1
Level
2
Level
3
Total
Franklin
Universal
Trust
Assets:
Investments
in
Securities:
Common
Stocks
:
Electric
Utilities
........................
$
44,925,725
$
—
$
—
$
44,925,725
Energy
Equipment
&
Services
.............
51,128
—
—
51,128
Machinery
............................
—
—
158,851
158,851
Metals
&
Mining
.......................
2,467,793
—
—
2,467,793
Multi-Utilities
..........................
32,131,014
—
—
32,131,014
Oil,
Gas
&
Consumable
Fuels
.............
1,429,389
—
—
1,429,389
Paper
&
Forest
Products
.................
43,656
—
—
43,656
Specialty
Retail
........................
103,166
—
—
103,166
Preferred
Stocks
........................
1,234,000
—
—
1,234,000
Warrants
:
Oil,
Gas
&
Consumable
Fuels
.............
—
—
90
90
Paper
&
Forest
Products
.................
—
299
—
299
Convertible
Bonds
.......................
—
2,696
—
2,696
Corporate
Bonds
:
Aerospace
&
Defense
...................
—
1,147,088
—
1,147,088
Airlines
..............................
—
522,500
—
522,500
Auto
Components
......................
—
5,277,163
—
5,277,163
Banks
...............................
—
1,995,519
—
1,995,519
Biotechnology
.........................
—
915,930
—
915,930
Building
Products
......................
—
2,938,859
—
2,938,859
Chemicals
...........................
—
5,521,388
—
5,521,388
Commercial
Services
&
Supplies
...........
—
2,170,551
—
2,170,551
Communications
Equipment
..............
—
1,628,124
—
1,628,124
Construction
&
Engineering
...............
—
940,671
—
940,671
Consumer
Finance
.....................
—
5,287,564
—
5,287,564
Containers
&
Packaging
.................
—
10,447,716
—
10,447,716
Diversified
Financial
Services
.............
—
1,321,515
—
1,321,515
Diversified
Telecommunication
Services
.....
—
9,825,722
—
9,825,722
Electric
Utilities
........................
—
1,588,440
—
1,588,440
Electronic
Equipment,
Instruments
&
Components
........................
—
1,353,913
—
1,353,913
Energy
Equipment
&
Services
.............
—
2,559,711
—
2,559,711
Entertainment
.........................
—
2,257,679
—
2,257,679
Equity
Real
Estate
Investment
Trusts
(REITs)
.
—
2,498,919
—
2,498,919
Food
Products
........................
—
4,217,552
—
4,217,552
Health
Care
Equipment
&
Supplies
.........
—
312,563
—
312,563
Health
Care
Providers
&
Services
..........
—
7,292,159
—
7,292,159
Hotels,
Restaurants
&
Leisure
.............
—
11,663,804
5,625
11,669,429
Household
Durables
....................
—
3,473,401
—
3,473,401
Independent
Power
and
Renewable
Electricity
Producers
..........................
—
6,285,829
—
6,285,829
Insurance
............................
—
1,698,704
—
1,698,704
Internet
&
Direct
Marketing
Retail
..........
—
527,703
—
527,703
IT
Services
...........................
—
3,105,454
—
3,105,454
Machinery
............................
—
4,569,354
—
4,569,354
Media
...............................
—
11,562,846
—
11,562,846
Metals
&
Mining
.......................
—
4,333,916
—
4,333,916
Oil,
Gas
&
Consumable
Fuels
.............
—
19,671,875
481
19,672,356
Personal
Products
.....................
—
315,414
—
315,414
10.
Fair
Value
Measurements
(continued)
Franklin
Universal
Trust
Notes
to
Financial
Statements
31
franklintempleton.com
Annual
Report
A
reconciliation
in
which
Level
3
inputs
are
used
in
determining
fair
value
is
presented
when
there
are
significant
Level
3
assets
and/or
liabilities
at
the
beginning
and/or
end
of
the year.
At
August
31,
2020,
the
reconciliation is
as follows:
Level
1
Level
2
Level
3
Total
Franklin
Universal
Trust
(continued)
Assets:
Investments
in
Securities:
Corporate
Bonds:
Pharmaceuticals
.......................
$
—
$
4,751,817
$
—
$
4,751,817
Real
Estate
Management
&
Development
....
—
1,517,208
—
1,517,208
Road
&
Rail
..........................
—
1,381,611
—
1,381,611
Semiconductors
&
Semiconductor
Equipment
.
—
1,403,984
—
1,403,984
Software
.............................
—
2,560,354
—
2,560,354
Specialty
Retail
........................
—
1,958,952
—
1,958,952
Technology
Hardware,
Storage
&
Peripherals
.
—
340,229
—
340,229
Textiles,
Apparel
&
Luxury
Goods
..........
—
1,052,605
—
1,052,605
Thrifts
&
Mortgage
Finance
...............
—
2,792,189
—
2,792,189
Trading
Companies
&
Distributors
..........
—
3,693,706
—
3,693,706
Wireless
Telecommunication
Services
.......
—
5,080,298
—
5,080,298
Marketplace
Loans
......................
—
—
4,023,963
4,023,963
Asset-Backed
Securities
..................
—
8,820,073
—
8,820,073
Escrows
and
Litigation
Trusts
...............
—
—
14
14
Short
Term
Investments
...................
5,235,951
332
—
5,236,283
Total
Investments
in
Securities
...........
$87,621,822
$174,585,899
$4,189,024
$266,396,745
Balance
at
Beginning
of
Year
Purchases
Sales
Transfer
Into
Level
3
a
Transfer
Out
of
Level
3
Cost
Basis
Adjust-
ments
b
Net
Realized
Gain
(Loss)
Net
Unr
ealized
Appreciatio
n
(
Depreciation
)
Balance
at
End
of
Year
Net
Change
in
Unrealized
Appreciation
(Depreciation)
on
Assets
Held
at
Year
End
a
a
a
a
a
a
a
a
a
a
a
Franklin
Universal
Trust
Assets:
Investments
in
Securities:
Common
Stocks
:
Machinery
$
—
$
—
$
—
$
158,851
$
—
$
—
$
—
$
—
$
158,851
$
—
Warrants
:
Oil,
Gas
&
Consumable
Fuels
.
12
—
—
3,796
—
—
—
(3,7
18
)
90
(3,706)
Corporate
Bonds
:
Hotels,
Restaurants
&
Leisure
—
—
—
5,625
—
—
—
—
5,625
—
Oil,
Gas
&
Consumable
Fuels
.
—
—
—
481
—
—
—
—
481
—
Marketplace
Loans
:
Diversified
Financial
Services
1,529,798
4,805,897
(
1,658,460
)
—
—
 —
 (17,889)
(
635,383
)
4,023,963
(631,780)
Escrows
and
Litigation
Trusts
—
c
—
—
1,400
—
—
—
(1,386)
14
(1,386)
Total
Investments
in
Securities
.....
$1,529,810
$4,805,897
$(1,658,460)
$170,153
$—
$—
(
17,889
)
(
640,4
87
)
$4,189,024
(
636
,
872
)
10.
Fair
Value
Measurements
(continued)
Franklin
Universal
Trust
Notes
to
Financial
Statements
32
franklintempleton.com
Annual
Report
Significant
unobservable
valuation
inputs
for
material
Level
3 assets
and/or
liabilities and
impact
to
fair
value
as
a
result
of
changes
in
unobservable
valuation
inputs
as
of
August
31,
2020,
are
as
follows:
11.
New
Accounting
Pronouncements
In
March
2020,
the
Financial
Accounting
Standards
Board
(FASB)
issued
Accounting
Standards
Update
(ASU)
No.
2020-
04,
Reference
Rate
Reform
(Topic
848)
–
Facilitation
of
the
Effects
of
Reference
Rate
Reform
on
Financial
Reporting.
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. 
12.
Subsequent
Events
The
Fund
has
evaluated
subsequent
even
ts
through
the
issuance
of
the
financial
statements
and
determined
that
no
events
have
occurred
that
require
disclosure
.
a
Transferred
into
level
3
as
a
result
of
the
unavailability
of
a
quoted
market
price
in
an
active
market
for
identical
securities
or
as
a
result
of
the
unreliability
of
the
foreign
exchange
rate
and
other
significant
observable
valuation
inputs.
May
include
amounts
related
to
a
corporate
action.
b
May
include
accretion,
amortization,
partnership
adjustments,
and/or
other
cost
basis
adjustments.
c
Includes
securities
determined
to
have
no
value.
Description
Fair
Value
at
End
of
Year/
Period
Valuation
Technique
Unobservable
Inputs
Amount
(Weighted
Average)
a
Impact
to
Fair
Value
if
Input
Increases
b
Franklin
Universal
Trust
Assets:
Investments
in
Securities:
Marketplace
Loans:
Lending
Club
.................
$3,658,403
Discounted
cash
flow
Loss-adjusted
discount
rate
7.4%
Decrease
c
Projected
loss
rate
23.4%
Decrease
c
Lending
Club
-
LCX
............
268,724
Discounted
cash
flow
Loss-adjusted
discount
rate
8.8%
Decrease
c
Projected
loss
rate
22.6%
Decrease
c
Upgrade
....................
96,836
Discounted
cash
flow
Loss-adjusted
discount
rate
11.9%
Decrease
c
Projected
loss
rate
43.5%
Decrease
b
All
Other
(
d
)
...................
165,061
Total
$4,189,024
a
W
eighted
based
on
the
relative
fair
value
of
the
financial
instruments
.
b
Represents
the
directional
change
in
the
fair
value
that
would
result
from
a
significant
and
reasonable
increase
in
the
corresponding
input.
A
significant
and
reasonable
decrease
in
the
input
would
have
the
opposite
effect.
Significant
impacts,
if
any,
to
fair
value
and/or
net
assets
have
been
indicated.
c
Represents
a
significant
impact
to
fair
value
but
not
net
assets.
d
Includes
fair
value
of
immaterial
assets
and/or
liabilities
developed
using
various
valuation
techniques
and
unobservable
inputs.
May
also
include
values
derived
using
private
transaction
prices
or
non-public
third
party
pricing
information
which
is
unobservable.
10.
Fair
Value
Measurements
(continued)
Franklin
Universal
Trust
Notes
to
Financial
Statements
33
franklintempleton.com
Annual
Report
Abbreviations
Currency
USD
United
States
Dollar
Selected
Portfolio
ADR
American
Depositary
Receipt
FRN
Floating
Rate
Note
LIBOR
London
Inter-Bank
Offered
Rate
PIK
Payment-In-Kind
Franklin
Universal
Trust
Report
of
Independent
Registered
Public
Accounting
Firm
34
franklintempleton.com
Annual
Report
To
the
Board
of
Trustees
and
Shareholders
of
Franklin
Universal
Trust
Opinion
on
the
Financial
Statements
We
have
audited
the
accompanying
statement
of
assets
and
liabilities,
including
the
statement
of
investments,
of
Franklin
Universal
Trust
(the
"Fund")
as
of
August
31,
2020,
the
related
statements
of
operations
and
cash
flows
for
the
year
ended
August
31,
2020,
the
statements
of
changes
in
net
assets
for
each
of
the
two
years
in
the
period
ended
August
31,
2020,
including
the
related
notes,
and
the
financial
highlights
for
each
of
the
five
years
in
the
period
ended
August
31,
2020
(collectively
referred
to
as
the
“financial
statements”).
In
our
opinion,
the
financial
statements
present
fairly,
in
all
material
respects,
the
financial
position
of
the
Fund
as
of
August
31,
2020,
the
results
of
its
operations
and
its
cash
flows
for
the
year
then
ended,
the
changes
in
its
net
assets
for
each
of
the
two
years
in
the
period
ended
August
31,
2020
and
the
financial
highlights
for
each
of
the
five
years
in
the
period
ended
August
31,
2020
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America.
Basis
for
Opinion
These
financial
statements
are
the
responsibility
of
the
Fund’s
management.
Our
responsibility
is
to
express
an
opinion
on
the
Fund’s
financial
statements
based
on
our
audits.
We
are
a
public
accounting
firm
registered
with
the
Public
Company
Accounting
Oversight
Board
(United
States)
(PCAOB)
and
are
required
to
be
independent
with
respect
to
the
Fund
in
accordance
with
the
U.S.
federal
securities
laws
and
the
applicable
rules
and
regulations
of
the
Securities
and
Exchange
Commission
and
the
PCAOB.
We
conducted
our
audits
of
these
financial
statements
in
accordance
with
the
standards
of
the
PCAOB.
Those
standards
require
that
we
plan
and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
the
financial
statements
are
free
of
material
misstatement,
whether
due
to
error
or
fraud.
Our
audits
included
performing
procedures
to
assess
the
risks
of
material
misstatement
of
the
financial
statements,
whether
due
to
error
or
fraud,
and
performing
procedures
that
respond
to
those
risks.
Such
procedures
included
examining,
on
a
test
basis,
evidence
regarding
the
amounts
and
disclosures
in
the
financial
statements.
Our
audits
also
included
evaluating
the
accounting
principles
used
and
significant
estimates
made
by
management,
as
well
as
evaluating
the
overall
presentation
of
the
financial
statements.
Our
procedures
included
confirmation
of
securities
owned
as
of
August
31,
2020
by
correspondence
with
the
custodian,
transfer
agent
and
brokers;
when
replies
were
not
received
from
brokers,
we
performed
other
auditing
procedures.
We
believe
that
our
audits
provide
a
reasonable
basis
for
our
opinion.
PricewaterhouseCoopers
LLP
San
Francisco,
California
October
21,
2020
We
have
served
as
the
auditor
of
one
or
more
investment
companies
in
the
Franklin
Templeton
Group
of
Funds
since
1948.
Franklin
Universal
Trust
Tax
Information
(unaudited)
35
franklintempleton.com
Annual
Report
Under
Section
854(b)(1)(A)
of
the
Internal
Revenue
Code,
the
Fund
hereby
reports
27.21%
of
the
ordinary
income
dividends
as
income
qualifying
for
the
dividends
received
deduction
for
the
fiscal
year
ended
August
31,
2020.
Under
Section
854(b)(1)(B)
of
the
Internal
Revenue
Code,
the
Fund
hereby
reports
the
maximum
amount
allowable
but
no
less
than
$2,799,090
as
qualified
dividends
for
purposes
of
the
maximum
rate
under
Section
1(h)(11)
of
the
Internal
Revenue
Code
for
the
fiscal
year
ended
August
31,
2020.
Distributions,
including
qualified
dividend
income,
paid
during
calendar
year
2020
will
be
reported
to
shareholders
on
Form
1099-DIV
by
mid-February
2021.
Shareholders
are
advised
to
check
with
their
tax
advisors
for
information
on
the
treatment
of
these
amounts
on
their
individual
income
tax
returns.
Under
Section
871(k)(1)(C)
of
the
Internal
Revenue
Code,
the
Fund
hereby
reports
the
maximum
amount
allowable
but
no
less
than
$30,571
as
a
short
term
capital
gain
dividend
for
purposes
of
the
tax
imposed
under
Section
871(a)(1)(A)
of
the
Internal
Revenue
Code
for
the
fiscal
year
ended
August
31,
2020.
Under
Section
871(k)(1)(C)
of
the
Internal
Revenue
Code,
the
Fund
hereby
reports
the
maximum
amount
allowable
but
no
less
than
$8,173,394
as
interest
related
dividends
for
purposes
of
the
tax
imposed
under
Section
871(a)(1)(A)
of
the
Internal
Revenue
Code
for
the
fiscal
year
ended
August
31,
2020.
Franklin
Universal
Trust
Important
Information
to
Shareholders
36
franklintempleton.com
Annual
Report
Share
Repurchase
Program
The
Fund’s
Board
previously
authorized
an
open-market
share
repurchase
program,
pursuant
to
which
the
Fund
may
purchase
Fund
shares,
from
time
to
time,
up
to
10%
of
the
Fund’s
common
shares
in
open-market
transactions,
at
the
discretion
of
management.
This
authorization
remains
in
effect.
Your
Fund’s
Goal
and
Main
Investments
The
Fund’s
primary
investment
objective
is
to
provide
high,
current
income
consistent
with
preservation
of
capital.
Its
secondary
objective
is
growth
of
income
through
dividend
increases
and
capital
appreciation.
Principal
Investment
Strategy
We
invest
primarily
in
two
asset
classes:
high-yield
bonds
and
utility
stocks.
Within
the
high-yield
portion
of
the
portfolio,
we
use
fundamental
research
to
invest
in
a
diversified
portfolio
of
bonds.
Within
the
utility
portion
of
the
portfolio,
we
focus
on
companies
with
attractive
dividend
yields
and
with
a
history
of
increasing
their
dividends.
In
seeking
to
obtain
higher
income,
the
Fund
may
invest
in
a
significant
portion
of
its
portfolio
in
lower-rated
U.S.
debt
securities
that
have
high
income
producing
characteristics,
including
obligations
of
corporations
and
other
business
organizations.
Lower-rated
securities
generally
pay
higher
yields
than
more
highly
rated
securities
to
compensate
investors
for
the
higher
risk.
The
Fund
may
also
invest
in
income
producing
debt
obligations
of
the
U.S.
Government,
its
agencies
and
instrumentalities,
and
foreign
governments
and
supranational
organizations.
Under
normal
market
conditions,
the
Fund
generally
will
invest
between
60%
and
80%
of
its
total
assets
in
high
income
producing
debt
securities
of
U.S.
and
foreign
issuers,
allocated
among
issuers,
geographic
regions,
and
currency
denominations
in
a
manner
that
is
consistent
with
its
objectives
based
upon
relative
interest
rates
among
various
instruments
denominated
in
different
currencies,
the
outlook
for
changes
in
these
interest
rates,
and
anticipated
changes
in
currency
exchange
rates.
Under
normal
market
conditions,
the
Fund
will
invest
approximately
20%
to
40%
of
its
assets
in
dividend-paying
common
and
preferred
stocks.
The
Fund
will
emphasize
investment
in
common
stocks
paying
high
current
dividends
with
a
focus
on
public
utility
companies.
The
Fund
may
also
invest
in
the
equity
and
convertible
securities
of
companies
engaged
in
the
business
of
extracting
and
processing
precious
metals
and
natural
resources,
such
as
gold
mining
stocks.
The
Fund
may
also
invest
a
small
portion
of
its
total
assets
in
loans
originated
through
on-line
marketplace
lending
platforms
that
provide
a
marketplace
for
lending
through
the
purchase
of
loans
(either
individually
or
in
aggregations)
and
other
types
of
marketplace
lending
instruments
(See
the
Notes
to
Financial
Statements
for
further
information).
Securities
may
be
purchased
by
the
Fund
on
a
“when
issued”
or
on
a
“forward
delivery”
basis,
which
means
that
the
obligations
will
be
delivered
at
a
future
date
beyond
customary
settlement
time.
The
Fund
employs
leverage
through
the
issuance
of
senior
fixed
rate
notes
(See
the
Notes
to
Financial
Statements
for
further
information).
The
Fund
may
also
invest
in
short-term
U.S.
government
securities
and
other
money
market
instruments
(including
certificates
of
deposit,
commercial
paper,
bankers’
acceptances,
short-term
foreign
government
securities,
and
repurchase
agreements)
although
it
typically
will
not
invest
more
than
5%
of
its
total
assets
in
such
securities
except
for
temporary
defensive
purposes.
Principal
Investment
Risks
You
could
lose
money
by
investing
in
the
Fund.
Closed-end
fund
shares
are
not
deposits
or
obligations
of,
or
guaranteed
or
endorsed
by,
any
bank,
and
are
not
insured
by
the
Federal
Deposit
Insurance
Corporation,
the
Federal
Reserve
Board,
or
any
other
agency
of
the
U.S.
government.
High-Yield
Debt
Securities
Issuers
of
lower-rated
or
“high-yield”
debt
securities
(also
known
as
“junk
bonds”)
are
not
as
strong
financially
as
those
issuing
higher
credit
quality
debt
securities.
High-yield
debt
securities
are
generally
considered
predominantly
speculative
by
the
applicable
rating
agencies
as
their
issuers
are
more
likely
to
encounter
financial
difficulties
because
they
may
be
more
highly
leveraged,
or
because
of
other
considerations.
In
addition,
high
yield
debt
securities
generally
are
more
vulnerable
to
changes
in
the
relevant
economy,
such
as
a
recession
or
a
sustained
period
of
rising
interest
rates,
that
could
affect
their
ability
to
make
interest
and
principal
payments
when
due.
The
prices
of
high-yield
Franklin
Universal
Trust
Important
Information
to
Shareholders
37
franklintempleton.com
Annual
Report
debt
securities
generally
fluctuate
more
than
those
of
higher
credit
quality.
High-yield
debt
securities
are
generally
more
illiquid
(harder
to
sell)
and
harder
to
value.
Interest
Rate
When
interest
rates
rise,
debt
security
prices
generally
fall.
The
opposite
is
also
generally
true:
debt
security
prices
rise
when
interest
rates
fall.
Interest
rate
changes
are
influenced
by
a
number
of
factors,
including
government
policy,
monetary
policy,
inflation
expectations,
perceptions
of
risk,
and
supply
of
and
demand
for
bonds.
In
general,
securities
with
longer
maturities
or
durations
are
more
sensitive
to
interest
rate
changes.
Credit
An
issuer
of
debt
securities
may
fail
to
make
interest
payments
or
repay
principal
when
due,
in
whole
or
in
part.
Changes
in
an
issuer’s
financial
strength
or
in
a
security’s
or
government’s
credit
rating
may
affect
a
security’s
value.
Utilities
Industry
Utility
company
equity
securities
historically
have
been
sensitive
to
interest
rate
movements:
when
interest
rates
have
risen,
the
stock
prices
of
these
companies
have
tended
to
fall.
Regulatory
changes
in
certain
states
have
led
to
greater
competition
in
the
industry
and
the
emergence
of
non-regulated
providers
as
a
significant
part
of
the
industry,
and
could
impact
the
operations
of
regulated
providers
and
increase
the
cost
of
compliance.
These
trends
have
also
made
shares
of
some
utility
companies
less
sensitive
to
interest
rate
changes
but
more
sensitive
to
changes
in
revenue
and
earnings
and
caused
them
to
reduce
the
ratio
of
their
earnings
they
pay
out
as
dividends.
In
addition,
the
industry
is
subject
to
a
variety
of
risks
specific
to
this
industry:
utilities
may
find
it
difficult
to
obtain
adequate
returns
on
invested
capital
in
spite
of
rate
increases
or
because
rate
increases
become
increasingly
difficult
to
obtain;
they
may
face
difficulty
in
financing
large
construction
programs
during
inflationary
and
rising
interest
rate
periods;
utilities
are
subject
to
many
restrictions
on
operations
and
increased
costs
due
to
environmental
and
safety
regulations;
utilities
may
face
difficulties
in
obtaining
fuel
sources,
such
as
coal,
for
electric
generation
at
reasonable
prices;
utilities
may
face
risks
associated
with
the
operation
of
nuclear
power
plants
(including
litigation,
issues
associated
with
the
use
of
radioactive
materials
and
the
effects
of
natural
or
man-made
disasters);
utilities
may
face
greater
demands
in
providing
reliable
service
with
the
increasing
complexity
of
the
power
grid;
utilities
also
may
be
subject
to
adverse
effects
of
the
results
of
energy
conservation
programs
as
well
as
other
factors
affecting
the
level
of
demand
for
services.
Market
The
market
values
of
securities
or
other
investments
owned
by
the
Fund
will
go
up
or
down,
sometimes
rapidly
or
unpredictably.
The
market
value
of
a
security
or
other
investment
may
be
reduced
by
market
activity
or
other
results
of
supply
and
demand
unrelated
to
the
issuer.
This
is
a
basic
risk
associated
with
all
investments.
When
there
are
more
sellers
than
buyers,
prices
tend
to
fall.
Likewise,
when
there
are
more
buyers
than
sellers,
prices
tend
to
rise.
Leverage
The
Fund
employs
leverage
through
the
issuance
of
senior
fixed
rate
notes
which
creates
an
opportunity
for
increased
income,
but,
at
the
same
time,
creates
special
risks
(including
the
likelihood
of
greater
volatility
of
net
asset
value
and
market
price
of
common
shares).
The
cost
of
leverage
rises
and
falls
with
changes
in
short-term
interest
rates.
The
costs
of
using
leverage
may
be
greater
than
the
proceeds
of
the
leverage.
The
Fund’s
leveraging
strategy
may
not
be
successful.
Foreign
Securities
(non-U.S.)
Investing
in
foreign
securities
typically
involves
more
risks
than
investing
in
U.S.
securities,
and
includes
risks
associated
with:
(i)
internal
and
external
political
and
economic
developments
–
e.g.,
the
political,
economic
and
social
policies
and
structures
of
some
foreign
countries
may
be
less
stable
and
more
volatile
than
those
in
the
U.S.
or
some
foreign
countries
may
be
subject
to
trading
restrictions
or
economic
sanctions;
(ii)
trading
practices
–
e.g.,
government
supervision
and
regulation
of
foreign
securities
and
currency
markets,
trading
systems
and
brokers
may
be
less
than
in
the
U.S.;
(iii)
availability
of
information
–
e.g.,
foreign
issuers
may
not
be
subject
to
the
same
disclosure,
accounting
and
financial
reporting
standards
and
practices
as
U.S.
issuers;
(iv)
limited
markets
–
e.g.,
the
securities
of
certain
foreign
issuers
may
be
less
liquid
(harder
to
sell)
and
more
volatile;
and
(v)
currency
exchange
rate
fluctuations
and
policies.
The
risks
of
foreign
investments
may
be
greater
in
developing
or
emerging
market
countries.
Franklin
Universal
Trust
Important
Information
to
Shareholders
38
franklintempleton.com
Annual
Report
Management
The
Fund
is
subject
to
management
risk
because
it
is
an
actively
managed
investment
portfolio.
The
Fund’s
investment
manager
applies
investment
techniques
and
risk
analyses
in
making
investment
decisions
for
the
Fund,
but
there
can
be
no
guarantee
that
these
decisions
will
produce
the
desired
results.
Franklin
Universal
Trust
Annual
Meeting
of
Shareholders
39
franklintempleton.com
Annual
Report
An
annual
shareholders’
meeting
of
Franklin
Universal
Trust
(Fund)
was
held
on
March 12,
2020.
At
the
meeting,
the
holders
of
25,131,894
shares
of
the
Fund’s
common
stock
were
represented
in
person
or
by
proxy,
constituting
a
quorum.
At
the
Meeting,
shareholders
elected
all
of
the
Fund’s
nominees
for
the
Board
of
Trustees.
The
results
of
the
voting
were
as
follows: 
Nominees
Shares
For
Shares
Withheld
Harris
J.
Ashton
20,042,148
731,481
Terrence
J.
Checki
20,047,129
726,500
Mary
C.Choksi
20,104,756
668,873
Edith
E.
Holiday
20,116,554
657,075
Gregory
E.
Johnson
20,073,666
699,963
Rupert
H.
Johnson,
Jr.
20,036,260
737,369
J.
Michael
Luttig
20,074,758
698,871
Larry
D.
Thompson
20,086,230
687,399
Franklin
Universal
Trust
Dividend
Reinvestment
and
Cash
Purchase
Plan
40
franklintempleton.com
Annual
Report
The
Fund’s
Dividend
Reinvestment
and
Cash
Purchase
Plan
(Plan)
offers
you
a
prompt
and
simple
way
to
reinvest
dividends
and
capital
gain
distributions
in
shares
of
the
Fund.
The
Plan
also
allows
you
to
purchase
additional
shares
of
the
Fund
by
making
voluntary
cash
payments.
American
Stock
Transfer
&
Trust
Company,
LLC
(Plan
Agent),
P.O.
Box
922,
Wall
Street
Station,
New
York,
NY
10269-0560,
acts
as
your
Plan
Agent
in
administering
the
Plan.
You
are
automatically
enrolled
in
the
Plan
unless
you
elect
to
receive
dividends
or
distributions
in
cash.
If
you
own
shares
in
your
own
name,
you
should
notify
the
Plan
Agent,
in
writing,
if
you
wish
to
receive
dividends
or
distributions
in
cash.
If
the
Fund
declares
a
dividend
or
capital
gain
distribution
payable
either
in
cash
or
in
stock
of
the
Fund
and
the
market
price
of
shares
on
the
valuation
date
equals
or
exceeds
the
net
asset
value,
the
Fund
will
issue
new
shares
to
you
at
the
higher
of
net
asset
value
or
95%
of
the
then
current
market
price.
Whenever
the
Fund
declares
a
distribution
from
capital
gains
or
an
income
dividend
payable
in
either
cash
or
shares,
if
the
net
asset
value
per
share
of
the
Fund’s
common
stock
exceeds
the
market
price
per
share
on
the
valuation
date,
the
Plan
Agent
shall
apply
the
amount
of
such
dividend
or
distribution
payable
to
participants
to
the
purchase
of
shares
(less
their
pro
rata
share
of
brokerage
commissions
incurred
with
respect
to
open
market
purchases
in
connection
with
the
reinvestment
of
such
dividend
or
distribution).
If
the
price
exceeds
the
net
asset
value
before
the
Plan
Agent
has
completed
its
purchases,
the
average
purchase
price
may
exceed
the
net
asset
value,
resulting
in
fewer
shares
being
acquired
than
if
the
Fund
had
issued
new
shares.
All
reinvestments
are
in
full
and
fractional
shares,
carried
to
three
decimal
places.
The
Fund
will
not
issue
shares
under
the
Plan
at
a
price
below
net
asset
value.
The
Plan
permits
you
on
a
voluntary
basis
to
submit
in
cash
payments
of
not
less
than
$100
each
up
to
a
total
of
$5,000
per
month
to
purchase
additional
shares
of
the
Fund.
It
is
entirely
up
to
you
whether
you
wish
to
buy
additional
shares
with
voluntary
cash
payments,
and
you
do
not
have
to
send
in
the
same
amount
each
time
if
you
do.
These
payments
should
be
made
by
check
or
money
order
payable
to
American
Stock
Transfer
&
Trust
Company,
LLC
and
sent
to
American
Stock
Transfer
&
Trust
Company,
LLC,
P.O.
Box
922,
Wall
Street
Station,
New
York,
NY
10269-0560,
Attn:
Franklin
Universal
Trust.
Your
cash
payment
will
be
aggregated
with
the
payments
of
other
participants
and
invested
on
your
behalf
by
the
Plan
Agent
in
shares
of
the
Fund
that
are
purchased
in
the
open
market.
The
Plan
Agent
will
invest
cash
payments
on
approximately
the
5th
of
each
month
in
which
no
dividend
or
distribution
is
payable
and,
during
each
month
in
which
a
dividend
or
distribution
is
payable,
will
invest
cash
payments
beginning
on
the
dividend
payment
date.
Under
no
circumstances
will
interest
be
paid
on
your
funds
held
by
the
Plan
Agent.
Accordingly,
you
should
send
any
voluntary
cash
payments
you
wish
to
make
shortly
before
an
investment
date
but
in
sufficient
time
to
ensure
that
your
payment
will
reach
the
Plan
Agent
not
less
than
two
business
days
before
an
investment
date.
Payments
received
less
than
two
business
days
before
an
investment
date
will
be
invested
during
the
next
month
or,
if
there
are
more
than
30
days
until
the
next
investment
date,
will
be
returned
to
you.
You
may
obtain
a
refund
of
any
cash
payment
by
written
notice,
if
the
Plan
Agent
receives
the
written
notice
not
less
than
48
hours
before
an
investment
date.
There
is
no
direct
charge
to
participants
for
reinvesting
dividends
and
capital
gain
distributions,
since
the
Plan
Agent’s
fees
are
paid
by
the
Fund.
However,
when
shares
are
purchased
in
the
open
market,
each
participant
will
pay
a
pro
rata
portion
of
any
brokerage
commissions
incurred.
The
Plan
Agent
will
deduct
a
$5.00
service
fee
from
each
of
your
voluntary
cash
payments.
The
automatic
reinvestment
of
dividends
and
capital
gain
distributions
does
not
relieve
you
of
any
taxes
which
may
be
payable
on
dividends
or
distributions.
In
connection
with
the
reinvestment
of
dividends
and
capital
gain
distributions,
if
the
Fund
issues
new
shares,
shareholders
receiving
such
shares
generally
will
be
treated
as
having
a
distribution
equal
to
the
market
value
of
the
shares
received,
and
if
shares
are
purchased
on
the
open
market,
shareholders
generally
will
be
treated
as
having
received
a
distribution
equal
to
the
cash
distribution
that
would
have
been
paid.
The
Fund
does
not
issue
new
shares
in
connection
with
voluntary
cash
payments.
All
investments
are
in
full
and
fractional
shares,
carried
to
three
decimal
places.
If
the
market
price
exceeds
the
net
asset
value
at
the
time
the
Plan
Agent
purchases
the
additional
shares,
you
will
receive
shares
at
a
price
greater
than
the
net
asset
value.
Franklin
Universal
Trust
Dividend
Reinvestment
and
Cash
Purchase
Plan
41
franklintempleton.com
Annual
Report
You
will
receive
a
monthly
account
statement
from
the
Plan
Agent
showing
total
dividends
and
capital
gain
distributions,
date
of
investment,
shares
acquired
and
price
per
share,
and
total
shares
of
record
held
by
you
and
by
the
Plan
Agent
for
you.
You
are
entitled
to
vote
all
shares
of
record,
including
shares
purchased
for
you
by
the
Plan
Agent,
and,
if
you
vote
by
proxy,
your
proxy
will
include
all
such
shares.
As
long
as
you
participate
in
the
Plan,
the
Plan
Agent
will
hold
the
shares
it
has
acquired
for
you
in
safekeeping,
in
its
name
or
in
the
name
of
its
nominee.
This
convenience
provides
added
protection
against
loss,
theft
or
inadvertent
destruction
of
certificates.
However,
you
may
request
that
a
certificate
representing
your
Plan
shares
be
issued
to
you.
You
may
withdraw
from
the
Plan
without
penalty
at
any
time
by
notifying
the
Plan
Agent,
in
writing,
at
the
address
above.
If
you
withdraw,
you
will
receive,
without
charge,
stock
certificates
issued
in
your
name
for
all
full
shares.
The
Plan
Agent
will
convert
any
fractional
shares
you
hold
at
the
time
of
your
withdrawal
to
cash
at
current
market
price
and
send
you
a
check
for
the
proceeds.
If
you
hold
shares
in
your
own
name,
please
address
all
notices,
correspondence,
questions,
or
other
communications
regarding
the
Plan
to
the
Plan
Agent
at
the
address
noted
above.
If
your
shares
are
not
held
in
your
name,
you
should
contact
your
brokerage
firm,
bank,
or
other
nominee
for
more
information
and
to
determine
if
our
nominee
will
participate
in
the
Plan
on
your
behalf.
The
Fund
or
the
Plan
Agent
may
amend
or
terminate
the
Plan.
You
will
receive
written
notice
at
least
90
days
before
the
effective
date
of
termination
or
of
any
amendment.
In
the
case
of
termination,
you
will
receive
written
notice
at
least
90
days
before
the
record
date
of
any
dividend
or
capital
gain
distribution
by
the
Fund.
Franklin
Universal
Trust
Board
Members
and
Officers
42
franklintempleton.com
Annual
Report
The
name,
year
of
birth
and
address
of
the
officers
and
board
members,
as
well
as
their
affiliations,
positions
held
with
the
Trust,
principal
occupations
during
at
least
the
past
five
years
and
number
of
U.S.
registered
portfolios
overseen
in
the
Franklin
Templeton
fund
complex,
are
shown
below.
Generally,
each
board
member
serves
until
that
person’s
successor
is
elected
and
qualified.
Independent
Board
Members
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Harris
J.
Ashton
(1932)
Trustee
Since
1998
126
Bar-S
Foods
(meat
packing
company)
(1981-2010).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Director,
RBC
Holdings,
Inc.
(bank
holding
company)
(until
2002);
and
President,
Chief
Executive
Officer
and
Chairman
of
the
Board,
General
Host
Corporation
(nursery
and
craft
centers)
(until
1998).
Terrence
J.
Checki
(1945)
Trustee
Since
2018
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
Universal
Trust
43
franklintempleton.com
Annual
Report
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Edith
E.
Holiday
(1952)
Lead
Independent
Trustee
Trustee
since
2004
and
Lead
Independent
Trustee
since
2019
126
Hess
Corporation
(exploration
of
oil
and
gas)
(1993-present),
Canadian
National
Railway
(railroad)
(2001-present),
White
Mountains
Insurance
Group,
Ltd.
(holding
company)
(2004-present),
Santander
Consumer
USA
Holdings,
Inc.
(consumer
finance)
(2016-present);
Santander
Holdings
USA.
(holding
company)
(2019-present);
and
formerly
,
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-May
2020;
previously
2010-2012),
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-September
2020);
Executive
Vice
President
-
Government
Affairs,
General
Counsel
and
Corporate
Secretary,
PepsiCo,
Inc.
(consumer
products)
(2012-2014);
Senior
Vice
President
-
Government
Affairs,
General
Counsel
and
Secretary,
PepsiCo,
Inc.
(2004-2011);
Senior
Fellow
of
The
Brookings
Institution
(2003-2004);
Visiting
Professor,
University
of
Georgia
School
of
Law
(2004);
and
Deputy
Attorney
General,
U.S.
Department
of
Justice
(2001-2003).
Independent
Board
Members
(continued)
Franklin
Universal
Trust
44
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
**Gregory
E.
Johnson
(1961)
Trustee
Since
2013
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,
Trustee
and
Senior
Vice
President
Chairman
of
the
Board
since
2013,
Trustee
and
Senior
Vice
President
since
1988
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
41
of
the
investment
companies
in
Franklin
Templeton.
Breda
M.
Beckerle
(1958)
Interim
Chief
Compliance
Officer
Since
January
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
41
of
the
investment
companies
in
Franklin
Templeton.
Sonal
Desai,
Ph.D.
(1963)
President
and
Chief
Executive
Officer
–
Investment
Management
Since
2018
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
and
Executive
Vice
President,
Franklin
Advisers,
Inc.;
Executive
Vice
President,
Franklin
Templeton
Institutional,
LLC;
and
officer
of
17
of
the
investment
companies
in
Franklin
Templeton.
Gaston
Gardey
(1967)
Treasurer,
Chief
Financial
Officer
and
Chief
Accounting
Officer
Since
2009
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Treasurer,
U.S.
Fund
Administration
&
Reporting
and
officer
of
24
of
the
investment
companies
in
Franklin
Templeton.
Franklin
Universal
Trust
45
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
41
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
41
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
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
41
of
the
investment
companies
in
Franklin
Templeton.
Robert
C.
Rosselot
(1960)
Chief
Compliance
Officer
Since
2013
Not
Applicable
Not
Applicable
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director,
Global
Compliance,
Franklin
Templeton;
Senior
Vice
President,
Franklin
Templeton
Companies,
LLC;
officer
of
41
of
the
investment
companies
in
Franklin
Templeton;
and
formerly
,
Senior
Associate
General
Counsel,
Franklin
Templeton
(2007-2013);
and
Secretary
and
Vice
President,
Templeton
Group
of
Funds
(2004-2013).
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
41
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
41
of
the
investment
companies
in
Franklin
Templeton.
Lori
A.
Weber
(1964)
Vice
President
and
Co-Secretary
Vice
President
since
2011
and
Co-Secretary
since
2019
Not
Applicable
Not
Applicable
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
Assistant
Secretary,
Franklin
Resources,
Inc.;
Vice
President
and
Secretary,
Templeton
Investment
Counsel,
LLC;
and
officer
of
41
of
the
investment
companies
in
Franklin
Templeton.
Interested
Board
Members
and
Officers
(continued)
Franklin
Universal
Trust
46
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.
Interested
Board
Members
and
Officers
(continued)
Franklin
Universal
Trust
Shareholder
Information
47
franklintempleton.com
Annual
Report
Proxy
Voting
Policies
and
Procedures
The
Fund’s
investment
manager
has
established
Proxy
Voting
Policies
and
Procedures
(Policies)
that
the
Fund
uses
to
determine
how
to
vote
proxies
relating
to
portfolio
securities.
Shareholders
may
view
the
Fund’s
complete
Policies
online
at
franklintempleton.com.
Alternatively,
shareholders
may
request
copies
of
the
Policies
free
of
charge
by
calling
the
Proxy
Group
collect
at
(954)
527-
7678
or
by
sending
a
written
request
to:
Franklin
Templeton
Companies,
LLC,
300
S.E.
2nd
Street,
Fort
Lauderdale,
FL
33301,
Attention:
Proxy
Group.
Copies
of
the
Fund’s
proxy
voting
records
are
also
made
available
online
at
franklintempleton.com
and
posted
on
the
U.S.
Securities
and
Exchange
Commission’s
website
at
sec.gov
and
reflect
the
most
recent
12-month
period
ended
June
30.
Quarterly
Statement
of
Investments
The
Fund
files
a
complete
statement
of
investments
with
the
U.S.
Securities
and
Exchange
Commission
for
the
first
and
third
quarters
for
each
fiscal
year
as
an
exhibit
to
its
report
on
Form
N-PORT.
Shareholders
may
view
the
filed
Form
N-PORT
by
visiting
the
Commission’s
website
at
sec.
gov.
The
filed
form
may
also
be
viewed
and
copied
at
the
Commission’s
Public
Reference
Room
in
Washington,
DC.
Information
regarding
the
operations
of
the
Public
Reference
Room
may
be
obtained
by
calling
(800)
SEC-0330.
FUT
A
10/20
©
2020
Franklin
Templeton
Investments.
All
rights
reserved.
To
help
ensure
we
provide
you
with
quality
service,
all
calls
to
and
from
our
service
areas
are
monitored
and/or
recorded.
Annual
Report
Franklin
Universal
Trust
Investment
Manager
Transfer
Agent
Franklin
Advisors,
Inc.
(800)
DIAL
BEN
®
/
342-
5236
American
Stock
Transfer
&
Trust
Co.,
LLC
6201
15th
Avenue
Brooklyn,
NY
11219
www.astfinancial.com
Item 2. Code of Ethics.
 
(a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer. 
 
(c) N/A
 
(d) N/A
 
(f) Pursuant to Item 13(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.
 
 
Item 3. Audit Committee Financial Expert.
 
(a)(1) The Registrant has an audit committee financial expert serving on its audit committee.
 
(2) The audit committee financial expert is Mary C. Choksi and she is "independent" as defined under the relevant Securities and Exchange Commission Rules and Releases. 
 
 
Item 4.
 Principal Accountant Fees and Services.
 
(a)      Audit Fees
The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or for services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements were $54,424 for the fiscal year ended August 31, 2020 and $51,122 for the fiscal year ended August 31, 2019.
 
(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.
 
The aggregate 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
 
were $0 for the fiscal year ended August 31, 2020 and $20,000 for the fiscal year ended August 31, 2019.  The services for which these fees were paid included professional fees in connection with tax treatment of equipment lease transactions and professional fees in connection with an Indonesia withholding tax refund claim.
 
(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 August 31, 2020 and $88 for the fiscal year ended August 31, 2019. 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 $175,744 for the fiscal year ended August 31, 2020 and $7,700 for the fiscal year ended August 31, 2019. The services for which these fees were paid included the issuance of an Auditors’ Certificate for South Korean regulatory shareholder disclosures, professional fees in connection with determining the feasibility of a U.S. direct lending structure, and valuation services related to a fair value engagement.  
 
(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 $175,744 for the fiscal year ended August 31, 2020 and $27,788 for the fiscal year ended August 31, 2019.
 
(h) The registrant’s audit committee of the board has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
 
 
Item 5. Audit Committee
of Listed Registrants.
 
Members of the Audit Committee are: Mary C. Choksi, J. Michael Luttig and Larry D. Thompson.
 
 
Item 6. Schedule of Investments.                      N/A


Item 7
. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
 
The board of trustees of the Fund has delegated the authority to vote proxies related to the portfolio securities held by the Fund to the Fund's investment manager, Franklin Advisers, Inc. in accordance with the Proxy Voting Policies and Procedures (Policies) adopted by the investment manager.
The investment manager has delegated its administrative duties with respect to the voting of proxies for securities to the Proxy Group within Franklin Templeton Companies, LLC (Proxy Group), an affiliate and wholly owned subsidiary of Franklin Resources, Inc. All proxies received by the Proxy Group will be voted based upon the investment manager’s instructions and/or policies. The investment manager votes proxies solely in the best interests of the Fund and its shareholders.
To assist it in analyzing proxies of equity securities, the investment manager subscribes to Institutional Shareholder Services, Inc. (ISS), an unaffiliated third-party corporate governance research service that provides in-depth analyses of shareholder meeting agendas, vote recommendations, vote execution services, ballot reconciliation services, recordkeeping and vote disclosure services. In addition, the investment manager subscribes to Glass, Lewis & Co., LLC (Glass Lewis), an unaffiliated third-party analytical research firm, to receive analyses and vote recommendations on the shareholder meetings of publicly held U.S. companies, as well as a limited subscription to its international research. Also, the investment manager has a supplemental subscription to Egan-Jones Proxy Services (Egan-Jones), an unaffiliated third party proxy advisory firm, to receive analyses and vote recommendations. Although analyses provided by ISS, Glass Lewis, Egan-Jones, and/or another independent third party proxy service provider (each a Proxy Service) are thoroughly reviewed and considered in making a final voting decision, the investment manager does not consider recommendations from a Proxy Service or any third party to be determinative of the investment manager's ultimate decision. Rather, the investment manager exercises its independent judgment in making voting decisions. For most proxy proposals, the investment manager’s evaluation should result in the same position being taken for all Funds. In some cases, however, the evaluation may result in a Fund voting differently, depending upon the nature and objective of the Fund, the composition of its portfolio and other factors. As a matter of policy, the officers, directors/trustees and employees of the investment manager and the Proxy Group will not be influenced by outside sources whose interests conflict with the interests of the Fund and its shareholders. Efforts are made to resolve all conflicts in the best interests of the investment manager’s clients. Material conflicts of interest are identified by the Proxy Group based upon analyses of client, distributor, broker-dealer and vendor lists, information periodically gathered from directors and officers, and information derived from other sources, including public filings. In situations where a material conflict of interest is identified, the Proxy Group may vote consistent with the voting recommendation of a Proxy Service; or send the proxy directly to the Fund's board or a committee of the board with the investment manager's recommendation regarding the vote for approval.
Where a material conflict of interest has been identified, but the items on which the investment manager’s vote recommendations differ from a Proxy Service and relate specifically to (1) shareholder proposals regarding social or environmental issues, (2) “Other Business” without describing the matters that might be considered, or (3) items the investment manager wishes to vote in opposition to the recommendations of an issuer’s management, the Proxy Group may defer to the vote recommendations of the investment manager rather than sending the proxy directly to the Fund's board or a board committee for approval.
To avoid certain potential conflicts of interest, the investment manager will employ echo voting or pass-through voting, if possible, in the following instances: (1) when the Fund invests in an underlying fund in reliance on any one of Sections 12(d)(1)(F) or (G) of the 1940 Act, the rules thereunder, or pursuant to a SEC exemptive order thereunder; (2) when the Fund invests uninvested cash in affiliated money market funds pursuant to the rules under the 1940 Act or any exemptive orders thereunder (“cash sweep arrangement”); or (3) when required pursuant to the Fund’s governing documents or applicable law. Echo voting means that the investment manager will vote the shares in the same proportion as the vote of all of the other holders of the underlying fund's shares. With respect to instances when a Franklin Templeton U.S. registered investment company invests in an underlying fund in reliance on any one of Sections 12(d)(1)(F) or (G) of the 1940 Act, the rules thereunder, or pursuant to an SEC exemptive order thereunder, and there are no other unaffiliated shareholders also invested in the underlying fund, the investment manager will vote in accordance with the recommendation of such investment company’s board of trustees or directors. In addition, to avoid certain potential conflicts of interest, and where required under a fund’s governing documents or applicable law, the investment manager will employ pass-through voting when a Franklin Templeton U.S. registered investment company invests in an underlying fund in reliance on Section 12(d)(1)(E) of the 1940 Act, the rules thereunder, or pursuant to an SEC exemptive order thereunder. In “pass-through voting,” a feeder fund will solicit voting instructions from its shareholders as to how to vote on the master fund’s proposals.
The recommendation of management on any issue is a factor that the investment manager considers in determining how proxies should be voted. However, the investment manager does not consider recommendations from management to be determinative of the investment manager’s ultimate decision. As a matter of practice, the votes with respect to most issues are cast in accordance with the position of the company's management. Each issue, however, is considered on its own merits, and the investment manager will not support the position of the company's management in any situation where it deems that the ratification of management’s position would adversely affect the investment merits of owning that company’s shares.
Engagement with issuers
. The investment manager believes that engagement with issuers is important to good corporate governance and to assist in making proxy voting decisions. The investment manager may engage with issuers to discuss specific ballot items to be voted on in advance of an annual or special meeting to obtain further information or clarification on the proposals. The investment manager may also engage with management on a range of environmental, social or corporate governance issues throughout the year.
Investment manager’s proxy voting policies and principles
    The investment manager has adopted general proxy voting guidelines, which are summarized below. These guidelines are not an exhaustive list of all the issues that may arise and the investment manager cannot anticipate all future situations. In all cases, each proxy and proposal (including both management and shareholder proposals) will be considered based on the relevant facts and circumstances on a case-by-case basis.
Board of directors.
    The investment manager supports an independent, diverse board of directors, and prefers that key committees such as audit, nominating, and compensation committees be comprised of independent directors. The investment manager supports boards with strong risk management oversight. The investment manager will generally vote against management efforts to classify a board and will generally support proposals to declassify the board of directors. The investment manager will consider withholding votes from directors who have attended less than 75% of meetings without a valid reason. While generally in favor of separating Chairman and CEO positions, the investment manager will review this issue as well as proposals to restore or provide for cumulative voting on a case-by-case basis, taking into consideration factors such as the company’s corporate governance guidelines or provisions and performance. The investment manager generally will support non-binding shareholder proposals to require a majority vote standard for the election of directors; however, if these proposals are binding, the investment manager will give careful review on a case-by-case basis of the potential ramifications of such implementation.
In the event of a contested election, the investment manager will review a number of factors in making a decision including management’s track record, the company’s financial performance, qualifications of candidates on both slates, and the strategic plan of the dissidents and/or shareholder nominees.
Ratification of auditors of portfolio companies.
    The investment manager will closely scrutinize the independence, role and performance of auditors. On a case-by-case basis, the investment manager will examine proposals relating to non-audit relationships and non-audit fees. The investment manager will also consider, on a case-by-case basis, proposals to rotate auditors, and will vote against the ratification of auditors when there is clear and compelling evidence of a lack of independence, accounting irregularities or negligence. The investment manager may also consider whether the ratification of auditors has been approved by an appropriate audit committee that meets applicable composition and independence requirements.
Management and director compensation.
    A company’s equity-based compensation plan should be in alignment with the shareholders’ long-term interests. The investment manager believes that executive compensation should be directly linked to the performance of the company. The investment manager evaluates plans on a case-by-case basis by considering several factors to determine whether the plan is fair and reasonable, including the ISS quantitative model utilized to assess such plans and/or the Glass Lewis evaluation of the plans. The investment manager will generally oppose plans that have the potential to be excessively dilutive, and will almost always oppose plans that are structured to allow the repricing of underwater options, or plans that have an automatic share replenishment “evergreen” feature. The investment manager will generally support employee stock option plans in which the purchase price is at least 85% of fair market value, and when potential dilution is 10% or less.
Severance compensation arrangements will be reviewed on a case-by-case basis, although the investment manager will generally oppose “golden parachutes” that are considered to be excessive. The investment manager will normally support proposals that require a percentage of directors’ compensation to be in the form of common stock, as it aligns their interests with those of shareholders.
The investment manager will review non-binding say-on-pay proposals on a case-by-case basis, and will generally vote in favor of such proposals unless compensation is misaligned with performance and/or shareholders’ interests, the company has not provided reasonably clear disclosure regarding its compensation practices, or there are concerns with the company’s remuneration practices.
Anti-takeover mechanisms and related issues.
    The investment manager generally opposes anti-takeover measures since they tend to reduce shareholder rights. However, as with all proxy issues, the investment manager conducts an independent review of each anti-takeover proposal. On occasion, the investment manager may vote with management when the research analyst has concluded that the proposal is not onerous and would not harm the Fund or its shareholders’ interests. The investment manager generally supports proposals that require shareholder rights’ plans (“poison pills”) to be subject to a shareholder vote and will closely evaluate such plans on a case-by-case basis to determine whether or not they warrant support. In addition, the investment manager will generally vote against any proposal to issue stock that has unequal or subordinate voting rights. The investment manager generally opposes any supermajority voting requirements as well as the payment of “greenmail.” The investment manager generally supports “fair price” provisions and confidential voting. The investment manager will review a company’s proposal to reincorporate to a different state or country on a case-by-case basis taking into consideration financial benefits such as tax treatment as well as comparing corporate governance provisions and general business laws that may result from the change in domicile.
Changes to capital structure.
    The investment manager realizes that a company's financing decisions have a significant impact on its shareholders, particularly when they involve the issuance of additional shares of common or preferred stock or the assumption of additional debt. The investment manager will review, on a case-by-case basis, proposals by companies to increase authorized shares and the purpose for the increase. The investment manager will generally not vote in favor of dual-class capital structures to increase the number of authorized shares where that class of stock would have superior voting rights. The investment manager will generally vote in favor of the issuance of preferred stock in cases where the company specifies the voting, dividend, conversion and other rights of such stock and the terms of the preferred stock issuance are deemed reasonable. The investment manager will review proposals seeking preemptive rights on a case-by-case basis.
Mergers and corporate restructuring.
    Mergers and acquisitions will be subject to careful review by the research analyst to determine whether they would be beneficial to shareholders. The investment manager will analyze various economic and strategic factors in making the final decision on a merger or acquisition. Corporate restructuring proposals are also subject to a thorough examination on a case-by-case basis.
Environmental and social issues.
    The investment manager considers environmental and social issues alongside traditional financial measures to provide a more comprehensive view of the value, risk and return potential of an investment. Companies may face significant financial, legal and reputational risks resulting from poor environmental and social practices, or negligent oversight of environmental or social issues. Franklin Templeton’s “Responsible Investment Principles and Policies” describes the investment manager’s approach to consideration of environmental, social and governance issues within the investment manager’s processes and ownership practices.
The investment manager will review shareholder proposals on a case-by-case basis and may support those that serve to enhance value or mitigate risk, are drafted appropriately, and do not disrupt the course of business or require a disproportionate or inappropriate use of company resources. In the investment manager’s experience, those companies that are managed well are often effective in dealing with the relevant environmental and social issues that pertain to their business. As such, the investment manager will generally give management discretion with regard to environmental and social issues. However, in cases where management and the board have not demonstrated adequate efforts to mitigate material environmental or social risks, have engaged in inappropriate or illegal conduct, or have failed to adequately address current or emergent risks that threaten shareholder value, the investment manager may choose to support well-crafted shareholder proposals that serve to promote or protect shareholder value. This may include seeking appropriate disclosure regarding material environmental and social issues.
The investment manager will consider supporting a shareholder proposal seeking disclosure and greater board oversight of lobbying and corporate political contributions if the investment manager believes that there is evidence of inadequate oversight by the company’s board, if the company’s current disclosure is significantly deficient, or if the disclosure is notably lacking in comparison to the company’s peers.
Governance matters.
    The investment manager generally supports the right of shareholders to call special meetings and act by written consent. However, the investment manager will review such shareholder proposals on a case-by-case basis in an effort to ensure that such proposals do not disrupt the course of business or require a disproportionate or inappropriate use of company resources.
Proxy access.
    In cases where the investment manager is satisfied with company performance and the responsiveness of management, it will generally vote against shareholder proxy access proposals not supported by management. In other instances, the investment manager will consider such proposals on a case-by-case basis, taking into account factors such as the size of the company, ownership thresholds and holding periods, nomination limits (e.g., number of candidates that can be nominated), the intentions of the shareholder proponent, and shareholder base.
Global corporate governance.
    Many of the tenets discussed above are applied to the investment manager's proxy voting decisions for international investments. However, the investment manager must be flexible in these worldwide markets. Principles of good corporate governance may vary by country, given the constraints of a country’s laws and acceptable practices in the markets. As a result, it is on occasion difficult to apply a consistent set of governance practices to all issuers. As experienced money managers, the investment manager's analysts are skilled in understanding the complexities of the regions in which they specialize and are trained to analyze proxy issues germane to their regions.
The investment manager will generally attempt to process every proxy it receives for all domestic and foreign securities. However, there may be situations in which the investment manager may be unable to successfully vote a proxy, or may choose not to vote a proxy, such as where: (i) a proxy ballot was not received from the custodian bank; (ii) a meeting notice was received too late; (iii) there are fees imposed upon the exercise of a vote and it is determined that such fees outweigh the benefit of voting; (iv) there are legal encumbrances to voting, including blocking restrictions in certain markets that preclude the ability to dispose of a security if the investment manager votes a proxy or where the investment manager is prohibited from voting by applicable law, economic or other sanctions, or other regulatory or market requirements, including but not limited to, effective Powers of Attorney; (v) additional documentation or the disclosure of beneficial owner details is required; (vi) the investment manager held shares on the record date but has sold them prior to the meeting date; (vii) a proxy voting service is not offered by the custodian in the market; (viii) due to either system error or human error, the investment manager’s intended vote is not correctly submitted; (ix) the investment manager believes it is not in the best interest of the Fund or its shareholders to vote the proxy for any other reason not enumerated herein; or (x) a security is subject to a securities lending or similar program that has transferred legal title to the security to another person.
In some non-U.S. jurisdictions, even if the investment manager uses reasonable efforts to vote a proxy on behalf of the Fund, such vote or proxy may be rejected because of (a) operational or procedural issues experienced by one or more third parties involved in voting proxies in such jurisdictions; (b) changes in the process or agenda for the meeting by the issuer for which the investment manager does not have sufficient notice; or (c) the exercise by the issuer of its discretion to reject the vote of the investment manager. In addition, despite the best efforts of the Proxy Group and its agents, there may be situations where the investment manager's votes are not received, or properly tabulated, by an issuer or the issuer's agent.
The investment manager or its affiliates may, on behalf of one or more of the proprietary registered investment companies advised by the investment manager or its affiliates, determine to use its best efforts to recall any security on loan where the investment manager or its affiliates (a) learn of a vote on a material event that may affect a security on loan and (b) determine that it is in the best interests of such proprietary registered investment companies to recall the security for voting purposes.
Procedures for meetings involving fixed income securities & privately held issuers.
    From time to time, certain custodians may process events for fixed income securities through their proxy voting channels rather than corporate action channels for administrative convenience. In such cases, the Proxy Group will receive ballots for such events on the ISS voting platform. The Proxy Group will solicit voting instructions from the investment manager for each Fund involved. If the Proxy Group does not receive voting instructions from the investment manager, the Proxy Group will take no action on the event. The investment manager may be unable to vote a proxy for a fixed income security, or may choose not to vote a proxy, for the reasons described above.
In the rare instance where there is a vote for a privately held issuer, the decision will generally be made by the relevant portfolio managers or research analysts.
The Proxy Group will monitor such meetings involving fixed income securities or privately held issuers for conflicts of interest in accordance with these procedures. If a fixed income or privately held issuer is flagged as a potential conflict of interest, the investment manager may nonetheless vote as it deems in the best interests of the Fund. The investment manager will report such decisions on an annual basis to the Fund board as may be required.
Shareholders may view the 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 33301-1923, Attention: Proxy Group. Copies of the Fund’s proxy voting records are available online at franklintempleton.com and posted on the SEC website at www.sec.gov. The proxy voting records are updated each year by August 31 to reflect the most recent 12-month period ended June 30.
 
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
 
(a)(1)  As of October 27, 2020, the portfolio managers of the Fund is as follows:
 
GLENN I. VOYLES CFA
, Senior Vice President of Advisers
Mr. Voyles has been a manager of the Fund since 1999, providing research and advice on the purchases and sales of individual securities, and portfolio risk assessment for the global income component of the Fund. He joined Franklin Templeton Investments in 1993.
 
CFA and Chartered Financial Analyst are trademarks owned by CFA Institute.
 
 
(a)(2)  This section reflects information about the portfolio managers as of the fiscal year ended August 31, 2020.
 
The following table shows the number of other accounts managed by each portfolio manager and the total assets in the accounts managed within each category:
 
 
 
 
 
 
 
 
Name
 
Number of Other Registered Investment Companies Managed1
 
Assets of Other Registered Investment Companies Managed
(x $1 million)1
 
 
Number of Other Pooled Investment Vehicles Managed1
Assets of Other Pooled Investment Vehicles Managed
(x $1 million)1
 
 
 
 
Number of Other Accounts Managed1
 
 
Assets of Other Accounts Managed
(x $1 million)1
Glenn I. Voyles
4
 
3,691.1
 
5
 
1,520.6
 
7
 
562.8
 
 
1.
 
The various pooled investment vehicles and accounts listed are managed by a team of investment professionals.  Accordingly, the individual managers listed would not be solely responsible for managing such listed amounts.
 
Portfolio managers that provide investment services to the Fund may also provide services to a variety of other investment products, including other funds, institutional accounts and private accounts.  The advisory fees for some of such other products and accounts may be different than that charged to the Fund and may include performance based compensation (as noted, in the chart above, if any).  This may result in fees that are higher (or lower) than the advisory fees paid by the Fund. As a matter of policy, each fund or account is managed solely for the benefit of the beneficial owners thereof. As discussed below, the separation of the trading execution function from the portfolio management function and the application of objectively based trade allocation procedures help to mitigate potential conflicts of interest that may arise as a result of the portfolio managers managing accounts with different advisory fees.
 
Conflicts. 
The management of multiple funds, including the Fund, and accounts may also give rise to potential conflicts of interest if the funds and other accounts have different objectives, benchmarks, time horizons, and fees as the portfolio manager must allocate his or her time and investment ideas across multiple funds and accounts. The investment manager seeks to manage such competing interests for the time and attention of portfolio managers by having portfolio managers focus on a particular investment discipline.  Most other accounts managed by a portfolio manager are managed using the same investment strategies that are used in connection with the management of the Fund.  Accordingly, portfolio holdings, position sizes, and industry and sector exposures tend to be similar across similar portfolios, which may minimize the potential for conflicts of interest. As noted above, the separate management of the trade execution and valuation functions from the portfolio management process also helps to reduce potential conflicts of interest. However, securities selected for funds or accounts other than the Fund may outperform the securities selected for the Fund. Moreover, if a portfolio manager identifies a limited investment opportunity that may be suitable for more than one fund or other account, the Fund may not be able to take full advantage of that opportunity due to an allocation of that opportunity across all eligible funds and other accounts. The investment manager seeks to manage such potential conflicts by using procedures intended to provide a fair allocation of buy and sell opportunities among funds and other accounts.
 
The structure of a portfolio manager’s compensation may give rise to potential conflicts of interest. A portfolio manager’s base pay and bonus tend to increase with additional and more complex responsibilities that include increased assets under management.  As such, there may be an indirect relationship between a portfolio manager’s marketing or sales efforts and his or her bonus. 
 
Finally, the management of personal accounts by a portfolio manager may give rise to potential conflicts of interest.  While the funds and the manager have adopted a code of ethics which they believe contains provisions reasonably necessary to prevent a wide range of prohibited activities by portfolio managers and others with respect to their personal trading activities, there can be no assurance that the code of ethics addresses all individual conduct that could result in conflicts of interest.
 
The manager and the Fund have adopted certain compliance procedures that are designed to address these, and other, types of conflicts.  However, there is no guarantee that such procedures will detect each and every situation where a conflict arises.
Compensation.
  The investment manager seeks to maintain a compensation program that is competitively positioned to attract, retain and motivate top-quality investment professionals. Portfolio managers receive a base salary, a cash incentive bonus opportunity, an equity compensation opportunity, and a benefits package. Portfolio manager compensation is reviewed annually and the level of compensation is based on individual performance, the salary range for a portfolio manager’s level of responsibility and Franklin Templeton guidelines. Portfolio managers are provided no financial incentive to favor one fund or account over another. Each portfolio manager’s compensation consists of the following three elements:
Base salary
  Each portfolio manager is paid a base salary.
Annual bonus
  Annual bonuses are structured to align the interests of the portfolio manager with those of the Fund’s shareholders. Each portfolio manager is eligible to receive an annual bonus. Bonuses generally are split between cash (50% to 65%) and restricted shares of Resources stock (17.5% to 25%) and mutual fund shares (17.5% to 25%). The deferred equity-based compensation is intended to build a vested interest of the portfolio manager in the financial performance of both Resources and mutual funds advised by the investment manager. The bonus plan is intended to provide a competitive level of annual bonus compensation that is tied to the portfolio manager achieving consistently strong investment performance, which aligns the financial incentives of the portfolio manager and Fund shareholders. The Chief Investment Officer of the investment manager and/or other officers of the investment manager, with responsibility for the Fund, have discretion in the granting of annual bonuses to portfolio managers in accordance with Franklin Templeton guidelines. The following factors are generally used in determining bonuses under the plan:
  • Investment performance.
    Primary consideration is given to the historic investment performance of all accounts managed by the portfolio manager over the 1, 3 and 5 preceding years measured against risk benchmarks developed by the fixed income management team. The pre-tax performance of each fund managed is measured relative to a relevant peer group and/or applicable benchmark as appropriate.
  • Non-investment performance.
    The more qualitative contributions of the portfolio manager to the investment manager’s business and the investment management team, including business knowledge, productivity, customer service, creativity, and contribution to team goals, are evaluated in determining the amount of any bonus award.
  • Responsibilities.
    The characteristics and complexity of funds managed by the portfolio manager are factored in the investment manager’s appraisal.
Additional long-term equity-based compensation
  Portfolio managers may also be awarded restricted shares or units of Resources stock or restricted shares or units of one or more mutual funds. Awards of such deferred equity-based compensation typically vest over time, so as to create incentives to retain key talent.
Benefits
Portfolio managers also participate in benefit plans and programs available generally to all employees of the investment manager.
Ownership of Fund shares.
  The investment manager has a policy of encouraging portfolio managers to invest in the funds they manage. Exceptions arise when, for example, a fund is closed to new investors or when tax considerations or jurisdictional constraints cause such an investment to be inappropriate for the portfolio manager. The following is the dollar range of Fund shares beneficially owned by the portfolio manager (such amounts may change from time to time):
 
 
Portfolio Manager
Dollar Range of Fund Shares Beneficially Owned
Glenn I. Voyles
None
 
 
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
.  During the period covered by this report, a third-party service provider commenced performing certain accounting and administrative services for the Registrant that are subject to Franklin Templeton’s oversight.
 
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Company.
 
Securities lending agent
The board of trustees has approved the Fund’s participation in a securities lending program. Under the securities lending program, Bank of New York Mellon serves as the Fund’s securities lending agent.
For the fiscal year ended August 31, 2020, the income earned by the Fund as well as the fees and/or compensation paid by the Fund in dollars pursuant to a securities lending agreement between the Trust with respect to the Fund and the Securities Lending Agent were as follows (figures may differ from those shown in shareholder reports due to time of availability and use of estimates):
 
 
Gross income earned by the Fund from securities lending activities
$2,384
Fees and/or compensation paid by the Fund for securities lending activities and related services
 
Fees paid to Securities Lending Agent from revenue split
$191
Fees paid for any cash collateral management service (including fees deducted from a pooled cash collateral reinvestment vehicle) not included in a revenue split
 
$-
Administrative fees not included in a revenue split
$-
Indemnification fees not included in a revenue split
$-
Rebate (paid to borrower)
$-
Other fees not included above
$18
Aggregate fees/compensation paid by the Fund for securities lending activities
$209
Net income from securities lending activities
$2,175
 
                                   
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 Gaston Gardey, Chief Financial Officer and Chief Accounting Officer
 
 
(b)
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer
 
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
FRANKLIN
UNIVERSAL TRUST
 
 
By _S\MATTHEW T. HINKLE_____
   Matthew T. Hinkle
   Chief Executive Officer - Finance and
   Administration
Date:  October 27, 2020
 
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
 
By _S\MATTHEW T. HINKLE_____
   Matthew T. Hinkle
   Chief Executive Officer - Finance and
   Administration
Date:  October 27, 2020
 
By _S\GASTON GARDEY__________
   Gaston Gardey
   Chief Financial Officer
and
   Chief Accounting Officer
Date:  October 27, 2020