For the fiscal year ended September 30, 2022
Business
GENERAL
Franklin Resources, Inc. (“Franklin”) is a holding company with subsidiaries operating under our Franklin Templeton® and/or subsidiary brand names.
holding company : a company whose main purpose is to control another company or companies through owning shares in it or them
subsidiary : connected with something but less important than it / (of a business company) owned or controlled by another company
Franklin’s common stock is traded on the New York Stock Exchange (the “NYSE”) under the ticker symbol “BEN” and is included in the Standard & Poor’s 500 Index.
In this Annual Report, Franklin and its subsidiaries are collectively referred to as the “Company,” and words such as “we,” “us,” “our” and similar terms refer to the Company. We have one operating segment, investment management and related services.
collectively : in a way that is done or shared by all members of a group of people; in a way that involves a whole group or society / in a way that refers to all members of a group
We offer our services and products under our various distinct brand names, including, but not limited to, Franklin®, Templeton®, Legg Mason®, Alcentra®, Benefit Street Partners®, Brandywine Global Investment Management®, Clarion Partners®, ClearBridge Investments®, Fiduciary Trust International™, Franklin Bissett®, Franklin Mutual Series®, K2®, Lexington Partners®, Martin Currie®, O’Shaughnessy® Asset Management, Royce® Investment Partners and Western Asset Management Company®. Unless otherwise indicated, our “funds” means the funds offered under our various brand names.
We are a global investment management organization with $1,297.4 billion in assets under management (“AUM”) as of September 30, 2022.
Our mission is to help people all over the world achieve the most important milestones of their lives through investment management expertise, wealth management and technology solutions.
milestone : (also milepost especially in North American English) a very important stage or event in the development of something / a stone by the side of a road that shows how far it is to the next town and to other places
Through our specialist investment managers, we offer investment specialization bringing extensive capabilities across our fixed income, equity, alternative and multi-asset products.
For 75 years, we have been committed to providing clients with exceptional investment management services and have developed a globally diversified business, including through strategic acquisitions.
We provide our investment management and related services to retail, institutional and high-net-worth investors in jurisdictions worldwide.
jurisdiction : the authority that an official organization has to make legal decisions about somebody/something / an area or a country in which a particular system of laws has authority
We deliver our investment capabilities through a variety of products and vehicles and multiple points of access, including directly to investors and through financial intermediaries.
financial intermediary : an organization that makes loans, sells financial products, etc
Our investment products include our sponsored funds, as well as institutional and high-net-worth separate accounts, retail separately managed account programs, sub-advised products, and other investment vehicles. Our funds include registered funds (including exchange-traded funds, or “ETFs”) and unregistered funds.
Related services include fund administration, sales and distribution, and shareholder servicing. Our sales and distribution services include distribution-related financial technology. We may perform services directly or through third parties. We also provide sub-advisory services to certain investment products sponsored by other companies that may be sold to investors under the brand names of those other companies or on a co-branded basis.
We offer our clients the combined experience of our investment professionals with expertise across asset classes and a sharp focus on managing risk. We are committed to delivering strong investment performance for our clients, and to offering a broad range of strategies and drawing on our diverse experiences and perspectives gained through our long history in the investment management business.
We know that success demands smart and effective business innovation, solutions and technologies, and we remain focused on investment excellence, innovating to meet evolving client goals, and building strong partnerships by delivering superior client service. We continue to focus on the long-term investment performance of our investment products and on providing high quality service to our clients.
The business and regulatory environments in which we operate globally remain complex, uncertain and subject to change. We are subject to various laws, rules and regulations globally that impose restrictions, limitations, registration, reporting and disclosure requirements on our business, and add complexity to our global compliance operations.
regulatory : having the power to control an area of business or industry and make sure that it is operating fairly
limitation : the act or process of limiting or controlling somebody/something / a rule, fact or condition that limits something
disclosure : the act of making something known or public that was previously secret or private
Incorporated herein by reference is certain financial information about our segment and geographic areas contained in Note 18 – Segment and Geographic Information in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report.
herein : in this place, document, statement or fact
consolidated financial statement : a report that gives information about the financial position of all the companies belonging to a business group, rather than giving information about each company separately
Recent Acquisition
On November 1, 2022, we acquired BNY Alcentra Group Holdings, Inc. (together with its subsidiaries, “Alcentra”) from The Bank of New York Mellon Corporation.
Alcentra is a leading European credit and private debt manager, with global expertise in senior secured loans, high yield bonds, private credit, structured credit, special situations and multi-strategy credit strategies. We expect this acquisition to expand our alternative credit capabilities and presence in Europe, and continue to strengthen the breadth and scale of our alternative asset strategies.
Company History
Since 1947, the Company and its predecessors have been engaged in the investment management and related services business.
predecessor : a person who did a job before somebody else / a thing, such as a machine, that has been followed or replaced by something else
Franklin was incorporated in the State of Delaware in November 1969, and originated our mutual fund business with the initial Franklin family of funds, known for its fixed income funds and growth and value-oriented equity funds.
Over the years, we have expanded and developed our business to meet evolving investor needs, in part, by acquiring companies engaged in investment management and related services.
We have added, among others: (i) the Templeton investment firm, known for its global investing strategies and value style of investing, in 1992, (ii) the Franklin Mutual Series investment firm, known for its value-oriented equity funds, in 1996, (iii) the Franklin Bissett investment firm, known for its Canadian fixed income funds and growth-oriented equity funds, in 2000, (iv) the Fiduciary Trust International investment, trust and fiduciary services firm, in 2001, (v) the Benefit Street Partners U.S. alternative credit manager firm, in 2019, (vi) the Athena Capital Advisors investment and wealth management firm, in March 2020, (vii) The Pennsylvania Trust Company investment, trust and fiduciary services firm, in May 2020, (viii) the Legg Mason global investment firm, including certain specialist investment managers, in July 2020, (ix) the O’Shaughnessy Asset Management quantitative asset management firm, in December 2021, and (x) the Lexington Partners global investment firm, known for its alternative asset capabilities, in April 2022.
OUR BUSINESS STRUCTURE
Through our subsidiaries, we are committed to helping investors navigate global markets, as well as continuing to evolve and build on our strengths to meet the needs of our clients.
We generally derive our revenues and income from providing investment management and related services to our products and the products we sub-advise. Our investment management fees, which represent a significant portion of our revenues, depend to a large extent on the level and relative mix of our AUM and the types of services provided, which are subject to change.
derive : to get something from something else
extent : how large, important, serious, etc. something is / the physical size of an area
Our business is conducted through our subsidiaries, including our specialist investment managers. Our specialist investment managers include subsidiaries registered with the U.S. Securities and Exchange Commission (the “SEC”) as investment advisers under the Investment Advisers Act of 1940 (the “Advisers Act”), as well as subsidiaries registered as investment adviser equivalents in jurisdictions including Australia, Brazil, Canada, China, Hong Kong, Ireland, India, Japan, Luxembourg, Malaysia, Mexico, Singapore, Switzerland, South Korea, Commonwealth of The Bahamas, the United Arab Emirates and the United Kingdom (“U.K.”).
Our U.S.-registered funds and most of our non-U.S.-registered funds operate as independent companies subject to the supervision and oversight of the funds’ own boards of directors or trustees.
Our registered open-end funds, or mutual funds, continuously offer their shares to investors. Our registered closed-end funds issue a set number of shares to investors in a public offering which are traded on a public stock exchange.
mutual fund : a company that offers a service to people by investing their money in various different businesses
Our investment managers manage a fund’s portfolio of securities in accordance with the fund’s stated objectives. To support the funds’ operations, our subsidiaries either provide or arrange for the investment and other management, shareholder servicing and administrative services required by the funds. We outsource various administration, technology, transfer agency and other services for our funds to third-party providers.
in accordance with something : (formal) according to a rule or the way that somebody says that something should be done
outsource : to arrange for somebody outside a company to do work or provide goods for that company
An investor may purchase shares of a mutual fund directly from us or through a broker-dealer, financial adviser, bank or other similar financial intermediary that provides investment advice to the investor, or an investor may purchase shares of a closed-end fund or ETF on the stock exchange where the fund is traded. Financial intermediaries may earn fees and commissions and receive other compensation with respect to fund shares sold to investors.
intermediary : a person or an organization that helps other people or organizations to make an agreement by being a means of communication between them
ETF : Exchange-Traded Fund: a fund that follows the level of share prices on a stock market, and that is also traded on a market
(omitted)
COMPETITION
The financial services industry is a highly competitive global industry. Competition is based on various factors, including, among others, business reputation, investment performance, product mix and offerings, service quality and innovation, distribution relationships, and fees charged.
We face strong competition from numerous investment management companies, securities brokerage and investment banking firms, insurance companies, banks and other financial institutions, which offer a wide range of financial and investment management services and products to the same retail, institutional and high-net-worth investors and accounts that we are seeking to attract.
We offer a broad product mix that meets a variety of investment goals and needs for different investors, and we may periodically introduce new products to provide investors with additional investment options.
periodically : in a way that happens fairly often and regularly
We primarily derive our fund sales through third-party broker-dealers, banks, investment advisers and other financial intermediaries. Because we rely on third-party distribution and sales channels to sell our products, we do not control the ultimate investment recommendations given by them to clients. Such financial intermediaries may recommend competing products.
rely on : to need or depend on somebody/something / to trust or have faith in somebody/something
Due to our international presence and varied product mix, it is difficult to assess our market position relative to other investment managers on a worldwide basis, but we believe that we are one of the more widely diversified investment managers based in the U.S.
We believe that our fixed income, equity, alternative and multi-asset asset mix, coupled with our global presence, will serve our competitive needs well over the long term. We continue to focus on the long-term performance of our investment products, service to clients and extensive marketing activities through our strong broker-dealer and other financial institution distribution network as well as with high-net-worth and institutional clients.
fixed-income : used to describe investments such as bonds that pay the same amount of money every month, year, etc
The establishment of new investment management firms and continuous development of investment products increases the competition that we face. Many of our competitors have long-standing and established relationships with broker-dealers, investment advisers and their clients, and some have affiliated brokerage businesses.
Others have focused on, offer and market specific product lines that provide strong competition to certain of our asset classes. In addition, consolidation in the financial services industry has created stronger competitors, some with greater financial resources and broader distribution channels than our own.
(the rest omitted)
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