INTERNAL CONTROL RPT

Report of Independent Registered Public Accounting Firm 

To the Shareholders and Board of Trustees of  

Franklin Alternative Strategies Funds: 

In planning and performing our audits of the financial statements of Franklin K2 Alternative Strategies Fund and Franklin K2 Long Short Credit Fund (two funds comprising Franklin Alternative Strategies Funds) (collectively, the “Funds”) as of and for the year ended May 31, 2020, in accordance with the standards of the Public Company Accounting Oversight Board (United States), we considered the Funds’ internal control over financial reporting, including controls over safeguarding securities, as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements and to comply with the requirements of Form N-CEN, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.  

The management of the Funds is responsible for establishing and maintaining effective internal control over financial reporting. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company’s assets that could have a material effect on the financial statements.  

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  

A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.  

Our consideration of the Funds’ internal control over financial reporting was for the limited purpose described in the first paragraph and would not necessarily disclose all deficiencies in internal control that might be material weaknesses under standards established by the Public Company Accounting Oversight Board (United States). However, we noted no deficiencies in the Funds’ internal control over financial reporting and its operation, including controls over safeguarding securities, that we consider to be a material weakness as defined above as of July 27, 2020. 

This report is intended solely for the information and use of management and Board of Trustees of Franklin Alternative Strategies Funds and the Securities and Exchange Commission and is not intended to be and should not be used by anyone other than these specified parties.  

/s/ Ernst & Young LLP  

Boston, Massachusetts 

July 27, 2020 

1 

EXEMPT ORDER INFO

SEC Releases, In the Matter of Age High Income Fund, Inc., et al.,
777 Mariners Island Boulevard, San Mateo, CA 94404, Securities and
 Exchange Commission, (Jan. 13, 1987)
SEC Releases
 Click to open document in a browser
37 SEC-DOCKET 569-02
Release No. IC-15534
File No. 812-6505
January 13, 1987
ORDER PERMITTING JOINT TRADING ACCOUNTS
AGE High Income Fund, Inc; Birr, Wilson Money Fund; Franklin
 California Tax-Free Income Fund, Inc.; Franklin New York Tax-Free
Income Fund, Inc; Franklin California Tax-Free Trust; Franklin
Tax-Free Trust; Franklin Corporate Cash Management Fund; Franklin
 Custodian Funds, Inc; Franklin Equity Fund; Franklin Federal Money
 Fund; Franklin Federal Tax-Free Income Fund; Franklin Gold Fund;
Franklin Money Fund; Franklin Option Fund; Franklin Tax-Exempt Money
 Fund; Franklin New York Tax-Exempt Money Fund; Franklin
Pennsylvania Investors Fund; and Institutional Fiduciary Trust
("Funds") and Franklin Advisers, Inc., filed an application on
 October 17, 1986, and an amendment thereto on November 24,
1986, requesting an order of the Commission under Section 17(d)
 of the Investment Company Act of 1940 ("Act") and Rule 17d-1
 thereunder to permit the Funds, as well as future investment
 companies for which subsidiaries or affiliates of Franklin
 Resources, Inc. serve as investment managers, to deposit
their cash balances remaining uninvested at the end of each
trading day into a single joint account whose daily balance
would be used to enter into one or more repurchase agreements
 in a total amount equal to the aggregate daily balance in
 the account ("Joint Accounts").
On December 17, 1986, a notice was issued (Investment Company
Act Release No. 15485) of the filing of the application. The
 notice gave interested persons an opportunity to request a
hearing and stated that an order disposing of the application
would be issued as of course unless a hearing should be ordered.
 No request for a hearing has been filed, and the Commission has
 not ordered a hearing.
The matter having been considered, it is found that the
participation of the Funds in the Joint Accounts is consistent
 with the provisions, policies and purposes of the Act and that
 their participation in the Joint Accounts is not on a basis less
 advantageous than that of any other participant. Accordingly,
IT IS ORDERED, pursuant to Section 17(d) of the Act and Rule 17d-1
 thereunder that the application to permit the Funds to participate
 in the Joint Accounts as described in the application, be, and
hereby is granted, effective forthwith.
For the Commission, by the Division of Investment Management,
under delegated authority.
Jonathan G. Katz
Secretary

EXEMPT ORDER INFO

UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
INVESTMENT COMPANY ACT OF 1940
Release No. 33117 / June 5, 2018
__________________________________________________________________
In the Matter of :
:
FRANKLIN ALTERNATIVE STRATEGIES FUNDS :
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND :
FRANKLIN CALIFORNIA TAX-FREE TRUST :
FRANKLIN CUSTODIAN FUNDS :
FRANKLIN ETF TRUST :
FRANKLIN FEDERAL TAX-FREE INCOME FUND :
FRANKLIN FLOATING RATE MASTER TRUST :
FRANKLIN FUND ALLOCATOR SERIES :
FRANKLIN GLOBAL TRUST :
FRANKLIN GOLD AND PRECIOUS METALS FUND :
FRANKLIN HIGH INCOME TRUST :
FRANKLIN INVESTORS SECURITIES TRUST :
FRANKLIN MANAGED TRUST :
FRANKLIN U.S. GOVERNMENT MONEY FUND :
FRANKLIN MUNICIPAL SECURITIES TRUST :
FRANKLIN MUTUAL SERIES FUNDS :
FRANKLIN NEW YORK TAX-FREE INCOME FUND :
FRANKLIN NEW YORK TAX-FREE TRUST :
FRANKLIN REAL ESTATE SECURITIES TRUST :
FRANKLIN STRATEGIC MORTGAGE PORTFOLIO :
FRANKLIN STRATEGIC SERIES :
FRANKLIN TAX-FREE TRUST :
FRANKLIN TEMPLETON ETF TRUST :
FRANKLIN TEMPLETON GLOBAL TRUST :
FRANKLIN TEMPLETON INTERNATIONAL TRUST :
FRANKLIN TEMPLETON MONEY FUND TRUST :
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST :
FRANKLIN VALUE INVESTORS TRUST :
INSTITUTIONAL FIDUCIARY TRUST :
TEMPLETON CHINA WORLD FUND :
TEMPLETON DEVELOPING MARKETS TRUST :
TEMPLETON FUNDS :
TEMPLETON GLOBAL INVESTMENT TRUST :
TEMPLETON GLOBAL OPPORTUNITIES TRUST :
TEMPLETON GLOBAL SMALLER COMPANIES FUND :
TEMPLETON GROWTH FUND, INC. :
TEMPLETON INCOME TRUST :
TEMPLETON INSTITUTIONAL FUNDS :
THE MONEY MARKET PORTFOLIOS :
FRANKLIN LIMITED DURATION INCOME TRUST :
2
FRANKLIN UNIVERSAL TRUST :
TEMPLETON DRAGON FUND, INC. :
TEMPLETON EMERGING MARKETS FUND :
TEMPLETON EMERGING MARKETS INCOME FUND :
TEMPLETON GLOBAL INCOME FUND :
FRANKLIN ADVISERS, INC. :
FRANKLIN TEMPLETON INVESTMENT MANAGEMENT LIMITED :
K2/D&S MANAGEMENT CO., L.L.C. :
FASA LLC :
FRANKLIN TEMPLETON INSTITUTIONAL, LLC :
FRANKLIN ADVISORY SERVICES, LLC :
FRANKLIN MUTUAL ADVISERS, LLC :
TEMPLETON INVESTMENT COUNSEL, LLC :
TEMPLETON ASSET MANAGEMENT LTD. :
TEMPLETON GLOBAL ADVISORS LIMITED :
:
One Franklin Parkway :
San Mateo, CA 94403 :
:
(812-14819) :
__________________________________________________________________:
ORDER UNDER SECTION 6(c) OF THE INVESTMENT COMPANY ACT OF 1940
GRANTING AN EXEMPTION FROM SECTIONS 18(f) AND 21(b) OF THE ACT;
UNDER
SECTION 12(d)(1)(J) OF THE ACT GRANTING AN EXEMPTION FROM SECTION
12(d)(1) OF THE ACT; UNDER SECTIONS 6(c) AND 17(b) OF THE ACT
GRANTING AN
EXEMPTION FROM SECTIONS 17(a)(1), 17(a)(2), AND 17(a)(3) OF THE
 ACT; AND
UNDER SECTION 17(d) OF THE ACT AND RULE 17d-1 UNDER THE ACT TO
 PERMIT
CERTAIN JOINT ARRANGEMENTS AND TRANSACTIONS
Franklin Alternative Strategies Funds, Franklin California Tax-Free
 Income Fund, Franklin
California Tax-Free Trust, Franklin Custodian Funds, Franklin ETF
Trust, Franklin Federal Tax-
Free Income Fund, Franklin Floating Rate Master Trust, Franklin Fund
 Allocator Series, Franklin
Global Trust, Franklin Gold and Precious Metals Fund, Franklin High
 Income Trust, Franklin
Investors Securities Trust, Franklin Managed Trust, Franklin U.S.
 Government Money Fund,
Franklin Municipal Securities Trust, Franklin Mutual Series Funds,
 Franklin New York Tax-Free
Income Fund, Franklin New York Tax-Free Trust, Franklin Real Estate
 Securities Trust, Franklin
Strategic Mortgage Portfolio, Franklin Strategic Series, Franklin
 Tax-Free Trust, Franklin
Templeton ETF Trust, Franklin Templeton Global Trust, Franklin
Templeton International Trust,
Franklin Templeton Money Fund Trust, Franklin Templeton Variable
 Insurance Products Trust,
Franklin Value Investors Trust, Institutional Fiduciary Trust,
 Templeton China World Fund,
Templeton Developing Markets Trust, Templeton Funds, Templeton
 Global Investment Trust,
Templeton Global Opportunities Trust, Templeton Global Smaller
 Companies Fund, Templeton
Growth Fund, Inc., Templeton Income Trust, Templeton Institutional
Funds, The Money Market
Portfolios, Franklin Limited Duration Income Trust, Franklin
 Universal Trust, Templeton Dragon
Fund, Inc., Templeton Emerging Markets Fund, Templeton Emerging
 Markets Income Fund, and
Templeton Global Income Fund, Franklin Advisers, Inc., Franklin
 Templeton Investment
Management Limited, K2/D&S Management Co., L.L.C., FASA LLC,
Franklin Templeton
Institutional, LLC, Franklin Advisory Services, LLC, Franklin
Mutual Advisers, LLC, Templeton
3
Investment Counsel, LLC, Templeton Asset Management Ltd., and
 Templeton Global Advisors
Limited filed an application on September 14, 2017, and an
amendment on March 9, 2018.
Applicants requested an order under section 6(c) of the Investment
 Company Act of 1940 (the
"Act") for an exemption from sections 18(f) and 21(b) of the Act,
 under section 12(d)(1)(J) of
the Act for an exemption from section 12(d)(1) of the Act, under
 sections 6(c) and 17(b) of the
Act for an exemption from sections 17(a)(1), 17(a)(2), and 17(a)(3)
 of the Act, and under section
17(d) of the Act and rule 17d-1 under the Act to permit certain
joint arrangements and
transactions. The order supersedes a prior order1 and permits
certain registered management
investment companies to participate in a joint lending and
borrowing facility.
On May 10, 2018, a notice of the filing of the application was
 issued (Investment Company Act
Release No. 33095). The notice gave interested persons an
 opportunity to request a hearing and
stated that an order disposing of the application would be issued
unless a hearing was ordered.
No request for a hearing has been filed, and the Commission has
not ordered a hearing.
The matter has been considered and it is found, on the basis of
the information set forth in the
application, as amended, that granting the requested exemption
 is consistent with and appropriate
in the public interest, and consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of the Act.
It is also found that the terms of the proposed transactions,
including the consideration to be paid
or received, are reasonable and fair and do not involve
overreaching on the part of any person
concerned, and that the proposed transactions are consistent
with the policy of each registered
investment company concerned and the general purposes of the
 Act.
It is further found that the participation of each registered
 investment company in the proposed
credit facility is consistent with the provisions, policies,
and purposes of the Act, and not on a
basis different from or less advantageous than that of other
participants.
Accordingly, in the matter of Franklin Alternative Strategies
Funds, et al., (File No. 812-14819),
IT IS ORDERED, under section 6(c) of the Act, that the requested
 exemptions from sections
18(f) and 21(b) of the Act are granted, effective immediately,
 subject to the conditions in the
application, as amended.
IT IS FURTHER ORDERED, under section 12(d)(1)(J) of the Act,
that the requested exemption
from section 12(d)(1) of the Act is granted, effective immediately,
 subject to the conditions in
the application, as amended.
IT IS FURTHER ORDERED, under sections 6(c) and 17(b) of the Act,
 that the requested
exemptions from sections 17(a)(1), 17(a)(2), and 17(a)(3) of the
 Act are granted, effective
immediately, subject to the conditions in the application, as
amended.
1 Franklin Gold Fund, et al., Investment Company Act Release Nos.
 24016 (Sept. 16, 1999) (notice) and
24080 (Oct. 13, 1999) (order).
4
IT IS FURTHER ORDERED, under section 17(d) of the Act and rule
17d-1 under the Act, that
the proposed transactions are approved, effective immediately,
 subject to the conditions in the
application, as amended.
For the Commission, by the Division of Investment Management,
under delegated authority.
Eduardo A. Aleman
Assistant Secretary

EXEMPT ORDER INFO

UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
INVESTMENT COMPANY ACT OF 1940
Release no. 32722/July 3, 2017
________________________________________________
In the Matter of :
:
Franklin Fund Allocator Series :
Franklin Advisers, Inc. :
Franklin Templeton Distributors, Inc. :
:
One Franklin Parkway :
San Mateo, CA 94403 :
:
(812-14611) :
________________________________________________:
ORDER UNDER SECTION 12(d)(1)(J) OF THE INVESTMENT COMPANY ACT OF
 1940 GRANTING AN EXEMPTION FROM SECTIONS 12(d)(1)(A), (B), AND
 (C) OF THE ACT, UNDER SECTIONS 6(c) AND 17(b) OF THE ACT
GRANTING AN EXEMPTION FROM SECTION 17(a) OF THE ACT, AND UNDER
 SECTION 6(C) OF THE ACT FOR AN EXEMPTION FROM RULE 12d1-2(a)
UNDER THE ACT
Franklin Fund Allocator Series, Franklin Advisers, Inc., and
 Franklin Templeton Distributors, Inc. filed an application
on February 9, 2016, and an amendment to the application on
May 23, 2017, requesting an order under section 12(d)(1)(J)
of the Investment Company Act of 1940 (the "Act") granting
 an exemption from sections 12(d)(1)(A), (B), and (C) of the
 Act, under sections 6(c) and 17(b) of the Act granting an
exemption from section 17(a) of the Act, and under section
6(c) of the Act for an exemption from rule 12d1-2(a) under
the Act. The order would permit (a) certain registered open-end
management investment companies that operate as "funds of funds"
 to acquire shares of certain registered open-end management
 investment companies, registered closed-end management investment
 companies, "business development companies," as defined by section
 2(a)(48) of the Act, and registered unit investment trusts that
 are within and outside the same group of investment companies as
 the acquiring investment companies and (b) certain registered
 open-end management investment companies relying on rule 12d1-2
 under the Act to invest in certain financial instruments.
On June 5, 2017, a notice of the filing of the application was
issued (Investment Company Act Release No. 32669). The notice
 gave interested persons an opportunity to request a hearing
 and stated that an order granting the application would be
issued unless a hearing was ordered. No request for a hearing
 has been filed, and the Commission has not ordered a hearing.
2
The matter has been considered and it is found, on the basis
of the information set forth in the application, as amended,
that granting the requested exemption is appropriate in and
consistent with the public interest and consistent with the
protection of investors and the purposes fairly intended by
 the policy and provisions of the Act.
It is also found that the terms of the proposed transactions
 are reasonable and fair and do not involve overreaching, and
 the proposed transactions are consistent with the policies of
 each registered investment company concerned and with the
 general purposes of the Act.
Accordingly,
IT IS ORDERED, that the relief requested under section 12(d)(1)(J)
 of the Act from sections 12(d)(1)(A), (B), and (C) of the Act,
 under sections 6(c) and 17(b) of the Act from section 17(a) of
the Act, and under section 6(c) of the Act for an exemption from
 rule 12d1-2(a) under the Act by Franklin Fund Allocator Series,
et al. (File No. 812-14611) is granted, effective immediately,
subject to the conditions contained in the application, as amended.
For the Commission, by the Division of Investment Management,
 under delegated authority.
Eduardo Aleman
Assistant Secretary

EXEMPT ORDER INFO

UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
INVESTMENT COMPANY ACT OF 1940 Release No. 30698 / September 24,
 2013
In the Matter of
FRANKLIN TEMPLETON INTERNATIONAL TRUST FRANKLIN TEMPLETON VARIABLE
 INSURANCE PRODUCTS
TRUST
TEMPLETON INCOME TRUST
TEMPLETON GLOBAL INVESTMENT TRUST FRANKLIN ALTERNATIVE STRATEGIES
 FUNDS
K2/D&S MANAGEMENT CO., L.L.C. TEMPLETON ASSET MANAGEMENT LTD.
FRANKLIN ADVISERS, INC. One Franklin Parkway
San Mateo, CA 94403-1906
(File No. 812-14167)
ORDER UNDER SECTION 6(c) OF THE INVESTMENT COMPANY ACT OF 1940
GRANTING AN EXEMPTION FROM SECTION 15(a) OF THE ACT AND RULE 18f-2
UNDER THE ACT AND CERTAIN DISCLOSURE REQUIREMENTS
Franklin Templeton International Trust, Franklin Templeton Variable
 Insurance Products Trust,
Templeton Income Trust, Templeton Global Investment Trust, Franklin
 Alternative Strategies
Funds, K2/D&S Management Co., L.L.C., Templeton Asset Management
Ltd., and Franklin
Advisers, Inc. filed an application on June 13, 2013, and an
amendment
 to the application on
August 27, 2013, requesting an order under section 6(c) of the
Investment Company Act of 1940
(the "Act") for an exemption from section 15(a) of the Act and
rule 18f-2 under the Act, as well
as from certain disclosure requirements. The order supersedes a
prior order1 and permits
applicants to enter into and materially amend subadvisory agreements
 without shareholder
approval and also grants relief from certain disclosure
requirements.
1 Franklin Advisers, Inc. and Franklin Templeton International
Trust, Investment Company Act Release Nos.
30105 (Jun. 18, 2012) (notice) and 30138 (Jul. 17, 2012) (order).
2
On August 27, 2013, a notice of the filing of the application was
issued (Investment Company
Act Release No. 30679. The notice gave interested persons an
opportunity to request a hearing
and stated that an order granting the application would be issued
unless a hearing was ordered.
No request for a hearing has been filed, and the Commission has
not ordered a hearing.
The matter has been considered and it is found, on the basis of
the information set forth in the
application, as amended, that granting the requested exemption is
 appropriate in the public
interest and consistent with the protection of investors and the
purposes fairly intended by the
policy and provisions of the Act.
Accordingly,
IT IS ORDERED, under section 6(c) of the Act, that the relief
 requested by Franklin Templeton
International Trust, et al. (File No. 812-14167) is granted,
effective immediately, subject to the
conditions contained in the application, as amended.
For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill
Deputy Secretary