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 811-02781
 
Templeton Funds
(Exact name of registrant as specified in charter)
 
300 S.E. 2nd Street
, Fort Lauderdale, FL 33301-1923

(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: (954) 527-7500_
 
 
Date of fiscal year end: _8/31__
 
Date of reporting period: 8/31/20_
 
Item 1. Reports to Stockholders.
 
 
ANNUAL
REPORT
AND
SHAREHOLDER
LETTER
Templeton
World
Fund
A
Series
of
Templeton
Funds
August
31,
2020
Sign
up
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:
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1,
2021,
as
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SEC,
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Fund’s
shareholder
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franklintempleton.com
Not
part
of
the
annual
report
1
SHAREHOLDER
LETTER
Dear
Shareholder:
During
the
12
months
ended
August
31,
2020,
global
economic
growth
weakened
significantly
as
a
result
of
the
novel
coronavirus
(COVID-19)
pandemic
and
subsequent
economic
lockdowns
imposed
by
many
governments
around
the
world.
Global
stocks
advanced
during
the
period,
however,
as
a
result
of
gains
prior
to
the
pandemic
combined
with
increased
investor
confidence
later
in
the
period
as
many
economies
began
to
reopen.
Many
central
banks
took
significant
actions
to
bolster
economic
growth
during
the
period.
The
U.S.
Federal
Reserve
cut
the
federal
funds
target
rate
range
four
times
to
0.00%–0.25%
and
initiated
massive
quantitative
easing
measures.
The
European
Central
Bank
left
its
key
interest
rate
unchanged
but
lowered
the
deposit
rate,
resumed
buying
bonds
and
announced
an
emergency
asset
purchase
plan.
In
this
environment,
global
developed
and
emerging
market
stocks
posted
positive
returns,
as
measured
by
the
MSCI
All
Country
World
Index.
We
are
committed
to
our
long-term
perspective
and
disciplined
investment
approach
as
we
conduct
a
rigorous,
fundamental
analysis
of
securities
with
a
regular
emphasis
on
investment
risk
management.
Historically,
patient
investors
have
achieved
rewarding
results
by
evaluating
their
goals,
diversifying
their
assets
globally
and
maintaining
a
disciplined
investment
program,
all
hallmarks
of
the
Templeton
investment
philosophy.
We
continue
to
recommend
investors
consult
their
financial
advisors
and
review
their
portfolios
to
design
a
long-term
strategy
and
portfolio
allocation
that
meet
their
individual
needs,
goals
and
risk
tolerance.
Templeton
World
Fund’s
annual
report
includes
more
detail
about
prevailing
conditions
and
a
discussion
about
investment
decisions
during
the
period.
Please
remember
all
securities
markets
fluctuate,
as
do
mutual
fund
share
prices.
We
thank
you
for
investing
with
Franklin
Templeton,
welcome
your
questions
and
comments,
and
look
forward
to
serving
your
investment
needs
in
the
years
ahead.
Sincerely,
Alan
Bartlett
Chief
Investment
Officer
Templeton
Equity
Group
This
letter
reflects
our
analysis
and
opinions
as
of
August
31,
2020,
unless
otherwise
indicated.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
state,
industry,
security
or
fund.
Statements
of
fact
are
from
sources
considered
reliable.
franklintempleton.com
Annual
Report
2
Contents
Annual
Report
Templeton
World
Fund
............................
3
Performance
Summary
...........................
7
Your
Fund’s
Expenses
............................
10
Financial
Highlights
and
Statement
of
Investments
....
11
Financial
Statements
.............................
20
Notes
to
Financial
Statements
.....................
24
Report
of
Independent
Registered
Public
Accounting
Firm
............................
36
Tax
Information
..................................
37
Board
Members
and
Officers
.......................
38
Shareholder
Information
..........................
43
Visit
franklintempleton.com
for
fund
updates,
to
access
your
account,
or
to
find
helpful
financial
planning
tools.
3
franklintempleton.com
Annual
Report
ANNUAL
REPORT
Templeton
World
Fund
This
annual
report
for
Templeton
World
Fund
covers
the
fiscal
year
ended
August
31,
2020
.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
long-term
capital
growth.
Under
normal
market
conditions,
the
Fund
invests
primarily
in
the
equity
securities
of
companies
located
anywhere
in
the
world,
including
developing
markets.
Under
normal
circumstances,
the
Fund
will
invest
in
issuers
located
in
at
least
three
different
countries
(including
the
U.S.).
The
Fund
intends
to
regularly
engage
in
currency-related
derivatives,
such
as
currency
and
cross-currency
forwards
and
currency
futures
contracts,
to
seek
to
hedge
all
or
substantially
all
of
its
foreign
currency
exposure
to
the
U.S.
dollar.
Performance
Overview
The
Fund’s
Class
A
shares
had
a
+4.47%
cumulative
total
return
for
the
12
months
under
review.
In
comparison,
the
Fund’s
benchmark,
the
MSCI
All
Country
World
Index
(ACWI)
100%
Hedged
to
USD,
which
measures
stock
performance
in
global
developed
and
emerging
markets,
posted
a
+16.02%
total
return.
1
Also
in
comparison,
the
Fund’s
second
benchmark,
the
Linked
MSCI
ACWI
100%
Hedged
to
USD/World,
posted
a
+16.02%
total
return,
2
and
the
Fund’s
third
benchmark,
the
MSCI
ACWI,
posted
a
+17.12%
total
return.
3
For
the
10-year
period
ended
August
31,
2020,
the
Fund’s
Class
A
shares
posted
a
+91.69%
cumulative
total
return,
compared
with
the
Linked
MSCI
ACWI
100%
Hedged
to
USD/World’s
+196.87%
cumulative
total
return
for
the
same
period.
2
Please
note
index
performance
information
is
provided
for
reference
and
we
do
not
attempt
to
track
the
index
but
rather
undertake
investments
on
the
basis
of
fundamental
research.
You
can
find
more
performance
data
in
the
Performance
Summary
beginning
on
page
7
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Economic
and
Market
Overview
Global
developed
and
emerging
market
equities,
as
measured
by
the
MSCI
All
Country
World
Index,
advanced
during
the
12-month
period.
Stocks
gained
for
the
first
four
months
of
the
reporting
period
but
fell
sharply
in
early
2020
amid
investor
fears
of
a
global
economic
slowdown
due
to
the
novel
coronavirus
(COVID-19)
pandemic.
Such
fears
drove
many
investors
to
sell
equities
and
buy
government
bonds,
cash
and
other
investments
perceived
as
safe.
During
the
last
five
months
of
the
period,
global
equities
rebounded
due
to
optimism
about
easing
lockdown
restrictions,
vaccine
development
and
government
stimulus
measures.
Despite
a
second
wave
of
infections
and
reintroduction
of
restrictions,
as
well
as
renewed
tensions
between
the
U.S.
and
China,
positive
investor
sentiment
and
economic
stimulus
led
global
markets
higher.
In
the
U.S.,
a
strong
labor
market
and
solid
consumer
spending
drove
economic
growth
through
February
2020.
However,
pandemic-related
restrictions
caused
stiff
headwinds
for
the
economy,
including
mass
layoffs
that
drove
the
unemployment
rate
to
14.7%
in
April.
4
According
to
Geographic
Composition
8/31/20
%
of
Total
Net
Assets
North
America
32.2%
Asia
29.1%
Europe
26.4%
Latin
America
&
Caribbean
2.7%
Short-Term
Investments
&
Other
Net
Assets
9.6%
1.
Source:
FactSet.
2.
Source:
FactSet.
The
Linked
MSCI
ACWI
100%
Hedged
to
USD/World
reflects
performance
of
the
MSCI
World
Index
through
6/29/2016
and
performance
of
the
MSCI
ACWI
100%
Hedged
to
USD
thereafter.
As
of
8/31/20,
the
Fund’s
Class
A
10-year
average
annual
total
return
not
including
the
maximum
sales
charge
was
+6.72%,
com-
pared
with
the
Linked
MSCI
ACWI
100%
Hedged
to
USD/World’s
10-year
average
annual
total
return
of
+11.49%.
3.
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.
4.
Source:
U.S.
Bureau
of
Labor
Statistics.
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
15
.
Templeton
World
Fund
4
franklintempleton.com
Annual
Report
the
National
Bureau
of
Economic
Research,
the
longest
U.S.
economic
expansion
in
history
ended
in
February
2020,
and
the
country
slipped
into
a
deep
recession.
Equities
began
to
rebound
in
the
spring
amid
declining
jobless
claims,
rising
retail
sales
and
optimism
about
treatments
and
potential
vaccines
for
COVID-19.
Despite
surging
summer
infection
rates
and
dampened
economic
activity,
which
caused
the
second-quarter
gross
domestic
product
to
decline
at
a
record
pace,
resilient
consumer
spending
in
July
and
optimism
about
an
economic
rebound
led
equities
higher.
However,
gains
were
concentrated
in
only
a
few
sectors,
including
consumer
staples,
health
care
and
information
technology.
The
U.S.
Federal
Reserve
(Fed)
lowered
the
federal
funds
target
rate
twice
in
late
2019
to
a
range
of
1.50%–1.75%
and
implemented
two
emergency
rate
cuts
in
March
2020,
decreasing
the
rate
to
a
range
of
0.00%–0.25%.
The
Fed
also
enacted
sweeping
quantitative
easing
measures
aimed
at
ensuring
credit
flows
to
borrowers
and
supporting
credit
markets
with
unlimited
amounts
of
bond
purchasing.
At
the
end
of
the
period,
the
Fed
announced
a
shift
in
inflation
policy
that
could
mean
interest
rates
will
potentially
remain
low,
even
amid
low
unemployment
and
rising
inflation.
In
the
eurozone,
forecasts
of
a
significant
contraction
in
2020
mounted
as
the
magnitude
of
the
pandemic’s
economic
disruption
became
apparent.
Nevertheless,
European
developed
market
equities,
as
measured
by
the
MSCI
Europe
Index,
advanced
as
some
social
distancing
restrictions
were
removed
and
robust
fiscal
stimulus
measures
led
to
a
significant
rebound
from
the
March
2020
lows.
Asian
developed
and
emerging
market
equities,
as
measured
by
the
MSCI
All
Country
Asia
Index,
also
advanced.
Generally
slow
yet
stable
economic
growth
and
easing
trade
tensions
between
the
U.S.
and
China
benefited
the
region,
until
the
pandemic
and
lockdowns
in
China
and
other
countries
derailed
economic
growth.
Sharp
market
declines
were
followed
by
a
rebound,
as
economies
reopened,
aided
by
robust
stimulus
measures
and
many
health
care
companies’
continued
development
of
COVID-19
vaccines
and
treatments.
Emerging
market
stocks,
as
measured
by
the
MSCI
Emerging
Markets
Index,
also
advanced
for
the
12-month
period
despite
steep
pandemic-related
declines,
generally
weaker
currencies
and
lower
energy
prices,
which
hurt
emerging
market
economies
reliant
on
these
exports.
During
the
last
five
months
of
the
reporting
period,
however,
improving
economic
activity,
higher
oil
prices
and
U.S.
dollar
weakness
led
emerging
markets
stocks
to
post
strong
gains,
reversing
earlier
losses.
Investment
Strategy
Our
investment
strategy
employs
a
bottom-up,
value-
oriented,
long-term
approach.
We
focus
on
the
market
price
of
a
company’s
securities
relative
to
our
evaluation
of
the
company’s
long-term
earnings,
asset
value
and
cash
flow
potential.
Our
analysis
includes
an
assessment
of
the
potential
impacts
of
material
environmental,
social
and
governance
(ESG)
factors
on
the
long-term
risk
and
return
profile
of
a
company.
We
also
consider
the
company’s
price/
earnings
ratio,
price/cash
flow
ratio,
profit
margins
and
liquidation
value.
Manager’s
Discussion
The
12
months
under
review
encompassed
a
volatile
and
challenging
period
for
price-disciplined
investors.
Market
leadership
was
concentrated
among
a
handful
of
the
biggest
large-capitalization
technology
and
e-commerce
stocks
that
saw
their
market
capitalizations
and
valuations
soar
to
new
records.
The
period
was
punctuated
by
a
severe
bear
market
and
global
recession
stemming
from
the
COVID-19-related
economic
shutdown,
though
official
intervention
prompted
a
quick
recovery
and
the
darlings
of
the
first
half
of
the
period
reasserted
their
leadership.
The
market
seemed
unhealthy
and
distorted
in
our
view,
divorced
as
it
was
from
economic
and
fundamental
realities.
In
this
unique
environment,
we
identified
major
risks
in
both
tails
of
the
market.
On
the
one
hand,
resilient
high-profile
stocks
traded
at
elevated
valuations
that
bode
poorly
for
long-term
returns,
in
our
view.
On
the
other,
many
optically
inexpensive
stocks
were
comprised
of
companies
that
carried
excessive
balance
sheet
and
operational
risks,
in
our
opinion,
and
might
struggle
to
survive
a
renewed
downturn.
Top
10
Industries
8/31/20
%
of
Total
Net
Assets
a
Pharmaceuticals
8.9%
Hotels,
Restaurants
&
Leisure
5.9%
Beverages
5.5%
Metals
&
Mining
5.3%
Food
&
Staples
Retailing
4.0%
Internet
&
Direct
Marketing
Retail
3.7%
Household
Durables
3.3%
Media
3.2%
Machinery
3.1%
Technology
Hardware,
Storage
&
Peripherals
3.0%
Templeton
World
Fund
5
franklintempleton.com
Annual
Report
Our
strategy
in
this
environment
has
been
diversification
amongst
different
value
types,
economic
exposure
and
risk
profiles.
We
reduced
exposure
to
energy
and
banks,
where
we
believe
many
stocks
were
inexpensive
for
good
reason
and
may
get
even
less
expensive.
Instead,
we
sought
cyclical
exposure
in
sectors
with
better
growth
and
quality
profiles
like
industrials
and
consumer
discretionary.
We
made
selective
investments
in
stocks
in
economically-
and
pandemic-exposed
industries
that
we
believe
had
been
oversold.
We
were
able
to
increase
exposure
to
more
cyclical
and
volatile
stocks
for
two
reasons.
First,
our
fundamental
focus
allowed
us
to
confidently
assess
balance
sheet
and
liquidity
risk.
And
second,
we
were
simultaneously
increasing
the
Fund’s
defensive
exposures
by
raising
cash
equivalents
including
time
deposits
in
foreign
currencies,
taking
long
positions
in
the
Japanese
yen
(a
generally
considered
global
safe
haven),
holding
uncorrelated
assets
like
precious
metals
firms
and
rotating
more
generally
into
higher
quality
companies
across
a
range
of
sectors.
The
result,
in
our
view,
was
a
more
dynamic,
flexible
and
genuinely
diverse
value
portfolio.
We
continue
to
believe
that
flexibility,
creativity
and
true
diversification
within
a
value
framework
is
appropriate
in
this
extended
and
uncertain
market
environment.
Looking
at
the
Fund
more
closely,
relative
underperformance
during
the
period
was
more
about
what
we
didn’t
own
than
what
we
did.
Our
significant
underweighting
in
information
technology
was
the
main
detractor,
unsurprising
for
a
year
when
just
five
tech
stocks
rose
to
become
around
a
quarter
of
the
entire
market
cap
of
the
Standard
&
Poor’s
®
500
Index,
a
record-high
concentration
in
the
world’s
largest
stock
market.
Communication
services
holdings
lagged
due
to
our
underweighted
position
and
lack
of
exposure
to
leading
stocks
in
the
sector’s
media
and
entertainment
category.
Similarly,
consumer
discretionary
detracted
primarily
because
of
our
lack
of
exposure
to
expensive
e-commerce
stocks.
Meanwhile,
an
elevated
cash
balance
helped
dampen
volatility
and
invest
opportunistically
in
the
downturn,
but
represented
a
drag
on
overall
performance
in
the
12-month
timeframe.
Turning
to
relative
contributors,
stock
selection
in
the
industrials
sector
outperformed
as
premier
global
economic
contributors
like
German
conglomerate
Siemens
and
U.S.
truck-maker
Navistar
led
the
cyclical
upswing
in
the
latter
half
of
the
period.
Meanwhile,
materials
holdings
benefited
from
precious
metals
exposure.
From
a
regional
standpoint,
stock
selection
in
Asia
detracted
from
relative
performance,
offseting
a
positive
overweighted
allocation,
pressured
by
weakness
in
Japan
and
China.
In
Europe,
relative
weakness
in
the
U.K.
offset
relative
strength
in
Switzerland
and
Germany,
while
in
North
America,
weakness
in
the
U.S.
outweighed
strength
in
Canada.
The
Fund’s
currency
hedges
had
a
positive
effect
on
Fund
performance
during
the
12
months
under
review.
However,
one
cannot
expect
the
same
results
for
future
periods.
Top
10
Holdings
8/31/20
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
Roche
Holding
AG
3.2%
Pharmaceuticals,
Switzerland
Samsung
Electronics
Co.
Ltd.
3.0%
Technology
Hardware,
Storage
&
Peripherals,
South
Korea
Wheaton
Precious
Metals
Corp.
2.7%
Metals
&
Mining,
Brazil
Sanofi
2.6%
Pharmaceuticals,
France
Comcast
Corp.
2.3%
Media,
United
States
Verizon
Communications,
Inc.
2.2%
Diversified
Telecommunication
Services,
United
States
Siemens
AG
2.2%
Industrial
Conglomerates,
Germany
Dollar
Tree,
Inc.
2.1%
Multiline
Retail,
United
States
Anheuser-Busch
InBev
SA/NV
2.1%
Beverages,
Belgium
E.ON
SE
2.1%
Multi-Utilities,
Germany
Top
10
Countries
8/31/20
a
%
of
Total
Net
Assets
a
a
United
States
31.8%
Japan
17.4%
Germany
6.5%
United
Kingdom
5.5%
China
4.0%
South
Korea
3.8%
France
3.5%
Switzerland
3.2%
Brazil
2.7%
Netherlands
2.1%
Templeton
World
Fund
6
franklintempleton.com
Annual
Report
It
is
important
to
recognize
the
effect
of
currency
movements
on
the
Fund's
performance.
In
general,
if
the
value
of
the
U.S.
dollar
goes
up
compared
with
a
foreign
currency,
an
investment
traded
in
that
foreign
currency
will
go
down
in
value
because
it
will
be
worth
fewer
U.S.
dollars.
This
can
have
a
negative
effect
on
Fund
performance.
Conversely,
when
the
U.S.
dollar
weakens
in
relation
to
a
foreign
currency,
an
investment
traded
in
that
foreign
currency
will
increase
in
value,
which
can
contribute
to
Fund
performance.
For
the
12
months
ended
August
31,
2020,
the
U.S.
dollar
declined
in
value
relative
to
most
currencies.
As
a
result,
the
Fund's
performance
was
positively
affected
by
the
portfolio's
substantial
investment
in
securities
with
non-U.S.
currency
exposure.
However,
one
cannot
expect
the
same
result
in
future
periods.
In
contrast,
the
Fund's
currency
hedges
had
a
negative
effect
on
Fund
performance
during
the
12
months
under
review.
Thank
you
for
your
continued
participation
in
Templeton
World
Fund.
We
look
forward
to
serving
your
future
investment
needs.
Peter
M.
Moeschter,
CFA
Herbert
J.
Arnett,
Jr.
Christopher
James
Peel,
CFA
Warren
Pustam,
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,
state,
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
Templeton
World
Fund
7
franklintempleton.com
Annual
Report
The
performance
table
and
graphs
do
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses
of
each
class.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
8/31/20
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
The
maximum
is
5.50%
and
the
minimum
is
0%.
Class
A
:
5.50%
maximum
initial
sales
charge;
Advisor
Class:
no
sales
charges.
For
other
share
classes,
visit
franklintempleton.com.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Share
Class
Cumulative
Total
Return
1
Average
Annual
Total
Return
2
–
A
3
1-Year
+4.47%
-1.25%
5-Year
+18.74%
+2.33%
10-Year
+91.69%
+6.12%
Advisor
1-Year
+4.66%
+4.66%
5-Year
+20.19%
+3.75%
10-Year
+96.34%
+6.98%
See
page
9
for
Performance
Summary
footnotes.
Templeton
World
Fund
Performance
Summary
8
franklintempleton.com
Annual
Report
See
page
9
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
indexes
include
reinvestment
of
any
income
or
distributions.
They
differ
from
the
Fund
in
composition
and
do
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
Class
A
(9/1/10
–
8/31/20)
Advisor
Class
(9/1/10
–
8/31/20)
Templeton
World
Fund
Performance
Summary
9
franklintempleton.com
Annual
Report
Each
class
of
shares
is
available
to
certain
eligible
investors
and
has
different
annual
fees
and
expenses,
as
described
in
the
prospectus.
All
investments
involve
risks,
including
possible
loss
of
principal.
Special
risks
are
associated
with
foreign
investing,
including
currency
fluctuations,
economic
instability
and
political
developments;
investments
in
developing
markets
involve
heightened
risks
related
to
the
same
factors.
Currency
rates
may
fluctuate
significantly
over
short
periods
of
time,
and
can
reduce
returns.
Because
the
Fund
may
invest
its
assets
in
companies
in
a
specific
region,
including
Europe,
it
is
subject
to
greater
risks
of
adverse
developments
in
that
region
and/or
the
surrounding
regions
than
a
fund
that
is
more
broadly
diversified
geographically.
Current
political
and
financial
uncertainty
concerning
the
economic
consequences
of
the
departure
of
the
U.K.
from
the
European
Union
may
increase
market
volatility.
Derivatives,
including
currency
management
strategies,
involve
costs
and
can
create
economic
leverage
in
the
portfolio
which
may
result
in
significant
volatility
and
cause
the
Fund
to
participate
in
losses
(as
well
as
enable
gains)
on
an
amount
that
exceeds
the
Fund’s
initial
investment.
The
Fund
may
not
achieve
the
anticipated
benefits,
and
may
realize
losses
when
a
counterparty
fails
to
perform
as
promised.
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
general,
in
ways
that
cannot
necessarily
be
foreseen.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
1.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
2.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
3.
Prior
to
9/10/18
these
shares
were
offered
at
a
higher
initial
sales
charge
of
5.75%,
thus
actual
returns
(with
sales
charges)
would
have
differed.
Average
annual
total
returns
(with
sales
charges)
have
been
restated
to
reflect
the
current
maximum
initial
sales
charge
of
5.50%.
4.
Source:
FactSet.
The
MSCI
ACWI
100%
Hedged
to
USD
represents
a
close
estimation
of
the
performance
that
can
be
achieved
by
hedging
the
currency
exposures
of
its
parent
index,
the
MSCI
ACWI,
to
the
USD,
the
"home"
currency
for
the
hedged
index.
The
Linked
MSCI
ACWI
100%
Hedged
to
USD/World
reflects
performance
of
the
MSCI
World
Index
through
6/29/2016
and
performance
of
the
MSCI
ACWI
100%
Hedged
to
USD
thereafter.
5.
Source:
Morningstar.
The
MSCI
ACWI
is
a
free
float-adjusted,
market
capitalization-weighted
index
designed
to
measure
equity
market
performance
in
global
developed
and
emerging
markets.
6.
Figures
are
as
stated
in
the
Fund’s
current
prospectus
and
may
differ
from
the
expense
ratios
disclosed
in
the
Your
Fund’s
Expenses
and
Financial
Highlights
sections
in
this
report.
In
periods
of
market
volatility,
assets
may
decline
significantly,
causing
total
annual
Fund
operating
expenses
to
become
higher
than
the
figures
shown.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Distributions
(9/1/19–8/31/20)
Share
Class
Net
Investment
Income
Short-Term
Capital
Gain
Long-Term
Capital
Gain
Total
A
$0.4997
$0.0304
$0.1262
$0.6563
C
$0.4088
$0.0304
$0.1262
$0.5654
R6
$0.5289
$0.0304
$0.1262
$0.6855
Advisor
$0.5238
$0.0304
$0.1262
$0.6804
Total
Annual
Operating
Expenses
6
Share
Class
A
1.05%
Advisor
0.80%
Your
Fund’s
Expenses
Templeton
World
Fund
10
franklintempleton.com
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value”
for
each
class
of
shares.
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
184/366
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements
for
Class
R6.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
3/1/20
Ending
Account
Value
8/31/20
Expenses
Paid
During
Period
3/1/20–8/31/20
1,2
Ending
Account
Value
8/31/20
Expenses
Paid
During
Period
3/1/20–8/31/20
1,2
a
Net
Annualized
Expense
Ratio
2
A
$1,000
$1,027.50
$5.45
$1,019.76
$5.43
1.07%
C
$1,000
$1,022.70
$9.29
$1,015.95
$9.26
1.83%
R6
$1,000
$1,029.20
$3.75
$1,021.44
$3.74
0.74%
Advisor
$1,000
$1,028.30
$4.19
$1,021.00
$4.18
0.82%
Templeton
Funds
Financial
Highlights
Templeton
World
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
11
a
Year
Ended
August
31,
2020
2019
2018
2017
2016
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$12.76
$17.24
$16.94
$15.47
$16.51
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.16
0.29
0.28
0.27
0.26
Net
realized
and
unrealized
gains
(losses)
...........
0.45
(2.17)
1.03
2.21
(0.17)
Total
from
investment
operations
....................
0.61
(1.88)
1.31
2.48
0.09
Less
distributions
from:
Net
investment
income
..........................
(0.50)
(0.67)
(0.02)
(0.57)
(0.28)
Net
realized
gains
.............................
(0.16)
(1.93)
(0.99)
(0.44)
(0.85)
Total
distributions
...............................
(0.66)
(2.60)
(1.01)
(1.01)
(1.13)
Net
asset
value,
end
of
year
.......................
$12.71
$12.76
$17.24
$16.94
$15.47
Total
return
c
...................................
4.47%
(10.22)%
7.81%
16.45%
0.84%
Ratios
to
average
net
assets
Expenses
.....................................
1.05%
1.05%
d
1.04%
e
1.06%
d,e
1.07%
d
Net
investment
income
...........................
1.29%
2.06%
1.64%
1.63%
1.73%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$2,831,844
$3,150,057
$3,973,648
$4,240,117
$4,195,518
Portfolio
turnover
rate
............................
52.25%
25.16%
28.39%
31.46%
21.62%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Templeton
Funds
Financial
Highlights
Templeton
World
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
12
a
Year
Ended
August
31,
2020
2019
2018
2017
2016
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$12.26
$16.35
$16.21
$14.84
$15.86
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.07
0.13
0.14
0.14
0.14
Net
realized
and
unrealized
gains
(losses)
...........
0.42
(2.01)
0.99
2.12
(0.16)
Total
from
investment
operations
....................
0.49
(1.88)
1.13
2.26
(0.02)
Less
distributions
from:
Net
investment
income
..........................
(0.41)
(0.28)
—
(0.45)
(0.15)
Net
realized
gains
.............................
(0.16)
(1.93)
(0.99)
(0.44)
(0.85)
Total
distributions
...............................
(0.57)
(2.21)
(0.99)
(0.89)
(1.00)
Net
asset
value,
end
of
year
.......................
$12.18
$12.26
$16.35
$16.21
$14.84
Total
return
c
...................................
3.61%
(10.94)%
7.01%
15.59%
0.11%
Ratios
to
average
net
assets
Expenses
.....................................
1.82%
1.80%
d
1.80%
e
1.81%
d,e
1.82%
d
Net
investment
income
...........................
0.54%
1.31%
0.88%
0.88%
0.98%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$18,630
$28,850
$117,879
$138,534
$158,126
Portfolio
turnover
rate
............................
52.25%
25.16%
28.39%
31.46%
21.62%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Templeton
Funds
Financial
Highlights
Templeton
World
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
13
a
Year
Ended
August
31,
2020
2019
2018
2017
2016
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$12.73
$17.21
$16.92
$15.45
$16.50
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.20
0.34
0.33
0.32
0.32
Net
realized
and
unrealized
gains
(losses)
...........
0.45
(2.17)
1.03
2.22
(0.18)
Total
from
investment
operations
....................
0.65
(1.83)
1.36
2.54
0.14
Less
distributions
from:
Net
investment
income
..........................
(0.53)
(0.72)
(0.08)
(0.63)
(0.34)
Net
realized
gains
.............................
(0.16)
(1.93)
(0.99)
(0.44)
(0.85)
Total
distributions
...............................
(0.69)
(2.65)
(1.07)
(1.07)
(1.19)
Net
asset
value,
end
of
year
.......................
$12.69
$12.73
$17.21
$16.92
$15.45
Total
return
....................................
4.71%
(9.88)%
8.13%
16.87%
1.18%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.79%
0.77%
0.74%
0.73%
0.72%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.76%
0.75%
0.72%
c
0.73%
c,d
0.72%
d
Net
investment
income
...........................
1.59%
2.36%
1.96%
1.96%
2.08%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$38,885
$43,595
$51,431
$55,504
$50,487
Portfolio
turnover
rate
............................
52.25%
25.16%
28.39%
31.46%
21.62%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Templeton
Funds
Financial
Highlights
Templeton
World
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
14
a
Year
Ended
August
31,
2020
2019
2018
2017
2016
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$12.74
$17.23
$16.93
$15.46
$16.50
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.19
0.33
0.32
0.32
0.30
Net
realized
and
unrealized
gains
(losses)
...........
0.45
(2.17)
1.03
2.20
(0.17)
Total
from
investment
operations
....................
0.64
(1.84)
1.35
2.52
0.13
Less
distributions
from:
Net
investment
income
..........................
(0.52)
(0.72)
(0.06)
(0.61)
(0.32)
Net
realized
gains
.............................
(0.16)
(1.93)
(0.99)
(0.44)
(0.85)
Total
distributions
...............................
(0.68)
(2.65)
(1.05)
(1.05)
(1.17)
Net
asset
value,
end
of
year
.......................
$12.70
$12.74
$17.23
$16.93
$15.46
Total
return
....................................
4.66%
(9.99)%
8.09%
16.74%
1.12%
Ratios
to
average
net
assets
Expenses
.....................................
0.81%
0.80%
c
0.80%
d
0.81%
c,d
0.82%
c
Net
investment
income
...........................
1.53%
2.31%
1.88%
1.88%
1.98%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$99,546
$112,891
$146,883
$157,237
$113,455
Portfolio
turnover
rate
............................
52.25%
25.16%
28.39%
31.46%
21.62%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Templeton
Funds
Statement
of
Investments,
August
31,
2020
Templeton
World
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
15
a
a
Industry
Shares
a
Value
a
Common
Stocks
90.4%
Belgium
2.1%
Anheuser-Busch
InBev
SA/NV
......
Beverages
1,086,267
$
63,130,675
Brazil
2.7%
Wheaton
Precious
Metals
Corp.
.....
Metals
&
Mining
1,538,656
82,195,381
Canada
0.4%
Husky
Energy,
Inc.
...............
Oil,
Gas
&
Consumable
Fuels
3,573,280
12,084,482
China
4.0%
a
Alibaba
Group
Holding
Ltd.
.........
Internet
&
Direct
Marketing
Retail
1,596,671
57,472,306
Gree
Electric
Appliances,
Inc.
of
Zhuhai,
A
...........................
Household
Durables
1,794,720
14,272,119
Yum
China
Holdings,
Inc.
..........
Hotels,
Restaurants
&
Leisure
823,982
47,552,001
119,296,426
Denmark
1.6%
AP
Moller
-
Maersk
A/S,
B
..........
Marine
31,274
47,919,575
France
3.5%
Pernod
Ricard
SA
................
Beverages
146,070
25,017,767
Sanofi
.........................
Pharmaceuticals
779,180
78,918,852
103,936,619
Germany
6.5%
a
adidas
AG
......................
Textiles,
Apparel
&
Luxury
Goods
66,932
20,366,377
Bayer
AG
......................
Pharmaceuticals
707,810
47,075,918
E.ON
SE
.......................
Multi-Utilities
5,228,845
61,926,827
Siemens
AG
....................
Industrial
Conglomerates
473,063
65,547,521
194,916,643
Hong
Kong
1.8%
AIA
Group
Ltd.
..................
Insurance
5,111,204
52,363,382
Japan
17.4%
East
Japan
Railway
Co.
...........
Road
&
Rail
150,500
9,798,283
Honda
Motor
Co.
Ltd.
.............
Automobiles
1,439,900
36,661,552
Isuzu
Motors
Ltd.
................
Automobiles
1,445,300
14,282,095
Japan
Airlines
Co.
Ltd.
............
Airlines
1,245,310
24,693,158
Keisei
Electric
Railway
Co.
Ltd.
......
Road
&
Rail
208,400
6,125,717
Kirin
Holdings
Co.
Ltd.
............
Beverages
2,266,600
44,562,096
Komatsu
Ltd.
...................
Machinery
2,007,100
43,703,708
Kyocera
Corp.
...................
Electronic
Equipment,
Instruments
&
Components
871,200
49,995,673
Makita
Corp.
....................
Machinery
658,700
30,434,727
Mitsubishi
Electric
Corp.
...........
Electrical
Equipment
2,530,700
34,866,162
Panasonic
Corp.
.................
Household
Durables
4,712,770
43,433,032
Seven
&
i
Holdings
Co.
Ltd.
.........
Food
&
Staples
Retailing
1,054,700
34,029,838
Sony
Corp.
.....................
Household
Durables
508,520
39,823,115
Sumitomo
Mitsui
Financial
Group,
Inc.
.
Banks
1,110,210
32,649,010
Suntory
Beverage
&
Food
Ltd.
......
Beverages
830,210
32,044,172
Takeda
Pharmaceutical
Co.
Ltd.
.....
Pharmaceuticals
1,167,593
43,540,404
520,642,742
Luxembourg
1.9%
a
ArcelorMittal
SA
.................
Metals
&
Mining
2,274,869
28,654,673
SES
SA,
FDR
...................
Media
4,042,586
28,729,409
57,384,082
Templeton
Funds
Statement
of
Investments
Templeton
World
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
16
a
a
Industry
Shares
a
Value
a
Common
Stocks
(continued)
Macau
1.2%
Galaxy
Entertainment
Group
Ltd.
....
Hotels,
Restaurants
&
Leisure
4,758,760
$
37,409,855
Netherlands
2.1%
NXP
Semiconductors
NV
..........
Semiconductors
&
Semiconductor
Equipment
258,729
32,537,759
Royal
Dutch
Shell
plc,
B
...........
Oil,
Gas
&
Consumable
Fuels
2,191,977
30,834,827
63,372,586
South
Korea
3.8%
KB
Financial
Group,
Inc.
...........
Banks
726,024
22,532,271
Samsung
Electronics
Co.
Ltd.
.......
Technology
Hardware,
Storage
&
Peripherals
1,974,699
89,691,037
112,223,308
Switzerland
3.2%
Roche
Holding
AG
...............
Pharmaceuticals
272,184
95,209,878
Thailand
0.9%
Bangkok
Bank
PCL
...............
Banks
7,888,971
27,114,138
United
Kingdom
5.5%
BAE
Systems
plc
................
Aerospace
&
Defense
4,360,021
30,264,210
BP
plc
.........................
Oil,
Gas
&
Consumable
Fuels
8,707,866
30,376,418
Burberry
Group
plc
...............
Textiles,
Apparel
&
Luxury
Goods
1,632,233
31,160,831
Compass
Group
plc
..............
Hotels,
Restaurants
&
Leisure
2,087,061
33,768,959
a
InterContinental
Hotels
Group
plc
....
Hotels,
Restaurants
&
Leisure
437,560
25,260,763
International
Consolidated
Airlines
Group
SA
.....................
Airlines
1,191,900
3,344,111
Whitbread
plc
...................
Hotels,
Restaurants
&
Leisure
300,400
10,129,871
164,305,163
United
States
31.8%
AbbVie,
Inc.
....................
Biotechnology
192,290
18,415,613
American
Express
Co.
............
Consumer
Finance
107,600
10,931,084
a
Booking
Holdings,
Inc.
............
Internet
&
Direct
Marketing
Retail
28,043
53,574,749
BorgWarner,
Inc.
.................
Auto
Components
433,116
17,580,178
Comcast
Corp.,
A
................
Media
1,500,902
67,255,419
a
Dollar
Tree,
Inc.
.................
Multiline
Retail
662,295
63,759,140
DuPont
de
Nemours,
Inc.
..........
Chemicals
401,133
22,367,176
a
EPAM
Systems,
Inc.
..............
IT
Services
158,619
51,884,275
Freeport-McMoRan,
Inc.
...........
Metals
&
Mining
3,131,613
48,884,479
Gilead
Sciences,
Inc.
.............
Biotechnology
557,856
37,236,888
Honeywell
International,
Inc.
........
Industrial
Conglomerates
99,630
16,493,747
Kellogg
Co.
.....................
Food
Products
682,947
48,427,772
Kroger
Co.
(The)
.................
Food
&
Staples
Retailing
1,060,897
37,852,805
a
Laboratory
Corp.
of
America
Holdings
.
Health
Care
Providers
&
Services
146,738
25,789,203
Lear
Corp.
.....................
Auto
Components
131,392
14,969,491
Medtronic
plc
...................
Health
Care
Equipment
&
Supplies
244,369
26,262,336
Oracle
Corp.
....................
Software
691,696
39,578,845
Ross
Stores,
Inc.
................
Specialty
Retail
428,582
39,035,249
Stanley
Black
&
Decker,
Inc.
........
Machinery
104,620
16,875,206
Starbucks
Corp.
.................
Hotels,
Restaurants
&
Leisure
264,910
22,376,948
Sysco
Corp.
....................
Food
&
Staples
Retailing
805,953
48,470,013
TJX
Cos.,
Inc.
(The)
..............
Specialty
Retail
714,298
39,136,387
United
Parcel
Service,
Inc.,
B
.......
Air
Freight
&
Logistics
264,971
43,354,555
Verizon
Communications,
Inc.
.......
Diversified
Telecommunication
Services
1,114,923
66,081,486
Walt
Disney
Co.
(The)
.............
Entertainment
323,010
42,595,329
Templeton
Funds
Statement
of
Investments
Templeton
World
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
17
At
August
31,
2020,
the
Fund
had
the
following
forward
exchange
contracts
outstanding.
See
Note
1
(
c
). 
a
a
Industry
Shares
a
Value
a
Common
Stocks
(continued)
United
States
(continued)
Zimmer
Biomet
Holdings,
Inc.
.......
Health
Care
Equipment
&
Supplies
214,216
$
30,178,750
949,367,123
Total
Common
Stocks
(Cost
$2,315,347,743)
....................................
2,702,872,058
Short
Term
Investments
2.9%
a
a
Principal
Amount
*
a
Value
a
a
a
a
a
a
Time
Deposits
2.9%
Canada
0.5%
National
Bank
of
Canada,
0.05%,
9/01/20
......................
16,000,000
16,000,000
France
2.4%
BNP
Paribas
SA,
0.07%,
9/01/20
.....
72,000,000
72,000,000
Total
Time
Deposits
(Cost
$88,000,000)
........................................
88,000,000
a
a
a
a
a
Total
Short
Term
Investments
(Cost
$88,000,000
)
................................
88,000,000
a
a
a
a
Total
Investments
(Cost
$2,403,347,743)
93.3%
..................................
$2,790,872,058
Other
Assets,
less
Liabilities
6.7%
.............................................
198,032,883
Net
Assets
100.0%
...........................................................
$2,988,904,941
a
a
a
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
a
Non-income
producing.
Forward
Exchange
Contracts
Currency
Counter-
party
a
Type
Quantity
Contract
Amount
*
Settlement
Date
Unrealized
Appreciation
Unrealized
Depreciation
a
a
a
a
a
a
a
a
OTC
Forward
Exchange
Contracts
British
Pound
......
BOFA
Buy
2,217,321
2,891,875
10/19/20
$
72,768
$
—
British
Pound
......
BOFA
Sell
30,296,472
38,390,350
10/19/20
—
(2,117,198)
British
Pound
......
BZWS
Buy
2,217,321
2,891,796
10/19/20
72,848
—
British
Pound
......
BZWS
Sell
30,571,820
38,747,792
10/19/20
—
(2,127,905)
British
Pound
......
CITI
Buy
2,217,321
2,891,745
10/19/20
72,898
—
British
Pound
......
CITI
Sell
30,296,099
38,376,578
10/19/20
—
(2,130,470)
British
Pound
......
HSBK
Buy
2,217,321
2,891,511
10/19/20
73,132
—
British
Pound
......
HSBK
Sell
22,805,207
28,915,611
10/19/20
—
(1,575,828)
British
Pound
......
UBSW
Buy
2,217,321
2,891,560
10/19/20
73,083
—
British
Pound
......
UBSW
Sell
30,581,927
38,752,122
10/19/20
—
(2,137,090)
Canadian
Dollar
....
BOFA
Buy
9,104,085
6,871,091
10/19/20
111,161
—
Canadian
Dollar
....
BOFA
Sell
33,228,786
24,559,839
10/19/20
—
(924,515)
Canadian
Dollar
....
BZWS
Buy
9,104,085
6,870,462
10/19/20
111,789
—
Canadian
Dollar
....
BZWS
Sell
33,231,964
24,557,503
10/19/20
—
(929,288)
Canadian
Dollar
....
CITI
Buy
9,104,085
6,870,916
10/19/20
111,335
—
Canadian
Dollar
....
CITI
Sell
33,229,930
24,554,660
10/19/20
—
(930,572)
Canadian
Dollar
....
HSBK
Buy
9,104,085
6,870,720
10/19/20
111,531
—
Canadian
Dollar
....
HSBK
Sell
33,228,501
24,559,746
10/19/20
—
(924,389)
Canadian
Dollar
....
UBSW
Buy
9,104,085
6,870,894
10/19/20
111,357
—
Canadian
Dollar
....
UBSW
Sell
33,230,706
24,559,653
10/19/20
—
(926,174)
Templeton
Funds
Statement
of
Investments
Templeton
World
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
18
Forward
Exchange
Contracts
(continued)
Currency
Counter-
party
a
Type
Quantity
Contract
Amount*
Settlement
Date
Unrealized
Appreciation
Unrealized
Depreciation
a
a
a
a
a
a
a
a
OTC
Forward
Exchange
Contracts
(continued)
Danish
Krone
......
BOFA
Buy
6,404,876
1,022,672
10/19/20
$
5,065
$
—
Danish
Krone
......
BOFA
Sell
64,426,044
9,969,666
10/19/20
—
(368,231)
Danish
Krone
......
BZWS
Buy
6,404,876
1,022,824
10/19/20
4,912
—
Danish
Krone
......
BZWS
Sell
63,399,360
9,813,687
10/19/20
—
(359,466)
Danish
Krone
......
CITI
Buy
6,404,876
1,022,676
10/19/20
5,060
—
Danish
Krone
......
CITI
Sell
64,405,693
9,965,424
10/19/20
—
(369,208)
Danish
Krone
......
HSBK
Buy
6,404,876
1,022,613
10/19/20
5,122
—
Danish
Krone
......
HSBK
Sell
64,396,524
9,965,738
10/19/20
—
(367,423)
Danish
Krone
......
UBSW
Buy
6,404,876
1,022,636
10/19/20
5,100
—
Danish
Krone
......
UBSW
Sell
64,439,265
9,971,584
10/19/20
—
(368,436)
Euro
.............
BOFA
Buy
4,655,788
5,488,713
10/19/20
73,298
—
Euro
.............
BOFA
Sell
74,229,494
85,112,651
10/19/20
—
(3,565,178)
Euro
.............
BZWS
Buy
4,655,788
5,488,473
10/19/20
73,536
—
Euro
.............
BZWS
Sell
74,239,565
85,131,177
10/19/20
—
(3,558,684)
Euro
.............
CITI
Buy
4,655,788
5,489,432
10/19/20
72,577
—
Euro
.............
CITI
Sell
74,218,989
85,090,372
10/19/20
—
(3,574,909)
Euro
.............
HSBK
Buy
4,655,788
5,488,517
10/19/20
73,493
—
Euro
.............
HSBK
Sell
74,221,415
85,091,141
10/19/20
—
(3,577,037)
Euro
.............
UBSW
Buy
4,655,788
5,489,084
10/19/20
72,925
—
Euro
.............
UBSW
Sell
74,221,232
85,093,158
10/19/20
—
(3,574,801)
Hong
Kong
Dollar
...
BOFA
Buy
9,494,798
1,224,947
10/19/20
—
(284)
Hong
Kong
Dollar
...
BOFA
Sell
253,745,860
32,726,258
10/19/20
482
(3,010)
Hong
Kong
Dollar
...
BZWS
Buy
9,494,798
1,224,887
10/19/20
—
(224)
Hong
Kong
Dollar
...
BZWS
Sell
253,745,402
32,726,862
10/19/20
177
(2,042)
Hong
Kong
Dollar
...
CITI
Buy
9,494,798
1,224,888
10/19/20
—
(225)
Hong
Kong
Dollar
...
CITI
Sell
253,761,223
32,727,614
10/19/20
313
(3,466)
Hong
Kong
Dollar
...
HSBK
Buy
9,494,798
1,224,866
10/19/20
—
(203)
Hong
Kong
Dollar
...
HSBK
Sell
253,713,273
32,722,852
10/19/20
520
(2,250)
Hong
Kong
Dollar
...
UBSW
Buy
9,494,798
1,224,903
10/19/20
—
(240)
Hong
Kong
Dollar
...
UBSW
Sell
126,771,774
16,350,783
10/19/20
235
(797)
Japanese
Yen
......
BOFA
Sell
10,336,145,856
96,873,365
10/19/20
—
(780,536)
Japanese
Yen
......
BZWS
Sell
10,336,177,384
96,887,644
10/19/20
—
(766,554)
Japanese
Yen
......
CITI
Sell
10,336,101,160
96,855,336
10/19/20
—
(798,143)
Japanese
Yen
......
HSBK
Sell
10,334,936,966
96,857,950
10/19/20
—
(784,530)
Japanese
Yen
......
UBSW
Sell
9,691,767,335
90,827,678
10/19/20
—
(738,260)
Korean
Won
.......
BOFA
Buy
7,100,000,000
6,006,768
10/19/20
—
(27,801)
Korean
Won
.......
BOFA
Sell
38,512,017,324
31,970,184
10/19/20
—
(461,094)
Korean
Won
.......
BZWS
Sell
5,508,969,860
4,595,291
10/19/20
—
(43,856)
Korean
Won
.......
CITI
Sell
22,505,113,566
18,686,345
10/19/20
—
(265,392)
Korean
Won
.......
GSCO
Sell
24,695,787,795
20,482,531
10/19/20
—
(313,989)
Korean
Won
.......
HSBK
Sell
27,981,038,203
23,236,048
10/19/20
—
(327,008)
Korean
Won
.......
UBSW
Sell
22,530,654,988
18,706,613
10/19/20
—
(266,631)
Swiss
Franc
.......
BOFA
Buy
1,338,680
1,473,826
10/19/20
10,316
(1,062)
Swiss
Franc
.......
BOFA
Sell
19,344,236
20,584,142
10/19/20
—
(846,708)
Swiss
Franc
.......
BZWS
Buy
1,338,680
1,473,790
10/19/20
10,295
(1,004)
Swiss
Franc
.......
BZWS
Sell
19,362,754
20,609,378
10/19/20
—
(841,988)
Swiss
Franc
.......
CITI
Buy
1,338,680
1,473,631
10/19/20
10,359
(910)
Swiss
Franc
.......
CITI
Sell
12,899,545
13,726,980
10/19/20
—
(564,007)
Swiss
Franc
.......
HSBK
Buy
1,338,680
1,473,630
10/19/20
10,397
(947)
Swiss
Franc
.......
HSBK
Sell
19,337,422
20,580,264
10/19/20
—
(843,038)
Swiss
Franc
.......
UBSW
Buy
1,338,680
1,473,688
10/19/20
10,327
(936)
Swiss
Franc
.......
UBSW
Sell
19,343,904
20,585,848
10/19/20
—
(844,635)
Thai
Baht
.........
BOFA
Buy
37,701,194
1,209,211
10/19/20
2,402
(264)
Thai
Baht
.........
BOFA
Sell
208,066,252
6,609,387
10/19/20
—
(75,836)
Thai
Baht
.........
BZWS
Buy
37,701,194
1,209,469
10/19/20
2,155
(275)
Thai
Baht
.........
BZWS
Sell
208,187,984
6,612,576
10/19/20
—
(76,558)
Thai
Baht
.........
CITI
Buy
37,701,194
1,209,162
10/19/20
2,368
(182)
Templeton
Funds
Statement
of
Investments
Templeton
World
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
19
See
Note 9
regarding
other
derivative
information.
Forward
Exchange
Contracts
(continued)
Currency
Counter-
party
a
Type
Quantity
Contract
Amount*
Settlement
Date
Unrealized
Appreciation
Unrealized
Depreciation
a
a
a
a
a
a
a
a
OTC
Forward
Exchange
Contracts
(continued)
Thai
Baht
.........
CITI
Sell
208,035,976
6,605,376
10/19/20
$
—
$
(78,873)
Thai
Baht
.........
HSBK
Buy
37,701,194
1,208,948
10/19/20
2,573
(172)
Thai
Baht
.........
HSBK
Sell
207,951,023
6,604,032
10/19/20
—
(77,488)
Thai
Baht
.........
UBSW
Buy
37,701,194
1,209,195
10/19/20
2,483
(329)
Thai
Baht
.........
UBSW
Sell
208,098,314
6,610,094
10/19/20
—
(76,159)
Yuan
Renminbi
.....
BOFA
Buy
1,884,487
270,068
10/19/20
4,109
—
Yuan
Renminbi
.....
BOFA
Sell
21,027,890
2,978,877
10/19/20
—
(80,514)
Yuan
Renminbi
.....
BZWS
Buy
1,884,487
270,024
10/19/20
4,154
—
Yuan
Renminbi
.....
BZWS
Sell
21,058,801
2,985,666
10/19/20
—
(78,221)
Yuan
Renminbi
.....
CITI
Buy
1,884,487
270,079
10/19/20
4,098
—
Yuan
Renminbi
.....
CITI
Sell
21,057,600
2,984,988
10/19/20
—
(78,724)
Yuan
Renminbi
.....
HSBK
Buy
1,884,487
270,033
10/19/20
4,145
—
Yuan
Renminbi
.....
HSBK
Sell
21,046,836
2,984,732
10/19/20
—
(77,415)
Yuan
Renminbi
.....
UBSW
Buy
1,884,487
270,089
10/19/20
4,089
—
Yuan
Renminbi
.....
UBSW
Sell
21,073,479
2,988,722
10/19/20
—
(77,301)
Total
Forward
Exchange
Contracts
...................................................
$1,398,987
$(44,716,883)
Net
unrealized
appreciation
(depreciation)
............................................
$(43,317,896)
*
In
U.S.
dollars
unless
otherwise
stated.
a
May
be
comprised
of
multiple
contracts
with
the
same
counterparty,
currency
and
settlement
date.
See
abbreviations
on
page
35
.
Templeton
Funds
Financial
Statements
Statement
of
Assets
and
Liabilities
August
31,
2020
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
20
Templeton
World
Fund
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
...................................................................
$2,403,347,743
Value
-
Unaffiliated
issuers
..................................................................
$2,790,872,058
Cash
....................................................................................
1,005,858
Foreign
currency,
at
value
(cost
$210,627,174)
.....................................................
212,581,730
Receivables:
Investment
securities
sold
...................................................................
2,477,019
Capital
shares
sold
........................................................................
718,684
Dividends
and
interest
.....................................................................
8,661,603
European
Union
tax
reclaims
................................................................
254,975
Deposits
with
brokers
for:
OTC
derivative
contracts
..................................................................
41,000,281
Unrealized
appreciation
on
OTC
forward
exchange
contracts
..........................................
1,398,987
Other
assets
..............................................................................
1,908
Total
assets
..........................................................................
3,058,973,103
Liabilities:
Payables:
Investment
securities
purchased
..............................................................
19,430,035
Capital
shares
redeemed
...................................................................
2,612,027
Management
fees
.........................................................................
1,743,853
Distribution
fees
..........................................................................
610,011
Transfer
agent
fees
........................................................................
540,239
Unrealized
depreciation
on
OTC
forward
exchange
contracts
..........................................
44,716,883
Accrued
expenses
and
other
liabilities
...........................................................
415,114
Total
liabilities
.........................................................................
70,068,162
Net
assets,
at
value
.................................................................
$2,988,904,941
Net
assets
consist
of:
Paid-in
capital
.............................................................................
$3,058,930,828
Total
distributable
earnings
(losses)
.............................................................
(70,025,887)
Net
assets,
at
value
.................................................................
$2,988,904,941
Templeton
Funds
Financial
Statements
Statement
of
Assets
and
Liabilities
(continued)
August
31,
2020
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
21
Templeton
World
Fund
Class
A:
Net
assets,
at
value
.......................................................................
$2,831,843,618
Shares
outstanding
........................................................................
222,717,959
Net
asset
value
per
share
a
..................................................................
$12.71
Maximum
offering
price
per
share
(net
asset
value
per
share
÷
94.50%)
................................
$13.45
Class
C:
Net
assets,
at
value
.......................................................................
$18,630,370
Shares
outstanding
........................................................................
1,529,366
Net
asset
value
and
maximum
offering
price
per
share
a
.............................................
$12.18
Class
R6:
Net
assets,
at
value
.......................................................................
$38,884,886
Shares
outstanding
........................................................................
3,065,284
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$12.69
Advisor
Class:
Net
assets,
at
value
.......................................................................
$99,546,067
Shares
outstanding
........................................................................
7,838,672
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$12.70
a
Redemption
price
is
equal
to
net
asset
value
less
contingent
deferred
sales
charges,
if
applicable.
Templeton
Funds
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.
22
Templeton
World
Fund
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$5,336,069)
Unaffiliated
issuers
........................................................................
$71,974,423
Interest:
Unaffiliated
issuers
........................................................................
2,141,640
Total
investment
income
...................................................................
74,116,063
Expenses:
Management
fees
(Note
3
a
)
...................................................................
21,971,271
Distribution
fees:
(Note
3c
)
Class
A
................................................................................
7,187,274
Class
C
................................................................................
242,344
Transfer
agent
fees:
(Note
3e
)
Class
A
................................................................................
2,515,901
Class
C
................................................................................
20,317
Class
R6
...............................................................................
24,369
Advisor
Class
............................................................................
90,089
Custodian
fees
(Note
4
)
......................................................................
364,853
Reports
to
shareholders
......................................................................
206,744
Registration
and
filing
fees
....................................................................
114,313
Professional
fees
...........................................................................
167,329
Trustees'
fees
and
expenses
..................................................................
181,998
Other
....................................................................................
74,421
Total
expenses
.........................................................................
33,161,223
Expenses
waived/paid
by
affiliates
(Note
3
f
)
....................................................
(12,015)
Net
expenses
.........................................................................
33,149,208
Net
investment
income
................................................................
40,966,855
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
(net
of
foreign
taxes
of
$2,496,588)
...........................................
(429,023,163)
Foreign
currency
transactions
................................................................
(6,049,856)
Forward
exchange
contracts
.................................................................
5,347,366
Net
realized
gain
(loss)
..................................................................
(429,725,653)
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
......................................................................
605,034,778
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
..............................
2,499,733
Forward
exchange
contracts
.................................................................
(73,723,140)
Change
in
deferred
taxes
on
unrealized
appreciation
...............................................
768,732
Net
change
in
unrealized
appreciation
(depreciation)
............................................
534,580,103
Net
realized
and
unrealized
gain
(loss)
............................................................
104,854,450
Net
increase
(decrease)
in
net
assets
resulting
from
operations
..........................................
$145,821,305
Templeton
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
23
Templeton
World
Fund
Year
Ended
August
31,
2020
Year
Ended
August
31,
2019
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
.................................................
$40,966,855
$77,443,570
Net
realized
gain
(loss)
.................................................
(429,725,653)
176,856,296
Net
change
in
unrealized
appreciation
(depreciation)
...........................
534,580,103
(678,396,695)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
................
145,821,305
(424,096,829)
Distributions
to
shareholders:
Class
A
.............................................................
(154,280,365)
(588,075,823)
Class
C
.............................................................
(1,156,202)
(5,799,689)
Class
R6
............................................................
(2,209,999)
(8,222,619)
Advisor
Class
........................................................
(5,819,233)
(22,790,328)
Total
distributions
to
shareholders
..........................................
(163,465,799)
(624,888,459)
Capital
share
transactions:
(Note
2
)
Class
A
.............................................................
(302,268,890)
161,650,576
Class
C
.............................................................
(9,949,131)
(76,313,651)
Class
R6
............................................................
(4,480,810)
5,522,328
Advisor
Class
........................................................
(12,145,110)
3,678,515
Total
capital
share
transactions
............................................
(328,843,941)
94,537,768
Net
increase
(decrease)
in
net
assets
...................................
(346,488,435)
(954,447,520)
Net
assets:
Beginning
of
year
.......................................................
3,335,393,376
4,289,840,896
End
of
year
...........................................................
$2,988,904,941
$3,335,393,376
Templeton
Funds
Notes
to
Financial
Statements
Templeton
World
Fund
24
franklintempleton.com
Annual
Report
1.
Organization
and
Significant
Accounting
Policies
Templeton
Funds (Trust)
is
registered
under
the
Investment
Company
Act
of
1940
(1940
Act)
as
an
open-end
management
investment
company,
consisting
of three separate
funds
and
applies
the
specialized
accounting
and
reporting
guidance
in
U.S.
Generally
Accepted
Accounting
Principles
(U.S.
GAAP).
Templeton
World
Fund
(Fund)
is
included
in
this
report.
The
Fund
offers four
classes
of
shares:
Class
A,
Class
C,
Class
R6
and
Advisor
Class. Class
C
shares
automatically
convert
to
Class
A
shares
after
they
have
been
held
for
10
years.
Each
class
of
shares
may
differ
by
its
initial
sales
load,
contingent
deferred
sales
charges,
voting
rights
on
matters
affecting
a
single
class,
its
exchange
privilege
and
fees
due
to
differing
arrangements
for
distribution
and
transfer
agent
fees. 
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.
Under
compliance
policies
and
procedures
approved
by
the
Trust'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. 
Investments
in
time
deposits
are
valued
at
cost,
which
approximates
fair
value.
Certain
derivative
financial
instruments
trade
in
the
OTC
market.
The
Fund's
pricing
services
use
various
techniques
including
industry
standard
option
pricing
models
and
proprietary
discounted
cash
flow
models
to
determine
the
fair
value
of
those
instruments.
The
Fund's
net
benefit
or
obligation
under
the
derivative
contract,
as
measured
by
the
fair
value
of
the
contract,
is
included
in
net
assets.
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
valued
using
these
procedures,
in
which
case
the
securities
Templeton
Funds
Notes
to
Financial
Statements
25
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
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.
Derivative
Financial
Instruments
The
Fund invested
in
derivative
financial
instruments
in
order
to
manage
risk
or
gain
exposure
to
various
other
investments
or
markets.
Derivatives
are
financial
contracts
based
on
an
underlying
or
notional
amount,
require
no
initial
investment
or
an
initial
net
investment
that
is
smaller
than
would
normally
be
required
to
have
a
similar
response
to
changes
in
market
factors,
and
require
or
permit
net
settlement.
Derivatives
contain
various
risks
including
the
potential
inability
of
the
counterparty
to
fulfill
their
obligations
under
the
terms
of
the
contract,
the
potential
for
an
illiquid
secondary
market,
and/or
the
potential
for
market
movements
which
expose
the
Fund
to
gains
or
losses
in
excess
of
the
amounts
shown
in
the
Statement
of
Assets
and
Liabilities.
Realized
gain
and
loss
and
unrealized
appreciation
and
depreciation
on
these
contracts
for
the
period
are
included
in
the
Statement
of
Operations.
Derivative
counterparty
credit
risk
is
managed
through
a
formal
evaluation
of
the
creditworthiness
of
all
potential
counterparties.
The
Fund
attempts
to
reduce its
exposure
to
counterparty
credit
risk
on
OTC
derivatives,
whenever
possible,
by
entering
into
International
Swaps
and
Derivatives
Association
(ISDA)
master
agreements
with
certain
counterparties.
These
agreements
contain
various
provisions,
including
but
not
limited
to
collateral
requirements,
events
of
default,
or
early
termination.
Termination
events
applicable
to
the
counterparty
include
certain
deteriorations
in
the
credit
quality
of
the
counterparty.
Termination
events
applicable
to
the Fund
include
failure
of
the
Fund
to
maintain
certain
net
asset
levels
and/or
limit
the
decline
in
net
assets
over
various
periods
of
time.
In
the
event
of
default
or
early
termination,
the
ISDA
master
agreement
gives
the
non-defaulting
party
the
right
to
net
and
close-out
all
transactions
traded,
whether
or
not
arising
under
the
ISDA
agreement,
to
one
net
amount
payable
by
one
counterparty
to
the
other.
However,
absent
an
event
of
default
or
early
termination,
OTC
derivative
assets
and
liabilities
are
presented
gross
and
not
offset
in
the
Statement
of
Assets
and
Liabilities.
Early
termination
by
the
counterparty
may
result
in
an
immediate
payment
by
the
Fund
of
any
net
liability
owed
to
that
counterparty
under
the
ISDA
agreement.
1.
Organization
and
Significant
Accounting
Policies
(continued)
a.
Financial
Instrument
Valuation 
(continued)
Templeton
Funds
Notes
to
Financial
Statements
26
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
Collateral
requirements
differ
by
type
of
derivative.
Collateral
terms
are
contract
specific
for
OTC
derivatives.
For
OTC
derivatives
traded
under
an
ISDA
master
agreement,
posting
of
collateral
is
required
by
either
the
Fund
or
the
applicable
counterparty
if
the
total
net
exposure
of
all
OTC
derivatives
with
the
applicable
counterparty
exceeds
the
minimum
transfer
amount,
which
typically
ranges
from
$100,000
to
$250,000,
and
can
vary
depending
on
the
counterparty
and
the
type
of
the
agreement.
Generally,
collateral
is
determined
at
the
close
of
Fund
business
each
day
and
any
additional
collateral
required
due
to
changes
in
derivative
values
may
be
delivered
by
the
Fund
or
the
counterparty
the
next
business
day,
or
within
a
few
business
days.
Collateral
pledged
and/or
received
by
the
Fund,
if
any,
is
held
in
segregated
accounts
with
the
Fund’s
custodian/counterparty
broker
and
can
be
in
the
form
of
cash
and/or
securities.
Unrestricted
cash
may
be
invested
according
to
the Fund's
investment
objectives.
To
the
extent
that
the
amounts
due
to
the
Fund
from
its
counterparties
are
not
subject
to
collateralization
or
are
not
fully
collateralized,
the
Fund
bears
the
risk
of
loss
from
counterparty
non-performance.
The
Fund
entered
into
OTC
forward
exchange
contracts
primarily
to
manage
and/or
gain
exposure
to
certain
foreign
currencies.
A
forward
exchange
contract
is
an
agreement
between
the
Fund
and
a
counterparty
to
buy
or
sell
a
foreign
currency
at
a
specific
exchange
rate
on
a
future
date.
See
Note
9 regarding
other
derivative
information.
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
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.
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.
At
August
31,
2020,
the Fund
had
no
securities
on
loan.
e.
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.
As
a
result
of
several
court
cases,
in
certain
countries
across
the
European
Union, the
Fund
filed
additional
tax
reclaims
for
previously
withheld
taxes
on
dividends
earned
in
those
countries
(EU
reclaims).
These
additional
filings
are
subject
to
various
administrative
proceedings
by
the
local
jurisdictions’
tax
authorities
within
the
European
Union,
as
well
as
a
number
of
related
judicial
proceedings.
Income
recognized,
if
any,
for
EU
reclaims
is
reflected
as
other
income
in
the
Statement
of
Operations
and
any
related
receivable,
if
any,
is
reflected
as
European
Union
tax
reclaims
in
the
Statement
of
Assets
and
Liabilities.
When
uncertainty
exists
as
to
the
ultimate
resolution
of
these
proceedings,
the
likelihood
of
receipt
of
these
EU
reclaims,
and
the
potential
timing
of
payment,
no
amounts
are
reflected
in
the
financial
statements.
For
U.S.
income
tax
1.
Organization
and
Significant
Accounting
Policies
(continued)
c.
Derivative
Financial
Instruments
(continued)
Templeton
Funds
Notes
to
Financial
Statements
27
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
purposes,
EU
reclaims
received
by
the
Fund,
if
any,
reduce
the
amounts
of
foreign
taxes
Fund
shareholders
can
use
as
tax
credits
in
their
individual
income
tax
returns.
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. 
f.
Security
Transactions,
Investment
Income,
Expenses
and
Distributions
Security
transactions
are
accounted
for
on
trade
date.
Realized
gains
and
losses
on
security
transactions
are
determined
on
a
specific
identification
basis.
Interest
income
and
estimated
expenses
are
accrued
daily.
Amortization
of
premium
and
accretion
of
discount
on
debt
securities
are
included
in
interest
income.
Paydown
gains
and
losses
are
recorded
as
an
adjustment
to
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.
Common
expenses
incurred
by
the
Trust
are
allocated
among
the
Funds
based
on
the
ratio
of
net
assets
of
each
Fund
to
the
combined
net
assets
of
the
Trust
or
based
on
the
ratio
of
number
of
shareholders
of
each
Fund
to
the
combined
number
of
shareholders
of
the
Trust.
Fund
specific
expenses
are
charged
directly
to
the
Fund
that
incurred
the
expense.
Realized
and
unrealized
gains
and
losses
and
net
investment
income,
excluding
class
specific
expenses,
are
allocated
daily
to
each
class
of
shares
based
upon
the
relative
proportion
of
net
assets
of
each
class.
Differences
in
per
share
distributions
by
class
are
generally
due
to
differences
in
class
specific
expenses.
g.
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.
h.
Guarantees
and
Indemnifications
Under
the
Trust's
organizational
documents,
its
officers
and
trustees
are
indemnified
by
the
Trust
against
certain
liabilities
arising
out
of
the
performance
of
their
duties
to
the
Trust.
Additionally,
in
the
normal
course
of
business,
the
Trust,
on
behalf
of
the
Fund,
enters
into
contracts
with
service
providers
that
contain
general
indemnification
clauses.
The
Trust's
maximum
exposure
under
these
arrangements
is
unknown
as
this
would
involve
future
claims
that
may
be
made
against
the
Trust
that
have
not
yet
occurred.
Currently,
the
Trust
expects
the
risk
of
loss
to
be
remote.
2.
Shares
of
Beneficial
Interest
At
August
31,
2020,
there
were
an
unlimited
number
of
shares
authorized
(without
par
value).
Transactions
in
the
Fund’s
shares
were
as
follows:
1.
Organization
and
Significant
Accounting
Policies
(continued)
e.
Income
and
Deferred
Taxes
(continued)
Templeton
Funds
Notes
to
Financial
Statements
28
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
3.
Transactions
with
Affiliates
Franklin
Resources,
Inc.
is
the
holding
company
for
various
subsidiaries
that
together
are
referred
to
as
Franklin
Templeton.
Certain
officers
and
trustees
of
the
Trust
are
also
officers
and/or
directors
of
the
following
subsidiaries:
Year
Ended
August
31,
2020
2019
Shares
Amount
Shares
Amount
Class
A
Shares:
Shares
sold
a
...................................
10,921,897
$138,692,097
16,704,222
$243,971,256
Shares
issued
in
reinvestment
of
distributions
..........
10,423,866
142,494,243
44,873,633
547,458,321
Shares
redeemed
...............................
(45,423,196)
(583,455,230)
(45,238,899)
(629,779,001)
Net
increase
(decrease)
..........................
(24,077,433)
$(302,268,890)
16,338,956
$161,650,576
Class
C
Shares:
Shares
sold
...................................
154,322
1,871,972
371,407
4,966,212
Shares
issued
in
reinvestment
of
distributions
..........
83,052
1,093,794
461,706
5,438,899
Shares
redeemed
a
..............................
(1,060,706)
(12,914,897)
(5,690,915)
(86,718,762)
Net
increase
(decrease)
..........................
(823,333)
$(9,949,131)
(4,857,802)
$(76,313,651)
Class
R6
Shares:
Shares
sold
...................................
595,082
7,580,152
1,183,321
16,198,465
Shares
issued
in
reinvestment
of
distributions
..........
89,223
1,214,330
353,599
4,292,695
Shares
redeemed
...............................
(1,044,860)
(13,275,292)
(1,099,031)
(14,968,832)
Net
increase
(decrease)
..........................
(360,555)
$(4,480,810)
437,889
$5,522,328
Advisor
Class
Shares:
Shares
sold
...................................
2,063,507
26,613,673
2,753,462
38,867,356
Shares
issued
in
reinvestment
of
distributions
..........
380,650
5,188,265
1,566,811
19,052,419
Shares
redeemed
...............................
(3,467,124)
(43,947,048)
(3,984,726)
(54,241,260)
Net
increase
(decrease)
..........................
(1,022,966)
$(12,145,110)
335,547
$3,678,515
a
May
include
a
portion
of
Class
C
shares
that
were
automatically
converted
to
Class
A.
Subsidiary
Affiliation
Templeton
Global
Advisors
Limited
(Global
Advisors)
Investment
manager
Franklin
Templeton
Services,
LLC
(FT
Services)
Administrative
manager
Franklin
Templeton
Distributors,
Inc.
(Distributors)
Principal
underwriter
Franklin
Templeton
Investor
Services,
LLC
(Investor
Services)
Transfer
agent
2.
Shares
of
Beneficial
Interest
(continued)
Templeton
Funds
Notes
to
Financial
Statements
29
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
a.
Management
Fees
The
Fund
pays
an
investment
management
fee
to
Global
Advisors
based
on
the
average
daily
net
assets
of
the
Fund
as
follows:
For
the
year
ended
August
31,
2020,
the
gross
effective
investment
management
fee
rate
was
0.695%
of
the
Fund’s
average
daily
net
assets. 
b.
Administrative
Fees
Under
an
agreement
with
Global
Advisors,
FT
Services
provides
administrative
services
to
the
Fund.
The
fee
is
paid
by
Global
Advisors
based
on
the
Fund’s
average
daily
net
assets,
and
is
not
an
additional
expense
of
the
Fund.
c.
Distribution
Fees
The
Board
has
adopted
distribution
plans
for
each
share
class,
with
the
exception
of
Class
R6
and
Advisor
Class
shares,
pursuant
to
Rule
12b-1
under
the
1940
Act.
Under
the
Fund’s
Class A reimbursement
distribution
plan,
the
Fund
reimburses
Distributors
for
costs
incurred
in
connection
with
the
servicing,
sale
and
distribution
of
the
Fund's
shares
up
to
the
maximum
annual
plan
rate.
Under
the
Class
A
reimbursement
distribution
plan,
costs
exceeding
the
maximum
for
the
current
plan
year
cannot
be
reimbursed
in
subsequent
periods.
In
addition,
under
the
Fund’s
Class C
compensation
distribution
plan,
the
Fund
pays
Distributors
for
costs
incurred
in
connection
with
the
servicing,
sale
and
distribution
of
the
Fund's
shares
up
to
the
maximum
annual
plan
rate.
The
plan
year,
for
purposes
of
monitoring
compliance
with
the
maximum
annual
plan
rates,
is
February
1
through
January
31.
The
maximum
annual
plan
rates,
based
on
the
average
daily
net
assets,
for
each
class,
are
as
follows:
d.
Sales
Charges/Underwriting
Agreements
Front-end
sales
charges
and
contingent
deferred
sales
charges
(CDSC)
do
not
represent
expenses
of
the
Fund.
These
charges
are
deducted
from
the
proceeds
of
sales
of
Fund
shares
prior
to
investment
or
from
redemption
proceeds
prior
to
remittance,
as
applicable.
Distributors
has
advised
the
Fund
of
the
following
commission
transactions
related
to
the
sales
and
redemptions
of
the
Fund's
shares
for
the
year:
Annualized
Fee
Rate
Net
Assets
0.705%
Up
to
and
including
$1
billion
0.690%
Over
$1
billion,
up
to
and
including
$5
billion
0.675%
Over
$5
billion,
up
to
and
including
$10
billion
0.655%
Over
$10
billion,
up
to
and
including
$15
billion
0.635%
Over
$15
billion,
up
to
and
including
$20
billion
0.615%
In
excess
of
$20
billion
Class
A
....................................................................................
0.25%
Class
C
....................................................................................
1.00%
Sales
charges
retained
net
of
commissions
paid
to
unaffiliated
brokers/dealers
..............................
$43,665
CDSC
retained
..............................................................................
$2,462
3.
Transactions
with
Affiliates
(continued)
Templeton
Funds
Notes
to
Financial
Statements
30
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
e.
Transfer
Agent
Fees
Each
class
of
shares pays
transfer
agent
fees
to
Investor
Services
for
its
performance
of
shareholder
servicing
obligations.
The
fees
are
based
on
an
annualized
asset
based
fee
of
0.02%
plus
a
transaction
based
fee.
In
addition,
each
class reimburses
Investor
Services
for
out
of
pocket
expenses
incurred
and,
except
for
Class
R6,
reimburses
shareholder
servicing
fees
paid
to
third
parties.
These
fees
are
allocated
daily
based
upon
their
relative
proportion
of
such
classes'
aggregate
net
assets.
Class
R6
pays
Investor
Services
transfer
agent
fees
specific
to
that
class.
For
the
year
ended
August
31,
2020,
the
Fund
paid
transfer
agent
fees
of
$2,650,676,
of
which $1,510,612
was
retained
by
Investor
Services.
f.
Waiver
and
Expense
Reimbursements
Investor
Services
has
contractually
agreed
in
advance
to
waive
or
limit
its
fees
so
that
the
Class
R6
transfer
agent
fees
do
not
exceed
0.03%
based
on
the
average
net
assets
of
the
class
until
December
31,
2020.
4.
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,
there
were
no
credits
earned.
5.
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:
For
tax
purposes,
the
Fund
may
elect
to
defer
any
portion
of
a
post-October
capital
loss
or
late-year
ordinary
loss
to
the
first
day
of
the
following
fiscal
year.
At
August
31,
2020,
the
Fund
deferred
late-year
ordinary
losses
of
$28,515,247.
At
August
31,
2020,
the
cost
of
investments
and
net
unrealized
appreciation
(depreciation)
for
income
tax
purposes
were
as
follows:
Capital
loss
carryforwards
not
subject
to
expiration:
Short
term
................................................................................
$26,214,165
Long
term
................................................................................
403,056,405
Total
capital
loss
carryforwards
...............................................................
$429,270,570
2020
2019
Distributions
paid
from:
Ordinary
income
..........................................................
$132,056,008
$222,455,694
Long
term
capital
gain
......................................................
31,409,791
402,432,765
$163,465,799
$624,888,459
3.
Transactions
with
Affiliates
(continued)
Templeton
Funds
Notes
to
Financial
Statements
31
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
Differences
between
income
and/or
capital
gains
as
determined
on
a
book
basis
and
a
tax
basis
are
primarily
due
to
differing
treatment
of
foreign
currency
transactions.
6.
Investment
Transactions
Purchases
and
sales
of
investments
(excluding
short
term
securities)
for
the
year
ended
August
31,
2020,
aggregated
$1,470,866,363
and
$1,955,443,246,
respectively.
7.
Concentration
of
Risk
Investing
in
foreign
securities
may
include
certain
risks
and
considerations
not
typically
associated
with
investing
in
U.S.
securities,
such
as
fluctuating
currency
values
and
changing
local,
regional
and
global
economic,
political
and
social
conditions,
which
may
result
in
greater
market
volatility.
Current
political
and
financial
uncertainty
surrounding
the
European
Union
may
increase
market
volatility
and
the
economic
risk
of
investing
in
securities
in
Europe.
In
addition,
certain
foreign
securities
may
not
be
as
liquid
as
U.S.
securities.
8. 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.
9.
Other
Derivative
Information
At
August
31,
2020,
investments
in
derivative
contracts
are
reflected
in
the
Statement of
Assets
and
Liabilities
as
follows:
For
the
year
ended
August
31,
2020,
the
effect
of
derivative
contracts
in
the
Statement
of
Operations
was
as
follows:
Cost
of
investments
..........................................................................
$2,362,223,829
Unrealized
appreciation
........................................................................
$593,188,205
Unrealized
depreciation
........................................................................
(164,539,976)
Net
unrealized
appreciation
(depreciation)
..........................................................
$428,648,229
Asset
Derivatives
Liability
Derivatives
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement(s)
of
Assets
and
Liabilities
Location
Fair
Value
Statement(s)
of
Assets
and
Liabilities
Location
Fair
Value
Templeton
World
Fund
Foreign
exchange
contracts
..
Unrealized
appreciation
on
OTC
forward
exchange
contracts
$
1,398,987
Unrealized
depreciation
on
OTC
forward
exchange
contracts
$
44,716,883
Total
....................
$1,398,987
$44,716,883
5.
Income
Taxes
(continued)
Templeton
Funds
Notes
to
Financial
Statements
32
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
For
the
year
ended
August
31,
2020,
the
average
month
end
contract
value
of
forward
exchange
contracts
was
$2,266,427,889.
At
August
31,
2020,
OTC
derivative
assets
and
liabilities
are
as
follows:
At
August
31,
2020,
OTC
derivative
assets,
which
may
be
offset
against
OTC
derivative
liabilities
and
collateral
received
from
the
counterparty,
are
as
follows:
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Operations
Location
Net
Realized
Gain
(Loss)
for
the
Year
Statement
of
Operations
Location
Net
Change
in
Unrealized
Appreciation
(Depreciation)
for
the
Year
Net
realized
gain
(loss)
from:
Net
change
in
unrealized
  appreciation
(depreciation)
on:
Templeton
World
Fund
Foreign
exchange
contracts
..
Forward
exchange
contracts
$5,347,366
Forward
exchange
contracts
$(73,723,140)
Total
....................
$5,347,366
$(73,723,140)
Gross
Amounts
of
Assets
and
Liabilities
Presented
in
the
Statement
of
Assets
and
Liabilities
Assets
a
Liabilities
a
Derivatives
Templeton
World
Fund
Forward
exchange
contracts
.............................
$
1,398,987
$
44,716,883
Total
.............................................
$1,398,987
$44,716,883
a
Absent
an
event
of
default
or
early
termination,
OTC
derivative
assets
and
liabilities
are
presented
gross
and
not
offset
in
the
Statement
of
Assets
and
Liabilities.
Amounts
Not
Offset
in
the
Statement
of
Assets
and
Liabilities
Gross
Amounts
of
Assets
Presented
in
the
Statement
of
Assets
and
Liabilities
Financial
Instruments
Available
for
Offset
Financial
Instruments
Collateral
Received
Cash
Collateral
Received
Net
Amount
(Not
less
than
zero)
Templeton
World
Fund
Counterparty
BOFA
....................
$279,600
$(279,600)
$—
$—
$—
BZWS
...................
279,866
(279,866)
—
—
—
CITI
.....................
279,008
(279,008)
—
—
—
GSCO
...................
—
—
—
—
—
HSBK
...................
280,913
(280,913)
—
—
—
UBSW
...................
279,600
(279,600)
—
—
—
Total
...................
$1,398,987
$(1,398,987)
$—
$—
$—
$
1
9.
Other
Derivative
Information
(continued)
Templeton
Funds
Notes
to
Financial
Statements
33
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
At
August
31,
2020,
OTC
derivative
liabilities,
which
may
be
offset
against
OTC
derivative
assets
and
collateral
pledged
to
the
counterparty,
are
as
follows:
See
Note
1(c)
regarding
derivative
financial
instruments. 
See
Abbreviations
on
page
35.
10.
Credit
Facility
The
Fund,
together
with
other
U.S.
registered
and
foreign
investment
funds
(collectively,
Borrowers),
managed
by
Franklin
Templeton,
are
borrowers
in
a
joint
syndicated
senior
unsecured
credit
facility
totaling
$2
billion
(Global
Credit
Facility)
which
matures
on
February
5,
2021.
This
Global
Credit
Facility
provides
a
source
of
funds
to
the
Borrowers
for
temporary
and
emergency
purposes,
including
the
ability
to
meet
future
unanticipated
or
unusually
large
redemption
requests.
Under
the
terms
of
the
Global
Credit
Facility,
the
Fund
shall,
in
addition
to
interest
charged
on
any
borrowings
made
by
the
Fund
and
other
costs
incurred
by
the Fund,
pay
its
share
of
fees
and
expenses
incurred
in
connection
with
the
implementation
and
maintenance
of
the
Global
Credit
Facility,
based
upon
its
relative
share
of
the
aggregate
net
assets
of
all
of
the
Borrowers,
including
an
annual
commitment
fee
of
0.15%
based
upon
the
unused
portion
of
the
Global
Credit
Facility.
These
fees
are
reflected
in
other
expenses
in
the
Statement
of
Operations.
During
the
year
ended
August
31,
2020,
the Fund
did
not
use
the
Global
Credit
Facility.
11.
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
Amounts
Not
Offset
in
the
Statement
of
Assets
and
Liabilities
Gross
Amounts
of
Liabilities
Presented
in
the
Statement
of
Assets
and
Liabilities
Financial
Instruments
Available
for
Offset
Financial
Instruments
Collateral
Pledged
Cash
Collateral
Pledged
a
Net
Amount
(Not
less
than
zero)
Templeton
World
Fund
Counterparty
BOFA
....................
$9,252,231
$(279,600)
$—
$(8,870,281)
$102,350
BZWS
...................
8,786,065
(279,866)
—
(8,480,000)
26,199
CITI
.....................
8,795,080
(279,008)
—
(8,300,000)
216,072
GSCO
...................
313,989
—
—
(313,989)
—
HSBK
...................
8,557,728
(280,913)
—
(6,150,000)
2,126,815
UBSW
...................
9,011,790
(279,600)
—
(8,732,190)
—
Total
...................
$44,716,883
$(1,398,987)
$—
$(40,846,460)
$2,471,436
a
In
some
instances,
the
collateral
amounts
disclosed
in
the
table
above
were
adjusted
due
to
the
requirement
to
limit
collateral
amounts
to
avoid
of
over
collateralization.  Actual
collateral
received
and/or
pledged
may
be
more
than
the
amounts
disclosed
herein.
9.
Other
Derivative
Information
(continued)
Templeton
Funds
Notes
to
Financial
Statements
34
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
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)
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:
12.
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. 
Level
1
Level
2
Level
3
Total
Templeton
World
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Belgium
.............................
$
—
$
63,130,675
$
—
$
63,130,675
Brazil
...............................
82,195,381
—
—
82,195,381
Canada
.............................
12,084,482
—
—
12,084,482
China
...............................
47,552,001
71,744,425
—
119,296,426
Denmark
............................
—
47,919,575
—
47,919,575
France
..............................
—
103,936,619
—
103,936,619
Germany
............................
—
194,916,643
—
194,916,643
Hong
Kong
...........................
—
52,363,382
—
52,363,382
Japan
...............................
—
520,642,742
—
520,642,742
Luxembourg
..........................
—
57,384,082
—
57,384,082
Macau
..............................
—
37,409,855
—
37,409,855
Netherlands
..........................
32,537,759
30,834,827
—
63,372,586
South
Korea
..........................
—
112,223,308
—
112,223,308
Switzerland
...........................
—
95,209,878
—
95,209,878
Thailand
.............................
—
27,114,138
—
27,114,138
United
Kingdom
.......................
—
164,305,163
—
164,305,163
United
States
.........................
949,367,123
—
—
949,367,123
Short
Term
Investments
...................
—
88,000,000
—
88,000,000
Total
Investments
in
Securities
...........
$1,123,736,746
$1,667,135,312
$—
$2,790,872,058
Other
Financial
Instruments:
Forward
exchange
contracts
................
$
—
$
1,398,987
$
—
$
1,398,987
Total
Other
Financial
Instruments
.........
$—
$1,398,987
$—
$1,398,987
Liabilities:
Other
Financial
Instruments:
Forward
exchange
contracts
................
—
44,716,883
—
44,716,883
Total
Other
Financial
Instruments
.........
$—
$44,716,883
$—
$44,716,883
11.
Fair
Value
Measurements
(continued)
Templeton
Funds
Notes
to
Financial
Statements
35
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
13.
Subsequent
Events
The
Fund
has
evaluated
subsequent
events
through
the
issuance
of
the
financial
statements
and
determined
that
no
events
have
occurred
that
require
disclosure.
Abbreviations
Counterparty
BOFA
Bank
of
America
Corp.
BZWS
Barclays
Bank
plc
CITI
Citibank,
Inc.
GSCO
Goldman
Sachs
Group,
Inc.
HSBK
HSBC
Bank
plc
UBSW
UBS
AG
Selected
Portfolio
FDR
Foreign
Depositary
Receipt
Templeton
Funds
Report
of
Independent
Registered
Public
Accounting
Firm
36
franklintempleton.com
Annual
Report
To
the
Board
of
Trustees
of
Templeton
Funds
and
Shareholders
of
Templeton
World
Fund
Opinion
on
the
Financial
Statements
We
have
audited
the
accompanying
statement
of
assets
and
liabilities,
including
the
statement
of
investments,
of
Templeton
World
Fund
(one
of
the
funds
constituting
Templeton
Funds,
referred
to
hereafter
as
the
“Fund”)
as
of
August
31,
2020,
the
related
statement
of
operations
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
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
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
19,
2020
We
have
served
as
the
auditor
of
one
or
more
investment
companies
in
the
Franklin
Templeton
Group
of
Funds
since
1948.
Templeton
Funds
Tax
Information
(unaudited)
37
franklintempleton.com
Annual
Report
Templeton
World
Fund
Under
Section
852(b)(3)(C)
of
the
Internal
Revenue
Code,
the
Fund
hereby
reports
the
maximum
amount
allowable
but
no
less
than
$31,409,791
as
a
long
term
capital
gain
dividend
for
the
fiscal
year
ended
August
31,
2020.
Under
Section
871(k)(2)(C)
of
the
Internal
Revenue
Code,
the
Fund
hereby
reports
the
maximum
amount
allowable
but
no
less
than
$7,559,995
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
854(b)(1)(A)
of
the
Internal
Revenue
Code,
the
Fund
hereby
reports
13.51%
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
$61,738,079
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.
At
August
31,
2020,
more
than
50%
of
the
Fund’s
total
assets
were
invested
in
securities
of
foreign
issuers.
In
most
instances,
foreign
taxes
were
withheld
from
income
paid
to
the
Fund
on
these
investments.
The
Fund
elects
to
treat
foreign
taxes
paid
as
allowed
under
Section
853
of
the
Internal
Revenue
Code.
This
election
will
allow
shareholders
of
record
as
of
the
2020
distribution
date,
to
treat
their
proportionate
share
of
foreign
taxes
paid
by
the
Fund
as
having
been
paid
directly
by
them.
The
shareholder
shall
consider
these
amounts
as
foreign
taxes
paid
in
the
tax
year
in
which
they
receive
the
Fund
distribution.
Templeton
Funds
Board
Members
and
Officers
38
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
1992
126
Bar-S
Foods
(meat
packing
company)
(1981-2010).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
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).
Ann
Torre
Bates
(1958)
Trustee
Since
2008
30
Ares
Capital
Corporation
(specialty
finance
company)
(2010-present),
United
Natural
Foods,
Inc.
(distributor
of
natural,
organic
and
specialty
foods)
(2013-present),
formerly
,
Allied
Capital
Corporation
(financial
services)
(2003-
2010),
SLM
Corporation
(Sallie
Mae)
(1997-2014)
and
Navient
Corporation
(loan
management,
servicing
and
asset
recovery)
(2014-2016).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Executive
Vice
President
and
Chief
Financial
Officer,
NHP
Incorporated
(manager
of
multifamily
housing)
(1995-1997);
and
Vice
President
and
Treasurer,
US
Airways,
Inc.
(until
1995).
Mary
C.
Choksi
(1950)
Trustee
Since
2016
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).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
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).
Templeton
Funds
39
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
2003
and
Lead
Independent
Trustee
since
2007
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).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
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).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
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).
David
W.
Niemiec
(1949)
Trustee
Since
2005
30
Hess
Midstream
LP
(oil
and
gas
midstream
infrastructure)
(2017-present).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Advisor,
Saratoga
Partners
(private
equity
fund);
and
formerly
,
Managing
Director,
Saratoga
Partners
(1998-2001)
and
SBC
Warburg
Dillon
Read
(investment
banking)
(1997-1998);
Vice
Chairman,
Dillon,
Read
&
Co.
Inc.
(investment
banking)
(1991-1997);
and
Chief
Financial
Officer,
Dillon,
Read
&
Co.
Inc.
(1982-1997).
Larry
D.
Thompson
(1945)
Trustee
Since
2005
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).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
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)
Templeton
Funds
40
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
Constantine
D.
Tseretopoulos
(1954)
Trustee
Since
2003
19
None
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Physician,
Chief
of
Staff,
owner
and
operator
of
the
Lyford
Cay
Hospital
(1987-present);
director
of
various
nonprofit
organizations;
and
formerly
,
Cardiology
Fellow,
University
of
Maryland
(1985-1987);
and
Internal
Medicine
Resident,
Greater
Baltimore
Medical
Center
(1982-
1985).
Robert
E.
Wade
(1946)
Trustee
Since
2006
30
El
Oro
Ltd
(investments)
(2003-
2019).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Attorney
at
law
engaged
in
private
practice
as
a
sole
practitioner
(1972-2008)
and
member
of
various
boards.
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
Vice
President
Chairman
of
the
Board
since
2013,
Trustee
since
1992
and
Vice
President
since
1996
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.
Alan
T.
Bartlett
(1970)
President
and
Chief
Executive
Officer
–
Investment
Management
Since
December
2019
Not
Applicable
Not
Applicable
Lyford
Cay
Nassau,
Bahamas
Principal
Occupation
During
at
Least
the
Past
5
Years:
President
and
Director,
Templeton
Global
Advisors
Limited;
Chief
Investment
Officer
of
Templeton
Global
Equity
Group;
officer
of
five
of
the
investment
companies
in
Franklin
Templeton;
Chairman
of
the
Board,
Goodhart
Partners;
and
formerly
,
Chief
Executive
Officer,
Goodhart
Partners
(2009-2019).
Independent
Board
Members
(continued)
Templeton
Funds
41
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
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.
Steven
J.
Gray
(1955)
Vice
President
Since
2009
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
G.
Kubilis
(1973)
Chief
Financial
Officer,
Chief
Accounting
Officer
and
Treasurer
Since
2017
Not
Applicable
Not
Applicable
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Treasurer,
U.S.
Fund
Administration
&
Reporting
and
officer
of
15
of
the
investment
companies
in
Franklin
Templeton.
Robert
Lim
(1948)
Vice
President
–
AML
Compliance
Since
2016
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Vice
President,
Franklin
Templeton
Companies,
LLC;
Chief
Compliance
Officer,
Franklin
Templeton
Distributors,
Inc.
and
Franklin
Templeton
Investor
Services,
LLC;
and
officer
of
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-
1923x
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).
Interested
Board
Members
and
Officers
(continued)
Templeton
Funds
42
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
U.S.
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
each
of
Ann
Torre
Bates
and
David
W.
Niemiec
as
an
audit
committee
financial
expert.
The
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
qualify
as
such
an
expert
in
view
of
their
extensive
business
background
and
experience.
Ms.
Bates
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2008.
She
currently
serves
as
a
director
of
Ares
Capital
Corporation
(2010-present)
and
United
Natural
Foods,
Inc.
(2013-present)
and
was
formerly
a
director
of
Navient
Corporation
from
2014
to
2016,
SLM
Corporation
from
1997
to
2014
and
Allied
Capital
Corporation
from
2003
to
2010,
Executive
Vice
President
and
Chief
Financial
Officer
of
NHP
Incorporated
from
1995
to
1997
and
Vice
President
and
Treasurer
of
US
Airways,
Inc.
until
1995.
Mr.
Niemiec
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2005,
currently
serves
as
an
Advisor
to
Saratoga
Partners
and
was
formerly
its
Managing
Director
from
1998
to
2001
and
serves
as
a
director
of
Hess
Midstream
Partners
LP
(2017-present).
Mr.
Niemiec
was
formerly
a
director
of
Emeritus
Corporation
from
1999
to
2010
and
OSI
Pharmaceuticals,
Inc.
from
2006
to
2010,
Managing
Director
of
SBC
Warburg
Dillon
Read
from
1997
to
1998,
and
was
Vice
Chairman
from
1991
to
1997
and
Chief
Financial
Officer
from
1982
to
1997
of
Dillon,
Read
&
Co.
Inc.
As
a
result
of
such
background
and
experience,
the
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
have
each
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.
Bates
and
Mr.
Niemiec
are
independent
Board
members
as
that
term
is
defined
under
the
applicable
U.S.
Securities
and
Exchange
Commission
Rules
and
Releases.
The
Statement
of
Additional
Information
(SAI)
includes
additional
information
about
the
board
members
and
is
available,
without
charge,
upon
request.
Shareholders
may
call
(800)
DIAL
BEN/342-5236
to
request
the
SAI.
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
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
Secretary
Vice
President
since
2011
and
Secretary
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:
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)
Templeton
Funds
Shareholder
Information
43
franklintempleton.com
Annual
Report
Board
Approval
of
Investment
Management
Agreements
TEMPLETON
FUNDS
Templeton
World
Fund
(Fund)
At
a
meeting
held
on
May
13,
2020
(Meeting),
the
Board
of
Trustees
(Board)
of
Templeton
Funds
(Trust),
including
a
majority
of
the
trustees
who
are
not
“interested
persons”
as
defined
in
the
Investment
Company
Act
of
1940
(Independent
Trustees),
reviewed
and
approved
the
continuance
of
the
investment
management
agreement
between
Templeton
Global
Advisors
Limited
(Manager)
and
the
Trust,
on
behalf
of
the
Fund
(Management
Agreement)
for
an
additional
one-year
period.
The
Independent
Trustees
received
advice
from
and
met
separately
with
Independent
Trustee
counsel
in
considering
whether
to
approve
the
continuation
of
the
Management
Agreement.
In
considering
the
continuation
of
the
Management
Agreement,
the
Board
reviewed
and
considered
information
provided
by
the
Manager
at
the
Meeting
and
throughout
the
year
at
meetings
of
the
Board
and
its
committees.
The
Board
also
reviewed
and
considered
information
provided
in
response
to
a
detailed
set
of
requests
for
information
submitted
to
the
Manager
by
Independent
Trustee
counsel
on
behalf
of
the
Independent
Trustees
in
connection
with
the
annual
contract
renewal
process.
In
addition,
prior
to
the
Meeting,
the
Independent
Trustees
held
a
telephonic
contract
renewal
meeting
at
which
the
Independent
Trustees
conferred
amongst
themselves
and
Independent
Trustee
counsel
about
contract
renewal
matters
and,
in
some
cases,
requested
additional
information
from
the
Manager
relating
to
the
contract.
The
Board
reviewed
and
considered
all
of
the
factors
it
deemed
relevant
in
approving
the
continuance
of
the
Management
Agreement,
including,
but
not
limited
to:
(i)
the
nature,
extent
and
quality
of
the
services
provided
by
the
Manager;
(ii)
the
investment
performance
of
the
Fund;
(iii)
the
costs
of
the
services
provided
and
profits
realized
by
the
Manager
and
its
affiliates
from
the
relationship
with
the
Fund;
(iv)
the
extent
to
which
economies
of
scale
are
realized
as
the
Fund
grows;
and
(v)
whether
fee
levels
reflect
these
economies
of
scale
for
the
benefit
of
Fund
investors.
In
approving
the
continuance
of
the
Management
Agreement,
the
Board,
including
a
majority
of
the
Independent
Trustees,
determined
that
the
terms
of
the
Management
Agreement
are
fair
and
reasonable
and
that
the
continuance
of
such
Management
Agreement
is
in
the
interests
of
the
Fund
and
its
shareholders.
While
attention
was
given
to
all
information
furnished,
the
following
discusses
some
primary
factors
relevant
to
the
Board’s
determination.
Nature,
Extent
and
Quality
of
Services
The
Board
reviewed
and
considered
information
regarding
the
nature,
extent
and
quality
of
investment
management
services
provided
by
the
Manager
and
its
affiliates
to
the
Fund
and
its
shareholders.
This
information
included,
among
other
things,
the
qualifications,
background
and
experience
of
the
senior
management
and
investment
personnel
of
the
Manager,
as
well
as
information
on
succession
planning
where
appropriate;
the
structure
of
investment
personnel
compensation;
oversight
of
third-
party
service
providers;
investment
performance
reports
and
related
financial
information
for
the
Fund;
reports
on
expenses
and
shareholder
services;
legal
and
compliance
matters;
risk
controls;
pricing
and
other
services
provided
by
the
Manager
and
its
affiliates;
and
management
fees
charged
by
the
Manager
and
its
affiliates
to
US
funds
and
other
accounts,
including
management’s
explanation
of
differences
among
accounts
where
relevant.
The
Board
also
reviewed
and
considered
an
annual
report
on
payments
made
by
Franklin
Templeton
(FT)
or
the
Fund
to
financial
intermediaries,
as
well
as
a
memorandum
relating
to
third-
party
servicing
arrangements,
which
included
discussion
of
the
changing
distribution
landscape
for
the
Fund.
The
Board
noted
management’s
continuing
efforts
and
expenditures
in
establishing
effective
business
continuity
plans
and
developing
strategies
to
address
areas
of
heightened
concern
in
the
mutual
fund
industry,
such
as
cybersecurity
and
liquidity
risk
management.
The
Board
also
reviewed
and
considered
the
benefits
provided
to
Fund
shareholders
of
investing
in
a
fund
that
is
part
of
the
FT
family
of
funds.
The
Board
noted
the
financial
position
of
Franklin
Resources,
Inc.
(FRI),
the
Manager’s
parent,
and
its
commitment
to
the
mutual
fund
business
as
evidenced
by
its
continued
introduction
of
new
funds,
reassessment
of
the
fund
offerings
in
response
to
the
market
environment
and
project
initiatives
and
capital
investments
relating
to
the
services
provided
to
the
Fund
by
the
FT
organization.
The
Board
specifically
noted
FT’s
commitment
to
enhancing
services
and
controlling
costs,
as
reflected
in
its
plan
to
outsource
certain
administrative
functions,
and
growth
opportunities,
as
evidenced
by
its
upcoming
acquisition
of
the
Legg
Mason
companies.
The
Templeton
Funds
Shareholder
Information
44
franklintempleton.com
Annual
Report
Board
acknowledged
the
change
in
leadership
at
FRI
and
the
opportunity
to
hear
from
Jennifer
Johnson,
President
and
Chief
Executive
Officer
of
FRI,
about
goals
she
has
for
the
company
that
will
benefit
the
Fund.
Following
consideration
of
such
information,
the
Board
was
satisfied
with
the
nature,
extent
and
quality
of
services
provided
by
the
Manager
and
its
affiliates
to
the
Fund
and
its
shareholders.
Fund
Performance
The
Board
reviewed
and
considered
the
performance
results
of
the
Fund
over
various
time
periods
ended
February
29,
2020.
The
Board
considered
the
performance
returns
for
the
Fund
in
comparison
to
the
performance
returns
of
mutual
funds
deemed
comparable
to
the
Fund
included
in
a
universe
(Performance
Universe)
selected
by
Broadridge
Financial
Solutions,
Inc.
(Broadridge),
an
independent
provider
of
investment
company
data.
The
Board
received
a
description
of
the
methodology
used
by
Broadridge
to
select
the
mutual
funds
included
in
a
Performance
Universe.
The
Board
also
reviewed
and
considered
Fund
performance
reports
provided
and
discussions
that
occurred
with
portfolio
managers
at
Board
meetings
throughout
the
year.
A
summary
of
the
Fund’s
performance
results
is
below.
The
Performance
Universe
for
the
Fund
included
the
Fund
and
all
retail
and
institutional
global
multi-cap
value
funds.
The
Board
noted
that
the
Fund’s
annualized
total
return
for
the
one-,
three-,
five-
and
10-year
periods
was
below
the
median
of
its
Performance
Universe.
The
Board
discussed
this
performance
with
management
and
management
explained
that
the
Fund’s
higher
exposure
to
value
stocks,
which
have
experienced
a
period
of
historic
underperformance,
and
underweight
position
in
US
stocks,
as
compared
to
peers
contributed
to
the
Fund’s
relative
underperformance.
Management
also
explained
that
weightings
in
particular
sectors
(such
as
information
technology,
communication
services
and
financials)
and
overall
stock
selection
contributed
to
the
Fund’s
relative
underperformance.
Management
further
explained
that
the
Fund
has
a
larger
allocation
to
emerging
markets
in
comparison
to
other
funds
in
its
peer
group,
which
have
underperformed
developed
markets
in
recent
years.
Management
then
discussed
with
the
Board
the
actions
that
are
being
taken
in
an
effort
to
address
the
sources
of
the
Fund’s
underperformance,
including
steps
that
have
been
taken/are
being
taken
to
further
diversify
the
Fund’s
portfolio
and
enhance
the
Fund’s
portfolio
risk-reward
characteristics
in
the
current
environment.
The
Board
concluded
that
the
Fund’s
Management
Agreement
should
be
continued
for
an
additional
one-year
period,
and
management’s
efforts
should
continue
to
be
monitored.
Comparative
Fees
and
Expenses
The
Board
reviewed
and
considered
information
regarding
the
Fund’s
actual
total
expense
ratio
and
its
various
components,
including,
as
applicable,
management
fees;
transfer
agent
expenses;
underlying
fund
expenses;
Rule
12b-1
and
non-Rule
12b-1
service
fees;
and
other
non-
management
fees.
The
Board
also
noted
the
quarterly
and
annual
reports
it
receives
on
all
marketing
support
payments
made
by
FT
to
financial
intermediaries.
The
Board
considered
the
actual
total
expense
ratio
and,
separately,
the
contractual
management
fee
rate,
without
the
effect
of
fee
waivers,
if
any
(Management
Rate)
of
the
Fund
in
comparison
to
the
median
expense
ratio
and
median
Management
Rate,
respectively,
of
other
mutual
funds
deemed
comparable
to
and
with
a
similar
expense
structure
to
the
Fund
selected
by
Broadridge
(Expense
Group).
Broadridge
fee
and
expense
data
is
based
upon
information
taken
from
each
fund’s
most
recent
annual
report,
which
reflects
historical
asset
levels
that
may
be
quite
different
from
those
currently
existing,
particularly
in
a
period
of
market
volatility.
While
recognizing
such
inherent
limitation
and
the
fact
that
expense
ratios
and
Management
Rates
generally
increase
as
assets
decline
and
decrease
as
assets
grow,
the
Board
believed
the
independent
analysis
conducted
by
Broadridge
to
be
an
appropriate
measure
of
comparative
fees
and
expenses.
The
Broadridge
Management
Rate
includes
administrative
charges,
and
the
actual
total
expense
ratio,
for
comparative
consistency,
was
shown
for
Class
A
shares
for
the
Fund
and
for
each
other
fund
in
the
Expense
Group.
The
Board
received
a
description
of
the
methodology
used
by
Broadridge
to
select
the
mutual
funds
included
in
an
Expense
Group.
The
Expense
Group
for
the
Fund
included
the
Fund,
two
other
global
multi-cap
value
funds,
six
global
multi-cap
core
funds
and
five
global
multi-cap
growth
funds.
The
Board
noted
that
the
Management
Rate
and
actual
total
expense
ratio
for
the
Fund
were
below
the
median
of
its
Expense
Group.
The
Board
concluded
that
the
Management
Rate
charged
to
the
Fund
is
reasonable.
Profitability
The
Board
reviewed
and
considered
information
regarding
the
profits
realized
by
the
Manager
and
its
affiliates
in
connection
with
the
operation
of
the
Fund.
In
this
respect,
the
Board
considered
the
Fund
profitability
analysis
provided
by
the
Manager
that
addresses
the
overall
profitability
of
FT’s
US
fund
business,
as
well
as
its
profits
in
providing
investment
management
and
other
services
to
each
of
the
individual
funds
during
the
12-month
period
ended
September
30,
2019,
being
the
most
recent
fiscal
year-
end
for
FRI.
The
Board
noted
that
although
management
Templeton
Funds
Shareholder
Information
45
franklintempleton.com
Annual
Report
continually
makes
refinements
to
its
methodologies
used
in
calculating
profitability
in
response
to
organizational
and
product-related
changes,
the
overall
methodology
has
remained
consistent
with
that
used
in
the
Fund’s
profitability
report
presentations
from
prior
years.
Additionally,
PricewaterhouseCoopers
LLP,
auditor
to
FRI
and
certain
FT
funds,
was
engaged
by
the
Manager
to
review
and
assess
the
allocation
methodologies
to
be
used
solely
by
the
Fund’s
Board
with
respect
to
the
profitability
analysis.
The
Board
noted
management’s
belief
that
costs
incurred
in
establishing
the
infrastructure
necessary
for
the
type
of
mutual
fund
operations
conducted
by
the
Manager
and
its
affiliates
may
not
be
fully
reflected
in
the
expenses
allocated
to
the
Fund
in
determining
its
profitability,
as
well
as
the
fact
that
the
level
of
profits,
to
a
certain
extent,
reflected
operational
cost
savings
and
efficiencies
initiated
by
management.
As
part
of
this
evaluation,
the
Board
considered
the
initiative
currently
underway
to
outsource
certain
operations,
which
effort
would
require
considerable
up-front
expenditures
by
the
Manager
but,
over
the
long
run
is
expected
to
result
in
greater
efficiencies.
The
Board
also
noted
management’s
expenditures
in
improving
shareholder
services
provided
to
the
Fund,
as
well
as
the
need
to
implement
systems
and
meet
additional
regulatory
and
compliance
requirements
resulting
from
recent
US
Securities
and
Exchange
Commission
and
other
regulatory
requirements,
notably
in
the
area
of
cybersecurity
protections.
The
Board
also
considered
the
extent
to
which
the
Manager
and
its
affiliates
might
derive
ancillary
benefits
from
fund
operations,
including
revenues
generated
from
transfer
agent
services,
potential
benefits
resulting
from
personnel
and
systems
enhancements
necessitated
by
fund
growth,
as
well
as
increased
leverage
with
service
providers
and
counterparties.
Based
upon
its
consideration
of
all
these
factors,
the
Board
concluded
that
the
level
of
profits
realized
by
the
Manager
and
its
affiliates
from
providing
services
to
the
Fund
was
not
excessive
in
view
of
the
nature,
extent
and
quality
of
services
provided
to
the
Fund.
Economies
of
Scale
The
Board
reviewed
and
considered
the
extent
to
which
the
Manager
may
realize
economies
of
scale,
if
any,
as
the
Fund
grows
larger
and
whether
the
Fund’s
management
fee
structure
reflects
any
economies
of
scale
for
the
benefit
of
shareholders.
With
respect
to
possible
economies
of
scale,
the
Board
noted
the
existence
of
management
fee
breakpoints,
which
operate
generally
to
share
any
economies
of
scale
with
the
Fund’s
shareholders
by
reducing
the
Fund’s
effective
management
fees
as
the
Fund
grows
in
size.
The
Board
considered
the
Manager’s
view
that
any
analyses
of
potential
economies
of
scale
in
managing
a
particular
fund
are
inherently
limited
in
light
of
the
joint
and
common
costs
and
investments
the
Manager
incurs
across
the
FT
family
of
funds
as
a
whole.
The
Board
concluded
that
to
the
extent
economies
of
scale
may
be
realized
by
the
Manager
and
its
affiliates,
the
Fund’s
management
fee
structure
provided
a
sharing
of
benefits
with
the
Fund
and
its
shareholders
as
the
Fund
grows.
Conclusion
Based
on
its
review,
consideration
and
evaluation
of
all
factors
it
believed
relevant,
including
the
above-described
factors
and
conclusions,
the
Board
unanimously
approved
the
continuation
of
the
Management
Agreement
for
an
additional
one-year
period.
Liquidity
Risk
Management
Program
Each
of
the
Funds
has
adopted
and
implemented
a
written
Liquidity
Risk
Management
Program
(the
“LRMP”)
as
required
by
Rule
22e-4
under
the
Investment
Company
Act
of
1940
(the
“Liquidity
Rule”).
The
LRMP
is
designed
to
assess
and
manage
each
Fund’s
liquidity
risk,
which
is
defined
as
the
risk
that
the
Fund
could
not
meet
requests
to
redeem
shares
issued
by
the
Fund
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
In
accordance
with
the
Liquidity
Rule,
the
LRMP
includes
policies
and
procedures
that
provide
for:
(1)
assessment,
management,
and
review
(no
less
frequently
than
annually)
of
each
Fund’s
liquidity
risk;
(2)
classification
of
each
Fund’s
portfolio
holdings
into
one
of
four
liquidity
categories
(Highly
Liquid,
Moderately
Liquid,
Less
Liquid,
and
Illiquid);
(3)
for
Funds
that
do
not
primarily
hold
assets
that
are
Highly
Liquid,
establishing
and
maintaining
a
minimum
percentage
of
the
Fund’s
net
assets
in
Highly
Liquid
investments
(called
a
“Highly
Liquid
Investment
Minimum”
or
“HLIM”);
and
(4)
prohibiting
the
Fund’s
acquisition
of
Illiquid
investments
that
would
result
in
the
Fund
holding
more
than
15%
of
its
net
assets
in
Illiquid
assets.
The
LRMP
also
requires
reporting
to
the
SEC
(on
a
non-public
basis)
and
to
the
Board
if
the
Fund’s
holdings
of
Illiquid
assets
exceed
15%
of
the
Fund’s
net
assets.
Funds
with
HLIMs
must
have
procedures
for
addressing
HLIM
shortfalls,
including
reporting
to
the
Board
and,
with
respect
to
HLIM
shortfalls
lasting
more
than
seven
consecutive
calendar
days,
reporting
to
the
Securities
and
Exchange
Commission
(“SEC”)
(on
a
non-public
basis).
The
Funds’
Board
of
Trustees
approved
the
appointment
of
the
Director
of
Liquidity
Risk
within
the
Investment
Risk
Management
Group
(the
“IRMG”)
as
the
Administrator
of
the
LRMP.
The
IRMG
maintains
the
Investment
Liquidity
Committee
(the
“ILC”)
to
provide
oversight
and
administration
of
policies
and
procedures
governing
liquidity
Templeton
Funds
Shareholder
Information
46
franklintempleton.com
Annual
Report
risk
management
for
FT
products
and
portfolios.
The
ILC
includes
representatives
from
Franklin
Templeton’s
Risk,
Trading,
Global
Compliance,
Investment
Compliance,
Investment
Operations,
Valuation
Committee
and
Product
Management
groups.
In
assessing
and
managing
each
Fund’s
liquidity
risk,
the
ILC
considers,
as
relevant,
a
variety
of
factors,
including
the
Fund’s
investment
strategy
and
the
liquidity
of
its
portfolio
investments
during
both
normal
and
reasonably
foreseeable
stressed
conditions;
its
short
and
long-term
cash
flow
projections;
and
its
cash
holdings
and
access
to
other
funding
sources
including
the
Funds’
interfund
lending
facility
and
line
of
credit.
Classification
of
the
Fund’s
portfolio
holdings
in
the
four
liquidity
categories
is
based
on
the
number
of
days
it
is
reasonably
expected
to
take
to
convert
the
investment
to
cash
(for
Highly
Liquid
and
Moderately
Liquid
holdings)
or
sell
or
dispose
of
the
investment
(for
Less
Liquid
and
Illiquid
investments),
in
current
market
conditions
without
significantly
changing
the
investment’s
market
value.
The
Fund
primarily
holds
liquid
assets
that
are
defined
under
the
Liquidity
Rule
as
"Highly
Liquid
Investments,"
and
therefore
is
not
required
to
establish
an
HLIM.
Highly
Liquid
Investments
are
defined
as
cash
and
any
investment
reasonably
expected
to
be
convertible
to
cash
in
current
market
conditions
in
three
business
days
or
less
without
the
conversion
to
cash
significantly
changing
the
market
value
of
the
investment.
At
meetings
of
the
Funds’
Board
of
Trustees
held
in
May
2020,
the
Program
Administrator
provided
a
written
report
to
the
Board
addressing
the
adequacy
and
effectiveness
of
the
program
during
the
period
December
1,
2018
to
December
31,
2019.
The
Program
Administrator
report
concluded
that
(i.)
the
LRMP,
as
adopted
and
implemented,
remains
reasonably
designed
to
assess
and
manage
each
Fund’s
liquidity
risk;
(ii.)
the
LRMP,
including
the
Highly
Liquid
Investment
Minimum
(“HLIM”)
where
applicable,
was
implemented
and
operated
effectively
to
achieve
the
goal
of
assessing
and
managing
each
Fund’s
liquidity
risk;
and
(iii.)
each
Fund
was
able
to
meet
requests
for
redemption
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
At
the
same
time,
the
Program
Administrator
also
presented
the
Fund
Board
of
Trustees
an
update
on
liquidity
during
the
first
quarter
of
2020
in
relation
to
the
COVID-19
pandemic.
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
Trust,
on
behalf
of
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.
Householding
of
Reports
and
Prospectuses
You
will
receive
each
Fund’s
financial
reports
every
six
months
as
well
as
an
annual
updated
summary
prospectus
(prospectus
available
upon
request).
To
reduce
Fund
expenses,
we
try
to
identify
related
shareholders
in
a
household
and
send
only
one
copy
of
the
financial
reports
and
summary
prospectus.
This
process,
called
“householding,”
will
continue
indefinitely
unless
you
instruct
us
otherwise.
If
you
prefer
not
to
have
these
documents
householded,
please
call
us
at
(800)
632-2301.
At
any
time
you
may
view
current
prospectuses/summary
prospectuses
and
financial
reports
on
our
website.
If
you
choose,
you
may
receive
these
documents
through
electronic
delivery.
102
A
10/20
©
2020
Franklin
Templeton
Investments.
All
rights
reserved.
Authorized
for
distribution
only
when
accompanied
or
preceded
by
a
summary
prospectus
and/or
prospectus.
Investors
should
carefully
consider
a
fund’s
investment
goals,
risks,
charges
and
expenses
before
investing.
A
prospectus
contains
this
and
other
information;
please
read
it
carefully
before
investing.
To
help
ensure
we
provide
you
with
quality
service,
all
calls
to
and
from
our
service
areas
are
monitored
and/or
recorded.
Annual
Report
and
Shareholder
Letter
Templeton
World
Fund
Investment
Manager
Distributor
Shareholder
Services
Templeton
Global
Advisors
Limited
Franklin
Templeton
Distributors,
Inc.
(800)
DIAL
BEN
®
/
342-5236
franklintempleton.com
(800)
632-2301
ANNUAL
REPORT
AND
SHAREHOLDER
LETTER
Templeton
Foreign
Fund
A
Series
of
Templeton
Funds
August
31,
2020
Sign
up
for
electronic
delivery
at
franklintempleton.com/edelivery
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)
632-2301
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,
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you
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franklintempleton.com
Not
part
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the
annual
report
1
SHAREHOLDER
LETTER
Dear
Shareholder:
During
the
12
months
ended
August
31,
2020,
global
economic
growth
weakened
significantly
as
a
result
of
the
novel
coronavirus
(COVID-19)
pandemic
and
subsequent
economic
lockdowns
imposed
by
many
governments
around
the
world.
Global
stocks
advanced
during
the
period,
however,
as
a
result
of
gains
prior
to
the
pandemic
combined
with
increased
investor
confidence
later
in
the
period
as
many
economies
began
to
reopen.
Many
central
banks
took
significant
actions
to
bolster
economic
growth
during
the
period.
The
U.S.
Federal
Reserve
cut
the
federal
funds
target
rate
range
four
times
to
0.00%–0.25%
and
initiated
massive
quantitative
easing
measures.
The
European
Central
Bank
left
its
key
interest
rate
unchanged
but
lowered
the
deposit
rate,
resumed
buying
bonds
and
announced
an
emergency
asset
purchase
plan.
In
this
environment,
stocks
in
global
developed
and
emerging
markets
excluding
the
U.S.
posted
positive
total
returns,
as
measured
by
the
MSCI
All
Country
World
Index
ex
USA
Index.
We
are
committed
to
our
long-term
perspective
and
disciplined
investment
approach
as
we
conduct
a
rigorous,
fundamental
analysis
of
securities
with
a
regular
emphasis
on
investment
risk
management.
Historically,
patient
investors
have
achieved
rewarding
results
by
evaluating
their
goals,
diversifying
their
assets
globally
and
maintaining
a
disciplined
investment
program,
all
hallmarks
of
the
Templeton
investment
philosophy.
We
continue
to
recommend
investors
consult
their
financial
advisors
and
review
their
portfolios
to
design
a
long-term
strategy
and
portfolio
allocation
that
meet
their
individual
needs,
goals
and
risk
tolerance.
Templeton
Foreign
Fund’s
annual
report
includes
more
detail
about
prevailing
conditions
and
a
discussion
about
investment
decisions
during
the
period.
Please
remember
all
securities
markets
fluctuate,
as
do
mutual
fund
share
prices.
We
thank
you
for
investing
with
Franklin
Templeton,
welcome
your
questions
and
comments,
and
look
forward
to
serving
your
investment
needs
in
the
years
ahead.
Sincerely,
Alan
Bartlett
Chief
Investment
Officer
Templeton
Equity
Group
This
letter
reflects
our
analysis
and
opinions
as
of
August
31,
2020,
unless
otherwise
indicated.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
state,
industry,
security
or
fund.
Statements
of
fact
are
from
sources
considered
reliable.
franklintempleton.com
Annual
Report
2
Contents
Annual
Report
Templeton
Foreign
Fund
..........................
3
Performance
Summary
...........................
7
Your
Fund’s
Expenses
............................
10
Financial
Highlights
and
Statement
of
Investments
....
11
Financial
Statements
.............................
19
Notes
to
Financial
Statements
.....................
23
Report
of
Independent
Registered
Public
Accounting
Firm
............................
33
Tax
Information
..................................
34
Board
Members
and
Officers
.......................
35
Shareholder
Information
..........................
40
Visit
franklintempleton.com
for
fund
updates,
to
access
your
account,
or
to
find
helpful
financial
planning
tools.
3
franklintempleton.com
Annual
Report
ANNUAL
REPORT
Templeton
Foreign
Fund
This
annual
report
for
Templeton
Foreign
Fund
covers
the
fiscal
year
ended
August
31,
2020
.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
long-term
capital
growth.
Under
normal
market
conditions,
the
Fund
invests
at
least
80%
of
its
net
assets
in
“foreign
securities.”
These
securities
are
predominantly
equity
securities
of
companies
located
outside
the
U.S.,
including
developing
markets.
Performance
Overview
The
Fund’s
Class
A
shares
posted
a
-2.76%
cumulative
total
return
for
the
12
months
under
review.
In
comparison,
the
Fund’s
benchmark,
the
MSCI
All
Country
World
Index
(ACWI)
ex
USA
Index,
which
measures
stock
performance
in
global
developed
and
emerging
markets
excluding
the
U.S.,
posted
a
+8.79%
total
return.
1
For
the
10-year
period
ended
Aug
31,
2020,
the
Fund’s
Class
A
shares
posted
a
+37.86%
cumulative
total
return,
compared
with
the
MSCI
ACWI
ex
USA
Index’s
+74.71%
cumulative
total
return
for
the
same
period.
1
Please
note
index
performance
information
is
provided
for
reference
and
we
do
not
attempt
to
track
the
index
but
rather
undertake
investments
on
the
basis
of
fundamental
research.
You
can
find
more
performance
data
in
the
Performance
Summary
beginning
on
page
7
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Economic
and
Market
Overview
Global
developed
and
emerging
market
equities,
as
measured
by
the
MSCI
ACWI,
advanced
during
the
12-month
period.
Stocks
gained
for
the
first
four
months
of
the
reporting
period
but
fell
sharply
in
early
2020
amid
investor
fears
of
a
global
economic
slowdown
due
to
the
novel
coronavirus
(COVID-19)
pandemic.
Such
fears
drove
many
investors
to
sell
equities
and
buy
government
bonds,
cash
and
other
investments
perceived
as
safe.
During
the
last
five
months
of
the
period,
global
equities
rebounded
due
to
optimism
about
easing
lockdown
restrictions,
vaccine
development
and
government
stimulus
measures.
Despite
a
second
wave
of
infections
and
reintroduction
of
restrictions,
as
well
as
renewed
tensions
between
the
U.S.
and
China,
positive
investor
sentiment
and
economic
stimulus
led
global
markets
higher.
In
the
U.S.,
a
strong
labor
market
and
solid
consumer
spending
drove
economic
growth
through
February
2020.
However,
pandemic-related
restrictions
caused
stiff
headwinds
for
the
economy,
including
mass
layoffs
that
drove
the
unemployment
rate
to
14.7%
in
April.
2
According
to
the
National
Bureau
of
Economic
Research,
the
longest
U.S.
economic
expansion
in
history
ended
in
February
2020,
and
the
country
slipped
into
a
deep
recession.
Equities
began
to
rebound
in
the
spring
amid
declining
jobless
claims,
rising
retail
sales
and
optimism
about
treatments
and
potential
vaccines
for
COVID-19.
Despite
surging
summer
infection
rates
and
dampened
economic
activity,
which
caused
the
second-quarter
gross
domestic
product
to
decline
at
a
record
pace,
resilient
consumer
spending
in
July
and
optimism
about
an
economic
rebound
led
equities
higher.
However,
gains
were
concentrated
in
only
a
few
sectors,
including
consumer
staples,
health
care
and
information
technology.
The
U.S.
Federal
Reserve
(Fed)
lowered
the
federal
funds
target
rate
twice
in
late
2019
to
a
range
of
1.50%–1.75%
and
implemented
two
emergency
rate
cuts
in
March
2020,
Geographic
Composition
8/31/20
%
of
Total
Net
Assets
Asia
45.7%
Europe
36.5%
North
America
4.5%
Latin
America
&
Caribbean
2.2%
Australia
&
New
Zealand
0.4%
Short-Term
Investments
&
Other
Net
Assets
10.7%
1.
Source:
Morningstar.
As
of
8/31/20,
the
Fund’s
Class
A
10-year
average
annual
total
return
not
including
the
maximum
sales
charge
was
+3.26%,
compared
with
the
MSCI
ACWI
ex
USA
Index’s
10-year
average
annual
total
return
of
+5.74%.
The
index
is
unmanaged
and
includes
reinvestment
of
any
income
or
distributions.
It
does
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
2.
Source:
U.S.
Bureau
of
Labor
Statistics.
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
16
.
Templeton
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Fund
4
franklintempleton.com
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Report
decreasing
the
rate
to
a
range
of
0.00%–0.25%.
The
Fed
also
enacted
sweeping
quantitative
easing
measures
aimed
at
ensuring
credit
flows
to
borrowers
and
supporting
credit
markets
with
unlimited
amounts
of
bond
purchasing.
At
the
end
of
the
period,
the
Fed
announced
a
shift
in
inflation
policy
that
could
mean
interest
rates
will
potentially
remain
low,
even
amid
low
unemployment
and
rising
inflation.
In
the
eurozone,
forecasts
of
a
significant
contraction
in
2020
mounted
as
the
magnitude
of
the
pandemic’s
economic
disruption
became
apparent.
Nevertheless,
European
developed
market
equities,
as
measured
by
the
MSCI
Europe
Index,
advanced
as
some
social
distancing
restrictions
were
removed
and
robust
fiscal
stimulus
measures
led
to
a
significant
rebound
from
the
March
2020
lows.
Asian
developed
and
emerging
market
equities,
as
measured
by
the
MSCI
All
Country
Asia
Index,
also
advanced.
Generally
slow
yet
stable
economic
growth
and
easing
trade
tensions
between
the
U.S.
and
China
benefited
the
region,
until
the
pandemic
and
lockdowns
in
China
and
other
countries
derailed
economic
growth.
Sharp
market
declines
were
followed
by
a
rebound,
as
economies
reopened,
aided
by
robust
stimulus
measures
and
many
health
care
companies’
continued
development
of
COVID-19
vaccines
and
treatments.
Emerging
market
stocks,
as
measured
by
the
MSCI
Emerging
Markets
Index,
also
advanced
for
the
12-month
period
despite
steep
pandemic-related
declines,
generally
weaker
currencies
and
lower
energy
prices,
which
hurt
emerging
market
economies
reliant
on
these
exports.
During
the
last
five
months
of
the
reporting
period,
however,
improving
economic
activity,
higher
oil
prices
and
U.S.
dollar
weakness
led
emerging
markets
stocks
to
post
strong
gains,
reversing
earlier
losses.
Investment
Strategy
Our
investment
strategy
employs
a
bottom-up,
value-
oriented,
long-term
approach.
We
focus
on
the
market
price
of
a
company’s
securities
relative
to
our
evaluation
of
the
company’s
long-term
earnings,
asset
value
and
cash
flow
potential.
Our
analysis
includes
an
assessment
of
the
potential
impacts
of
material
environmental,
social
and
governance
(ESG)
factors
on
the
long-term
risk
and
return
profile
of
a
company.
We
also
consider
the
company’s
price/
earnings
ratio,
price/cash
flow
ratio,
profit
margins
and
liquidation
value.
Manager’s
Discussion
The
12
months
under
review
encompassed
a
volatile
and
challenging
period
for
price-disciplined
investors.
Market
leadership
was
concentrated
among
a
handful
of
the
biggest
large-capitalization
technology
and
e-commerce
stocks
that
saw
their
market
capitalizations
and
valuations
soar
to
new
records.
The
period
was
punctuated
by
a
severe
bear
market
and
global
recession
stemming
from
the
COVID-19-related
economic
shutdown,
though
official
intervention
prompted
a
quick
recovery
and
the
darlings
of
the
first
half
of
the
period
reasserted
their
leadership.
The
market
seemed
unhealthy
and
distorted
in
our
view,
divorced
as
it
was
from
economic
and
fundamental
realities.
In
this
unique
environment,
we
identified
major
risks
in
both
tails
of
the
market.
On
the
one
hand,
resilient
high-profile
stocks
traded
at
elevated
valuations
that
bode
poorly
for
long-term
returns,
in
our
view.
On
the
other,
many
optically
inexpensive
stocks
were
comprised
of
companies
that
carried
excessive
balance
sheet
and
operational
risks,
in
our
opinion,
and
might
struggle
to
survive
a
renewed
downturn.
Our
strategy
in
this
environment
has
been
diversification
amongst
different
value
types,
economic
exposure
and
risk
profiles.
We
reduced
exposure
to
some
cyclical
sectors
where
companies
appeared
structurally
challenged,
despite
being
optically
inexpensive.
We
also
made
selective
investments
in
stocks
in
economically-
and
pandemic-
exposed
industries
that
we
believe
had
been
oversold.
We
were
able
to
increase
exposure
to
more
cyclical
stocks
for
two
reasons.
First,
our
fundamental
focus
allowed
us
to
confidently
assess
balance
sheet
and
liquidity
risk.
And
second,
we
were
simultaneously
increasing
the
Fund’s
defensive
exposures
by
raising
cash
equivalents
including
time
deposits
in
foreign
currencies,
taking
long
positions
Top
10
Industries
8/31/20
%
of
Total
Net
Assets
a
Pharmaceuticals
10.6%
Banks
8.6%
Semiconductors
&
Semiconductor
Equipment
5.4%
Metals
&
Mining
5.3%
Oil,
Gas
&
Consumable
Fuels
5.0%
Automobiles
4.2%
Real
Estate
Management
&
Development
4.1%
Technology
Hardware,
Storage
&
Peripherals
3.3%
Food
&
Staples
Retailing
3.2%
Diversified
Financial
Services
3.1%
Templeton
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in
the
Japanese
yen
(a
generally
considered
global
safe
haven),
holding
uncorrelated
assets
like
precious
metals
stocks
and
rotating
more
generally
into
higher
quality
companies
across
a
range
of
sectors.
The
result,
in
our
view,
was
a
more
dynamic,
flexible
and
genuinely
diverse
value
portfolio.
We
continue
to
believe
that
flexibility,
creativity
and
true
diversification
within
a
value
framework
are
appropriate
in
this
extended
and
uncertain
market
environment.
Looking
at
the
Fund
more
closely,
relative
underperformance
during
the
period
was
largely
attributable
to
stock
selection
in
the
communication
services
sector.
Luxembourg-based
satellite
operator
SES
(not
held
at
period-end)
was
the
sector’s
biggest
laggard,
declining
after
the
firm
issued
disappointing
guidance.
An
overweight
position
in
the
energy
sector
also
detracted
during
a
period
when
oil
prices
came
under
significant
pressure
as
demand
withered
during
the
pandemic-related
economic
shutdown
and
disagreements
on
supply
management
from
major
producers
exacerbated
the
imbalance.
Within
the
sector,
we
have
reduced
exposure
to
firms
with
excessive
operational
and
financial
leverage
in
favor
of
large
integrated
oil
producers
whose
attractive
dividends
and
improved
capital
discipline
can
help
weather
a
downturn.
We
are
also
focused
on
cost
position
and
production
economics,
favoring
companies
with
low
breakeven
rates
that
can
self-fund
capex
and
stay
cash
flow
positive
even
in
a
volatile
oil
price
environment.
Turning
to
contributors,
strong
stock
selection
in
the
utilities
sector
aided
performance,
led
by
German
power
supplier
E.On.
Shares
rallied
after
the
firm
maintained
full-year
guidance
despite
uncertainty
surrounding
the
coronavirus
pandemic.
At
the
security
level,
Canadian
mine
financing
firm
Wheaton
Precious
Metals
–
a
materials
sector
constituent
–
was
the
Fund’s
top
contributor
during
the
year,
rallying
as
the
price
of
gold
rose
to
a
record
high
in
nominal
terms.
From
a
regional
standpoint,
stock
selection
in
Asia
offset
a
positive
overweight
allocation,
pressured
by
weakness
in
China
and
Hong
Kong.
In
Europe,
relative
weakness
in
the
UK
offset
relative
strength
in
Spain
and
the
Netherlands.
It
is
important
to
recognize
the
effect
of
currency
movements
on
the
Fund’s
performance.
In
general,
if
the
value
of
the
U.S.
dollar
goes
up
compared
with
a
foreign
currency,
an
investment
traded
in
that
foreign
currency
will
go
down
in
value
because
it
will
be
worth
fewer
U.S.
dollars.
This
can
have
a
negative
effect
on
Fund
performance.
Conversely,
when
the
U.S.
dollar
weakens
in
relation
to
a
foreign
currency,
an
investment
traded
in
that
foreign
currency
will
increase
in
value,
which
can
contribute
to
Fund
performance.
For
the
12
months
ended
August
31,
2020,
the
U.S.
dollar
declined
in
value
relative
to
most
currencies.
As
a
result,
the
Fund’s
performance
was
positively
affected
by
the
portfolio’s
investment
predominantly
in
securities
with
non-U.S.
currency
exposure.
However,
one
cannot
expect
the
same
result
in
future
periods.
Top
10
Holdings
8/31/20
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
Takeda
Pharmaceutical
Co.
Ltd.
3.4%
Pharmaceuticals,
Japan
Samsung
Electronics
Co.
Ltd.
3.3%
Technology
Hardware,
Storage
&
Peripherals,
South
Korea
Bayer
AG
3.2%
Pharmaceuticals,
Germany
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.
3.0%
Semiconductors
&
Semiconductor
Equipment,
Taiwan
Berkshire
Hathaway,
Inc.
2.6%
Diversified
Financial
Services,
United
States
NXP
Semiconductors
NV
2.4%
Semiconductors
&
Semiconductor
Equipment,
Netherlands
CK
Hutchison
Holdings
Ltd.
2.3%
Industrial
Conglomerates,
United
Kingdom
Wheaton
Precious
Metals
Corp.
2.2%
Metals
&
Mining,
Brazil
KB
Financial
Group,
Inc.
2.2%
Banks,
South
Korea
Sanofi
2.0%
Pharmaceuticals,
France
Top
10
Countries
8/31/20
a
%
of
Total
Net
Assets
a
a
Japan
24.4%
United
Kingdom
9.3%
Germany
8.0%
Netherlands
7.3%
South
Korea
6.5%
Hong
Kong
4.9%
China
4.5%
France
4.4%
United
States
3.8%
Taiwan
3.0%
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Thank
you
for
your
continued
participation
in
Templeton
Foreign
Fund.
We
look
forward
to
serving
your
future
investment
needs.
Christopher
James
Peel,
CFA
Herbert
J.
Arnett,
Jr.
Peter
M.
Moeschter,
CFA
Warren
Pustam,
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,
state,
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
Templeton
Foreign
Fund
7
franklintempleton.com
Annual
Report
The
performance
table
and
graphs
do
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses
of
each
class.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
8/31/20
1
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
The
maximum
is
5.50%
and
the
minimum
is
0%.
Class
A
:
5.50%
maximum
initial
sales
charge;
Advisor
Class:
no
sales
charges.
For
other
share
classes,
visit
franklintempleton.com.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
A
4
1-Year
-2.76%
-8.05%
5-Year
+2.70%
-0.59%
10-Year
+37.86%
+2.68%
Advisor
1-Year
-2.57%
-2.57%
5-Year
+3.89%
+0.77%
10-Year
+41.36%
+3.52%
See
page
9
for
Performance
Summary
footnotes.
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Fund
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Summary
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See
page
9
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
index
includes
reinvestment
of
any
income
or
distributions.
It
differs
from
the
Fund
in
composition
and
does
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
Class
A
(9/1/10
–
8/31/20)
Advisor
Class
(9/1/10
–
8/31/20)
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Each
class
of
shares
is
available
to
certain
eligible
investors
and
has
different
annual
fees
and
expenses,
as
described
in
the
prospectus.
All
investments
involve
risks,
including
possible
loss
of
principal.
Special
risks
are
associated
with
foreign
investing,
including
currency
fluctuations,
economic
instability
and
political
developments;
investments
in
developing
markets
involve
heightened
risks
related
to
the
same
factors.
Currency
rates
may
fluctuate
significantly
over
short
periods
of
time,
and
can
reduce
returns.
Because
the
Fund
may
invest
its
assets
in
companies
in
a
specific
region,
including
Europe,
it
is
subject
to
greater
risks
of
adverse
developments
in
that
region
and/or
the
surrounding
regions
than
a
fund
that
is
more
broadly
diversified
geographically.
Current
political
uncertainty
concerning
the
economic
consequences
of
the
departure
of
the
United
Kingdom
from
the
European
Union
may
increase
market
volatility.
Derivatives,
including
currency
management
strategies,
involve
costs
and
can
create
economic
leverage
in
the
portfolio
which
may
result
in
significant
volatility
and
cause
the
Fund
to
participate
in
losses
(as
well
as
enable
gains)
on
an
amount
that
exceeds
the
Fund’s
initial
investment.
The
Fund
may
not
achieve
the
anticipated
benefits,
and
may
realize
losses
when
a
counterparty
fails
to
perform
as
promised.
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
general,
in
ways
that
cannot
necessarily
be
foreseen.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
1.
The
Fund
has
an
expense
reduction
contractually
guaranteed
through
12/31/20.
Fund
investment
results
reflect
the
expense
reduction;
without
this
reduction,
the
results
would
have
been
lower.
2.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
3.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
4.
Prior
to
9/10/18
these
shares
were
offered
at
a
higher
initial
sales
charge
of
5.75%,
thus
actual
returns
(with
sales
charges)
would
have
differed.
Average
annual
total
returns
(with
sales
charges)
have
been
restated
to
reflect
the
current
maximum
initial
sales
charge
of
5.50%.
5.
Source:
Morningstar.
The
MSCI
ACWI
ex
USA
Index
is
a
free
float-adjusted,
market
capitalization-weighted
index
designed
to
measure
equity
market
performance
in
global
developed
and
emerging
markets,
excluding
the
U.S.
6.
Figures
are
as
stated
in
the
Fund’s
current
prospectus
and
may
differ
from
the
expense
ratios
disclosed
in
the
Your
Fund’s
Expenses
and
Financial
Highlights
sections
in
this
report.
In
periods
of
market
volatility,
assets
may
decline
significantly,
causing
total
annual
Fund
operating
expenses
to
become
higher
than
the
figures
shown.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Distributions
(9/1/19–8/31/20)
Share
Class
Net
Investment
Income
A
$0.2408
C
$0.1708
R
$0.2253
R6
$0.2721
Advisor
$0.2581
Total
Annual
Operating
Expenses
6
Share
Class
With
Fee
Waiver
Without
Fee
Waiver
A
1.10%
1.15%
Advisor
0.85%
0.90%
Your
Fund’s
Expenses
Templeton
Foreign
Fund
10
franklintempleton.com
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value”
for
each
class
of
shares.
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
184/366
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
3/1/20
Ending
Account
Value
8/31/20
Expenses
Paid
During
Period
3/1/20–8/31/20
1,
2
Ending
Account
Value
8/31/20
Expenses
Paid
During
Period
3/1/20–8/31/20
1,
2
a
Net
Annualized
Expense
Ratio
2
A
$1,000
$979.50
$5.49
$1,019.59
$5.61
1.10%
C
$1,000
$976.30
$9.19
$1,015.84
$9.37
1.85%
R
$1,000
$977.50
$6.73
$1,018.33
$6.87
1.35%
R6
$1,000
$980.80
$3.41
$1,021.70
$3.48
0.68%
Advisor
$1,000
$979.20
$4.25
$1,020.84
$4.34
0.85%
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
11
a
Year
Ended
August
31,
2020
2019
2018
2017
2016
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$6.61
$7.69
$7.81
$6.87
$6.74
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.10
0.19
0.12
0.11
0.11
Net
realized
and
unrealized
gains
(losses)
...........
(0.25)
(1.09)
(0.13)
0.96
0.11
Total
from
investment
operations
....................
(0.15)
(0.90)
(0.01)
1.07
0.22
Less
distributions
from:
Net
investment
income
..........................
(0.24)
(0.18)
(0.11)
(0.13)
(0.09)
Net
realized
gains
.............................
—
—
—
—
(—)
c
Total
distributions
...............................
(0.24)
(0.18)
(0.11)
(0.13)
(0.09)
Net
asset
value,
end
of
year
.......................
$6.22
$6.61
$7.69
$7.81
$6.87
Total
return
d
...................................
(2.76)%
(11.73)%
(0.15)%
15.83%
3.46%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.19%
1.15%
1.16%
1.21%
1.22%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
1.10%
1.08%
1.11%
e
1.21%
e,f
1.22%
e,f
Net
investment
income
...........................
1.55%
2.69%
1.54%
1.55%
1.66%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$1,766,365
$2,395,260
$2,929,181
$3,287,394
$3,644,336
Portfolio
turnover
rate
............................
42.37%
30.81%
23.01%
42.56%
22.89%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Amount
rounds
to
less
than
$0.01
per
share.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
12
a
Year
Ended
August
31,
2020
2019
2018
2017
2016
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$6.54
$7.49
$7.60
$6.69
$6.56
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.05
0.12
0.06
0.05
0.06
Net
realized
and
unrealized
gains
(losses)
...........
(0.25)
(1.05)
(0.12)
0.94
0.11
Total
from
investment
operations
....................
(0.20)
(0.93)
(0.06)
0.99
0.17
Less
distributions
from:
Net
investment
income
..........................
(0.17)
(0.02)
(0.05)
(0.08)
(0.04)
Net
realized
gains
.............................
—
—
—
—
(—)
c
Total
distributions
...............................
(0.17)
(0.02)
(0.05)
(0.08)
(0.04)
Net
asset
value,
end
of
year
.......................
$6.17
$6.54
$7.49
$7.60
$6.69
Total
return
d
...................................
(3.42)%
(12.40)%
(0.79)%
14.92%
2.64%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.94%
1.90%
1.91%
1.96%
1.97%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
1.85%
1.83%
1.86%
e
1.96%
e,f
1.97%
e,f
Net
investment
income
...........................
0.81%
1.94%
0.79%
0.80%
0.91%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$54,093
$87,160
$281,640
$346,032
$397,512
Portfolio
turnover
rate
............................
42.37%
30.81%
23.01%
42.56%
22.89%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Amount
rounds
to
less
than
$0.01
per
share.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
13
a
Year
Ended
August
31,
2020
2019
2018
2017
2016
Class
R
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$6.47
$7.53
$7.65
$6.73
$6.61
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.08
0.17
0.10
0.09
0.09
Net
realized
and
unrealized
gains
(losses)
...........
(0.24)
(1.07)
(0.12)
0.94
0.10
Total
from
investment
operations
....................
(0.16)
(0.90)
(0.02)
1.03
0.19
Less
distributions
from:
Net
investment
income
..........................
(0.23)
(0.16)
(0.10)
(0.11)
(0.07)
Net
realized
gains
.............................
—
—
—
—
(—)
c
Total
distributions
...............................
(0.23)
(0.16)
(0.10)
(0.11)
(0.07)
Net
asset
value,
end
of
year
.......................
$6.08
$6.47
$7.53
$7.65
$6.73
Total
return
....................................
(3.03)%
(11.96)%
(0.32)%
15.57%
3.10%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.44%
1.40%
1.41%
1.46%
1.47%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
1.35%
1.33%
1.36%
d
1.46%
d,e
1.47%
d,e
Net
investment
income
...........................
1.33%
2.44%
1.29%
1.30%
1.41%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$109,187
$127,546
$148,638
$153,516
$159,802
Portfolio
turnover
rate
............................
42.37%
30.81%
23.01%
42.56%
22.89%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Amount
rounds
to
less
than
$0.01
per
share.
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%.
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
14
a
Year
Ended
August
31,
2020
2019
2018
2017
2016
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$6.51
$7.58
$7.70
$6.78
$6.66
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.12
0.22
0.15
0.16
0.14
Net
realized
and
unrealized
gains
(losses)
...........
(0.24)
(1.08)
(0.12)
0.93
0.11
Total
from
investment
operations
....................
(0.12)
(0.86)
0.03
1.09
0.25
Less
distributions
from:
Net
investment
income
..........................
(0.27)
(0.21)
(0.15)
(0.17)
(0.13)
Net
realized
gains
.............................
—
—
—
—
(—)
c
Total
distributions
...............................
(0.27)
(0.21)
(0.15)
(0.17)
(0.13)
Net
asset
value,
end
of
year
.......................
$6.12
$6.51
$7.58
$7.70
$6.78
Total
return
....................................
(2.38)%
(11.34)%
0.24%
16.52%
3.92%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.79%
0.77%
0.73%
0.74%
0.72%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.70%
0.68%
0.68%
d
0.73%
d
0.72%
d,e
Net
investment
income
...........................
1.96%
3.09%
1.97%
2.03%
2.16%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$594,452
$906,474
$1,496,328
$1,757,902
$880,092
Portfolio
turnover
rate
............................
42.37%
f
30.81%
23.01%
42.56%
22.89%
f
Excludes
the
value
of
portfolio
securities
received
as
a
result
of
a
subscription
in-kind.
See
Note
11.
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Amount
rounds
to
less
than
$0.01
per
share.
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%.
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
15
a
Year
Ended
August
31,
2020
2019
2018
2017
2016
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$6.51
$7.58
$7.70
$6.78
$6.66
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.11
0.20
0.14
0.13
0.12
Net
realized
and
unrealized
gains
(losses)
...........
(0.24)
(1.07)
(0.12)
0.94
0.11
Total
from
investment
operations
....................
(0.13)
(0.87)
0.02
1.07
0.23
Less
distributions
from:
Net
investment
income
..........................
(0.26)
(0.20)
(0.14)
(0.15)
(0.11)
Net
realized
gains
.............................
—
—
—
—
(—)
c
Total
distributions
...............................
(0.26)
(0.20)
(0.14)
(0.15)
(0.11)
Net
asset
value,
end
of
year
.......................
$6.12
$6.51
$7.58
$7.70
$6.78
Total
return
....................................
(2.57)%
(11.53)%
0.16%
16.10%
3.65%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.94%
0.90%
0.91%
0.96%
0.97%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.85%
0.83%
0.86%
d
0.96%
d,e
0.97%
d,e
Net
investment
income
...........................
1.79%
2.94%
1.79%
1.80%
1.91%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$857,179
$857,482
$1,627,827
$1,717,937
$1,125,431
Portfolio
turnover
rate
............................
42.37%
30.81%
23.01%
42.56%
22.89%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Amount
rounds
to
less
than
$0.01
per
share.
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%.
Templeton
Funds
Statement
of
Investments,
August
31,
2020
Templeton
Foreign
Fund
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
16
a
a
Industry
Shares
a
Value
a
Common
Stocks
89.3%
Australia
0.4%
Downer
EDI
Ltd.
.................
Commercial
Services
&
Supplies
4,344,020
$
14,361,785
Belgium
0.5%
a
Galapagos
NV
..................
Biotechnology
135,550
18,197,897
a
Brazil
2.2%
Wheaton
Precious
Metals
Corp.
.....
Metals
&
Mining
1,387,641
74,128,123
Canada
0.7%
Husky
Energy,
Inc.
...............
Oil,
Gas
&
Consumable
Fuels
6,964,335
23,552,697
China
4.5%
a
Alibaba
Group
Holding
Ltd.
.........
Internet
&
Direct
Marketing
Retail
1,353,290
48,711,786
a
Baidu,
Inc.,
ADR
.................
Interactive
Media
&
Services
437,438
54,491,652
Sinopec
Engineering
Group
Co.
Ltd.,
H
Construction
&
Engineering
53,179,380
23,559,203
Sinopharm
Group
Co.
Ltd.,
H
.......
Health
Care
Providers
&
Services
10,403,069
25,544,254
152,306,895
Denmark
0.6%
AP
Moller
-
Maersk
A/S,
B
..........
Marine
13,658
20,927,466
France
4.4%
Cie
Generale
des
Etablissements
Michelin
SCA
..................
Auto
Components
478,220
54,160,702
a
Dassault
Aviation
SA
..............
Aerospace
&
Defense
29,680
26,883,247
Sanofi
.........................
Pharmaceuticals
662,306
67,081,328
148,125,277
Germany
8.0%
Bayer
AG
......................
Pharmaceuticals
1,611,842
107,202,416
Bayerische
Motoren
Werke
AG
......
Automobiles
679,583
48,968,421
b,c
Covestro
AG,
144A,
Reg
S
.........
Chemicals
645,759
30,784,648
E.ON
SE
.......................
Multi-Utilities
5,693,589
67,430,934
Siemens
AG
....................
Industrial
Conglomerates
121,128
16,783,473
271,169,892
Hong
Kong
4.9%
AIA
Group
Ltd.
..................
Insurance
6,377,332
65,334,639
CK
Asset
Holdings
Ltd.
............
Real
Estate
Management
&
Development
11,737,636
63,708,713
Swire
Pacific
Ltd.,
A
..............
Real
Estate
Management
&
Development
4,628,592
25,204,674
Value
Partners
Group
Ltd.
..........
Capital
Markets
22,084,479
10,111,777
164,359,803
India
1.7%
Housing
Development
Finance
Corp.
Ltd.
.........................
Thrifts
&
Mortgage
Finance
2,238,490
56,104,480
Japan
24.4%
Hitachi
Ltd.
.....................
Electronic
Equipment,
Instruments
&
Components
1,873,484
62,333,871
Honda
Motor
Co.
Ltd.
.............
Automobiles
1,442,535
36,728,643
Isuzu
Motors
Ltd.
................
Automobiles
5,596,186
55,300,118
Kirin
Holdings
Co.
Ltd.
............
Beverages
3,275,401
64,395,453
Komatsu
Ltd.
...................
Machinery
1,909,447
41,577,358
Matsumotokiyoshi
Holdings
Co.
Ltd.
..
Food
&
Staples
Retailing
1,477,124
51,776,422
Mitsui
Fudosan
Co.
Ltd.
...........
Real
Estate
Management
&
Development
2,714,683
49,113,287
Nippon
Television
Holdings,
Inc.
.....
Media
1,135,496
13,396,422
Seria
Co.
Ltd.
...................
Multiline
Retail
778,437
34,424,810
Sony
Corp.
.....................
Household
Durables
676,490
52,977,148
Sumitomo
Metal
Mining
Co.
Ltd.
.....
Metals
&
Mining
1,834,193
55,958,232
Templeton
Funds
Statement
of
Investments
Templeton
Foreign
Fund
(continued)
franklintempleton.com
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statements.
Annual
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17
a
a
Industry
Shares
a
Value
a
Common
Stocks
(continued)
Japan
(continued)
Sumitomo
Mitsui
Financial
Group,
Inc.
.
Banks
1,817,763
$
53,456,699
Sundrug
Co.
Ltd.
.................
Food
&
Staples
Retailing
1,543,699
57,452,704
Takeda
Pharmaceutical
Co.
Ltd.
.....
Pharmaceuticals
3,119,640
116,333,675
Tokyo
Broadcasting
System
Holdings,
Inc.
.........................
Media
1,244,108
21,489,254
Topcon
Corp.
...................
Electronic
Equipment,
Instruments
&
Components
253,200
2,035,705
Tosoh
Corp.
....................
Chemicals
1,668,581
24,687,299
Toyota
Industries
Corp.
............
Auto
Components
542,036
31,488,670
824,925,770
Luxembourg
1.4%
a
ArcelorMittal
SA
.................
Metals
&
Mining
3,864,382
48,676,474
a
Netherlands
7.3%
EXOR
NV
......................
Diversified
Financial
Services
305,979
18,045,390
b,c
Flow
Traders,
144A,
Reg
S
.........
Capital
Markets
891,815
35,118,693
a
ING
Groep
NV
..................
Banks
5,940,645
48,485,914
NXP
Semiconductors
NV
..........
Semiconductors
&
Semiconductor
Equipment
640,168
80,507,528
SBM
Offshore
NV
................
Energy
Equipment
&
Services
3,753,945
64,774,033
246,931,558
Norway
1.8%
Equinor
ASA
....................
Oil,
Gas
&
Consumable
Fuels
3,695,145
59,788,977
Portugal
1.0%
Galp
Energia
SGPS
SA,
B
.........
Oil,
Gas
&
Consumable
Fuels
3,282,907
35,250,897
South
Korea
6.5%
KB
Financial
Group,
Inc.
...........
Banks
2,449,027
76,005,946
Samsung
Electronics
Co.
Ltd.
.......
Technology
Hardware,
Storage
&
Peripherals
2,467,300
112,065,026
Shinhan
Financial
Group
Co.
Ltd.
....
Banks
1,246,900
31,043,583
219,114,555
Spain
0.2%
a
Tecnicas
Reunidas
SA
............
Energy
Equipment
&
Services
460,913
5,887,043
a
Switzerland
2.0%
Roche
Holding
AG
...............
Pharmaceuticals
193,404
67,652,659
Taiwan
3.0%
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.
......................
Semiconductors
&
Semiconductor
Equipment
6,886,510
100,239,915
Thailand
0.7%
Kasikornbank
PCL
...............
Banks
8,155,140
22,204,837
United
Kingdom
9.3%
BAE
Systems
plc
................
Aerospace
&
Defense
6,452,250
44,786,998
BP
plc
.........................
Oil,
Gas
&
Consumable
Fuels
14,233,472
49,651,877
CK
Hutchison
Holdings
Ltd.
.........
Industrial
Conglomerates
11,680,836
76,394,783
Imperial
Brands
plc
...............
Tobacco
3,181,295
53,072,843
a
Standard
Chartered
plc
............
Banks
11,407,711
59,444,663
Vodafone
Group
plc
..............
Wireless
Telecommunication
Services
21,216,149
31,104,553
314,455,717
United
States
3.8%
Avnet,
Inc.
.....................
Electronic
Equipment,
Instruments
&
Components
979,770
26,953,473
a
Berkshire
Hathaway,
Inc.,
B
.........
Diversified
Financial
Services
402,541
87,770,040
Templeton
Funds
Statement
of
Investments
Templeton
Foreign
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
18
See
Abbreviations
on
page
32.
a
a
Industry
Shares
a
Value
a
Common
Stocks
(continued)
United
States
(continued)
a
Booking
Holdings,
Inc.
............
Internet
&
Direct
Marketing
Retail
7,527
$
14,379,957
ManpowerGroup
,
Inc.
.............
Professional
Services
4,656
341,331
129,444,801
Total
Common
Stocks
(Cost
$2,921,287,386)
....................................
3,017,807,518
Short
Term
Investments
4.8%
a
a
Principal
Amount
*
a
Value
a
a
a
a
a
a
Time
Deposits
4.8%
Canada
2.0%
National
Bank
of
Canada,
0.05%,
9/01/20
......................
8,000,000
8,000,000
Royal
Bank
of
Canada,
0.06%,
9/01/20
60,000,000
60,000,000
France
2.8%
BNP
Paribas
SA,
0.07%,
9/01/20
.....
95,000,000
95,000,000
Total
Time
Deposits
(Cost
$163,000,000)
.......................................
163,000,000
a
a
a
a
a
Total
Short
Term
Investments
(Cost
$163,000,000
)
...............................
163,000,000
a
a
a
a
Total
Investments
(Cost
$3,084,287,386)
94.1%
..................................
$3,180,807,518
Other
Assets,
less
Liabilities
5.9%
.............................................
200,469,513
Net
Assets
100.0%
...........................................................
$3,381,277,031
a
a
a
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
a
Non-income
producing.
b
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
$65,903,341,
representing
1.9%
of
net
assets.
c
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
aggregate
value
of
these
securities
was
$65,903,341,
representing
1.9%
of
net
assets.
Templeton
Funds
Financial
Statements
Statement
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Assets
and
Liabilities
August
31,
2020
franklintempleton.com
The
accompanying
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integral
part
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these
financial
statements.
Annual
Report
19
Templeton
Foreign
Fund
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
...................................................................
$3,084,287,386
Value
-
Unaffiliated
issuers
..................................................................
$3,180,807,518
Cash
....................................................................................
430,311
Foreign
currency,
at
value
(cost
$
183,275,803
)
.....................................................
186,725,272
Receivables:
Investment
securities
sold
...................................................................
2,239,176
Capital
shares
sold
........................................................................
9,155,497
Dividends
and
interest
.....................................................................
14,664,497
European
Union
tax
reclaims
................................................................
6,212,213
Other
assets
..............................................................................
2,352
Total
assets
..........................................................................
3,400,236,836
Liabilities:
Payables:
Investment
securities
purchased
..............................................................
1,168,874
Capital
shares
redeemed
...................................................................
14,301,550
Management
fees
.........................................................................
1,851,126
Distribution
fees
..........................................................................
467,020
Transfer
agent
fees
........................................................................
67,316
Deferred
tax
...............................................................................
448,926
Accrued
expenses
and
other
liabilities
...........................................................
654,993
Total
liabilities
.........................................................................
18,959,805
Net
assets,
at
value
.................................................................
$3,381,277,031
Net
assets
consist
of:
Paid-in
capital
.............................................................................
$4,100,634,560
Total
distributable
earnings
(losses)
.............................................................
(719,357,529)
Net
assets,
at
value
.................................................................
$3,381,277,031
Templeton
Funds
Financial
Statements
Statement
of
Assets
and
Liabilities
(continued)
August
31,
2020
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
20
Templeton
Foreign
Fund
Class
A:
Net
assets,
at
value
.......................................................................
$1,766,365,273
Shares
outstanding
........................................................................
283,895,991
Net
asset
value
per
share
a
..................................................................
$6.22
Maximum
offering
price
per
share
(net
asset
value
per
share
÷
94
.50
%
)
................................
$6.58
Class
C:
Net
assets,
at
value
.......................................................................
$54,093,173
Shares
outstanding
........................................................................
8,773,760
Net
asset
value
and
maximum
offering
price
per
share
a
.............................................
$6.17
Class
R:
Net
assets,
at
value
.......................................................................
$109,187,371
Shares
outstanding
........................................................................
17,951,625
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$6.08
Class
R6:
Net
assets,
at
value
.......................................................................
$594,452,481
Shares
outstanding
........................................................................
97,157,098
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$6.12
Advisor
Class:
Net
assets,
at
value
.......................................................................
$857,178,733
Shares
outstanding
........................................................................
139,959,919
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$6.12
a
Redemption
price
is
equal
to
net
asset
value
less
contingent
deferred
sales
charges,
if
applicable.
Templeton
Funds
Financial
Statements
Statement
of
Operations
for
the
year
ended
August
31,
2020
franklintempleton.com
The
accompanying
notes
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an
integral
part
of
these
financial
statements.
Annual
Report
21
Templeton
Foreign
Fund
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$12,102,917)
Unaffiliated
issuers
........................................................................
$100,162,167
Interest:
Unaffiliated
issuers
........................................................................
1,572,180
Income
from
securities
loaned:
Unaffiliated
entities
(net
of
fees
and
rebates)
.....................................................
11,001
Non-controlled
affiliates
(Note
3
f
)
.............................................................
682
Total
investment
income
...................................................................
101,746,030
Expenses:
Management
fees
(Note
3
a
)
...................................................................
26,519,456
Distribution
fees:
(Note
3c
)
Class
A
................................................................................
5,370,403
Class
C
................................................................................
700,261
Class
R
................................................................................
589,639
Transfer
agent
fees:
(Note
3e
)
Class
A
................................................................................
4,232,390
Class
C
................................................................................
136,998
Class
R
................................................................................
233,046
Class
R6
...............................................................................
424,881
Advisor
Class
............................................................................
1,401,348
Custodian
fees
(Note
4
)
......................................................................
534,639
Reports
to
shareholders
......................................................................
590,137
Registration
and
filing
fees
....................................................................
121,195
Professional
fees
...........................................................................
165,369
Trustees'
fees
and
expenses
..................................................................
221,872
Other
....................................................................................
70,007
Total
expenses
.........................................................................
41,311,641
Expenses
waived/paid
by
affiliates
(Note
3
f
and
3
g
)
..............................................
(3,404,032)
Net
expenses
.........................................................................
37,907,609
Net
investment
income
................................................................
63,838,421
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
......................................................................
(492,630,222)
Written
options
...........................................................................
920,265
Foreign
currency
transactions
................................................................
(7,976,604)
Net
realized
gain
(loss)
..................................................................
(499,686,561)
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
......................................................................
349,061,887
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
..............................
4,999,700
Change
in
deferred
taxes
on
unrealized
appreciation
...............................................
(448,926)
Net
change
in
unrealized
appreciation
(depreciation)
............................................
353,612,661
Net
realized
and
unrealized
gain
(loss)
............................................................
(146,073,900)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
..........................................
$(82,235,479)
Templeton
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
22
Templeton
Foreign
Fund
Year
Ended
August
31,
2020
Year
Ended
August
31,
2019
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
.................................................
$63,838,421
$155,694,905
Net
realized
gain
(loss)
.................................................
(499,686,561)
(43,002,011)
Net
change
in
unrealized
appreciation
(depreciation)
...........................
353,612,661
(771,601,065)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
................
(82,235,479)
(658,908,171)
Distributions
to
shareholders:
Class
A
.............................................................
(79,858,470)
(68,150,133)
Class
C
.............................................................
(1,948,865)
(366,884)
Class
R
.............................................................
(4,201,944)
(3,143,046)
Class
R6
............................................................
(35,631,273)
(42,923,315)
Advisor
Class
........................................................
(28,374,973)
(34,608,197)
Total
distributions
to
shareholders
..........................................
(150,015,525)
(149,191,575)
Capital
share
transactions:
(Note
2
)
Class
A
.............................................................
(507,216,275)
(130,959,980)
Class
C
.............................................................
(29,035,746)
(173,447,242)
Class
R
.............................................................
(11,200,337)
(443,226)
Class
R6
............................................................
(247,767,572)
(407,314,077)
Advisor
Class
........................................................
34,825,853
(589,427,189)
Total
capital
share
transactions
............................................
(760,394,077)
(1,301,591,714)
Net
increase
(decrease)
in
net
assets
...................................
(992,645,081)
(2,109,691,460)
Net
assets:
Beginning
of
year
.......................................................
4,373,922,112
6,483,613,572
End
of
year
...........................................................
$3,381,277,031
$4,373,922,112
Templeton
Funds
23
franklintempleton.com
Annual
Report
Notes
to
Financial
Statements
Templeton
Foreign
Fund
1.
Organization
and
Significant
Accounting
Policies
Templeton
Funds (Trust)
is
registered
under
the
Investment
Company
Act
of
1940
(1940
Act)
as
an
open-end
management
investment
company,
consisting
of three separate
funds
and
applies
the
specialized
accounting
and
reporting
guidance
in
U.S.
Generally
Accepted
Accounting
Principles
(U.S.
GAAP).
Templeton
Foreign
Fund
(Fund)
is
included
in
this
report.
The
Fund
offers five
classes
of
shares:
Class
A,
Class
C,
Class
R,
Class
R6
and
Advisor
Class. Class
C
shares
automatically
convert
to
Class
A
shares
after
they
have
been
held
for
10
years.
Each
class
of
shares
may
differ
by
its
initial
sales
load,
contingent
deferred
sales
charges,
voting
rights
on
matters
affecting
a
single
class,
its
exchange
privilege
and
fees
due
to
differing
arrangements
for
distribution
and
transfer
agent
fees.
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.
Under
compliance
policies
and
procedures
approved
by
the
Trust’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. 
Investments
in
open-end
mutual
funds
are
valued
at
the
closing
NAV.
Investments
in
time
deposits
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
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
Templeton
Funds
Notes
to
Financial
Statements
24
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
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.
Derivative
Financial
Instruments
The
Fund invested
in
derivative
financial
instruments
in
order
to
manage
risk
or
gain
exposure
to
various
other
investments
or
markets.
Derivatives
are
financial
contracts
based
on
an
underlying
or
notional
amount,
require
no
initial
investment
or
an
initial
net
investment
that
is
smaller
than
would
normally
be
required
to
have
a
similar
response
to
changes
in
market
factors,
and
require
or
permit
net
settlement.
Derivatives
contain
various
risks
including
the
potential
inability
of
the
counterparty
to
fulfill
their
obligations
under
the
terms
of
the
contract,
the
potential
for
an
illiquid
secondary
market,
and/or
the
potential
for
market
movements
which
expose
the
Fund
to
gains
or
losses
in
excess
of
the
amounts
shown
in
the
Statement
of
Assets
and
Liabilities.
Realized
gain
and
loss
and
unrealized
appreciation
and
depreciation
on
these
contracts
for
the
period
are
included
in
the
Statement
of
Operations.
The
Fund
purchased
or
wrote
exchange
traded
option
contracts
primarily
to
manage
and/or
gain
exposure
to
equity
price
risk.
An
option
is
a
contract
entitling
the
holder
to
purchase
or
sell
a
specific
amount
of
shares
or
units
of
an
asset
or
notional
amount
of
a
swap
(swaption),
at
a
specified
price.
When
an
option
is
purchased
or
written,
an
amount
equal
to
the
premium
paid
or
received
is
recorded
as
an
asset
or
liability,
respectively.
Upon
exercise
of
an
option,
the
acquisition
cost
or
sales
proceeds
of
the
underlying
investment
is
adjusted
by
any
premium
received
or
paid.
Upon
expiration
of
an
option,
any
premium
received
or
paid
is
recorded
as
a
realized
gain
or
loss.
Upon
closing
an
option
other
than
through
expiration
or
exercise,
the
difference
between
the
premium
received
or
paid
and
the
cost
to
close
the
position
is
recorded
as
a
realized
gain
or
loss.
See
Note
9 regarding
other
derivative
information.
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
security
values
is
delivered
to
the
Fund
on
the
next
business
day.
Any
cash
collateral
received
is
deposited
into
a
joint
1.
Organization
and
Significant
Accounting
Policies
(continued)
a.
Financial
Instrument
Valuation 
(continued)
Templeton
Funds
Notes
to
Financial
Statements
25
franklintempleton.com
Annual
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Templeton
Foreign
Fund
(continued)
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.
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.
At
August
31,
2020,
the Fund
had
no
securities
on
loan.
e.
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.
As
a
result
of
several
court
cases,
in
certain
countries
across
the
European
Union, the
Fund
filed
additional
tax
reclaims
for
previously
withheld
taxes
on
dividends
earned
in
those
countries
(EU
reclaims).
These
additional
filings
are
subject
to
various
administrative
proceedings
by
the
local
jurisdictions’
tax
authorities
within
the
European
Union,
as
well
as
a
number
of
related
judicial
proceedings.
Income
recognized,
if
any,
for
EU
reclaims
is
reflected
as
other
income
in
the
Statement
of
Operations
and
any
related
receivable,
if
any,
is
reflected
as
European
Union
tax
reclaims
in
the
Statement
of
Assets
and
Liabilities.
When
uncertainty
exists
as
to
the
ultimate
resolution
of
these
proceedings,
the
likelihood
of
receipt
of
these
EU
reclaims,
and
the
potential
timing
of
payment,
no
amounts
are
reflected
in
the
financial
statements.
For
U.S.
income
tax
purposes,
EU
reclaims
received
by
the
Fund,
if
any,
reduce
the
amounts
of
foreign
taxes
Fund
shareholders
can
use
as
tax
credits
in
their
individual
income
tax
returns.
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. 
f.
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.
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.
Common
expenses
incurred
by
the
Trust
are
allocated
among
the
Funds
based
on
the
ratio
of
net
assets
of
each
Fund
to
the
combined
net
assets
of
the
Trust
or
based
on
the
ratio
of
number
of
shareholders
of
each
Fund
to
the
1.
Organization
and
Significant
Accounting
Policies
(continued)
d.
Securities
Lending
(continued)
Templeton
Funds
Notes
to
Financial
Statements
26
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
combined
number
of
shareholders
of
the
Trust.
Fund
specific
expenses
are
charged
directly
to
the
Fund
that
incurred
the
expense.
Realized
and
unrealized
gains
and
losses
and
net
investment
income,
excluding
class
specific
expenses,
are
allocated
daily
to
each
class
of
shares
based
upon
the
relative
proportion
of
net
assets
of
each
class.
Differences
in
per
share
distributions
by
class
are
generally
due
to
differences
in
class
specific
expenses.
g.
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.
h.
Guarantees
and
Indemnifications
Under
the
Trust's
organizational
documents,
its
officers
and
trustees
are
indemnified
by
the
Trust
against
certain
liabilities
arising
out
of
the
performance
of
their
duties
to
the
Trust.
Additionally,
in
the
normal
course
of
business,
the
Trust,
on
behalf
of
the
Fund,
enters
into
contracts
with
service
providers
that
contain
general
indemnification
clauses.
The
Trust’s
maximum
exposure
under
these
arrangements
is
unknown
as
this
would
involve
future
claims
that
may
be
made
against
the
Trust
that
have
not
yet
occurred.
Currently,
the
Trust
expects
the
risk
of
loss
to
be
remote.
2.
Shares
of
Beneficial
Interest
At
August
31,
2020,
there
were
an
unlimited
number
of
shares
authorized
(without
par
value).
Transactions
in
the
Fund’s
shares
were
as
follows:
Year
Ended
August
31,
2020
2019
Shares
Amount
Shares
Amount
Class
A
Shares:
Shares
sold
a
...................................
69,357,092
$423,459,874
60,076,607
$431,602,364
Shares
issued
in
reinvestment
of
distributions
..........
10,008,404
72,260,672
9,160,942
60,462,214
Shares
redeemed
...............................
(157,643,462)
(1,002,936,821)
(87,887,100)
(623,024,558)
Net
increase
(decrease)
..........................
(78,277,966)
$(507,216,275)
(18,649,551)
$(130,959,980)
Class
C
Shares:
Shares
sold
...................................
1,009,042
6,191,651
1,767,261
12,393,197
Shares
issued
in
reinvestment
of
distributions
..........
254,680
1,833,698
53,121
349,007
Shares
redeemed
a
..............................
(5,809,614)
(37,061,095)
(26,108,139)
(186,189,446)
Net
increase
(decrease)
..........................
(4,545,892)
$(29,035,746)
(24,287,757)
$(173,447,242)
Class
R
Shares:
Shares
sold
...................................
3,392,420
20,676,976
4,996,574
34,848,635
Shares
issued
in
reinvestment
of
distributions
..........
582,573
4,118,799
456,753
2,955,188
Shares
redeemed
...............................
(5,730,365)
(35,996,112)
(5,4
85,518)
(38,247,049)
Net
increase
(decrease)
..........................
(1,755,372)
$(11,200,337)
(32,191)
$(443,226)
1.
Organization
and
Significant
Accounting
Policies
(continued)
f.
Security
Transactions,
Investment
Income,
Expenses
and
Distributions
(continued)
Templeton
Funds
Notes
to
Financial
Statements
27
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
3.
Transactions
with
Affiliates
Franklin
Resources,
Inc.
is
the
holding
company
for
various
subsidiaries
that
together
are
referred
to
as
Franklin
Templeton.
Certain
officers
and
trustees
of
the
Trust
are
also
officers
and/or
directors
of
the
following
subsidiaries:
a.
Management
Fees
The
Fund
pays
an
investment
management
fee
to
Global
Advisors
based
on
the
average
daily
net
assets
of
the
Fund
as
follows:
For
the
year
ended
August
31,
2020,
the
gross
effective
investment
management
fee
rate
was
0.695%
of
the
Fund’s
average
daily
net
assets. 
Year
Ended
August
31,
2020
2019
Shares
Amount
Shares
Amount
Class
R6
Shares:
Shares
sold
...................................
26,657,151
166,908,516
51,021,196
358,593,724
Shares
sold
in-ki
nd
(Note
11)
......................
4,415,123
25,960,926
—
—
Shares
issued
in
reinvestment
of
distributions
..........
4,730,244
33,490,128
6,213,456
40,263,197
Shares
redeemed
...............................
(77,893,716)
(474,127,142)
(115,369,383)
(806,170,998)
Net
increase
(decrease)
..........................
(42,091,198)
$(247,767,572)
(58,134,731)
$(407,314,077)
Advisor
Class
Shares:
Shares
sold
...................................
73,215,449
446,263,258
54,889,039
383,794,530
Shares
issued
in
reinvestment
of
distributions
..........
3,669,165
26,051,069
4,889,130
31,730,455
Shares
redeemed
...............................
(68,556,435)
(437,488,474)
(142,845,936)
(1,004,952,174)
Net
increase
(decrease)
..........................
8,328,179
$34,825,853
(83,067,767)
$(589,427,189)
a
May
include
a
portion
of
Class
C
shares
that
were
automatically
converted
to
Class
A.
Subsidiary
Affiliation
Templeton
Global
Advisors
Limited
(Global
Advisors)
Investment
manager
Franklin
Templeton
Services,
LLC
(FT
Services)
Administrative
manager
Franklin
Templeton
Distributors,
Inc.
(Distributors)
Principal
underwriter
Franklin
Templeton
Investor
Services,
LLC
(Investor
Services)
Transfer
agent
Annualized
Fee
Rate
Net
Assets
0.705%
Up
to
and
including
$1
billion
0.690%
Over
$1
billion,
up
to
and
including
$5
billion
0.675%
Over
$5
billion,
up
to
and
including
$10
billion
0.655%
Over
$10
billion,
up
to
and
including
$15
billion
0.635%
Over
$15
billion,
up
to
and
including
$20
billion
0.615%
Over
$20
billion,
up
to
and
including
$25
billion
0.605%
Over
$25
billion,
up
to
and
including
$30
billion
0.595%
Over
$30
billion,
up
to
and
including
$35
billion
0.585%
In
excess
of
$35
billion
2.
Shares
of
Beneficial
Interest
(continued)
Templeton
Funds
Notes
to
Financial
Statements
28
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
b.
Administrative
Fees
Under
an
agreement
with
Global
Advisors,
FT
Services
provides
administrative
services
to
the
Fund.
The
fee
is
paid
by
Global
Advisors
based
on
the
Fund’s
average
daily
net
assets,
and
is
not
an
additional
expense
of
the
Fund.
c.
Distribution
Fees
The
Board
has
adopted
distribution
plans
for
each
share
class,
with
the
exception
of
Class
R6
and
Advisor
Class
shares,
pursuant
to
Rule
12b-1
under
the
1940
Act.
Under
the
Fund’s
Class A reimbursement
distribution
plan,
the
Fund
reimburses
Distributors
for
costs
incurred
in
connection
with
the
servicing,
sale
and
distribution
of
the
Fund's
shares
up
to
the
maximum
annual
plan
rate.
Under
the
Class
A
reimbursement
distribution
plan,
costs
exceeding
the
maximum
for
the
current
plan
year
cannot
be
reimbursed
in
subsequent
periods.
In
addition,
under
the
Fund’s
Class C
and
R
compensation
distribution
plans,
the
Fund
pays
Distributors
for
costs
incurred
in
connection
with
the
servicing,
sale
and
distribution
of
the
Fund's
shares
up
to
the
maximum
annual
plan
rate
for
each
class.
The
plan
year,
for
purposes
of
monitoring
compliance
with
the
maximum
annual
plan
rates,
is
February
1
through
January
31.
 The
maximum
annual
plan
rates,
based
on
the
average
daily
net
assets,
for
each
class,
are
as
follows:
d.
Sales
Charges/Underwriting
Agreements
Front-end
sales
charges
and
contingent
deferred
sales
charges
(CDSC)
do
not
represent
expenses
of
the
Fund.
These
charges
are
deducted
from
the
proceeds
of
sales
of
Fund
shares
prior
to
investment
or
from
redemption
proceeds
prior
to
remittance,
as
applicable.
Distributors
has
advised
the
Fund
of
the
following
commission
transactions
related
to
the
sales
and
redemptions
of
the
Fund's
shares
for
the
year:
e.
Transfer
Agent
Fees
Each
class
of
shares pays
transfer
agent
fees
to
Investor
Services
for
its
performance
of
shareholder
servicing
obligations.
The
fees
are
based
on
an
annualized
asset
based
fee
of
0.02%
plus
a
transaction
based
fee.
In
addition,
each
class reimburses
Investor
Services
for
out
of
pocket
expenses
incurred
and,
except
for
Class
R6,
reimburses
shareholder
servicing
fees
paid
to
third
parties.
These
fees
are
allocated
daily
based
upon
their
relative
proportion
of
such
classes'
aggregate
net
assets.
Class
R6
pays
Investor
Services
transfer
agent
fees
specific
to
that
class.
For
the
year
ended
August
31,
2020,
the
Fund
paid
transfer
agent
fees
of
$6,428,663,
of
which
$2,176,458
was
retained
by
Investor
Services.
f.
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:
Class
A
....................................................................................
0.25%
Class
C
....................................................................................
1.00%
Class
R
....................................................................................
0.50%
Sales
charges
retained
net
of
commissions
paid
to
unaffiliated
brokers/dealers
..............................
$123,309
CDSC
retained
..............................................................................
$10,979
3.
Transactions
with
Affiliates
(continued)
Templeton
Funds
Notes
to
Financial
Statements
29
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
g.
Waiver
and
Expense
Reimbursements
Global
Advisors
and
Investor
Services
have
contractually
agreed
in
advance
to
waive
or
limit
their
respective
fees
and
to
assume
as
their
own
expense
certain
expenses
otherwise
payable
by
the
Fund
so
that
the
operating
expenses
(excluding
distribution
fees,
acquired
fund
fees
and
expenses,
and
certain
non-routine
expenses
or
costs,
including
those
relating
to
litigation,
indemnification,
reorganizations,
and
liquidations)
for
Class
A,
Class
C,
Class
R
and
Advisor
Class
of
the
Fund
do
not
exceed
0.85%,
and
for
Class
R6
do
not
exceed
0.70%,
based
on
the
average
net
assets
of
each
class
until
December
31,
2020.
Total
expenses
waived
or
paid
are
not
subject
to
recapture
subsequent
to
the
Fund's
fiscal
year
end.
Prior
to
January
1,
2020,
expenses
(excluding
certain
fees
and
expenses
as
previously
disclosed)
for
Class
R6
were
limited
to
0.69%
based
on
the
average
net
assets
of
the
class.
4.
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,
there
were
no
credit
earned. 
5.
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:
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
Templeton
Foreign
Fund
Non-Controlled
Affiliates
Income
from
securities
loaned
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0%
.........
$—
$19,455,097
$(19,455,097)
$
—
$
—
$
—
—
$
682
Total
Affiliated
Securities
....
$—
$19,455,097
$(19,455,097)
$—
$—
$—
$682
Capital
loss
carryforwards
not
subject
to
expiration:
Short
term
................................................................................
$58,793,713
Long
term
................................................................................
739,809,912
Total
capital
loss
carryforwards
...............................................................
$798,603,625
2020
2019
Distributions
paid
from:
Ordinary
income
..........................................................
$150,015,525
$149,191,575
3.
Transactions
with
Affiliates
(continued)
f.
Investments
in
Affiliated
Management
Investment
Companies
(continued)
Templeton
Funds
Notes
to
Financial
Statements
30
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
At
August
31,
2020,
the
cost
of
investments,
net
unrealized
appreciation
(depreciation)
and
undistributed
ordinary
income
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
of
EU
reclaims,
wash
sales
and
passive
foreign
investment
company
shares.
6.
Investment
Transactions
Purchases
and
sales
of
investments
(excluding
short
term
securities
and
in-kind
transactions)
for
the
year
ended
August
31,
2020,
aggregated
$1,474,124,043
and
$2,455,646,636,
respectively.
7.
Concentration
of
Risk
Investing
in
foreign
securities
may
include
certain
risks
and
considerations
not
typically
associated
with
investing
in
U.S.
securities,
such
as
fluctuating
currency
values
and
changing
local,
regional
and
global
economic,
political
and
social
conditions,
which
may
result
in
greater
market
volatility.
Current
political
and
financial
uncertainty
surrounding
the
European
Union
may
increase
market
volatility
and
the
economic
risk
of
investing
in
securities
in
Europe.
In
addition,
certain
foreign
securities
may
not
be
as
liquid
as
U.S.
securities.
8. 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.
9.
Other
Derivative
Information
For
the
year
ended
August
31,
2020,
the
effect
of
derivative
contracts
in
the
Statement
of
Operations
was
as
follows: 
Cost
of
investments
..........................................................................
$3,145,816,523
Unrealized
appreciation
........................................................................
$491,469,429
Unrealized
depreciation
........................................................................
(456,478,434)
Net
unrealized
appreciation
(depreciation)
..........................................................
$34,990,995
Distributable
earnings:
Undistributed
ordinary
income
...................................................................
$34,368,627
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Operations
Location
Net
Realized
Gain
(Loss)
for
the
Year
Statement
of
Operations
Location
Net
Change
in
Unrealized
Appreciation
(Depreciation)
for
the
Year
Net
realized
gain
(loss)
from:
Net
change
in
unrealized
  appreciation
(depreciation)
on:
Templeton
Foreign
Fund
Equity
Contracts
...........
Written
options
$920,265
Written
options
$—
5.
Income
Taxes
(continued)
Templeton
Funds
Notes
to
Financial
Statements
31
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
For
the
year
ended
August
31,
2020,
the
average
month
end
notional
amount
of
options
contracts
represented
35,403
shares.
See
Note
1(c)
regarding
derivative
financial
instruments.
10.
Credit
Facility
The
Fund,
together
with
other
U.S.
registered
and
foreign
investment
funds
(collectively,
Borrowers),
managed
by
Franklin
Templeton,
are
borrowers
in
a
joint
syndicated
senior
unsecured
credit
facility
totaling
$2
billion
(Global
Credit
Facility)
which
matures
on
February
5,
2021.
This
Global
Credit
Facility
provides
a
source
of
funds
to
the
Borrowers
for
temporary
and
emergency
purposes,
including
the
ability
to
meet
future
unanticipated
or
unusually
large
redemption
requests.
Under
the
terms
of
the
Global
Credit
Facility,
the
Fund
shall,
in
addition
to
interest
charged
on
any
borrowings
made
by
the
Fund
and
other
costs
incurred
by
the Fund,
pay
its
share
of
fees
and
expenses
incurred
in
connection
with
the
implementation
and
maintenance
of
the
Global
Credit
Facility,
based
upon
its
relative
share
of
the
aggregate
net
assets
of
all
of
the
Borrowers,
including
an
annual
commitment
fee
of
0.15%
based
upon
the
unused
portion
of
the
Global
Credit
Facility.
These
fees
are
reflected
in
other
expenses
in
the
Statement
of
Operations.
During
the
year
ended
August
31,
2020,
the Fund
did
not
use
the
Global
Credit
Facility.
11.
Subscription
In-Kind
On
June
19,
2020,
certain
shareholders
purchased
Class
R6
shares
of
Templeton
Foreign
Fund.
The
portfolio
securities
were
received
primarily
by
means
of
a
subscription
in-kind
in
exchange
for
shares
of
the
Fund.
Portfolio
securities
were
transferred
as
detailed
below: 
*This
amount
includes
cash
of
$6,339,296
associated
with
the
subscription
in-kind. 
12.
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)
Value
Type
$25,960,926*
Subscription
in-kind
9.
Other
Derivative
Information
(continued)
Templeton
Funds
Notes
to
Financial
Statements
32
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
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
carried
at
fair
value,
is
as
follows:
13.
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. 
14.
Subsequent
Events
The
Fund
has
evaluated
subsequent
events
through
the
issuance
of
the financial
statements
and
determined
that
no
events
have
occurred
that
require
disclosure.
Abbreviations
Level
1
Level
2
Level
3
Total
Templeton
Foreign
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Australia
.............................
$
—
$
14,361,785
$
—
$
14,361,785
Belgium
.............................
—
18,197,897
—
18,197,897
Brazil
...............................
74,128,123
—
—
74,128,123
Canada
.............................
23,552,697
—
—
23,552,697
China
...............................
54,491,652
97,815,243
—
152,306,895
Denmark
............................
—
20,927,466
—
20,927,466
France
..............................
—
148,125,277
—
148,125,277
Germany
............................
—
271,169,892
—
271,169,892
Hong
Kong
...........................
—
164,359,803
—
164,359,803
India
................................
—
56,104,480
—
56,104,480
Japan
...............................
—
824,925,770
—
824,925,770
Luxembourg
..........................
—
48,676,474
—
48,676,474
Netherlands
..........................
115,626,221
131,305,337
—
246,931,558
Norway
..............................
—
59,788,977
—
59,788,977
Portugal
.............................
—
35,250,897
—
35,250,897
South
Korea
..........................
—
219,114,555
—
219,114,555
Spain
...............................
—
5,887,043
—
5,887,043
Switzerland
...........................
—
67,652,659
—
67,652,659
Taiwan
..............................
—
100,239,915
—
100,239,915
Thailand
.............................
—
22,204,837
—
22,204,837
United
Kingdom
.......................
—
314,455,717
—
314,455,717
United
States
.........................
129,444,801
—
—
129,444,801
Short
Term
Investments
...................
—
163,000,000
—
163,000,000
Total
Investments
in
Securities
...........
$397,243,494
$2,783,564,024
$—
$3,180,807,518
Selected
Portfolio
ADR
American
Depositary
Receipt
12.
Fair
Value
Measurements
(continued)
Templeton
Funds
Report
of
Independent
Registered
Public
Accounting
Firm
33
franklintempleton.com
Annual
Report
To
the
Board
of
Trustees
of
Templeton
Funds
and
Shareholders
of
Templeton
Foreign
Fund
Opinion
on
the
Financial
Statements
We
have
audited
the
accompanying
statement
of
assets
and
liabilities,
including
the
statement
of
investments,
of
Templeton
Foreign
Fund
(one
of
the
funds
constituting
Templeton
Funds,
referred
to
hereafter
as
the
“Fund”)
as
of
August
31,
2020,
the
related
statement
of
operations
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
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
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
19,
2020
We
have
served
as
the
auditor
of
one
or
more
investment
companies
in
the
Franklin
Templeton
Group
of
Funds
since
1948.
Templeton
Funds
Tax
Information
(unaudited)
34
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
Under
Section
854(b)(1)(B)
of
the
Internal
Revenue
Code,
the
Fund
hereby
reports
the
maximum
amount
allowable
but
no
less
than
$74,791,048
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.
At
August
31,
2020,
more
than
50%
of
the
Fund's
total
assets
were
invested
in
securities
of
foreign
issuers.
In
most
instances,
foreign
taxes
were
withheld
from
income
paid
to
the
Fund
on
these
investments.
The
Fund
elects
to
treat
foreign
taxes
paid
as
allowed
under
Section
853
of
the
Internal
Revenue
Code.
This
election
will
allow
shareholders
of
record
as
of
the
2020
distribution
date,
to
treat
their
proportionate
share
of
foreign
taxes
paid
by
the
Fund
as
having
been
paid
directly
by
them.
The
shareholder
shall
consider
these
amounts
as
foreign
taxes
paid
in
the
tax
year
in
which
they
receive
the
Fund
distribution.
Templeton
Funds
Board
Members
and
Officers
35
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
1992
126
Bar-S
Foods
(meat
packing
company)
(1981-2010).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
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).
Ann
Torre
Bates
(1958)
Trustee
Since
2008
30
Ares
Capital
Corporation
(specialty
finance
company)
(2010-present),
United
Natural
Foods,
Inc.
(distributor
of
natural,
organic
and
specialty
foods)
(2013-present),
formerly
,
Allied
Capital
Corporation
(financial
services)
(2003-
2010),
SLM
Corporation
(Sallie
Mae)
(1997-2014)
and
Navient
Corporation
(loan
management,
servicing
and
asset
recovery)
(2014-2016).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Executive
Vice
President
and
Chief
Financial
Officer,
NHP
Incorporated
(manager
of
multifamily
housing)
(1995-1997);
and
Vice
President
and
Treasurer,
US
Airways,
Inc.
(until
1995).
Mary
C.
Choksi
(1950)
Trustee
Since
2016
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).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
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).
Templeton
Funds
36
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
2003
and
Lead
Independent
Trustee
since
2007
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).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
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).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
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).
David
W.
Niemiec
(1949)
Trustee
Since
2005
30
Hess
Midstream
LP
(oil
and
gas
midstream
infrastructure)
(2017-present).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Advisor,
Saratoga
Partners
(private
equity
fund);
and
formerly
,
Managing
Director,
Saratoga
Partners
(1998-2001)
and
SBC
Warburg
Dillon
Read
(investment
banking)
(1997-1998);
Vice
Chairman,
Dillon,
Read
&
Co.
Inc.
(investment
banking)
(1991-1997);
and
Chief
Financial
Officer,
Dillon,
Read
&
Co.
Inc.
(1982-1997).
Larry
D.
Thompson
(1945)
Trustee
Since
2005
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).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
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)
Templeton
Funds
37
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
Constantine
D.
Tseretopoulos
(1954)
Trustee
Since
2003
19
None
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Physician,
Chief
of
Staff,
owner
and
operator
of
the
Lyford
Cay
Hospital
(1987-present);
director
of
various
nonprofit
organizations;
and
formerly
,
Cardiology
Fellow,
University
of
Maryland
(1985-1987);
and
Internal
Medicine
Resident,
Greater
Baltimore
Medical
Center
(1982-
1985).
Robert
E.
Wade
(1946)
Trustee
Since
2006
30
El
Oro
Ltd
(investments)
(2003-
2019).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Attorney
at
law
engaged
in
private
practice
as
a
sole
practitioner
(1972-2008)
and
member
of
various
boards.
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
Vice
President
Chairman
of
the
Board
since
2013,
Trustee
since
1992
and
Vice
President
since
1996
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.
Alan
T.
Bartlett
(1970)
President
and
Chief
Executive
Officer
–
Investment
Management
Since
December
2019
Not
Applicable
Not
Applicable
Lyford
Cay
Nassau,
Bahamas
Principal
Occupation
During
at
Least
the
Past
5
Years:
President
and
Director,
Templeton
Global
Advisors
Limited;
Chief
Investment
Officer
of
Templeton
Global
Equity
Group;
officer
of
five
of
the
investment
companies
in
Franklin
Templeton;
Chairman
of
the
Board,
Goodhart
Partners;
and
formerly
,
Chief
Executive
Officer,
Goodhart
Partners
(2009-2019).
Independent
Board
Members
(continued)
Templeton
Funds
38
franklintempleton.com
Annual
Report
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
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.
Steven
J.
Gray
(1955)
Vice
President
Since
2009
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
G.
Kubilis
(1973)
Chief
Financial
Officer,
Chief
Accounting
Officer
and
Treasurer
Since
2017
Not
Applicable
Not
Applicable
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Treasurer,
U.S.
Fund
Administration
&
Reporting
and
officer
of
15
of
the
investment
companies
in
Franklin
Templeton.
Robert
Lim
(1948)
Vice
President
–
AML
Compliance
Since
2016
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Vice
President,
Franklin
Templeton
Companies,
LLC;
Chief
Compliance
Officer,
Franklin
Templeton
Distributors,
Inc.
and
Franklin
Templeton
Investor
Services,
LLC;
and
officer
of
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-
1923x
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).
Interested
Board
Members
and
Officers
(continued)
Templeton
Funds
39
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
U.S.
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
each
of
Ann
Torre
Bates
and
David
W.
Niemiec
as
an
audit
committee
financial
expert.
The
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
qualify
as
such
an
expert
in
view
of
their
extensive
business
background
and
experience.
Ms.
Bates
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2008.
She
currently
serves
as
a
director
of
Ares
Capital
Corporation
(2010-present)
and
United
Natural
Foods,
Inc.
(2013-present)
and
was
formerly
a
director
of
Navient
Corporation
from
2014
to
2016,
SLM
Corporation
from
1997
to
2014
and
Allied
Capital
Corporation
from
2003
to
2010,
Executive
Vice
President
and
Chief
Financial
Officer
of
NHP
Incorporated
from
1995
to
1997
and
Vice
President
and
Treasurer
of
US
Airways,
Inc.
until
1995.
Mr.
Niemiec
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2005,
currently
serves
as
an
Advisor
to
Saratoga
Partners
and
was
formerly
its
Managing
Director
from
1998
to
2001
and
serves
as
a
director
of
Hess
Midstream
Partners
LP
(2017-present).
Mr.
Niemiec
was
formerly
a
director
of
Emeritus
Corporation
from
1999
to
2010
and
OSI
Pharmaceuticals,
Inc.
from
2006
to
2010,
Managing
Director
of
SBC
Warburg
Dillon
Read
from
1997
to
1998,
and
was
Vice
Chairman
from
1991
to
1997
and
Chief
Financial
Officer
from
1982
to
1997
of
Dillon,
Read
&
Co.
Inc.
As
a
result
of
such
background
and
experience,
the
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
have
each
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.
Bates
and
Mr.
Niemiec
are
independent
Board
members
as
that
term
is
defined
under
the
applicable
U.S.
Securities
and
Exchange
Commission
Rules
and
Releases.
The
Statement
of
Additional
Information
(SAI)
includes
additional
information
about
the
board
members
and
is
available,
without
charge,
upon
request.
Shareholders
may
call
(800)
DIAL
BEN/342-5236
to
request
the
SAI.
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
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
Secretary
Vice
President
since
2011
and
Secretary
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:
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)
Templeton
Funds
Shareholder
Information
40
franklintempleton.com
Annual
Report
Board
Approval
of
Investment
Management
Agreements
TEMPLETON
FUNDS
Templeton
Foreign
Fund
(Fund)
At
a
meeting
held
on
May
13,
2020
(Meeting),
the
Board
of
Trustees
(Board)
of
Templeton
Funds
(Trust),
including
a
majority
of
the
trustees
who
are
not
“interested
persons”
as
defined
in
the
Investment
Company
Act
of
1940
(Independent
Trustees),
reviewed
and
approved
the
continuance
of
the
investment
management
agreement
between
Templeton
Global
Advisors
Limited
(Manager)
and
the
Trust,
on
behalf
of
the
Fund
(Management
Agreement)
for
an
additional
one-year
period.
The
Independent
Trustees
received
advice
from
and
met
separately
with
Independent
Trustee
counsel
in
considering
whether
to
approve
the
continuation
of
the
Management
Agreement.
In
considering
the
continuation
of
the
Management
Agreement,
the
Board
reviewed
and
considered
information
provided
by
the
Manager
at
the
Meeting
and
throughout
the
year
at
meetings
of
the
Board
and
its
committees.
The
Board
also
reviewed
and
considered
information
provided
in
response
to
a
detailed
set
of
requests
for
information
submitted
to
the
Manager
by
Independent
Trustee
counsel
on
behalf
of
the
Independent
Trustees
in
connection
with
the
annual
contract
renewal
process.
In
addition,
prior
to
the
Meeting,
the
Independent
Trustees
held
a
telephonic
contract
renewal
meeting
at
which
the
Independent
Trustees
conferred
amongst
themselves
and
Independent
Trustee
counsel
about
contract
renewal
matters
and,
in
some
cases,
requested
additional
information
from
the
Manager
relating
to
the
contract.
The
Board
reviewed
and
considered
all
of
the
factors
it
deemed
relevant
in
approving
the
continuance
of
the
Management
Agreement,
including,
but
not
limited
to:
(i)
the
nature,
extent
and
quality
of
the
services
provided
by
the
Manager;
(ii)
the
investment
performance
of
the
Fund;
(iii)
the
costs
of
the
services
provided
and
profits
realized
by
the
Manager
and
its
affiliates
from
the
relationship
with
the
Fund;
(iv)
the
extent
to
which
economies
of
scale
are
realized
as
the
Fund
grows;
and
(v)
whether
fee
levels
reflect
these
economies
of
scale
for
the
benefit
of
Fund
investors.
In
approving
the
continuance
of
the
Management
Agreement,
the
Board,
including
a
majority
of
the
Independent
Trustees,
determined
that
the
terms
of
the
Management
Agreement
are
fair
and
reasonable
and
that
the
continuance
of
such
Management
Agreement
is
in
the
interests
of
the
Fund
and
its
shareholders.
While
attention
was
given
to
all
information
furnished,
the
following
discusses
some
primary
factors
relevant
to
the
Board’s
determination.
Nature,
Extent
and
Quality
of
Services
The
Board
reviewed
and
considered
information
regarding
the
nature,
extent
and
quality
of
investment
management
services
provided
by
the
Manager
and
its
affiliates
to
the
Fund
and
its
shareholders.
This
information
included,
among
other
things,
the
qualifications,
background
and
experience
of
the
senior
management
and
investment
personnel
of
the
Manager,
as
well
as
information
on
succession
planning
where
appropriate;
the
structure
of
investment
personnel
compensation;
oversight
of
third-
party
service
providers;
investment
performance
reports
and
related
financial
information
for
the
Fund;
reports
on
expenses
and
shareholder
services;
legal
and
compliance
matters;
risk
controls;
pricing
and
other
services
provided
by
the
Manager
and
its
affiliates;
and
management
fees
charged
by
the
Manager
and
its
affiliates
to
US
funds
and
other
accounts,
including
management’s
explanation
of
differences
among
accounts
where
relevant.
The
Board
also
reviewed
and
considered
an
annual
report
on
payments
made
by
Franklin
Templeton
(FT)
or
the
Fund
to
financial
intermediaries,
as
well
as
a
memorandum
relating
to
third-
party
servicing
arrangements,
which
included
discussion
of
the
changing
distribution
landscape
for
the
Fund.
The
Board
noted
management’s
continuing
efforts
and
expenditures
in
establishing
effective
business
continuity
plans
and
developing
strategies
to
address
areas
of
heightened
concern
in
the
mutual
fund
industry,
such
as
cybersecurity
and
liquidity
risk
management.
The
Board
also
reviewed
and
considered
the
benefits
provided
to
Fund
shareholders
of
investing
in
a
fund
that
is
part
of
the
FT
family
of
funds.
The
Board
noted
the
financial
position
of
Franklin
Resources,
Inc.
(FRI),
the
Manager’s
parent,
and
its
commitment
to
the
mutual
fund
business
as
evidenced
by
its
continued
introduction
of
new
funds,
reassessment
of
the
fund
offerings
in
response
to
the
market
environment
and
project
initiatives
and
capital
investments
relating
to
the
services
provided
to
the
Fund
by
the
FT
organization.
The
Board
specifically
noted
FT’s
commitment
to
enhancing
services
and
controlling
costs,
as
reflected
in
its
plan
to
outsource
certain
administrative
functions,
and
growth
opportunities,
as
evidenced
by
its
upcoming
acquisition
of
the
Legg
Mason
companies.
The
Templeton
Funds
Shareholder
Information
41
franklintempleton.com
Annual
Report
Board
acknowledged
the
change
in
leadership
at
FRI
and
the
opportunity
to
hear
from
Jennifer
Johnson,
President
and
Chief
Executive
Officer
of
FRI,
about
goals
she
has
for
the
company
that
will
benefit
the
Fund.
Following
consideration
of
such
information,
the
Board
was
satisfied
with
the
nature,
extent
and
quality
of
services
provided
by
the
Manager
and
its
affiliates
to
the
Fund
and
its
shareholders.
Fund
Performance
The
Board
reviewed
and
considered
the
performance
results
of
the
Fund
over
various
time
periods
ended
February
29,
2020.
The
Board
considered
the
performance
returns
for
the
Fund
in
comparison
to
the
performance
returns
of
mutual
funds
deemed
comparable
to
the
Fund
included
in
a
universe
(Performance
Universe)
selected
by
Broadridge
Financial
Solutions,
Inc.
(Broadridge),
an
independent
provider
of
investment
company
data.
The
Board
received
a
description
of
the
methodology
used
by
Broadridge
to
select
the
mutual
funds
included
in
a
Performance
Universe.
The
Board
also
reviewed
and
considered
Fund
performance
reports
provided
and
discussions
that
occurred
with
portfolio
managers
at
Board
meetings
throughout
the
year.
A
summary
of
the
Fund’s
performance
results
is
below.
The
Performance
Universe
for
the
Fund
included
the
Fund
and
all
retail
and
institutional
international
multi-cap
value
funds.
The
Board
noted
that
the
Fund’s
annualized
total
return
for
the
one-,
three-,
five-
and
10-year
periods
was
below
the
median
of
its
Performance
Universe.
The
Board
discussed
this
performance
with
management
and
management
explained
that,
even
though
the
Fund’s
peer
group
is
comprised
of
multi-cap
value
funds,
the
Fund’s
Performance
Universe
is
more
skewed
toward
growth,
which
has
negatively
impacted
the
Fund’s
relative
returns
during
a
period
of
historic
and
sustained
outperformance
of
growth
over
value
investing
strategies.
Management
also
explained
that
the
Fund
has
a
larger
allocation
to
emerging
markets
in
comparison
to
some
of
the
other
funds
in
the
Performance
Universe,
which
have
underperformed
developed
markets
in
recent
years.
Management
further
explained
that
over
the
one-,
three-
and
five-year
periods,
the
Fund’s
underperformance
has
largely
been
attributable
to
stock
selection
in
the
consumer
discretionary,
energy,
financials,
health
care
and
industrials.
Management
then
discussed
with
the
Board
the
actions
that
are
being
taken
in
an
effort
to
address
the
sources
of
the
Fund’s
underperformance,
including
steps
that
have
been
taken/
are
being
taken
to
further
diversify
the
Fund’s
portfolio
and
enhance
the
Fund’s
portfolio
risk-reward
characteristics
in
the
current
environment.
The
Board
concluded
that
the
Fund’s
Management
Agreement
should
be
continued
for
an
additional
one-year
period,
and
management’s
efforts
should
continue
to
be
monitored.
Comparative
Fees
and
Expenses
The
Board
reviewed
and
considered
information
regarding
the
Fund’s
actual
total
expense
ratio
and
its
various
components,
including,
as
applicable,
management
fees;
transfer
agent
expenses;
underlying
fund
expenses;
Rule
12b-1
and
non-Rule
12b-1
service
fees;
and
other
non-
management
fees.
The
Board
also
noted
the
quarterly
and
annual
reports
it
receives
on
all
marketing
support
payments
made
by
FT
to
financial
intermediaries.
The
Board
considered
the
actual
total
expense
ratio
and,
separately,
the
contractual
management
fee
rate,
without
the
effect
of
fee
waivers,
if
any
(Management
Rate)
of
the
Fund
in
comparison
to
the
median
expense
ratio
and
median
Management
Rate,
respectively,
of
other
mutual
funds
deemed
comparable
to
and
with
a
similar
expense
structure
as
the
Fund
selected
by
Broadridge
(Expense
Group).
Broadridge
fee
and
expense
data
is
based
upon
information
taken
from
each
fund’s
most
recent
annual
report,
which
reflects
historical
asset
levels
that
may
be
quite
different
from
those
currently
existing,
particularly
in
a
period
of
market
volatility.
While
recognizing
such
inherent
limitation
and
the
fact
that
expense
ratios
and
Management
Rates
generally
increase
as
assets
decline
and
decrease
as
assets
grow,
the
Board
believed
the
independent
analysis
conducted
by
Broadridge
to
be
an
appropriate
measure
of
comparative
fees
and
expenses.
The
Broadridge
Management
Rate
includes
administrative
charges,
and
the
actual
total
expense
ratio,
for
comparative
consistency,
was
shown
for
Class
A
shares
for
the
Fund
and
for
each
of
the
other
funds
in
the
Expense
Group.
The
Board
received
a
description
of
the
methodology
used
by
Broadridge
to
select
the
mutual
funds
included
in
an
Expense
Group.
The
Expense
Group
for
the
Fund
included
the
Fund,
two
other
international
multi-cap
value
funds,
four
international
multi-cap
growth
funds
and
four
international
multi-cap
core
funds.
The
Board
noted
that
the
Management
Rate
and
actual
total
expense
ratio
for
the
Fund
were
below
the
medians
and
in
the
first
quintile
(least
expensive)
of
its
Expense
Group.
The
Board
concluded
that
the
Management
Rate
charged
to
the
Fund
is
reasonable.
In
doing
so,
the
Board
noted
the
Fund’s
actual
total
expense
ratio
reflected
a
fee
waiver
from
management.
Profitability
Templeton
Funds
Shareholder
Information
42
franklintempleton.com
Annual
Report
The
Board
reviewed
and
considered
information
regarding
the
profits
realized
by
the
Manager
and
its
affiliates
in
connection
with
the
operation
of
the
Fund.
In
this
respect,
the
Board
considered
the
Fund
profitability
analysis
provided
by
the
Manager
that
addresses
the
overall
profitability
of
FT’s
US
fund
business,
as
well
as
its
profits
in
providing
investment
management
and
other
services
to
each
of
the
individual
funds
during
the
12-month
period
ended
September
30,
2019,
being
the
most
recent
fiscal
year-
end
for
FRI.
The
Board
noted
that
although
management
continually
makes
refinements
to
its
methodologies
used
in
calculating
profitability
in
response
to
organizational
and
product-related
changes,
the
overall
methodology
has
remained
consistent
with
that
used
in
the
Fund’s
profitability
report
presentations
from
prior
years.
Additionally,
PricewaterhouseCoopers
LLP,
auditor
to
FRI
and
certain
FT
funds,
was
engaged
by
the
Manager
to
review
and
assess
the
allocation
methodologies
to
be
used
solely
by
the
Fund’s
Board
with
respect
to
the
profitability
analysis.
The
Board
noted
management’s
belief
that
costs
incurred
in
establishing
the
infrastructure
necessary
for
the
type
of
mutual
fund
operations
conducted
by
the
Manager
and
its
affiliates
may
not
be
fully
reflected
in
the
expenses
allocated
to
the
Fund
in
determining
its
profitability,
as
well
as
the
fact
that
the
level
of
profits,
to
a
certain
extent,
reflected
operational
cost
savings
and
efficiencies
initiated
by
management.
As
part
of
this
evaluation,
the
Board
considered
the
initiative
currently
underway
to
outsource
certain
operations,
which
effort
would
require
considerable
up-front
expenditures
by
the
Manager
but,
over
the
long
run
is
expected
to
result
in
greater
efficiencies.
The
Board
also
noted
management’s
expenditures
in
improving
shareholder
services
provided
to
the
Fund,
as
well
as
the
need
to
implement
systems
and
meet
additional
regulatory
and
compliance
requirements
resulting
from
recent
US
Securities
and
Exchange
Commission
and
other
regulatory
requirements,
notably
in
the
area
of
cybersecurity
protections.
The
Board
also
considered
the
extent
to
which
the
Manager
and
its
affiliates
might
derive
ancillary
benefits
from
fund
operations,
including
revenues
generated
from
transfer
agent
services,
potential
benefits
resulting
from
personnel
and
systems
enhancements
necessitated
by
fund
growth,
as
well
as
increased
leverage
with
service
providers
and
counterparties.
Based
upon
its
consideration
of
all
these
factors,
the
Board
concluded
that
the
level
of
profits
realized
by
the
Manager
and
its
affiliates
from
providing
services
to
the
Fund
was
not
excessive
in
view
of
the
nature,
extent
and
quality
of
services
provided
to
the
Fund.
Economies
of
Scale
The
Board
reviewed
and
considered
the
extent
to
which
the
Manager
may
realize
economies
of
scale,
if
any,
as
the
Fund
grows
larger
and
whether
the
Fund’s
management
fee
structure
reflects
any
economies
of
scale
for
the
benefit
of
shareholders.
With
respect
to
possible
economies
of
scale,
the
Board
noted
the
existence
of
management
fee
breakpoints,
which
operate
generally
to
share
any
economies
of
scale
with
the
Fund’s
shareholders
by
reducing
the
Fund’s
effective
management
fees
as
the
Fund
grows
in
size.
The
Board
considered
the
Manager’s
view
that
any
analyses
of
potential
economies
of
scale
in
managing
a
particular
fund
are
inherently
limited
in
light
of
the
joint
and
common
costs
and
investments
the
Manager
incurs
across
the
FT
family
of
funds
as
a
whole.
The
Board
concluded
that
to
the
extent
economies
of
scale
may
be
realized
by
the
Manager
and
its
affiliates,
the
Fund’s
management
fee
structure
provided
a
sharing
of
benefits
with
the
Fund
and
its
shareholders
as
the
Fund
grows.
Conclusion
Based
on
its
review,
consideration
and
evaluation
of
all
factors
it
believed
relevant,
including
the
above-described
factors
and
conclusions,
the
Board
unanimously
approved
the
continuation
of
the
Management
Agreement
for
an
additional
one-year
period.
Liquidity
Risk
Management
Program
Each
of
the
Funds
has
adopted
and
implemented
a
written
Liquidity
Risk
Management
Program
(the
“LRMP”)
as
required
by
Rule
22e-4
under
the
Investment
Company
Act
of
1940
(the
“Liquidity
Rule”).
The
LRMP
is
designed
to
assess
and
manage
each
Fund’s
liquidity
risk,
which
is
defined
as
the
risk
that
the
Fund
could
not
meet
requests
to
redeem
shares
issued
by
the
Fund
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
In
accordance
with
the
Liquidity
Rule,
the
LRMP
includes
policies
and
procedures
that
provide
for:
(1)
assessment,
management,
and
review
(no
less
frequently
than
annually)
of
each
Fund’s
liquidity
risk;
(2)
classification
of
each
Fund’s
portfolio
holdings
into
one
of
four
liquidity
categories
(Highly
Liquid,
Moderately
Liquid,
Less
Liquid,
and
Illiquid);
(3)
for
Funds
that
do
not
primarily
hold
assets
that
are
Highly
Liquid,
establishing
and
maintaining
a
minimum
percentage
of
the
Fund’s
net
assets
in
Highly
Liquid
investments
(called
a
“Highly
Liquid
Investment
Minimum”
or
“HLIM”);
and
(4)
prohibiting
the
Fund’s
acquisition
of
Illiquid
investments
that
would
result
in
the
Fund
holding
more
than
15%
of
its
net
assets
in
Illiquid
assets.
The
LRMP
also
requires
reporting
to
the
SEC
(on
a
non-public
basis)
and
to
the
Board
if
the
Fund’s
holdings
of
Illiquid
assets
exceed
15%
of
the
Fund’s
net
assets.
Funds
with
HLIMs
must
have
procedures
for
Templeton
Funds
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43
franklintempleton.com
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addressing
HLIM
shortfalls,
including
reporting
to
the
Board
and,
with
respect
to
HLIM
shortfalls
lasting
more
than
seven
consecutive
calendar
days,
reporting
to
the
Securities
and
Exchange
Commission
(“SEC”)
(on
a
non-public
basis).
The
Funds’
Board
of
Trustees
approved
the
appointment
of
the
Director
of
Liquidity
Risk
within
the
Investment
Risk
Management
Group
(the
“IRMG”)
as
the
Administrator
of
the
LRMP.
The
IRMG
maintains
the
Investment
Liquidity
Committee
(the
“ILC”)
to
provide
oversight
and
administration
of
policies
and
procedures
governing
liquidity
risk
management
for
FT
products
and
portfolios.
The
ILC
includes
representatives
from
Franklin
Templeton’s
Risk,
Trading,
Global
Compliance,
Investment
Compliance,
Investment
Operations,
Valuation
Committee
and
Product
Management
groups.
In
assessing
and
managing
each
Fund’s
liquidity
risk,
the
ILC
considers,
as
relevant,
a
variety
of
factors,
including
the
Fund’s
investment
strategy
and
the
liquidity
of
its
portfolio
investments
during
both
normal
and
reasonably
foreseeable
stressed
conditions;
its
short
and
long-term
cash
flow
projections;
and
its
cash
holdings
and
access
to
other
funding
sources
including
the
Funds’
interfund
lending
facility
and
line
of
credit.
Classification
of
the
Fund’s
portfolio
holdings
in
the
four
liquidity
categories
is
based
on
the
number
of
days
it
is
reasonably
expected
to
take
to
convert
the
investment
to
cash
(for
Highly
Liquid
and
Moderately
Liquid
holdings)
or
sell
or
dispose
of
the
investment
(for
Less
Liquid
and
Illiquid
investments),
in
current
market
conditions
without
significantly
changing
the
investment’s
market
value.
The
Fund
primarily
holds
liquid
assets
that
are
defined
under
the
Liquidity
Rule
as
"Highly
Liquid
Investments,"
and
therefore
is
not
required
to
establish
an
HLIM.
Highly
Liquid
Investments
are
defined
as
cash
and
any
investment
reasonably
expected
to
be
convertible
to
cash
in
current
market
conditions
in
three
business
days
or
less
without
the
conversion
to
cash
significantly
changing
the
market
value
of
the
investment.
At
meetings
of
the
Funds’
Board
of
Trustees
held
in
May
2020,
the
Program
Administrator
provided
a
written
report
to
the
Board
addressing
the
adequacy
and
effectiveness
of
the
program
during
the
period
December
1,
2018
to
December
31,
2019.
The
Program
Administrator
report
concluded
that
(i.)
the
LRMP,
as
adopted
and
implemented,
remains
reasonably
designed
to
assess
and
manage
each
Fund’s
liquidity
risk;
(ii.)
the
LRMP,
including
the
Highly
Liquid
Investment
Minimum
(“HLIM”)
where
applicable,
was
implemented
and
operated
effectively
to
achieve
the
goal
of
assessing
and
managing
each
Fund’s
liquidity
risk;
and
(iii.)
each
Fund
was
able
to
meet
requests
for
redemption
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
At
the
same
time,
the
Program
Administrator
also
presented
the
Fund
Board
of
Trustees
an
update
on
liquidity
during
the
first
quarter
of
2020
in
relation
to
the
COVID-19
pandemic.
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
Trust,
on
behalf
of
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.
Householding
of
Reports
and
Prospectuses
You
will
receive
each
Fund’s
financial
reports
every
six
months
as
well
as
an
annual
updated
summary
prospectus
(prospectus
available
upon
request).
To
reduce
Fund
expenses,
we
try
to
identify
related
shareholders
in
a
household
and
send
only
one
copy
of
the
financial
reports
and
summary
prospectus.
This
process,
called
“householding,”
will
continue
indefinitely
unless
you
instruct
us
otherwise.
If
you
prefer
not
to
have
these
documents
householded,
please
call
us
at
(800)
632-2301.
At
any
time
you
may
view
current
prospectuses/summary
prospectuses
and
financial
reports
on
our
website.
If
you
choose,
you
may
receive
these
documents
through
electronic
delivery.
104
A
10/20
©
2020
Franklin
Templeton
Investments.
All
rights
reserved.
Authorized
for
distribution
only
when
accompanied
or
preceded
by
a
summary
prospectus
and/or
prospectus.
Investors
should
carefully
consider
a
fund’s
investment
goals,
risks,
charges
and
expenses
before
investing.
A
prospectus
contains
this
and
other
information;
please
read
it
carefully
before
investing.
To
help
ensure
we
provide
you
with
quality
service,
all
calls
to
and
from
our
service
areas
are
monitored
and/or
recorded.
Annual
Report
and
Shareholder
Letter
Templeton
Foreign
Fund
Investment
Manager
Distributor
Shareholder
Services
Templeton
Global
Advisors
Limited
Franklin
Templeton
Distributors,
Inc.
(800)
DIAL
BEN
®
/
342-5236
franklintempleton.com
(800)
632-2301
1
Annual
Report
ANNUAL
REPORT
Templeton
International
Climate
Change
Fund
This
annual
report
for
Templeton
International
Climate
Change
Fund
covers
the
fiscal
year
ended
August
31,
2020
.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
total
return
over
the
longer
term
by
investing
in
the
equity
securities
of
companies
we
believe
are
both
undervalued
and
meet
the
Fund’s
standards
for
transitioning
to
a
lower
carbon
economy.
Under
normal
market
conditions,
the
Fund
invests
at
least
80%
of
its
net
assets
in
“non-U.S.
securities,”
as
defined
in
the
prospectus.
These
securities
are
predominantly
equity
securities
of
companies
located
outside
the
U.S.,
including
developing
markets.
Performance
Overview
The
Fund’s
Advisor
Class
shares
posted
a
+23.70%
cumulative
total
return
for
the
12
months
under
review.
In
comparison,
the
Fund’s
benchmark,
the
MSCI
All
Country
World
Index
(ACWI)
ex
USA
Index,
which
measures
stock
performance
in
global
developed
and
emerging
markets
excluding
the
U.S.,
posted
a
+8.79%
total
return.
1
Please
note
index
performance
information
is
provided
for
reference
and
we
do
not
attempt
to
track
the
index
but
rather
undertake
investments
on
the
basis
of
fundamental
research.
You
can
find
more
performance
data
in
the
Performance
Summary
beginning
on
page
5
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
Economic
and
Market
Overview
Global
developed
and
emerging
market
equities,
as
measured
by
the
MSCI
ACWI,
advanced
during
the
12-month
period.
Stocks
gained
for
the
first
four
months
of
the
reporting
period
but
fell
sharply
in
early
2020
amid
investor
fears
of
a
global
economic
slowdown
due
to
the
novel
coronavirus
(COVID-19)
pandemic.
Such
fears
drove
many
investors
to
sell
equities
and
buy
government
bonds,
cash
and
other
investments
perceived
as
safe.
During
the
last
five
months
of
the
period,
global
equities
rebounded
due
to
optimism
about
easing
lockdown
restrictions,
vaccine
development
and
government
stimulus
measures.
Despite
a
second
wave
of
infections
and
reintroduction
of
restrictions,
as
well
as
renewed
tensions
between
the
U.S.
and
China,
positive
investor
sentiment
and
economic
stimulus
led
global
markets
higher.
In
the
U.S.,
a
strong
labor
market
and
solid
consumer
spending
drove
economic
growth
through
February
2020.
However,
pandemic-related
restrictions
caused
stiff
headwinds
for
the
economy,
including
mass
layoffs
that
drove
the
unemployment
rate
to
14.7%
in
April.
2
According
to
the
National
Bureau
of
Economic
Research,
the
longest
U.S.
economic
expansion
in
history
ended
in
February
2020,
and
the
country
slipped
into
a
deep
recession.
Equities
began
to
rebound
in
the
spring
amid
declining
jobless
claims,
rising
retail
sales
and
optimism
about
treatments
and
potential
vaccines
for
COVID-19.
Despite
surging
summer
infection
rates
and
dampened
economic
activity,
which
caused
the
second-quarter
gross
domestic
product
to
decline
at
a
record
pace,
resilient
consumer
spending
in
July
and
optimism
about
an
economic
rebound
led
equities
higher.
However,
gains
were
concentrated
in
only
a
few
sectors,
including
consumer
staples,
health
care
and
information
technology.
The
U.S.
Federal
Reserve
(Fed)
lowered
the
federal
funds
target
rate
twice
in
late
2019
to
a
range
of
1.50%–1.75%
and
implemented
two
emergency
rate
cuts
in
March
2020,
decreasing
the
rate
to
a
range
of
0.00%–0.25%.
The
Fed
also
enacted
sweeping
quantitative
easing
measures
aimed
at
ensuring
credit
flows
to
borrowers
and
supporting
credit
markets
with
unlimited
amounts
of
bond
purchasing.
At
the
Geographic
Composition
8/31/20
%
of
Total
Net
Assets
Europe
65.7%
Asia
29.3%
Latin
America
&
Caribbean
0.6%
Short-Term
Investments
&
Other
Net
Assets
4.4%
1.
Source:
Morningstar.
The
index
is
unmanaged
and
includes
reinvestment
of
any
income
or
distributions.
It
does
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
2.
Source:
U.S.
Bureau
of
Labor
Statistics.
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
10
.
Templeton
International
Climate
Change
Fund
2
Annual
Report
end
of
the
period,
the
Fed
announced
a
shift
in
inflation
policy
that
could
mean
interest
rates
will
potentially
remain
low,
even
amid
low
unemployment
and
rising
inflation.
In
the
eurozone,
forecasts
of
a
significant
contraction
in
2020
mounted
as
the
magnitude
of
the
pandemic’s
economic
disruption
became
apparent.
Nevertheless,
European
developed
market
equities,
as
measured
by
the
MSCI
Europe
Index,
advanced
as
some
social
distancing
restrictions
were
removed
and
robust
fiscal
stimulus
measures
led
to
a
significant
rebound
from
the
March
2020
lows.
Asian
developed
and
emerging
market
equities,
as
measured
by
the
MSCI
All
Country
Asia
Index,
also
advanced.
Generally
slow
yet
stable
economic
growth
and
easing
trade
tensions
between
the
U.S.
and
China
benefited
the
region,
until
the
pandemic
and
lockdowns
in
China
and
other
countries
derailed
economic
growth.
Sharp
market
declines
were
followed
by
a
rebound,
as
economies
reopened,
aided
by
robust
stimulus
measures
and
many
health
care
companies’
continued
development
of
COVID-19
vaccines
and
treatments.
Emerging
market
stocks,
as
measured
by
the
MSCI
Emerging
Markets
Index,
also
advanced
for
the
12-month
period
despite
steep
pandemic-related
declines,
generally
weaker
currencies
and
lower
energy
prices,
which
hurt
emerging
market
economies
reliant
on
these
exports.
During
the
last
five
months
of
the
reporting
period,
however,
improving
economic
activity,
higher
oil
prices
and
U.S.
dollar
weakness
led
emerging
markets
stocks
to
post
strong
gains,
reversing
earlier
losses.
Investment
Strategy
Our
investment
strategy
employs
a
bottom-up,
value-
oriented,
long-term
approach
to
select
attractively
valued
companies
preparing
for
a
transition
to
a
lower
carbon
economy
and
that
meet
our
climate
change
criteria.
We
focus
on
the
market
price
of
the
company’s
securities
relative
to
our
evaluation
of
the
company’s
long-term
earnings,
asset
value
and
cash
flow
potential.
Our
analysis
includes
an
assessment
of
the
potential
impacts
of
material
environmental,
social
and
governance
(ESG)
factors
on
the
long-term
risk
and
return
profile
of
a
company.
We
also
consider
a
company’s
price/earnings
ratio,
price/cash
flow
ratio,
profit
margins
and
liquidation
value.
Manager’s
Discussion
Despite
a
challenging
environment
for
value
investors,
the
fund
significantly
outperformed
its
benchmark,
the
MSCI
ACWI
ex
USA
Index,
for
the
12-month
period.
Stock
selection
in
the
industrials
and
utilities
sectors
contributed
significantly
to
relative
performance,
as
did
an
underweighting
in
the
financials
sector.
Spain-based
Siemens
Gamesa
Renewable
Energy,
the
world’s
largest
offshore
wind
turbine
manufacturer,
was
the
top
contributor
to
industrials
sector
relative
returns.
We
still
see
attractive
growth
in
the
industry,
with
potential
for
profit
margin
improvement
from
current
levels
over
the
forecast
period.
Moreover,
in
our
view,
the
company
remains
well
positioned
with
the
largest
exposure
to
offshore
wind,
which
offers
the
greatest
growth.
We
see
further
upside
as
Siemens
Gamesa
executes
on
its
large
offshore
backlog
and
delivers
improving
margins.
Denmark-based
Vestas
Wind
Systems,
the
largest
manufacturer
of
onshore
wind
turbines
globally,
also
contributed
to
relative
performance.
During
the
period,
Vestas
reported
results
that
surprised
on
the
upside
for
both
revenues
and
orders.
In
the
industrials
sector
generally,
we
have
avoided
what
we
considered
expensive
companies
that
fail
to
reflect
the
maturity
of
their
business
cycles
or
are
excessively
optimistic
about
sustainable
growth
rates
and
returns.
Protectionism
is
a
risk
as
export-oriented
capital
goods
firms
remain
at
the
forefront
of
trade
war
rhetoric,
though
valuations
are
beginning
to
reflect
such
concerns.
Returns
in
the
utilities
sector,
a
particular
point
of
focus
for
the
Fund,
were
boosted
by
Denmark-based
Orsted
and
German
power
utility
E.ON.
Orsted
performed
well
as
the
company
continued
to
build
out
its
pipeline
of
offshore
wind
projects,
including
an
expansion
into
new
Top
10
Industries
8/31/20
%
of
Total
Net
Assets
a
Electrical
Equipment
18.4%
Chemicals
11.4%
Semiconductors
&
Semiconductor
Equipment
8.1%
Pharmaceuticals
5.8%
Multi-Utilities
4.6%
Containers
&
Packaging
4.4%
Food
Products
4.2%
Household
Durables
4.2%
Electronic
Equipment,
Instruments
&
Components
4.1%
Industrial
Conglomerates
3.4%
Templeton
International
Climate
Change
Fund
3
Annual
Report
markets
in
Asia
and
North
America.
E.ON’s
transition
from
a
diversified
and
geographically
dispersed
operation
into
a
focused
European
utility
is
nearing
completion,
and
we
believe
the
company
should
benefit
over
time
from
a
stable
regulatory
environment
and
lower
interest
costs
once
debt
is
refinanced.
In
contrast,
stock
selection
in
the
communication
services
sector
and
an
underweighting
in
the
health
care
sector
detracted
from
relative
performance
for
the
period.
Singapore
Telecommunication
(SingTel)
is
the
largest
telecommunication
services
provider
in
Singapore
and
the
second
largest
in
Australia.
SingTel’s
share
price
fell
due
to
dividend
concerns
over
the
period.
U.K.-based
multinational
telecommunications
conglomerate
Vodafone
was
another
significant
communication
services
detractor.
We
believe
Vodafone
stands
to
benefit
from
stabilizing
revenue
trends
and
a
cost-cutting
program
that
will
rationalize
the
cost
base
and
improve
profit
margins.
However,
challenges
introduced
by
COVID-19
have
slowed
revenue
recovery.
These
challenges
have
brought
the
negative
revenue
impact
of
lower
roaming
fees,
lower
fixed-line
subscriber
growth
and
potential
loss
of
small
businesses
and
slower
enterprise
revenue
growth.
We
believe
these
will
be
slightly
offset
by
high
fixed
connectivity
demand,
along
with
lower
operating
costs.
Key
health
care
themes
currently
include
steady
demand
growth
from
aging
developed
market
populations,
strong
per-capita
health
care
spending
growth
in
emerging
markets,
improving
innovation
and
opportunities
for
companies
capable
of
providing
low-cost
alternatives
amid
ongoing
pricing
pressures.
In
both
the
pharmaceuticals
and
non-
pharmaceuticals
spaces,
we
look
for
companies
with
what
we
view
as
undemanding
valuations
positioned
on
the
right
side
of
these
themes.
Regionally,
stock
selection
in
Europe
contributed
significantly
to
relative
performance
for
the
period.
Stock
selection
in
Asia
also
aided
relative
performance,
although
an
underweighting
in
China
and
an
overweighting
in
Singapore
detracted.
It
is
important
to
recognize
the
effect
of
currency
movements
on
the
Fund's
performance.
In
general,
if
the
value
of
the
U.S.
dollar
goes
up
compared
with
a
foreign
currency,
an
investment
traded
in
that
foreign
currency
will
go
down
in
value
because
it
will
be
worth
fewer
U.S.
dollars.
This
can
have
a
negative
effect
on
Fund
performance.
Conversely,
when
the
U.S.
dollar
weakens
in
relation
to
a
foreign
currency,
an
investment
traded
in
that
foreign
currency
will
increase
in
value,
which
can
contribute
to
Fund
performance:
For
the
12
months
ended
August
31,
2020,
the
U.S.
dollar
declined
in
value
relative
to
most
currencies.
As
a
result,
the
Fund's
performance
was
positively
affected
by
the
portfolio's
investment
predominantly
in
securities
with
non-U.S.
currency
exposure.
However,
one
cannot
expect
the
same
results
in
future
periods.
Maarten
Bloemen
Portfolio
Manager
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
Top
10
Holdings
8/31/20
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
Siemens
Gamesa
Renewable
Energy
SA
4.7%
Electrical
Equipment,
Spain
Prysmian
SpA
4.4%
Electrical
Equipment,
Italy
Signify
NV
4.2%
Electrical
Equipment,
Netherlands
Infineon
Technologies
AG
3.6%
Semiconductors
&
Semiconductor
Equipment,
Germany
Vestas
Wind
Systems
A/S
3.5%
Electrical
Equipment,
Denmark
BillerudKorsnas
AB
3.5%
Containers
&
Packaging,
Sweden
Siemens
AG
3.4%
Industrial
Conglomerates,
Germany
E.ON
SE
3.4%
Multi-Utilities,
Germany
Sanofi
3.1%
Pharmaceuticals,
France
Samsung
Electronics
Co.
Ltd.
3.1%
Technology
Hardware,
Storage
&
Peripherals,
South
Korea
Top
10
Countries
8/31/20
a
%
of
Total
Net
Assets
a
a
France
12.8%
Japan
12.7%
Germany
11.8%
Netherlands
7.3%
Spain
6.6%
Denmark
6.4%
Belgium
6.1%
Taiwan
5.6%
Sweden
5.5%
South
Korea
5.1%
Templeton
International
Climate
Change
Fund
4
Annual
Report
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.
Performance
Summary
as
of
August
31,
2020
Templeton
International
Climate
Change
Fund
5
Annual
Report
The
performance
table
and
graph
do
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
8/31/20
1
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
Advisor
Class
shares
are
offered
without
sales
charges.
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.
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
1-Year
+23.70%
+23.70%
Since
Inception
(6/1/18)
+11.20%
+4.83%
See
page
7
for
Performance
Summary
footnotes.
Templeton
International
Climate
Change
Fund
Performance
Summary
6
Annual
Report
See
page
7
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
index
includes
reinvestment
of
any
income
or
distributions.
It
differs
from
the
Fund
in
composition
and
does
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
6/1/18–8/31/20
Templeton
International
Climate
Change
Fund
Performance
Summary
7
Annual
Report
All
investments
involve
risks,
including
possible
loss
of
principal.
Special
risks
are
associated
with
foreign
investing,
including
currency
fluctuations,
economic
instability
and
political
developments;
investments
in
developing
markets
involve
heightened
risks
related
to
the
same
factors.
Currency
rates
may
fluctuate
significantly
over
short
periods
of
time,
and
can
reduce
returns.
Because
the
Fund
may
invest
its
assets
in
companies
in
a
specific
region,
including
Europe,
it
is
subject
to
greater
risks
of
adverse
developments
in
that
region
and/or
the
surrounding
regions
than
a
fund
that
is
more
broadly
diversified
geographical-
ly.
Current
political
uncertainty
concerning
the
economic
consequences
of
the
departure
of
the
U.K.
from
the
European
Union
may
increase
market
volatility.
Derivatives,
including
currency
management
strategies,
involve
costs
and
can
create
economic
leverage
in
the
portfolio,
which
may
result
in
significant
volatility
and
cause
the
Fund
to
participate
in
losses
(as
well
as
enable
gains)
on
an
amount
that
exceeds
the
Fund’s
initial
investment.
The
Fund
may
not
achieve
the
anticipated
benefits,
and
may
realize
losses
when
a
counterparty
fails
to
perform
as
promised.
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
general,
in
ways
that
cannot
necessarily
be
foreseen.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
1.
The
Fund
has
an
expense
reduction
contractually
guaranteed
through
12/31/20.
Fund
investment
results
reflect
the
expense
reduction;
without
this
reduction,
the
results
would
have
been
lower.
2.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
3.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
4.
Source:
Morningstar.
The
MSCI
ACWI
ex
USA
Index
is
a
free
float-adjusted,
market
capitalization-weighted
index
designed
to
measure
equity
market
performance
in
global
developed
and
emerging
markets,
excluding
the
U.S.
5.
Figures
are
as
stated
in
the
Fund’s
current
prospectus
and
may
differ
from
the
expense
ratios
disclosed
in
the
Your
Fund’s
Expenses
and
Financial
Highlights
sections
in
this
report.
In
periods
of
market
volatility,
assets
may
decline
significantly,
causing
total
annual
Fund
operating
expenses
to
become
higher
than
the
figures
shown.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Distributions
(9/1/19–8/31/20)
Net
Investment
Income
$0.2950
Total
Annual
Operating
Expenses
5
With
Fee
Waiver
Without
Fee
Waiver
0.98%
9.66%
Your
Fund’s
Expenses
Templeton
International
Climate
Change
Fund
8
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value.”
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.
50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
184/366
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Beginning
Account
Value
3/1/20
Ending
Account
Value
8/31/20
Expenses
Paid
During
Period
3/1/20–8/31/20
1,
2
Ending
Account
Value
8/31/20
Expenses
Paid
During
Period
3/1/20–8/31/20
1,
2
a
Annualized
Expense
Ratio
2
$1,000
$1,167.90
$5.29
$1,020.26
$4.93
0.97%
Templeton
Funds
Financial
Highlights
Templeton
International
Climate
Change
Fund
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
9
a
Year
Ended
August
31,
Year
Ended
August
31,
2018
a
2020
2019
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
............................................
$8.91
$9.64
$10.00
Income
from
investment
operations
b
:
Net
investment
income
c
..................................................
0.07
0.27
0.04
Net
realized
and
unrealized
gains
(losses)
....................................
2.03
(0.93)
(0.40)
Total
from
investment
operations
.............................................
2.10
(0.66)
(0.36)
Less
distributions
from:
Net
investment
income
...................................................
(0.30)
(0.05)
—
Net
realized
gains
......................................................
—
(0.02)
—
Total
distributions
........................................................
(0.30)
(0.07)
—
Net
asset
value,
end
of
year
................................................
$10.71
$8.91
$9.64
Total
return
d
............................................................
23.70%
(6.75)%
(3.60)%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
and
expense
reduction
.............
6.48%
9.65%
13.30%
Expenses
net
of
waiver
and
payments
by
affiliates
and
expense
reduction
..............
0.97%
0.97%
0.97%
Net
investment
income
....................................................
0.74%
2.94%
1.51%
Supplemental
data
Net
assets,
end
of
year
(000’s)
..............................................
$2,142
$1,783
$1,929
Portfolio
turnover
rate
.....................................................
39.99%
9.55%
7.95%
a
For
the
period
June
1,
2018
(commencement
of
operations)
to
August
31,
2018.
b
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year,
except
for
non-recurring
expenses,
if
any.
Templeton
Funds
Statement
of
Investments,
August
31,
2020
Templeton
International
Climate
Change
Fund
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
10
a
a
Industry
Shares
a
Value
a
Common
Stocks
95.6%
Belgium
6.1%
Recticel
SA
.....................
Chemicals
3,442
$
35,059
Solvay
SA
......................
Chemicals
349
30,069
Umicore
SA
....................
Chemicals
1,406
64,532
129,660
China
1.6%
Xinyi
Solar
Holdings
Ltd.
...........
Semiconductors
&
Semiconductor
Equipment
26,413
33,272
Denmark
6.4%
a,b
Orsted
A/S,
144A,
Reg
S
...........
Electric
Utilities
439
62,145
Vestas
Wind
Systems
A/S
..........
Electrical
Equipment
498
75,293
137,438
France
12.8%
Air
Liquide
SA
...................
Chemicals
269
44,605
c
Cie
de
Saint-Gobain
..............
Building
Products
1,263
51,056
Danone
SA
.....................
Food
Products
535
35,178
Sanofi
.........................
Pharmaceuticals
647
65,531
Schneider
Electric
SE
.............
Electrical
Equipment
276
34,132
Sodexo
SA
.....................
Hotels,
Restaurants
&
Leisure
280
19,987
Veolia
Environnement
SA
..........
Multi-Utilities
1,003
24,198
274,687
Germany
11.8%
E.ON
SE
.......................
Multi-Utilities
6,177
73,156
Infineon
Technologies
AG
..........
Semiconductors
&
Semiconductor
Equipment
2,754
76,576
LANXESS
AG
...................
Chemicals
531
31,085
Siemens
AG
....................
Industrial
Conglomerates
524
72,605
253,422
India
3.0%
c
Azure
Power
Global
Ltd.
...........
Independent
Power
and
Renewable
Electricity
Producers
2,600
64,792
c
Italy
4.4%
Prysmian
SpA
...................
Electrical
Equipment
3,335
93,198
Japan
12.7%
East
Japan
Railway
Co.
...........
Road
&
Rail
800
52,084
KH
Neochem
Co.
Ltd.
.............
Chemicals
1,000
21,659
Rinnai
Corp.
....................
Household
Durables
700
64,759
Sekisui
House
Ltd.
...............
Household
Durables
1,300
25,684
Sumitomo
Metal
Mining
Co.
Ltd.
.....
Metals
&
Mining
1,600
48,813
Takeda
Pharmaceutical
Co.
Ltd.
.....
Pharmaceuticals
1,591
59,330
272,329
Mexico
0.6%
Industrias
Bachoco
SAB
de
CV,
B
....
Food
Products
4,200
13,132
Netherlands
7.3%
c
Arcadis
NV
.....................
Construction
&
Engineering
2,906
66,673
a,b,c
Signify
NV,
144A,
Reg
S
...........
Electrical
Equipment
2,697
89,962
156,635
Singapore
1.3%
Singapore
Telecommunications
Ltd.
..
Diversified
Telecommunication
Services
16,100
27,176
Templeton
Funds
Statement
of
Investments
Templeton
International
Climate
Change
Fund
(continued)
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
11
a
a
Industry
Shares
a
Value
a
Common
Stocks
(continued)
South
Korea
5.1%
b
Samsung
Electronics
Co.
Ltd.,
GDR,
Reg
S
.......................
Technology
Hardware,
Storage
&
Peripherals
55
$
66,152
Samsung
SDI
Co.
Ltd.
............
Electronic
Equipment,
Instruments
&
Components
116
44,058
110,210
Spain
6.6%
a,b
Befesa
SA,
144A,
Reg
S
...........
Commercial
Services
&
Supplies
992
41,294
Siemens
Gamesa
Renewable
Energy
SA
..........................
Electrical
Equipment
3,752
100,670
141,964
Sweden
5.5%
BillerudKorsnas
AB
...............
Containers
&
Packaging
4,421
74,494
c
Scandi
Standard
AB
..............
Food
Products
4,894
42,342
116,836
Switzerland
2.0%
c
Landis+Gyr
Group
AG
.............
Electronic
Equipment,
Instruments
&
Components
713
43,006
c
Taiwan
5.6%
Giant
Manufacturing
Co.
Ltd.
........
Leisure
Products
5,500
57,126
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.,
ADR
..................
Semiconductors
&
Semiconductor
Equipment
800
63,400
120,526
United
Kingdom
2.8%
DS
Smith
plc
....................
Containers
&
Packaging
5,629
19,365
Johnson
Matthey
plc
..............
Chemicals
518
16,336
Vodafone
Group
plc
..............
Wireless
Telecommunication
Services
16,398
24,041
59,742
Total
Common
Stocks
(Cost
$1,682,478)
.......................................
2,048,025
Short
Term
Investments
3.5%
a
a
Industry
Shares
a
Value
a
a
a
a
a
a
Money
Market
Funds
3.5%
United
States
3.5%
d,e
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0%
.............
74,649
74,649
Total
Money
Market
Funds
(Cost
$74,649)
......................................
74,649
a
a
a
a
a
Total
Short
Term
Investments
(Cost
$74,649
)
...................................
74,649
a
a
a
a
Total
Investments
(Cost
$1,757,127)
99.1%
.....................................
$2,122,674
Other
Assets,
less
Liabilities
0.9%
.............................................
18,853
Net
Assets
100.0%
...........................................................
$2,141,527
a
a
a
Templeton
Funds
Statement
of
Investments
Templeton
International
Climate
Change
Fund
(continued)
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
12
See
Abbreviations
on
page
23
.
a
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
$193,401,
representing
9.0%
of
net
assets.
b
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
aggregate
value
of
these
securities
was
$259,553,
representing
12.1%
of
net
assets.
c
Non-income
producing.
d
See
Note
3(e)
regarding
investments
in
affiliated
management
investment
companies.
e
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
Templeton
Funds
Financial
Statements
Statement
of
Assets
and
Liabilities
August
31,
2020
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
13
Templeton
International
Climate
Change
Fund
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
...................................................................
$1,682,478
Cost
-
Non-controlled
affiliates
(Note
3
e
)
........................................................
74,649
Value
-
Unaffiliated
issuers
..................................................................
$2,048,025
Value
-
Non-controlled
affiliates
(Note
3
e
)
.......................................................
74,649
Receivables:
Dividends
...............................................................................
2,619
Affiliates
................................................................................
90,318
Other
assets
..............................................................................
57
Total
assets
..........................................................................
2,215,668
Liabilities:
Payables:
Investment
securities
purchased
..............................................................
15,755
Professional
fees
.........................................................................
54,406
Accrued
expenses
and
other
liabilities
...........................................................
3,980
Total
liabilities
.........................................................................
74,141
Net
assets,
at
value
.................................................................
$2,141,527
Net
assets
consist
of:
Paid-in
capital
.............................................................................
$1,990,852
Total
distributable
earnings
(losses)
.............................................................
150,675
Net
assets,
at
value
.................................................................
$2,141,527
Shares
outstanding
.........................................................................
200,000
Net
asset
value
and
maximum
offering
price
per
share
...............................................
$10.71
Templeton
Funds
Financial
Statements
Statement
of
Operations
for
the
year
ended
August
31,
2020
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
14
Templeton
International
Climate
Change
Fund
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$4,946)
Unaffiliated
issuers
........................................................................
$31,491
Non-controlled
affiliates
(Note
3
e
)
.............................................................
607
Total
investment
income
...................................................................
32,098
Expenses:
Management
fees
(Note
3
a
)
...................................................................
13,248
Transfer
agent
fees
(Note
3
d
)
..................................................................
547
Custodian
fees
(Note
4
)
......................................................................
633
Reports
to
shareholders
......................................................................
2,821
Registration
and
filing
fees
....................................................................
3,285
Professional
fees
...........................................................................
80,513
Other
....................................................................................
20,954
Total
expenses
.........................................................................
122,001
Expense
reductions
(Note
4
)
...............................................................
(188)
Expenses
waived/paid
by
affiliates
(Note
3f)
....................................................
(103,567)
Net
expenses
.........................................................................
18,246
Net
investment
income
................................................................
13,852
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
......................................................................
(198,191)
Foreign
currency
transactions
................................................................
556
Net
realized
gain
(loss)
..................................................................
(197,635)
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
......................................................................
601,707
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
..............................
39
Net
change
in
unrealized
appreciation
(depreciation)
............................................
601,746
Net
realized
and
unrealized
gain
(loss)
............................................................
404,111
Net
increase
(decrease)
in
net
assets
resulting
from
operations
..........................................
$417,963
Templeton
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
15
Templeton
International
Climate
Change
Fund
Year
Ended
August
31,
2020
Year
Ended
August
31,
2019
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
.................................................
$13,852
$53,077
Net
realized
gain
(loss)
.................................................
(197,635)
(22,039)
Net
change
in
unrealized
appreciation
(depreciation)
...........................
601,746
(162,198)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
................
417,963
(131,160)
Distributions
to
shareholders
..............................................
(59,000)
(14,800)
Net
increase
(decrease)
in
net
assets
...................................
358,963
(145,960)
Net
assets:
Beginning
of
year
.......................................................
1,782,564
1,928,524
End
of
year
...........................................................
$2,141,527
$1,782,564
Templeton
Funds
Notes
to
Financial
Statements
Templeton
International
Climate
Change
Fund
16
Annual
Report
1.
Organization
and
Significant
Accounting
Policies
Templeton
Funds (Trust)
is
registered
under
the
Investment
Company
Act
of
1940
(1940
Act)
as
an
open-end
management
investment
company,
consisting
of three separate
funds
and
applies
the
specialized
accounting
and
reporting
guidance
in
U.S.
Generally
Accepted
Accounting
Principles
(U.S.
GAAP).
Templeton
International
Climate
Change
Fund
(Fund)
is
included
in
this
report.
The
Fund
has five
classes
of
shares:
Class
A,
Class
C,
Class
R,
Class
R6
and
Advisor
Class. Each
class
of
shares
may
differ
by
its
initial
sales
load,
contingent
deferred
sales
charges,
voting
rights
on
matters
affecting
a
single
class,
its
exchange
privilege
and
fees
due
to
differing
arrangements
for
distribution
and
transfer
agent
fees. 
The
Fund
currently
operates
with
one
class
of
shares,
Advisor
Class.
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.
Under
compliance
policies
and
procedures
approved
by
the
Trust’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. 
Investments
in
open-end
mutual
funds
are
valued
at
the
closing
NAV.
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
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
Templeton
Funds
Notes
to
Financial
Statements
17
Annual
Report
Templeton
International
Climate
Change
Fund
(continued)
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.
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. 
d.
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.
Estimated
expenses
are
accrued
daily.
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
1.
Organization
and
Significant
Accounting
Policies
(continued)
a.
Financial
Instrument
Valuation 
(continued)
Templeton
Funds
Notes
to
Financial
Statements
18
Annual
Report
Templeton
International
Climate
Change
Fund
(continued)
reclassifications
have
no
impact
on
net
assets
or
the
results
of
operations.
Temporary
differences
are
not
reclassified,
as
they
may
reverse
in
subsequent
periods.
Common
expenses
incurred
by
the
Trust
are
allocated
among
the
Funds
based
on
the
ratio
of
net
assets
of
each
Fund
to
the
combined
net
assets
of
the
Trust
or
based
on
the
ratio
of
number
of
shareholders
of
each
Fund
to
the
combined
number
of
shareholders
of
the
Trust.
Fund
specific
expenses
are
charged
directly
to
the
Fund
that
incurred
the
expense.
Realized
and
unrealized
gains
and
losses
and
net
investment
income,
excluding
class
specific
expenses,
are
allocated
daily
to
each
class
of
shares
based
upon
the
relative
proportion
of
net
assets
of
each
class.
Differences
in
per
share
distributions
by
class
are
generally
due
to
differences
in
class
specific
expenses.
e.
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.
f.
Guarantees
and
Indemnifications
Under
the
Trust’s
organizational
documents,
its
officers
and
trustees
are
indemnified
by
the
Trust
against
certain
liabilities
arising
out
of
the
performance
of
their
duties
to
the
Trust.
Additionally,
in
the
normal
course
of
business,
the
Trust,
on
behalf
of
the
Fund,
enters
into
contracts
with
service
providers
that
contain
general
indemnification
clauses.
The
Trust’s
maximum
exposure
under
these
arrangements
is
unknown
as
this
would
involve
future
claims
that
may
be
made
against
the
Trust
that
have
not
yet
occurred.
Currently,
the
Trust
expects
the
risk
of
loss
to
be
remote.
2.
Shares
of
Beneficial
Interest
At
August
31,
2020,
there
were
an
unlimited
number
of
shares
authorized
(without
par
value).
During
the
years ended
August
31,
2020
and
2019
there
were
no
transactions
of
the
Fund’s
shares.
3.
Transactions
with
Affiliates
Franklin
Resources,
Inc.
is
the
holding
company
for
various
subsidiaries
that
together
are
referred
to
as
Franklin
Templeton.
Certain
officers
and
trustees
of
the
Fund
are
also
officers
and/or
directors
of
the
following
subsidiaries:
Subsidiary
Affiliation
Franklin
Templeton
Investment
Corporation
(FTIC)
Investment
manager
Franklin
Templeton
Services,
LLC
(FT
Services)
Administrative
manager
Franklin
Templeton
Distributors,
Inc.
(Distributors)
Principal
underwriter
Franklin
Templeton
Investor
Services,
LLC
(Investor
Services)
Transfer
agent
1.
Organization
and
Significant
Accounting
Policies
(continued)
d.
Security
Transactions,
Investment
Income,
Expenses
and
Distributions
(continued)
Templeton
Funds
Notes
to
Financial
Statements
19
Annual
Report
Templeton
International
Climate
Change
Fund
(continued)
a.
Management
Fees
The
Fund
pays
an
investment
management
fee
to
FTIC
based
on
the
average
daily
net
assets
of
the
Fund
as
follows:
b.
Administrative
Fees
Under
an
agreement
with
FTIC,
FT
Services
provides
administrative
services
to
the
Fund.
The
fee
is
paid
by
FTIC
based
on
the
Fund's
average
daily
net
assets,
and
is
not
an
additional
expense
of
the
Fund.
c.
Distribution
Fees
The
Board
has
adopted
distribution
plans
for
each
share
class,
with
the
exception
of
Class
R6
and
Advisor
Class
shares,
pursuant
to
Rule
12b-1
under
the
1940
Act.
Under
the
Fund’s
Class
A
reimbursement
distribution
plan,
the
Fund
reimburses
Distributors
for
costs
incurred
in
connection
with
the
servicing,
sale
and
distribution
of the
Fund's
shares
up
to
the
maximum
annual
plan
rate.
Under
the
Class
A
reimbursement
distribution
plan,
costs
exceeding
the
maximum
for
the
current
plan
year
cannot
be
reimbursed
in
subsequent
periods.
In
addition,
under
the
Fund’s
Class
C
and
R
compensation
distribution
plans,
the
Fund
pays
Distributors
for
costs
incurred
in
connection
with
the
servicing,
sale
and
distribution
of
the
Fund's
shares
up
to
the
maximum
annual
plan
rate
for
each
class.
The
plan
year,
for
purposes
of
monitoring
compliance
with
the
maximum
annual
plan
rates,
is
February
1
through
January
31.
The
maximum
annual
plan
rates,
based
on
the
average
daily
net
assets,
for
each
class,
are
as
follows:
d.
Transfer
Agent
Fees
Each
class of
shares
pays
transfer
agent
fees
to
Investor
Services
for
its
performance
of
shareholder
servicing
obligations.
The
fees
are
based
on
an
annualized
asset
based
fee
of
0.02%
plus
a
transaction
based
fee.
In
addition,
each
class reimburses
Investor
Services
for
out
of
pocket
expenses
incurred
and,
except
for
Class
R6,
reimburses
shareholder
servicing
fees
paid
to
third
parties.
These
fees
are
allocated
daily
based
upon
their
relative
proportion
of
such
classes’
aggregate
net
assets.
Class
R6
pays
Investor
Services
transfer
agent
fees
specific
to
that
class.
For
the
year
ended
August
31,
2020,
the
Fund
paid
transfer
agent
fees
of
$547
which were
retained
by
Investor
Services.
Annualized
Fee
Rate
Net
Assets
0.705%
Up
to
and
including
$1
billion
0.690%
Over
$1
billion,
up
to
and
including
$5
billion
0.675%
Over
$5
billion,
up
to
and
including
$10
billion
0.655%
Over
$10
billion,
up
to
and
including
$15
billion
0.635%
Over
$15
billion,
up
to
and
including
$20
billion
0.615%
Over
$20
billion,
up
to
and
including
$25
billion
0.605%
Over
$25
billion,
up
to
and
including
$30
billion
0.595%
Over
$30
billion,
up
to
and
including
$35
billion
0.585%
In
excess
of
$35
billion
Class
A
....................................................................................
0.25%
Class
C
....................................................................................
1.00%
Class
R
....................................................................................
0.50%
3.
Transactions
with
Affiliates
(continued)
Templeton
Funds
Notes
to
Financial
Statements
20
Annual
Report
Templeton
International
Climate
Change
Fund
(continued)
e.
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:
f.
Waiver
and
Expense
Reimbursements
FTIC
has
contractually
agreed
in
advance
to
waive
or
limit
its
fees
and
to
assume
as
its
own
expense
certain
expenses
otherwise
payable
by
the
Fund
so
that
the
operating expenses
(excluding
distribution
fees,
acquired
fund
fees
and
expenses
and
certain
non-routine
expenses
or
costs,
including
those
relating
to
litigation,
indemnification,
reorganizations,
and
liquidations)
of
the
Fund
does
not
exceed
0.97%
based
on
the
average
net
assets
of
each
class
until
December
31,
2020.Total
expenses
waived
or
paid
are
not
subject
to
recapture
subsequent
to
the
Fund's
fiscal
year
end.
g.
Other
Affiliated
Transactions
At
August
31,
2020,
Franklin
Resources,
Inc.
owned
100%
of
the
Fund's
outstanding
shares.
Investment
activities
of
this
shareholder
could
have
a
material
impact
on
the
Fund.
4.
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. 
5.
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:
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
Templeton
International
Climate
Change
Fund
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0%
.........
$36,996
$457,216
$(419,563)
$
—
$
—
$
74,649
74,649
$
607
Total
Affiliated
Securities
....
$36,996
$457,216
$(419,563)
$—
$—
$74,649
$607
Capital
loss
carryforwards
not
subject
to
expiration:
Short
term
................................................................................
$52,792
Long
term
................................................................................
170,062
Total
capital
loss
carryforwards
...............................................................
$222,854
3.
Transactions
with
Affiliates
(continued)
Templeton
Funds
Notes
to
Financial
Statements
21
Annual
Report
Templeton
International
Climate
Change
Fund
(continued)
The
tax
character
of
distributions
paid
during
the
years
ended
August
31,
2020
and
August
31,
2019,
was
as
follows:
At
August
31,
2020,
the
cost
of
investments,
net
unrealized
appreciation
(depreciation)
and
undistributed
ordinary
income
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
of
wash
sales.
6.
Investment
Transactions
Purchases
and
sales
of
investments
(excluding
short
term
securities)
for
the
year
ended
August
31,
2020,
aggregated
$707,040
and
$783,282,
respectively.
7.
Concentration
of
Risk
Investing
in
foreign
securities
may
include
certain
risks
and
considerations
not
typically
associated
with
investing
in
U.S.
securities,
such
as
fluctuating
currency
values
and
changing
local,
regional
and
global
economic,
political
and
social
conditions,
which
may
result
in
greater
market
volatility.
Current
political
and
financial
uncertainty
surrounding
the
European
Union
may
increase
market
volatility
and
the
economic
risk
of
investing
in
securities
in
Europe.
In
addition,
certain
foreign
securities
may
not
be
as
liquid
as
U.S.
securities.
8. 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.
9.
Credit
Facility
The
Fund,
together
with
other
U.S.
registered
and
foreign
investment
funds
(collectively,
Borrowers),
managed
by
Franklin
Templeton,
are
borrowers
in
a
joint
syndicated
senior
unsecured
credit
facility
totaling
$2
billion
(Global
Credit
Facility)
which
matures
on
February
5,
2021.
This
Global
Credit
Facility
provides
a
source
of
funds
to
the
Borrowers
for
temporary
and
emergency
purposes,
including
the
ability
to
meet
future
unanticipated
or
unusually
large
redemption
requests.
2020
2019
Distributions
paid
from:
Ordinary
income
..........................................................
$59,000
$14,800
Cost
of
investments
..........................................................................
$1,761,505
Unrealized
appreciation
........................................................................
$424,944
Unrealized
depreciation
........................................................................
(63,775)
Net
unrealized
appreciation
(depreciation)
..........................................................
$361,169
Distributable
earnings:
Undistributed
ordinary
income
...................................................................
$12,321
5.
Income
Taxes
(continued)
Templeton
Funds
Notes
to
Financial
Statements
22
Annual
Report
Templeton
International
Climate
Change
Fund
(continued)
Under
the
terms
of
the
Global
Credit
Facility,
the
Fund
shall,
in
addition
to
interest
charged
on
any
borrowings
made
by
the
Fund
and
other
costs
incurred
by
the Fund,
pay
its
share
of
fees
and
expenses
incurred
in
connection
with
the
implementation
and
maintenance
of
the
Global
Credit
Facility,
based
upon
its
relative
share
of
the
aggregate
net
assets
of
all
of
the
Borrowers,
including
an
annual
commitment
fee
of
0.15%
based
upon
the
unused
portion
of
the
Global
Credit
Facility.
These
fees
are
reflected
in
other
expenses
in
the
Statement
of
Operations.
During
the
year
ended
August
31,
2020,
the Fund
did
not
use
the
Global
Credit
Facility.
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)
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
carried
at
fair
value,
is
as
follows:
Level
1
Level
2
Level
3
Total
Templeton
International
Climate
Change
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Belgium
.............................
$
—
$
129,660
$
—
$
129,660
China
...............................
—
33,272
—
33,272
Denmark
............................
—
137,438
—
137,438
France
..............................
—
274,687
—
274,687
Germany
............................
—
253,422
—
253,422
India
................................
64,792
—
—
64,792
Italy
................................
—
93,198
—
93,198
Japan
...............................
—
272,329
—
272,329
Mexico
..............................
13,132
—
—
13,132
Netherlands
..........................
—
156,635
—
156,635
Singapore
............................
—
27,176
—
27,176
South
Korea
..........................
—
110,210
—
110,210
Spain
...............................
—
141,964
—
141,964
Sweden
.............................
—
116,836
—
116,836
Switzerland
...........................
—
43,006
—
43,006
Taiwan
..............................
63,400
57,126
—
120,526
United
Kingdom
.......................
—
59,742
—
59,742
Short
Term
Investments
...................
74,649
—
—
74,649
Total
Investments
in
Securities
...........
$215,973
$1,906,701
$—
$2,122,674
9.
Credit
Facility
(continued)
Templeton
Funds
Notes
to
Financial
Statements
23
Annual
Report
Templeton
International
Climate
Change
Fund
(continued)
11.
New
Accounting
Pronouncements
In
March
2020,
the
Financial
Accounting
Standards
Board
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
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
events
through
the
issuance
of
the financial
statements
and
determined
that
no
events
have
occurred
that
require
disclosure.
Abbreviations
Selected
Portfolio
ADR
American
Depositary
Receipt
GDR
Global
Depositary
Receipt
Templeton
Funds
Report
of
Independent
Registered
Public
Accounting
Firm
24
Annual
Report
To
the
Board
of
Trustees
of
Templeton
Funds
and
Shareholders
of
Templeton
International
Climate
Change
Fund
Opinion
on
the
Financial
Statements
We
have
audited
the
accompanying
statement
of
assets
and
liabilities,
including
the
statement
of
investments,
of
Templeton
International
Climate
Change
Fund
(one
of
the
funds
constituting
Templeton
Funds,
referred
to
hereafter
as
the
“Fund”)
as
of
August
31,
2020,
the
related
statement
of
operations
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
periods
indicated
therein
(collectively
referred
to
as
the
“financial
statements”).
In
our
opinion,
the
financial
statements
present
fairly,
in
all
material
respects,
the
financial
position
of
the
Fund
as
of
August
31,
2020,
the
results
of
its
operations
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
periods
indicated
therein
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
19,
2020
We
have
served
as
the
auditor
of
one
or
more
investment
companies
in
the
Franklin
Templeton
Group
of
Funds
since
1948.
Templeton
Funds
Tax
Information
(unaudited)
25
Annual
Report
Templeton
International
C
limate
Change
Fund
Under
Section
854(b)(1)(B)
of
the
Internal
Revenue
Code,
the
Fund
hereby
reports
the
maximum
amount
allowable
but
no
less
than
$32,858
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.
At
August
31,
2020,
more
than
50%
of
the
Fund's
total
assets
were
invested
in
securities
of
foreign
issuers.
In
most
instances,
foreign
taxes
were
withheld
from
income
paid
to
the
Fund
on
these
investments.
The
Fund
elects
to
treat
foreign
taxes
paid
as
allowed
under
Section
853
of
the
Internal
Revenue
Code.
This
election
will
allow
shareholders
of
record
as
of
the
2020
distribution
date,
to
treat
their
proportionate
share
of
foreign
taxes
paid
by
the
Fund
as
having
been
paid
directly
by
them.
The
shareholder
shall
consider
these
amounts
as
foreign
taxes
paid
in
the
tax
year
in
which
they
receive
the
Fund
distribution.
Templeton
Funds
Board
Members
and
Officers
26
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
1992
126
Bar-S
Foods
(meat
packing
company)
(1981-2010).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
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).
Ann
Torre
Bates
(1958)
Trustee
Since
2008
30
Ares
Capital
Corporation
(specialty
finance
company)
(2010-present),
United
Natural
Foods,
Inc.
(distributor
of
natural,
organic
and
specialty
foods)
(2013-present),
formerly
,
Allied
Capital
Corporation
(financial
services)
(2003-
2010),
SLM
Corporation
(Sallie
Mae)
(1997-2014)
and
Navient
Corporation
(loan
management,
servicing
and
asset
recovery)
(2014-2016).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Executive
Vice
President
and
Chief
Financial
Officer,
NHP
Incorporated
(manager
of
multifamily
housing)
(1995-1997);
and
Vice
President
and
Treasurer,
US
Airways,
Inc.
(until
1995).
Mary
C.
Choksi
(1950)
Trustee
Since
2016
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).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
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).
Templeton
Funds
27
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
2003
and
Lead
Independent
Trustee
since
2007
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).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
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).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
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).
David
W.
Niemiec
(1949)
Trustee
Since
2005
30
Hess
Midstream
LP
(oil
and
gas
midstream
infrastructure)
(2017-present).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Advisor,
Saratoga
Partners
(private
equity
fund);
and
formerly
,
Managing
Director,
Saratoga
Partners
(1998-2001)
and
SBC
Warburg
Dillon
Read
(investment
banking)
(1997-1998);
Vice
Chairman,
Dillon,
Read
&
Co.
Inc.
(investment
banking)
(1991-1997);
and
Chief
Financial
Officer,
Dillon,
Read
&
Co.
Inc.
(1982-1997).
Larry
D.
Thompson
(1945)
Trustee
Since
2005
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).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
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)
Templeton
Funds
28
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
Constantine
D.
Tseretopoulos
(1954)
Trustee
Since
2003
19
None
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Physician,
Chief
of
Staff,
owner
and
operator
of
the
Lyford
Cay
Hospital
(1987-present);
director
of
various
nonprofit
organizations;
and
formerly
,
Cardiology
Fellow,
University
of
Maryland
(1985-1987);
and
Internal
Medicine
Resident,
Greater
Baltimore
Medical
Center
(1982-
1985).
Robert
E.
Wade
(1946)
Trustee
Since
2006
30
El
Oro
Ltd
(investments)
(2003-
2019).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Attorney
at
law
engaged
in
private
practice
as
a
sole
practitioner
(1972-2008)
and
member
of
various
boards.
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
Vice
President
Chairman
of
the
Board
since
2013,
Trustee
since
1992
and
Vice
President
since
1996
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.
Alan
T.
Bartlett
(1970)
President
and
Chief
Executive
Officer
–
Investment
Management
Since
December
2019
Not
Applicable
Not
Applicable
Lyford
Cay
Nassau,
Bahamas
Principal
Occupation
During
at
Least
the
Past
5
Years:
President
and
Director,
Templeton
Global
Advisors
Limited;
Chief
Investment
Officer
of
Templeton
Global
Equity
Group;
officer
of
five
of
the
investment
companies
in
Franklin
Templeton;
Chairman
of
the
Board,
Goodhart
Partners;
and
formerly
,
Chief
Executive
Officer,
Goodhart
Partners
(2009-2019).
Independent
Board
Members
(continued)
Templeton
Funds
29
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
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.
Steven
J.
Gray
(1955)
Vice
President
Since
2009
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
G.
Kubilis
(1973)
Chief
Financial
Officer,
Chief
Accounting
Officer
and
Treasurer
Since
2017
Not
Applicable
Not
Applicable
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Treasurer,
U.S.
Fund
Administration
&
Reporting
and
officer
of
15
of
the
investment
companies
in
Franklin
Templeton.
Robert
Lim
(1948)
Vice
President
–
AML
Compliance
Since
2016
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Vice
President,
Franklin
Templeton
Companies,
LLC;
Chief
Compliance
Officer,
Franklin
Templeton
Distributors,
Inc.
and
Franklin
Templeton
Investor
Services,
LLC;
and
officer
of
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-
1923x
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).
Interested
Board
Members
and
Officers
(continued)
Templeton
Funds
30
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
U.S.
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
each
of
Ann
Torre
Bates
and
David
W.
Niemiec
as
an
audit
committee
financial
expert.
The
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
qualify
as
such
an
expert
in
view
of
their
extensive
business
background
and
experience.
Ms.
Bates
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2008.
She
currently
serves
as
a
director
of
Ares
Capital
Corporation
(2010-present)
and
United
Natural
Foods,
Inc.
(2013-present)
and
was
formerly
a
director
of
Navient
Corporation
from
2014
to
2016,
SLM
Corporation
from
1997
to
2014
and
Allied
Capital
Corporation
from
2003
to
2010,
Executive
Vice
President
and
Chief
Financial
Officer
of
NHP
Incorporated
from
1995
to
1997
and
Vice
President
and
Treasurer
of
US
Airways,
Inc.
until
1995.
Mr.
Niemiec
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2005,
currently
serves
as
an
Advisor
to
Saratoga
Partners
and
was
formerly
its
Managing
Director
from
1998
to
2001
and
serves
as
a
director
of
Hess
Midstream
Partners
LP
(2017-present).
Mr.
Niemiec
was
formerly
a
director
of
Emeritus
Corporation
from
1999
to
2010
and
OSI
Pharmaceuticals,
Inc.
from
2006
to
2010,
Managing
Director
of
SBC
Warburg
Dillon
Read
from
1997
to
1998,
and
was
Vice
Chairman
from
1991
to
1997
and
Chief
Financial
Officer
from
1982
to
1997
of
Dillon,
Read
&
Co.
Inc.
As
a
result
of
such
background
and
experience,
the
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
have
each
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.
Bates
and
Mr.
Niemiec
are
independent
Board
members
as
that
term
is
defined
under
the
applicable
U.S.
Securities
and
Exchange
Commission
Rules
and
Releases.
The
Statement
of
Additional
Information
(SAI)
includes
additional
information
about
the
board
members
and
is
available,
without
charge,
upon
request.
Shareholders
may
call
(800)
DIAL
BEN/342-5236
to
request
the
SAI.
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
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
Secretary
Vice
President
since
2011
and
Secretary
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:
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)
Templeton
Funds
Shareholder
Information
31
Annual
Report
Board
Approval
of
Investment
Management
Agreements
TEMPLETON
FUNDS
Templeton
International
Climate
Change
Fund
(Fund)
At
a
meeting
held
on
May
13,
2020
(Meeting),
the
Board
of
Trustees
(Board)
of
Templeton
Funds
(Trust),
including
a
majority
of
the
trustees
who
are
not
“interested
persons”
as
defined
in
the
Investment
Company
Act
of
1940
(Independent
Trustees),
reviewed
and
approved
the
continuance
of
the
investment
management
agreement
between
Franklin
Templeton
Investments
Corp.
(Manager)
and
the
Trust,
on
behalf
of
the
Fund
(Management
Agreement)
for
an
additional
one-year
period.
The
Independent
Trustees
received
advice
from
and
met
separately
with
Independent
Trustee
counsel
in
considering
whether
to
approve
the
continuation
of
the
Management
Agreement.
In
considering
the
continuation
of
the
Management
Agreement,
the
Board
reviewed
and
considered
information
provided
by
the
Manager
at
the
Meeting
and
throughout
the
year
at
meetings
of
the
Board
and
its
committees.
The
Board
also
reviewed
and
considered
information
provided
in
response
to
a
detailed
set
of
requests
for
information
submitted
to
the
Manager
by
Independent
Trustee
counsel
on
behalf
of
the
Independent
Trustees
in
connection
with
the
annual
contract
renewal
process.
In
addition,
prior
to
the
Meeting,
the
Independent
Trustees
held
a
telephonic
contract
renewal
meeting
at
which
the
Independent
Trustees
conferred
amongst
themselves
and
Independent
Trustee
counsel
about
contract
renewal
matters
and,
in
some
cases,
requested
additional
information
from
the
Manager
relating
to
the
contract.
The
Board
reviewed
and
considered
all
of
the
factors
it
deemed
relevant
in
approving
the
continuance
of
the
Management
Agreement,
including,
but
not
limited
to:
(i)
the
nature,
extent
and
quality
of
the
services
provided
by
the
Manager;
(ii)
the
investment
performance
of
the
Fund;
(iii)
the
costs
of
the
services
provided
and
profits
realized
by
the
Manager
and
its
affiliates
from
the
relationship
with
the
Fund;
(iv)
the
extent
to
which
economies
of
scale
are
realized
as
the
Fund
grows;
and
(v)
whether
fee
levels
reflect
these
economies
of
scale
for
the
benefit
of
Fund
investors.
In
approving
the
continuance
of
the
Management
Agreement,
the
Board,
including
a
majority
of
the
Independent
Trustees,
determined
that
the
terms
of
the
Management
Agreement
are
fair
and
reasonable
and
that
the
continuance
of
such
Management
Agreement
is
in
the
interests
of
the
Fund
and
its
shareholders.
While
attention
was
given
to
all
information
furnished,
the
following
discusses
some
primary
factors
relevant
to
the
Board’s
determination.
Nature,
Extent
and
Quality
of
Services
The
Board
reviewed
and
considered
information
regarding
the
nature,
extent
and
quality
of
investment
management
services
provided
by
the
Manager
and
its
affiliates
to
the
Fund
and
its
shareholders.
This
information
included,
among
other
things,
the
qualifications,
background
and
experience
of
the
senior
management
and
investment
personnel
of
the
Manager,
as
well
as
information
on
succession
planning
where
appropriate;
the
structure
of
investment
personnel
compensation;
oversight
of
third-
party
service
providers;
investment
performance
reports
and
related
financial
information
for
the
Fund;
reports
on
expenses
and
shareholder
services;
legal
and
compliance
matters;
risk
controls;
pricing
and
other
services
provided
by
the
Manager
and
its
affiliates;
and
management
fees
charged
by
the
Manager
and
its
affiliates
to
US
funds
and
other
accounts,
including
management’s
explanation
of
differences
among
accounts
where
relevant.
The
Board
also
reviewed
and
considered
an
annual
report
on
payments
made
by
Franklin
Templeton
(FT)
or
the
Fund
to
financial
intermediaries,
as
well
as
a
memorandum
relating
to
third-
party
servicing
arrangements,
which
included
discussion
of
the
changing
distribution
landscape
for
the
Fund.
The
Board
noted
management’s
continuing
efforts
and
expenditures
in
establishing
effective
business
continuity
plans
and
developing
strategies
to
address
areas
of
heightened
concern
in
the
mutual
fund
industry,
such
as
cybersecurity
and
liquidity
risk
management.
The
Board
also
reviewed
and
considered
the
benefits
provided
to
Fund
shareholders
of
investing
in
a
fund
that
is
part
of
the
FT
family
of
funds.
The
Board
noted
the
financial
position
of
Franklin
Resources,
Inc.
(FRI),
the
Manager’s
parent,
and
its
commitment
to
the
mutual
fund
business
as
evidenced
by
its
continued
introduction
of
new
funds,
reassessment
of
the
fund
offerings
in
response
to
the
market
environment
and
project
initiatives
and
capital
investments
relating
to
the
services
provided
to
the
Fund
by
the
FT
organization.
The
Board
specifically
noted
FT’s
commitment
to
enhancing
services
and
controlling
costs,
as
reflected
in
its
plan
to
outsource
certain
administrative
functions,
and
growth
opportunities,
as
evidenced
by
its
upcoming
acquisition
of
the
Legg
Mason
companies.
The
Templeton
Funds
Shareholder
Information
32
Annual
Report
Board
acknowledged
the
change
in
leadership
at
FRI
and
the
opportunity
to
hear
from
Jennifer
Johnson,
President
and
Chief
Executive
Officer
of
FRI,
about
goals
she
has
for
the
company
that
will
benefit
the
Fund.
Following
consideration
of
such
information,
the
Board
was
satisfied
with
the
nature,
extent
and
quality
of
services
provided
by
the
Manager
and
its
affiliates
to
the
Fund
and
its
shareholders.
Fund
Performance
The
Board
reviewed
and
considered
the
performance
results
of
the
Fund
over
the
one-year
period
ended
February
29,
2020.
The
Board
noted
that
the
Fund
commenced
operations
on
June
1,
2018
and
that
the
Fund
is
100%
owned
by
FRI
and
is
not
currently
sold
to
the
public.
The
Board
considered
the
performance
return
for
the
Fund
in
comparison
to
the
performance
returns
of
mutual
funds
deemed
comparable
to
the
Fund
included
in
a
universe
(Performance
Universe)
selected
by
Broadridge
Financial
Solutions,
Inc.
(Broadridge),
an
independent
provider
of
investment
company
data.
The
Board
received
a
description
of
the
methodology
used
by
Broadridge
to
select
the
mutual
funds
included
in
a
Performance
Universe.
The
Board
also
reviewed
and
considered
Fund
performance
reports
provided
and
discussions
that
occurred
with
portfolio
managers
at
Board
meetings
throughout
the
year.
A
summary
of
the
Fund’s
performance
results
is
below.
The
Performance
Universe
for
the
Fund
included
the
Fund
and
all
retail
and
institutional
international
multi-cap
core
funds.
The
Board
noted
that
the
Fund’s
annualized
total
return
for
the
one-year
period
was
above
the
median
and
in
the
first
quintile
(best)
of
its
Performance
Universe.
The
Board
concluded
that
the
Fund’s
performance
was
satisfactory.
Comparative
Fees
and
Expenses
The
Board
reviewed
and
considered
information
regarding
the
Fund’s
actual
total
expense
ratio
and
its
various
components,
including,
as
applicable,
management
fees;
transfer
agent
expenses;
underlying
fund
expenses;
Rule
12b-1
and
non-Rule
12b-1
service
fees;
and
other
non-
management
fees.
The
Board
also
noted
the
quarterly
and
annual
reports
it
receives
on
all
marketing
support
payments
made
by
FT
to
financial
intermediaries.
The
Board
considered
the
actual
total
expense
ratio
and,
separately,
the
contractual
management
fee
rate,
without
the
effect
of
fee
waivers,
if
any
(Management
Rate)
of
the
Fund
in
comparison
to
the
median
expense
ratio
and
median
Management
Rate,
respectively,
of
other
mutual
funds
deemed
comparable
to
and
with
a
similar
expense
structure
to
the
Fund
selected
by
Broadridge
(Expense
Group).
Broadridge
fee
and
expense
data
is
based
upon
information
taken
from
each
fund’s
most
recent
annual
report,
which
reflects
historical
asset
levels
that
may
be
quite
different
from
those
currently
existing,
particularly
in
a
period
of
market
volatility.
While
recognizing
such
inherent
limitation
and
the
fact
that
expense
ratios
and
Management
Rates
generally
increase
as
assets
decline
and
decrease
as
assets
grow,
the
Board
believed
the
independent
analysis
conducted
by
Broadridge
to
be
an
appropriate
measure
of
comparative
fees
and
expenses.
The
Broadridge
Management
Rate
includes
administrative
charges,
and
the
actual
total
expense
ratio,
for
comparative
consistency,
was
shown
for
Advisor
Class
shares
for
the
Fund
and
Class
I,
Class
S,
Class
Y
and
Institutional
Class
shares
for
funds
in
the
Expense
Group
with
multiple
classes
of
shares.
The
Board
received
a
description
of
the
methodology
used
by
Broadridge
to
select
the
mutual
funds
included
in
an
Expense
Group.
The
Expense
Group
for
the
Fund
included
the
Fund
and
16
other
international
multi-cap
core
funds,
all
of
which
were
institutional
funds.
The
Board
noted
that
the
Management
Rate
for
the
Fund
was
below
the
median
and
in
the
first
quintile
(least
expensive)
of
its
Expense
Group.
The
Board
also
noted
that
the
actual
total
expense
ratio
for
the
Fund
was
slightly
above
the
median
of
its
Expense
Group.
The
Board
concluded
that
the
Management
Rate
charged
to
the
Fund
is
reasonable.
Profitability
The
Board
reviewed
and
considered
information
regarding
the
profits
realized
by
the
Manager
and
its
affiliates
in
connection
with
the
operation
of
the
Fund.
In
this
respect,
the
Board
considered
the
Fund
profitability
analysis
provided
by
the
Manager
that
addresses
the
overall
profitability
of
FT’s
US
fund
business,
as
well
as
its
profits
in
providing
investment
management
and
other
services
to
each
of
the
individual
funds
during
the
12-month
period
ended
September
30,
2019,
being
the
most
recent
fiscal
year-
end
for
FRI.
The
Board
noted
that
although
management
continually
makes
refinements
to
its
methodologies
used
in
calculating
profitability
in
response
to
organizational
and
product-related
changes,
the
overall
methodology
has
remained
consistent
with
that
used
in
the
Fund’s
profitability
report
presentations
from
prior
years.
Additionally,
PricewaterhouseCoopers
LLP,
auditor
to
FRI
and
certain
FT
funds,
was
engaged
by
the
Manager
to
review
and
assess
the
allocation
methodologies
to
be
used
solely
by
the
Fund’s
Board
with
respect
to
the
profitability
analysis.
The
Board
noted
management’s
belief
that
costs
incurred
in
establishing
the
infrastructure
necessary
for
the
type
of
mutual
fund
operations
conducted
by
the
Manager
and
its
affiliates
may
not
be
fully
reflected
in
the
expenses
Templeton
Funds
Shareholder
Information
33
Annual
Report
allocated
to
the
Fund
in
determining
its
profitability,
as
well
as
the
fact
that
the
level
of
profits,
to
a
certain
extent,
reflected
operational
cost
savings
and
efficiencies
initiated
by
management.
As
part
of
this
evaluation,
the
Board
considered
the
initiative
currently
underway
to
outsource
certain
operations,
which
effort
would
require
considerable
up-front
expenditures
by
the
Manager
but,
over
the
long
run
is
expected
to
result
in
greater
efficiencies.
The
Board
also
noted
management’s
expenditures
in
improving
shareholder
services
provided
to
the
Fund,
as
well
as
the
need
to
implement
systems
and
meet
additional
regulatory
and
compliance
requirements
resulting
from
recent
US
Securities
and
Exchange
Commission
and
other
regulatory
requirements,
notably
in
the
area
of
cybersecurity
protections.
The
Board
also
considered
the
extent
to
which
the
Manager
and
its
affiliates
might
derive
ancillary
benefits
from
fund
operations,
including
revenues
generated
from
transfer
agent
services,
potential
benefits
resulting
from
personnel
and
systems
enhancements
necessitated
by
fund
growth,
as
well
as
increased
leverage
with
service
providers
and
counterparties.
Based
upon
its
consideration
of
all
these
factors,
the
Board
concluded
that
the
level
of
profits
realized
by
the
Manager
and
its
affiliates
from
providing
services
to
the
Fund
was
not
excessive
in
view
of
the
nature,
extent
and
quality
of
services
provided
to
the
Fund.
Economies
of
Scale
The
Board
reviewed
and
considered
the
extent
to
which
the
Manager
may
realize
economies
of
scale,
if
any,
as
the
Fund
grows
larger
and
whether
the
Fund’s
management
fee
structure
reflects
any
economies
of
scale
for
the
benefit
of
shareholders.
In
connection
with
this
review,
the
Trustees
noted
that
management
anticipates
that
the
parent
of
the
Manager
or
an
affiliate
will
be
the
sole
shareholder
of
the
Fund
for
a
period
of
time
after
which
the
Manager
will
consider
whether
to
offer
the
Fund
for
sale
to
the
public.
With
respect
to
possible
economies
of
scale
in
the
future,
the
Board
noted
the
existence
of
management
fee
breakpoints,
which
operate
generally
to
share
any
economies
of
scale
with
the
Fund’s
shareholders
by
reducing
the
Fund’s
effective
management
fees
as
the
Fund
grows
in
size,
though
it
is
not
anticipated
that
the
Fund
will
generate
significant,
if
any,
profit
for
the
Manager
and/or
its
affiliates
for
some
time.
Conclusion
Based
on
its
review,
consideration
and
evaluation
of
all
factors
it
believed
relevant,
including
the
above-described
factors
and
conclusions,
the
Board
unanimously
approved
the
continuation
of
the
Management
Agreement
for
an
additional
one-year
period.
Liquidity
Risk
Management
Program
Each
of
the
Funds
has
adopted
and
implemented
a
written
Liquidity
Risk
Management
Program
(the
“LRMP”)
as
required
by
Rule
22e-4
under
the
Investment
Company
Act
of
1940
(the
“Liquidity
Rule”).
The
LRMP
is
designed
to
assess
and
manage
each
Fund’s
liquidity
risk,
which
is
defined
as
the
risk
that
the
Fund
could
not
meet
requests
to
redeem
shares
issued
by
the
Fund
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
In
accordance
with
the
Liquidity
Rule,
the
LRMP
includes
policies
and
procedures
that
provide
for:
(1)
assessment,
management,
and
review
(no
less
frequently
than
annually)
of
each
Fund’s
liquidity
risk;
(2)
classification
of
each
Fund’s
portfolio
holdings
into
one
of
four
liquidity
categories
(Highly
Liquid,
Moderately
Liquid,
Less
Liquid,
and
Illiquid);
(3)
for
Funds
that
do
not
primarily
hold
assets
that
are
Highly
Liquid,
establishing
and
maintaining
a
minimum
percentage
of
the
Fund’s
net
assets
in
Highly
Liquid
investments
(called
a
“Highly
Liquid
Investment
Minimum”
or
“HLIM”);
and
(4)
prohibiting
the
Fund’s
acquisition
of
Illiquid
investments
that
would
result
in
the
Fund
holding
more
than
15%
of
its
net
assets
in
Illiquid
assets.
The
LRMP
also
requires
reporting
to
the
SEC
(on
a
non-public
basis)
and
to
the
Board
if
the
Fund’s
holdings
of
Illiquid
assets
exceed
15%
of
the
Fund’s
net
assets.
Funds
with
HLIMs
must
have
procedures
for
addressing
HLIM
shortfalls,
including
reporting
to
the
Board
and,
with
respect
to
HLIM
shortfalls
lasting
more
than
seven
consecutive
calendar
days,
reporting
to
the
Securities
and
Exchange
Commission
(“SEC”)
(on
a
non-public
basis).
The
Funds’
Board
of
Trustees
approved
the
appointment
of
the
Director
of
Liquidity
Risk
within
the
Investment
Risk
Management
Group
(the
“IRMG”)
as
the
Administrator
of
the
LRMP.
The
IRMG
maintains
the
Investment
Liquidity
Committee
(the
“ILC”)
to
provide
oversight
and
administration
of
policies
and
procedures
governing
liquidity
risk
management
for
FT
products
and
portfolios.
The
ILC
includes
representatives
from
Franklin
Templeton’s
Risk,
Trading,
Global
Compliance,
Investment
Compliance,
Investment
Operations,
Valuation
Committee
and
Product
Management
groups.
In
assessing
and
managing
each
Fund’s
liquidity
risk,
the
ILC
considers,
as
relevant,
a
variety
of
factors,
including
the
Fund’s
investment
strategy
and
the
liquidity
of
its
portfolio
investments
during
both
normal
and
reasonably
foreseeable
stressed
conditions;
its
short
and
long-term
cash
flow
projections;
and
its
cash
holdings
and
access
to
other
funding
sources
including
the
Funds’
interfund
lending
facility
and
line
of
credit..
Classification
of
the
Fund’s
portfolio
holdings
in
the
four
liquidity
categories
is
based
on
the
number
of
days
it
is
reasonably
expected
to
take
to
convert
Templeton
Funds
Shareholder
Information
34
Annual
Report
the
investment
to
cash
(for
Highly
Liquid
and
Moderately
Liquid
holdings)
or
sell
or
dispose
of
the
investment
(for
Less
Liquid
and
Illiquid
investments),
in
current
market
conditions
without
significantly
changing
the
investment’s
market
value.
The
Fund
primarily
holds
liquid
assets
that
are
defined
under
the
Liquidity
Rule
as
"Highly
Liquid
Investments,"
and
therefore
is
not
required
to
establish
an
HLIM.
Highly
Liquid
Investments
are
defined
as
cash
and
any
investment
reasonably
expected
to
be
convertible
to
cash
in
current
market
conditions
in
three
business
days
or
less
without
the
conversion
to
cash
significantly
changing
the
market
value
of
the
investment.
At
meetings
of
the
Funds’
Board
of
Trustees
held
in
May
2020,
the
Program
Administrator
provided
a
written
report
to
the
Board
addressing
the
adequacy
and
effectiveness
of
the
program
during
the
period
December
1,
2018
to
December
31,
2019.
The
Program
Administrator
report
concluded
that
(i.)
the
LRMP,
as
adopted
and
implemented,
remains
reasonably
designed
to
assess
and
manage
each
Fund’s
liquidity
risk;
(ii.)
the
LRMP,
including
the
Highly
Liquid
Investment
Minimum
(“HLIM”)
where
applicable,
was
implemented
and
operated
effectively
to
achieve
the
goal
of
assessing
and
managing
each
Fund’s
liquidity
risk;
and
(iii.)
each
Fund
was
able
to
meet
requests
for
redemption
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
At
the
same
time,
the
Program
Administrator
also
presented
the
Fund
Board
of
Trustees
an
update
on
liquidity
during
the
first
quarter
of
2020
in
relation
to
the
COVID-19
pandemic.
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
Trust,
on
behalf
of
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.
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 experts are Ann Torre Bates and
David W. Niemiec and they are "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 $193,441 for the fiscal year ended August 31, 2020 and $185,514 for the fiscal year ended August 31, 2019.
 
(b)      Audit-Related Fees
The aggregate 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 were $6,266 for the fiscal year ended August 31, 2020 and $6,266 for the fiscal year ended August 31, 2019. The services for which these fees were paid included attestation services.
 
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 $3,198 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 $145,744 for the fiscal year ended August 31, 2020 and $29,900 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, benchmarking services in connection with the ICI TA Survey, 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 $152,010 for the fiscal year ended August 31, 2020 and $59,364 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.             
N/A
 
 
Item 6. Schedule of Investments.
                            N/A
 
 
Item 7
. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.                           N/A
 
 
Item 8. Portfolio Managers of Closed-End Management Investment Companies.  N/A
 
 
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.                          N/A
 
 
Item 10. Submission of Matters to a Vote of Security Holders.
 
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that would require disclosure herein.
 
 
Item 11. Controls and Procedures.
 
(a)
 Evaluation of Disclosure Controls and Procedures.  The Registrant maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
 
Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.
 
 
(b)
  Changes in Internal Controls. 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.                            N/A
 
 
Item 13. Exhibits.
 
(a)(1)
Code of Ethics
 
 
(a)(2)
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Robert G. Kubilis, Chief Financial Officer and Chief Accounting Officer
 
 
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Robert G. Kubilis, Chief Financial Officer and Chief Accounting Officer
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
TEMPLETON FUNDS
 
 
 
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\ROBERT G. KUBILIS______
Robert G. Kubilis
Chief Financial Officer
and
Chief Accounting Officer
Date:  October 27, 2020