N-CSRS 1 primary-document.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM N-CSRS
 
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: 2/28/21_
 
Item 1. Reports to Stockholders.
 
a.)
 
The following is a copy of the report transmitted to shareholders pursuant to Rule30e-1 under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30e-1.)


b.)
 
A copy of the notice transmitted to shareholders in reliance on Rule 30e-3 under the 1940 Act that contains disclosures specified by paragraph (c)(3) of that rule is included in the Annual Report. Not Applicable.
 
SEMIANNUAL
REPORT
AND
SHAREHOLDER
LETTER
Templeton
World
Fund
A
Series
of
Templeton
Funds
February
28,
2021
Sign
up
for
electronic
delivery
at
franklintempleton.com/edelivery
Not
FDIC
Insured
May
Lose
Value
No
Bank
Guarantee
franklintempleton.com
Not
part
of
the
semiannual
report
1
SHAREHOLDER
LETTER
Dear
Shareholder:
During
the
six
months
ended
February
28,
2021,
the
global
economic
recovery
was
hindered
by
a
surge
of
novel
coronavirus
(COVID-19)
cases
in
certain
regions.
Despite
this,
global
equities
advanced
over
the
period
amid
successful
trials
of
COVID-19
vaccines,
the
start
of
vaccination
programs
in
some
countries
and
expectations
for
fiscal
stimulus
from
the
new
U.S.
presidential
administration.
Investor
sentiment
was
further
boosted
by
encouraging
economic
data
from
China
and
signals
that
the
U.S.
Federal
Reserve
would
continue
to
support
low
interest
rates.
Global
equities
trimmed
some
gains
near
period-end
due
to
investor
concerns
that
rising
inflation
could
lead
some
central
banks
to
raise
interest
rates.
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
financial
professionals
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
semiannual
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
Global
Equity
Group
This
letter
reflects
our
analysis
and
opinions
as
of
February
28,
2021,
unless
otherwise
indicated.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
fund.
Statements
of
fact
are
from
sources
considered
reliable.
franklintempleton.com
Semiannual
Report
2
Contents
Semiannual
Report
Templeton
World
Fund
3
Performance
Summary
7
Your
Fund’s
Expenses
9
Financial
Highlights
and
Statement
of
Investments
10
Financial
Statements
19
Notes
to
Financial
Statements
23
Tax
Information
34
Shareholder
Information
35
Visit
franklintempleton.com
for
fund
updates,
to
access
your
account,
or
to
find
helpful
financial
planning
tools.
3
franklintempleton.com
Semiannual
Report
SEMIANNUAL
REPORT
Templeton
World
Fund
This
semiannual
report
for
Templeton
World
Fund
covers
the
period
ended
February
28,
2021.
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
posted
a
+14.15%
cumulative
total
return
for
the
six
months
under
review.
In
comparison,
the
Fund’s
new
primary
benchmark,
the
MSCI
All
Country
World
Index
(ACWI)
100%
Hedged
to
USD-NR,
which
measures
stock
performance
in
global
developed
and
emerging
markets,
posted
a
+12.38%
total
return,
while
the
Fund’s
former
primary
benchmark,
the
MSCI
ACWI
100%
Hedged
to
USD
(gross
of
taxes
on
dividends),
posted
a
+12.59%
total
return.
1
The
MSCI
ACWI
100%
Hedged
to
USD-NR
is
replacing
the
MSCI
ACWI
100%
Hedged
to
USD
(gross
of
taxes
on
dividends)
as
the
Fund’s
primary
benchmark
because
the
investment
manager
believes
the
MSCI
ACWI
100%
Hedged
to
USD-NR
provides
a
more
consistent
basis
for
comparison
relative
to
the
Fund’s
peers.
Also
in
comparison,
the
Fund’s
new
secondary
benchmark,
the
Linked
MSCI
ACWI
100%
Hedged
to
USD-NR/ACWI-
NR,
posted
a
+12.38%
total
return,
2
while
the
Fund’s
former
secondary
benchmarks,
the
Linked
MSCI
ACWI
100%
Hedged
to
USD/World
(gross
of
taxes
on
dividends)
and
the
MSCI
ACWI,
posted
+12.59%
2
and
+13.25%
3
total
returns,
respectively.
The
Linked
MSCI
ACWI
100%
Hedged
to
USD-
NR/ACWI-NR
is
replacing
the
Linked
MSCI
ACWI
100%
Hedged
to
USD/World
(gross
of
taxes
on
dividends)
and
the
MSCI
ACWI
as
the
Fund’s
secondary
benchmark
because
the
investment
manager
believes
the
Linked
MSCI
ACWI
Hedged
to
USD-NR/ACWI-NR
provides
a
more
consistent
basis
for
comparison
relative
to
the
Fund’s
peers.
For
the
10-year
period
ended
February
28,
2021,
the
Fund’s
Class
A
shares
posted
a
+74.67%
cumulative
total
return,
compared
with
the
MSCI
ACWI
100%
Hedged
to
USD-NR’s
+160.14%
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
ACWI,
advanced
during
the
six
months
ended
February
28,
2021.
Equities
in
all
major
regions
of
the
world
posted
positive
returns
for
the
period
despite
the
global
surge
of
the
novel
coronavirus
(COVID-19).
Following
stock
market
declines
in
September
and
October
2020
due
to
geopolitical
tensions
and
rising
infection
rates,
equities
began
to
rebound
in
November,
as
successful
trials
of
COVID-19
vaccines,
the
start
of
vaccination
programs
in
some
countries
and
expectations
Geographic
Composition
2/28/21
%
of
Total
Net
Assets
North
America
38.9%
Europe
29.0%
Asia
23.9%
Latin
America
&
Caribbean
1.3%
Short-Term
Investments
&
Other
Net
Assets
6.9%
1.
Source:
FactSet.
As
of
2/28/21,
the
Fund’s
Class
A
10-year
average
annual
total
return
not
including
the
maximum
sales
charge
was
+5.74%,
compared
with
the
MSCI
ACWI
100%
Hedged
to
USD-NR’s
10-year
average
annual
total
return
of
+10.03%.
2.
Source:
FactSet.
The
Linked
MSCI
ACWI
100%
Hedged
to
USD-NR/ACWI-NR
reflects
performance
of
the
MSCI
ACWI-NR
through
6/29/2016
and
the
MSCI
ACWI
100%
Hedged
to
USD-NR
thereafter.
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.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
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
14
.
Templeton
World
Fund
4
franklintempleton.com
Semiannual
Report
for
fiscal
stimulus
from
the
new
U.S.
administration
led
many
equity
markets
to
reach
new
highs.
Some
indications
of
economic
revival,
most
notably
in
China,
also
helped
drive
stocks
higher.
However,
global
equity
markets
pared
some
gains
in
late
February
2021
amid
investor
concerns
that
rising
inflation
could
lead
some
central
banks
to
raise
interest
rates.
In
the
U.S.,
equities
posted
solid
gains
for
the
period
amid
the
government’s
fiscal
and
monetary
stimulus
measures,
the
approval
of
several
highly
effective
COVID-19
vaccines
and
the
onset
of
vaccinations.
Stocks
came
under
pressure
in
the
first
half
of
the
period
amid
uncertainties
about
the
U.S.
presidential
election
and
additional
fiscal
stimulus
measures.
Consumer
spending
slowed
during
the
fourth
quarter
of
2020
as
surging
COVID-19
infections
led
to
new
restrictions
in
some
states.
Nevertheless,
growth
in
residential
and
corporate
investment,
solid
corporate
earnings
results
and
the
outcome
of
the
U.S.
presidential
election
bolstered
investor
sentiment,
and
equities
began
to
rally
in
November.
The
start
of
COVID-19
vaccination
programs,
higher
retail
spending
and
progress
on
additional
stimulus
legislation
under
the
new
U.S.
administration
further
supported
stocks.
The
unemployment
rate
declined
from
8.4%
in
August
2020
to
6.2%
in
February
2021.
4
Despite
a
selloff
near
period-end
due
to
investor
concerns
about
rising
bond
yields
amid
the
economic
recovery
and
potential
for
higher
inflation,
U.S.
equities
posted
strong
overall
gains.
The
U.S.
Federal
Reserve
(Fed)
maintained
the
federal
funds
target
rate
at
a
range
of
0.00%–0.25%
and
continued
its
program
of
open-ended
bond
purchases
to
help
keep
markets
functioning.
Furthermore,
the
Fed
signaled
that
interest
rates
would
potentially
remain
low,
even
if
inflation
moderately
exceeded
the
Fed’s
2%
target
for
some
time.
In
the
eurozone,
the
economy
contracted
in
the
fourth
quarter
of
2020.
Gross
domestic
product
(GDP)
growth
rates
varied
widely
among
the
region’s
largest
economies
amid
renewed
lockdowns
and
delays
in
COVID-19
vaccine
distribution.
Germany’s
and
Spain’s
GDP
expanded
modestly
in
the
fourth
quarter,
while
France’s
contracted.
Despite
investor
concerns
about
rising
infection
rates,
optimism
about
successful
vaccine
development
and
a
Brexit
resolution
contributed
to
a
positive
performance
for
European
developed
market
equities,
as
measured
by
the
MSCI
Europe
Index.
Asian
developed
and
emerging
market
equities,
as
measured
by
the
MSCI
All
Country
Asia
Index,
rose
significantly
for
the
period.
China,
a
key
driver
of
regional
economies,
maintained
its
economic
recovery
and
was
the
only
major
global
economy
to
post
positive
GDP
growth
for
calendar-year
2020.
Asian
equity
markets
were
also
aided
by
optimism
that
economic
revitalization
would
be
further
spurred
by
COVID-19
vaccines.
Global
emerging
market
stocks,
as
measured
by
the
MSCI
Emerging
Markets
Index,
also
posted
sizable
gains
for
the
period.
Improving
economic
activity,
stabilizing
oil
prices
and
U.S.
dollar
weakness
supported
emerging
market
equities.
In
spite
of
higher
COVID-19
cases
in
some
countries,
emerging
market
stocks
rallied
amid
easing
political
uncertainty,
commencement
of
COVID-19
vaccinations
and
rising
commodity
prices.
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.
Top
10
Industries
2/28/21
%
of
Total
Net
Assets
a
Hotels,
Restaurants
&
Leisure
7.5%
Pharmaceuticals
5.8%
Beverages
5.2%
Oil,
Gas
&
Consumable
Fuels
3.8%
Metals
&
Mining
3.7%
Technology
Hardware,
Storage
&
Peripherals
3.7%
IT
Services
3.6%
Chemicals
3.6%
Household
Durables
3.3%
Machinery
3.2%
4.
Source:
U.S.
Bureau
of
Labor
Statistics.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Templeton
World
Fund
5
franklintempleton.com
Semiannual
Report
Manager’s
Discussion
The
Fund
outperformed
the
MSCI
ACWI
100%
Hedged
to
USD-NR
during
the
six-month
period,
primarily
attributable
to
stock
selection.
At
the
beginning
of
2020,
we
were
cautiously
positioned
and
focused
on
what
we
considered
quality
stocks
in
anticipation
of
a
typical
late-cycle
economic
pattern.
That
defensive
bias
was
beneficial
when
COVID-19
struck,
but
opportunities
quickly
evolved
as
markets
reeled
and
policymakers
responded
aggressively.
Over
the
course
of
the
spring
and
summer,
we
used
market
dislocations
to
buy
beaten-down
cyclical
stocks
and
companies
hit
particularly
hard
by
the
pandemic.
We
relied
on
fundamental
analysis
and
valuation
discipline
to
identify
companies
we
felt
could
weather
the
crisis
and
emerge
stronger,
and
we
studied
the
virus
and
vaccine
response
to
develop
a
framework
and
timeline
around
economic
reopening
prospects.
We
developed
convictions
and
implemented
them
in
our
portfolios
as
part
of
a
broader
strategy
of
diversification
across
value
types
and
economic
exposures.
These
efforts
positioned
the
Fund
well
for
the
semiannual
review
period,
which
saw
vaccines
emerge
roughly
along
our
expected
timeline,
raising
hopes
for
economic
reopening
and
prompting
a
value
rebound
led
by
many
of
the
cyclical
and
“away-from-home”
stocks
to
which
we
had
earlier
increased
exposure.
Fund
results
during
the
period
aligned
closely
to
value
types
and
economic
sensitivity.
At
Templeton,
we
classify
all
of
our
holdings
by
their
respective
value
characteristics.
Our
largest
value
category
is
“classic
value,”
which
tends
to
be
low-valuation
multiple,
cyclically
depressed
stocks
where
the
past
can
be
a
guide
to
the
future.
We
also
have
exposure
to
quality
stocks
(which
tend
to
offer
long-term
resilience),
mispriced
growth
stocks
(where
we
believe
the
future
should
be
better
than
the
past),
discounted
cash
flow
stories
(where
cash
generation
is
key)
and
discounted
asset
plays
(where
unlocking
of
asset
value
drives
the
thesis).
During
the
semiannual
review
period,
our
classic
value
holdings
were
the
clear
outperformers.
Vaccine
and
stimulus
prospects
boosted
investor
expectations
of
economic
reflation
and
interest
rates
began
to
rise,
reversing
value’s
long-standing
weakness.
From
a
sector
standpoint,
information
technology
was
the
top
relative
contributor.
Our
underweight
to
what
we
considered
expensive
software
and
services
stocks
aided
relative
performance
during
a
period
when
momentum
stocks
began
to
consolidate.
However,
the
primary
cause
of
outperformance
was
stock
selection,
particularly
in
technology
hardware
and
equipment,
which
was
led
by
Samsung
Electronics.
Shares
of
the
South
Korean
semiconductor
and
electronics
firm
rose
to
a
record
price
high
due
to
signs
of
a
cyclical
upswing
in
the
memory
chips
business
and
investor
expectations
that
the
company’s
mobile
and
5G
network
gear
businesses
would
benefit
from
tighter
trade
sanctions
on
China.
With
significant
cash
reserves
on
its
balance
sheet,
we
also
see
significant
flexibility
around
capital
deployment
and
are
encouraged
by
the
company’s
commitment
to
return
capital
to
shareholders.
In
our
view,
the
stock
remains
inexpensive
for
a
global
technology
leader
with
strong
competitive
positions
across
a
number
of
attractive
businesses.
Top
10
Countries
2/28/21
a
%
of
Total
Net
Assets
a
a
United
States
38.9%
Japan
14.8%
United
Kingdom
7.7%
Germany
6.6%
South
Korea
3.6%
France
3.4%
Belgium
3.2%
Switzerland
2.6%
China
2.1%
Hong
Kong
2.0%
Top
10
Holdings
2/28/21
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
Samsung
Electronics
Co.
Ltd.
3.6%
Technology
Hardware,
Storage
&
Peripherals,
South
Korea
Roche
Holding
AG
2.6%
Pharmaceuticals,
Switzerland
Walt
Disney
Co.
(The)
2.4%
Entertainment,
United
States
Sysco
Corp.
2.3%
Food
&
Staples
Retailing,
United
States
Anheuser-Busch
InBev
SA/NV
2.2%
Beverages,
Belgium
Booking
Holdings,
Inc.
2.1%
Internet
&
Direct
Marketing
Retail,
United
States
AIA
Group
Ltd.
2.0%
Insurance,
Hong
Kong
Sanofi
2.0%
Pharmaceuticals,
France
Verizon
Communications,
Inc.
1.8%
Diversified
Telecommunication
Services,
United
States
E.ON
SE
1.8%
Multi-Utilities,
Germany
Templeton
World
Fund
6
franklintempleton.com
Semiannual
Report
Other
key
contributors
to
the
Fund’s
relative
performance
included
sectors
and
securities
that
tended
to
be
leveraged
to
economic
reopening
and
expansion
themes
to
varying
degrees.
In
sector
terms,
stock
selection
in
consumer
discretionary
and,
to
lesser
extents,
stock
selection
and
an
underweighting
in
industrials,
as
well
as
stock
selection
in
materials,
communication
services,
energy
and
consumer
staples,
helped
relative
results.
Notable
individual
relative
contributors
included
natural
resource
companies
such
as
U.S.-based
Freeport-McMoRan,
(the
world’s
largest
copper
producer),
Luxembourg-based
ArcelorMittal,
(the
world’s
largest
steelmaker)
and
U.S.-based
Marathon
Petroleum,
(the
largest
U.S.
oil
refiner);
COVID-19
impacted
“away-
from-home”
stocks
such
as
U.S.-based
media
conglomerate
and
theme
park
operator
Walt
Disney,
U.S.
restaurant
supplier
Sysco
and
U.K.-based
International
Consolidated
Airlines
Group
(British
Airways
parent);
and
a
handful
of
companies
highly
geared
to
global
economic
growth,
such
as
Japanese
machinery
firm
Komatsu,
Dutch
chipmaker
NXP
Semiconductors,
Japanese
electronics
firm
Sony
and
the
aforementioned
South
Korea-based
semiconductor
and
electronics
firm
Samsung
Electronics.
In
contrast,
the
financials
sector
detracted
significantly
from
the
Fund’s
relative
performance.
There
were
no
financials
stocks
among
our
10
biggest
relative
detractors,
and
the
total
return
of
our
overall
financials
sector
holdings
roughly
kept
up
with
the
benchmark’s;
however,
our
significant
underweight
detracted
from
relative
performance
during
a
period
when
economic
optimism
and
a
steepening
yield
curve
buoyed
bank
shares.
We
continue
to
largely
avoid
Western
banks,
where
the
combination
of
structurally
low
interest
rates,
regulatory
risks
and
the
potential
for
yield
curve
manipulation
are
all
likely
to
negatively
impact
future
earnings.
We
are
also
worried
about
ongoing
excesses
in
credit
markets
and
the
risk
of
an
eventual
loan-loss
cycle
in
the
banking
industry.
Health
care
and
utilities
were
the
only
other
relative
sector
detractors.
In
health
care,
shares
of
French
pharmaceuticals
firm
Sanofi
declined
after
a
laboratory
mistake
set
back
the
development
of
its
COVID-19
vaccine.
The
setback
is
immaterial
to
earnings
as
COVID-19
vaccine
development
is
expected
to
be
not-for-profit.
Overall,
we
believe
the
stock
continues
to
look
attractive
on
a
relative
basis,
with
what
we
view
as
low
valuation
multiples,
good
mid-term
growth,
improving
research
and
development
productivity
and
a
high
dividend
yield.
In
the
utilities
sector,
German
power
provider
E.ON
pressured
results.
We
still
hold
a
positive
view
on
the
stock
as
we
believe
E.ON
is
transitioning
into
a
more
focused,
regulated
business.
The
Fund’s
use
of
currency
forward
contracts—designed
to
offset
the
Fund’s
exposure
to
foreign
currencies—had
a
negative
effect
on
Fund
performance
during
the
six
months
under
review.
From
a
geographic
standpoint,
all
major
regions
represented
in
the
Fund’s
portfolio
contributed
to
relative
performance.
In
North
America,
stock
selection
and
a
favorable
underweight
in
the
U.S.
more
than
offset
weakness
in
Canada,
where
precious
metals
firm
Wheaton
Precious
Metals,
which
has
operations
in
Brazil,
declined
due
to
higher
real
interest
rates
and
an
improved
macroeconomic
outlook.
An
overweight
in
Asia
also
helped
relative
results,
as
strength
in
South
Korea
and
Hong
Kong
more
than
offset
weakness
in
China.
In
Europe,
relative
strength
in
the
U.K.
and
Demark
overcame
relative
weakness
in
France,
Germany
and
Switzerland.
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
February
28,
2021,
the
end
of
the
reporting
period.
The
way
we
implement
our
main
investment
strategies
and
the
resulting
portfolio
holdings
may
change
depending
on
factors
such
as
market
and
economic
conditions.
These
opinions
may
not
be
relied
upon
as
investment
advice
or
an
offer
for
a
particular
security.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
the
Fund.
Statements
of
fact
are
from
sources
considered
reliable,
but
the
investment
manager
makes
no
representation
or
warranty
as
to
their
completeness
or
accuracy.
Although
historical
performance
is
no
guarantee
of
future
results,
these
insights
may
help
you
understand
our
investment
management
philosophy.
CFA
®
is
a
trademark
owned
by
CFA
Institute.
Performance
Summary
as
of
February
28,
2021
Templeton
World
Fund
7
franklintempleton.com
Semiannual
Report
The
performance
table
does
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
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
2/28/21
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
6-Month
+14.15%
4
+7.88%
1-Year
+17.29%
+10.84%
5-Year
+54.03%
+7.79%
10-Year
+74.67%
+5.14%
Advisor
6-Month
+14.33%
+14.33%
1-Year
+17.57%
+17.57%
5-Year
+55.98%
+9.30%
10-Year
+79.04%
+6.00%
See
page
8
for
Performance
Summary
footnotes.
Templeton
World
Fund
Performance
Summary
8
franklintempleton.com
Semiannual
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.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
1.
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.
Total
return
information
is
based
on
net
asset
values
calculated
for
shareholder
transactions.
Certain
adjustments
were
made
to
the
net
asset
values
of
the
Fund
at
2/28/21
for
financial
reporting
purposes.
Accordingly,
adjusted
total
returns
have
been
disclosed
in
the
Financial
Highlights
and
differ
from
those
reported
here.
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.
Total
Annual
Operating
Expenses
5
Share
Class
A
1.06%
Advisor
0.81%
Your
Fund’s
Expenses
Templeton
World
Fund
9
franklintempleton.com
Semiannual
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
181/365
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
9/1/20
Ending
Account
Value
2/28/21
Expenses
Paid
During
Period
9/1/20–2/28/21
1,2
Ending
Account
Value
2/28/21
Expenses
Paid
During
Period
9/1/20–2/28/21
1,2
a
Net
Annualized
Expense
Ratio
2
A
$1,000
$1,141.51
$5.52
$1,019.64
$5.21
1.04%
C
$1,000
$1,137.11
$9.54
$1,015.87
$9.00
1.80%
R6
$1,000
$1,142.63
$4.05
$1,021.02
$3.82
0.76%
Advisor
$1,000
$1,143.31
$4.25
$1,020.83
$4.01
0.80%
Templeton
Funds
Financial
Highlights
Templeton
World
Fund
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
10
a
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
2019
2018
2017
2016
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
.....
$12.71
$12.76
$17.24
$16.94
$15.47
$16.51
Income
from
investment
operations
a
:
Net
investment
income
b
.............
0.12
c
0.16
0.29
0.28
0.27
0.26
Net
realized
and
unrealized
gains
(losses)
1.69
0.45
(2.17)
1.03
2.21
(0.17)
Total
from
investment
operations
........
1.81
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
period
..........
$14.52
$12.71
$12.76
$17.24
$16.94
$15.47
Total
return
d
.......................
14.24%
4.47%
(10.22)%
7.81%
16.45%
0.84%
Ratios
to
average
net
assets
e
Expenses
.........................
1.04%
f
1.05%
1.05%
f
1.04%
g
1.06%
f,g
1.07%
f
Net
investment
income
...............
1.85%
c
1.29%
2.06%
1.64%
1.63%
1.73%
Supplemental
data
Net
assets,
end
of
period
(000’s)
........
$3,010,067
$2,831,844
$3,150,057
$3,973,648
$4,240,117
$4,195,518
Portfolio
turnover
rate
................
21.82%
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
Net
investment
income
per
share
includes
approximately
$0.16
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
(0.51)%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable,
and
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
g
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.
Semiannual
Report
11
a
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
2019
2018
2017
2016
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
.....
$12.18
$12.26
$16.35
$16.21
$14.84
$15.86
Income
from
investment
operations
a
:
Net
investment
income
b
.............
0.07
c
0.07
0.13
0.14
0.14
0.14
Net
realized
and
unrealized
gains
(losses)
1.60
0.42
(2.01)
0.99
2.12
(0.16)
Total
from
investment
operations
........
1.67
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
period
..........
$13.85
$12.18
$12.26
$16.35
$16.21
$14.84
Total
return
d
.......................
13.71%
3.61%
(10.94)%
7.01%
15.59%
0.11%
Ratios
to
average
net
assets
e
Expenses
.........................
1.80%
f
1.82%
1.80%
f
1.80%
g
1.81%
f,g
1.82%
f
Net
investment
income
...............
1.07%
c
0.54%
1.31%
0.88%
0.88%
0.98%
Supplemental
data
Net
assets,
end
of
period
(000’s)
........
$17,429
$18,630
$28,850
$117,879
$138,534
$158,126
Portfolio
turnover
rate
................
21.82%
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
Net
investment
income
per
share
includes
approximately
$0.16
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
(1.28)%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable,
and
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
g
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Templeton
Funds
Financial
Highlights
Templeton
World
Fund
(continued)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
12
a
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
2019
2018
2017
2016
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
.....
$12.69
$12.73
$17.21
$16.92
$15.45
$16.50
Income
from
investment
operations
a
:
Net
investment
income
b
.............
0.14
c
0.20
0.34
0.33
0.32
0.32
Net
realized
and
unrealized
gains
(losses)
1.67
0.45
(2.17)
1.03
2.22
(0.18)
Total
from
investment
operations
........
1.81
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
period
..........
$14.50
$12.69
$12.73
$17.21
$16.92
$15.45
Total
return
d
.......................
14.26%
4.71%
(9.88)%
8.13%
16.87%
1.18%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
..........................
0.78%
0.79%
0.77%
0.74%
0.73%
0.72%
Expenses
net
of
waiver
and
payments
by
affiliates
..........................
0.76%
0.76%
0.75%
0.72%
f
0.73%
f,g
0.72%
g
Net
investment
income
...............
2.11%
c
1.59%
2.36%
1.96%
1.96%
2.08%
Supplemental
data
Net
assets,
end
of
period
(000’s)
........
$40,743
$38,885
$43,595
$51,431
$55,504
$50,487
Portfolio
turnover
rate
................
21.82%
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
Net
investment
income
per
share
includes
approximately
$0.16
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
(0.24)%.
d
Total
return
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year.
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
g
Benefit
of
waiver
and
payments
by
affiliates
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.
Semiannual
Report
13
a
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
2019
2018
2017
2016
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
.....
$12.70
$12.74
$17.23
$16.93
$15.46
$16.50
Income
from
investment
operations
a
:
Net
investment
income
b
.............
0.14
c
0.19
0.33
0.32
0.32
0.30
Net
realized
and
unrealized
gains
(losses)
1.68
0.45
(2.17)
1.03
2.20
(0.17)
Total
from
investment
operations
........
1.82
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
period
..........
$14.52
$12.70
$12.74
$17.23
$16.93
$15.46
Total
return
d
.......................
14.33%
4.66%
(9.99)%
8.09%
16.74%
1.12%
Ratios
to
average
net
assets
e
Expenses
.........................
0.80%
f
0.81%
0.80%
f
0.80%
g
0.81%
f,g
0.82%
f
Net
investment
income
...............
2.08%
c
1.53%
2.31%
1.88%
1.88%
1.98%
Supplemental
data
Net
assets,
end
of
period
(000’s)
........
$108,048
$99,546
$112,891
$146,883
$157,237
$113,455
Portfolio
turnover
rate
................
21.82%
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
Net
investment
income
per
share
includes
approximately
$0.16
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
(0.28)%.
d
Total
return
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
g
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Templeton
Funds
Statement
of
Investments
(unaudited),
February
28,
2021
Templeton
World
Fund
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
14
a
a
Industry
Shares
a
Value
a
Common
Stocks
93.1%
Belgium
3.2%
Anheuser-Busch
InBev
SA/NV
......
Beverages
1,239,853
$
71,342,697
Umicore
SA
....................
Chemicals
527,092
30,964,712
102,307,409
Brazil
1.3%
Wheaton
Precious
Metals
Corp.
.....
Metals
&
Mining
1,112,677
39,796,540
China
2.1%
Gree
Electric
Appliances,
Inc.
of
Zhuhai,
A
...........................
Household
Durables
1,966,020
17,921,039
Yum
China
Holdings,
Inc.
..........
Hotels,
Restaurants
&
Leisure
828,283
49,564,455
67,485,494
Denmark
1.0%
AP
Moller
-
Maersk
A/S,
B
..........
Marine
14,656
31,344,118
France
3.4%
Danone
SA
.....................
Food
Products
226,095
15,374,030
Pernod
Ricard
SA
................
Beverages
154,236
29,277,632
Sanofi
.........................
Pharmaceuticals
692,372
63,536,834
108,188,496
Germany
6.6%
a
adidas
AG
......................
Textiles,
Apparel
&
Luxury
Goods
66,932
23,330,500
Bayer
AG
......................
Pharmaceuticals
585,089
35,537,517
Continental
AG
..................
Auto
Components
98,247
14,123,728
E.ON
SE
.......................
Multi-Utilities
5,640,147
57,507,155
Infineon
Technologies
AG
..........
Semiconductors
&
Semiconductor
Equipment
855,659
37,229,626
Siemens
AG
....................
Industrial
Conglomerates
270,372
41,841,379
209,569,905
Hong
Kong
2.0%
AIA
Group
Ltd.
..................
Insurance
5,111,204
64,459,592
Japan
14.8%
East
Japan
Railway
Co.
...........
Road
&
Rail
150,500
11,217,608
Fujitsu
Ltd.
.....................
IT
Services
175,400
25,447,943
Honda
Motor
Co.
Ltd.
.............
Automobiles
1,206,355
33,346,774
Isuzu
Motors
Ltd.
................
Automobiles
1,445,300
15,211,540
a
Japan
Airlines
Co.
Ltd.
............
Airlines
1,393,810
33,367,394
Keisei
Electric
Railway
Co.
Ltd.
......
Road
&
Rail
208,400
7,551,830
Kirin
Holdings
Co.
Ltd.
............
Beverages
1,764,468
34,763,142
Komatsu
Ltd.
...................
Machinery
1,883,300
56,540,309
Kyocera
Corp.
...................
Electronic
Equipment,
Instruments
&
Components
702,088
45,446,471
Makita
Corp.
....................
Machinery
658,700
28,161,438
Mitsubishi
Electric
Corp.
...........
Electrical
Equipment
2,530,700
37,478,344
Nexon
Co.
Ltd.
..................
Entertainment
810,923
25,534,602
Panasonic
Corp.
.................
Household
Durables
2,511,307
32,468,050
Sony
Corp.
.....................
Household
Durables
526,700
55,622,752
Suntory
Beverage
&
Food
Ltd.
......
Beverages
830,210
28,500,980
470,659,177
Luxembourg
1.9%
ArcelorMittal
SA
.................
Metals
&
Mining
1,642,600
38,355,294
SES
SA,
FDR
...................
Media
2,783,212
22,241,656
60,596,950
Templeton
Funds
Statement
of
Investments
(unaudited)
Templeton
World
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
15
a
a
Industry
Shares
a
Value
a
Common
Stocks
(continued)
Macau
1.3%
Galaxy
Entertainment
Group
Ltd.
....
Hotels,
Restaurants
&
Leisure
4,547,665
$
41,486,805
Netherlands
1.5%
NXP
Semiconductors
NV
..........
Semiconductors
&
Semiconductor
Equipment
258,729
47,230,979
Norway
1.1%
Equinor
ASA
....................
Oil,
Gas
&
Consumable
Fuels
1,792,690
34,002,764
South
Korea
3.7%
Samsung
Electronics
Co.
Ltd.
.......
Technology
Hardware,
Storage
&
Peripherals
1,586,527
115,857,724
Switzerland
2.6%
Roche
Holding
AG
...............
Pharmaceuticals
255,449
83,802,348
United
Kingdom
7.7%
BAE
Systems
plc
................
Aerospace
&
Defense
5,148,218
34,841,099
BP
plc
.........................
Oil,
Gas
&
Consumable
Fuels
8,707,866
35,655,623
Burberry
Group
plc
...............
Textiles,
Apparel
&
Luxury
Goods
1,495,070
38,052,395
Compass
Group
plc
..............
Hotels,
Restaurants
&
Leisure
2,112,246
42,884,058
a
InterContinental
Hotels
Group
plc
....
Hotels,
Restaurants
&
Leisure
559,401
39,302,943
a
International
Consolidated
Airlines
Group
SA
.....................
Airlines
10,184,233
27,541,562
a
Whitbread
plc
...................
Hotels,
Restaurants
&
Leisure
520,616
24,776,409
243,054,089
United
States
38.9%
Albemarle
Corp.
.................
Chemicals
226,888
35,669,063
American
Express
Co.
............
Consumer
Finance
291,995
39,495,244
a
Booking
Holdings,
Inc.
............
Internet
&
Direct
Marketing
Retail
28,043
65,298,406
BorgWarner,
Inc.
.................
Auto
Components
582,697
26,221,365
Comcast
Corp.,
A
................
Media
842,272
44,404,580
a
Dollar
Tree,
Inc.
.................
Multiline
Retail
562,802
55,267,156
DuPont
de
Nemours,
Inc.
..........
Chemicals
692,428
48,691,537
a
EPAM
Systems,
Inc.
..............
IT
Services
138,258
51,654,571
a
Freeport-McMoRan,
Inc.
...........
Metals
&
Mining
1,188,520
40,302,713
Honeywell
International,
Inc.
........
Industrial
Conglomerates
144,235
29,185,952
Hyatt
Hotels
Corp.,
A
..............
Hotels,
Restaurants
&
Leisure
124,975
10,991,551
Kellogg
Co.
.....................
Food
Products
500,930
28,908,670
Kroger
Co.
(The)
.................
Food
&
Staples
Retailing
840,325
27,066,868
a
Laboratory
Corp.
of
America
Holdings
.
Health
Care
Providers
&
Services
150,752
36,166,912
Lear
Corp.
.....................
Auto
Components
156,960
26,069,486
Marathon
Petroleum
Corp.
.........
Oil,
Gas
&
Consumable
Fuels
918,840
50,187,041
Medtronic
plc
...................
Health
Care
Equipment
&
Supplies
365,204
42,717,912
Public
Service
Enterprise
Group,
Inc.
.
Multi-Utilities
278,904
15,013,402
Ross
Stores,
Inc.
................
Specialty
Retail
428,582
49,989,805
Southern
Co.
(The)
...............
Electric
Utilities
541,373
30,706,677
Southwest
Airlines
Co.
............
Airlines
638,951
37,142,222
Stanley
Black
&
Decker,
Inc.
........
Machinery
104,620
18,291,761
Starbucks
Corp.
.................
Hotels,
Restaurants
&
Leisure
264,910
28,618,227
Sysco
Corp.
....................
Food
&
Staples
Retailing
914,968
72,858,902
TJX
Cos.,
Inc.
(The)
..............
Specialty
Retail
782,206
51,617,774
a
T-Mobile
US,
Inc.
................
Wireless
Telecommunication
Services
231,760
27,804,247
United
Parcel
Service,
Inc.,
B
.......
Air
Freight
&
Logistics
193,347
30,515,957
Verizon
Communications,
Inc.
.......
Diversified
Telecommunication
Services
1,049,420
58,032,926
Visa,
Inc.,
A
.....................
IT
Services
181,256
38,496,962
Walt
Disney
Co.
(The)
.............
Entertainment
403,337
76,246,827
Templeton
Funds
Statement
of
Investments
(unaudited)
Templeton
World
Fund
(continued)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
16
At
February
28,
2021,
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
266,057
$
43,383,254
1,237,017,970
Total
Common
Stocks
(Cost
$2,237,761,802)
....................................
2,956,860,360
Short
Term
Investments
6.2%
a
a
Principal
Amount
*
a
Value
a
a
a
a
a
a
Time
Deposits
6.2%
Canada
6.2%
National
Bank
of
Canada,
0.05%,
3/01/21
......................
54,000,000
54,000,000
Royal
Bank
of
Canada,
0.06%,
3/01/21
142,000,000
142,000,000
Total
Time
Deposits
(Cost
$196,000,000)
.......................................
196,000,000
a
a
a
a
a
Total
Short
Term
Investments
(Cost
$196,000,000
)
...............................
196,000,000
a
a
a
a
Total
Investments
(Cost
$2,433,761,802)
99.3%
..................................
$3,152,860,360
Other
Assets,
less
Liabilities
0.7%
.............................................
23,426,497
Net
Assets
100.0%
...........................................................
$3,176,286,857
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
3,762,544
5,159,914
4/21/21
$
81,999
$
—
British
Pound
......
BOFA
Sell
38,327,743
52,340,841
4/21/21
—
(1,056,730)
British
Pound
......
BZWS
Buy
3,762,544
5,160,261
4/21/21
81,653
—
British
Pound
......
BZWS
Sell
38,603,764
52,729,945
4/21/21
—
(1,052,175)
British
Pound
......
CITI
Buy
3,761,867
5,159,251
4/21/21
81,720
—
British
Pound
......
CITI
Sell
38,327,143
52,340,588
4/21/21
—
(1,056,147)
British
Pound
......
HSBK
Buy
3,762,544
5,160,035
4/21/21
81,878
—
British
Pound
......
HSBK
Sell
30,837,071
42,123,941
4/21/21
—
(837,751)
British
Pound
......
UBSW
Buy
3,762,544
5,160,697
4/21/21
81,217
—
British
Pound
......
UBSW
Sell
38,614,237
52,737,261
4/21/21
—
(1,059,449)
Canadian
Dollar
....
BOFA
Buy
4,275,286
3,357,076
4/21/21
2,115
—
Canadian
Dollar
....
BOFA
Sell
15,279,327
12,030,651
4/21/21
25,333
—
Canadian
Dollar
....
BZWS
Buy
4,275,286
3,357,131
4/21/21
2,060
—
Canadian
Dollar
....
BZWS
Sell
12,882,744
10,142,000
4/21/21
19,733
—
Canadian
Dollar
....
CITI
Buy
4,275,286
3,356,889
4/21/21
2,300
—
Canadian
Dollar
....
CITI
Sell
15,280,575
12,032,421
4/21/21
26,124
—
Canadian
Dollar
....
HSBK
Buy
4,275,286
3,357,131
4/21/21
2,059
—
Canadian
Dollar
....
HSBK
Sell
15,278,868
12,048,596
4/21/21
43,640
—
Canadian
Dollar
....
UBSW
Buy
4,275,286
3,357,155
4/21/21
2,036
—
Canadian
Dollar
....
UBSW
Sell
15,281,266
12,031,215
4/21/21
24,374
—
Danish
Krone
......
BOFA
Buy
30,334,816
4,966,716
4/21/21
—
(40,823)
Danish
Krone
......
BOFA
Sell
73,798,120
12,036,249
4/21/21
52,603
—
Templeton
Funds
Statement
of
Investments
(unaudited)
Templeton
World
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
17
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
......
BZWS
Buy
30,334,816
4,966,931
4/21/21
$
—
$
(41,039)
Danish
Krone
......
BZWS
Sell
72,776,196
11,872,900
4/21/21
55,199
—
Danish
Krone
......
CITI
Buy
30,334,816
4,966,657
4/21/21
—
(40,764)
Danish
Krone
......
CITI
Sell
61,298,900
9,994,671
4/21/21
40,701
—
Danish
Krone
......
GSCO
Sell
4,082,084
669,260
4/21/21
6,394
—
Danish
Krone
......
HSBK
Buy
30,334,816
4,966,159
4/21/21
—
(40,266)
Danish
Krone
......
HSBK
Sell
65,367,345
10,664,038
4/21/21
49,418
—
Danish
Krone
......
UBSW
Buy
30,334,816
4,966,992
4/21/21
—
(41,099)
Danish
Krone
......
UBSW
Sell
73,817,139
12,039,983
4/21/21
53,248
—
Euro
.............
BOFA
Buy
2,100,905
2,554,511
4/21/21
—
(16,692)
Euro
.............
BOFA
Sell
80,838,230
98,147,335
4/21/21
497,584
—
Euro
.............
BZWS
Buy
2,100,905
2,554,669
4/21/21
—
(16,850)
Euro
.............
BZWS
Sell
80,847,777
98,213,221
4/21/21
551,939
—
Euro
.............
CITI
Buy
2,100,905
2,554,589
4/21/21
—
(16,770)
Euro
.............
CITI
Sell
74,020,947
89,862,311
4/21/21
447,600
—
Euro
.............
GSCO
Sell
6,808,171
8,302,210
4/21/21
78,178
—
Euro
.............
HSBK
Buy
2,100,905
2,554,785
4/21/21
—
(16,965)
Euro
.............
HSBK
Sell
80,829,033
98,154,543
4/21/21
515,903
—
Euro
.............
UBSW
Buy
2,100,905
2,554,558
4/21/21
—
(16,738)
Euro
.............
UBSW
Sell
80,831,150
98,160,973
4/21/21
519,776
—
Hong
Kong
Dollar
...
BOFA
Buy
35,752,290
4,612,680
4/21/21
—
(2,916)
Hong
Kong
Dollar
...
BOFA
Sell
224,915,838
29,013,456
4/21/21
13,661
—
Hong
Kong
Dollar
...
BZWS
Buy
35,752,290
4,612,738
4/21/21
—
(2,973)
Hong
Kong
Dollar
...
BZWS
Sell
224,915,124
29,013,047
4/21/21
13,344
—
Hong
Kong
Dollar
...
CITI
Buy
35,752,290
4,612,686
4/21/21
—
(2,922)
Hong
Kong
Dollar
...
CITI
Sell
224,930,851
29,014,940
4/21/21
13,210
—
Hong
Kong
Dollar
...
HSBK
Buy
35,752,290
4,612,657
4/21/21
—
(2,893)
Hong
Kong
Dollar
...
HSBK
Sell
224,882,976
29,009,884
4/21/21
14,325
—
Hong
Kong
Dollar
...
UBSW
Buy
35,752,290
4,612,705
4/21/21
—
(2,940)
Hong
Kong
Dollar
...
UBSW
Sell
97,941,735
12,633,314
4/21/21
5,078
—
Japanese
Yen
......
BOFA
Buy
229,943,053
2,159,110
4/21/21
—
(601)
Japanese
Yen
......
BOFA
Sell
10,062,926,182
96,742,162
4/21/21
2,279,984
—
Japanese
Yen
......
BZWS
Buy
229,943,053
2,159,376
4/21/21
—
(867)
Japanese
Yen
......
BZWS
Sell
10,062,891,016
96,770,459
4/21/21
2,308,612
—
Japanese
Yen
......
CITI
Buy
229,943,053
2,159,180
4/21/21
—
(670)
Japanese
Yen
......
CITI
Sell
10,062,980,523
96,757,967
4/21/21
2,295,280
—
Japanese
Yen
......
HSBK
Buy
229,943,053
2,159,110
4/21/21
—
(601)
Japanese
Yen
......
HSBK
Sell
10,061,821,909
96,798,083
4/21/21
2,346,271
—
Japanese
Yen
......
UBSW
Buy
229,943,053
2,159,272
4/21/21
—
(763)
Japanese
Yen
......
UBSW
Sell
9,918,360,221
95,360,413
4/21/21
2,255,297
—
Norwegian
Krone
...
BOFA
Buy
944,181
109,224
4/21/21
—
(321)
Norwegian
Krone
...
BOFA
Sell
58,111,996
6,831,813
4/21/21
129,109
—
Norwegian
Krone
...
BZWS
Buy
944,181
109,113
4/21/21
—
(210)
Norwegian
Krone
...
BZWS
Sell
58,111,358
6,831,813
4/21/21
129,183
—
Norwegian
Krone
...
CITI
Buy
944,181
109,216
4/21/21
—
(314)
Norwegian
Krone
...
CITI
Sell
49,025,149
5,780,720
4/21/21
126,103
—
Norwegian
Krone
...
GSCO
Sell
9,090,627
1,051,093
4/21/21
2,570
—
Norwegian
Krone
...
HSBK
Buy
944,181
109,208
4/21/21
—
(305)
Norwegian
Krone
...
HSBK
Sell
58,111,275
6,831,813
4/21/21
129,192
—
Norwegian
Krone
...
UBSW
Buy
944,181
109,244
4/21/21
—
(341)
Norwegian
Krone
...
UBSW
Sell
58,122,149
6,831,813
4/21/21
127,939
—
South
Korean
Won
..
BOFA
Buy
7,384,371,309
6,636,406
4/21/21
—
(86,587)
South
Korean
Won
..
BOFA
Sell
31,198,825,945
28,421,997
4/21/21
749,137
—
South
Korean
Won
..
BZWS
Buy
7,364,371,309
6,622,336
4/21/21
—
(90,257)
South
Korean
Won
..
BZWS
Sell
27,933,302,375
25,476,130
4/21/21
699,737
—
South
Korean
Won
..
CITI
Buy
7,384,371,309
6,640,639
4/21/21
—
(90,820)
South
Korean
Won
..
CITI
Sell
27,092,264,172
24,700,739
4/21/21
670,334
—
Templeton
Funds
Statement
of
Investments
(unaudited)
Templeton
World
Fund
(continued)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
18
See
Note 8
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)
South
Korean
Won
..
GSCO
Buy
5,965,967,972
5,372,427
4/21/21
$
—
$
(80,709)
South
Korean
Won
..
GSCO
Sell
22,859,394,978
20,838,099
4/21/21
562,182
—
South
Korean
Won
..
HSBK
Buy
7,384,371,309
6,633,066
4/21/21
—
(83,248)
South
Korean
Won
..
HSBK
Sell
32,568,639,244
29,676,650
4/21/21
788,788
—
South
Korean
Won
..
UBSW
Buy
5,614,904,490
5,048,972
4/21/21
—
(68,641)
South
Korean
Won
..
UBSW
Sell
27,119,502,209
24,713,630
4/21/21
659,066
—
Swiss
Franc
.......
BOFA
Sell
16,139,959
18,149,264
4/21/21
381,152
—
Swiss
Franc
.......
BZWS
Sell
16,158,477
18,178,859
4/21/21
390,361
—
Swiss
Franc
.......
CITI
Sell
9,695,268
10,902,122
4/21/21
228,823
—
Swiss
Franc
.......
HSBK
Sell
16,133,145
18,148,540
4/21/21
387,930
—
Swiss
Franc
.......
UBSW
Sell
16,139,627
18,147,339
4/21/21
379,593
—
Thai
Baht
.........
BOFA
Buy
109,997,301
3,663,489
4/21/21
—
(54,573)
Thai
Baht
.........
BOFA
Sell
109,997,301
3,658,041
4/21/21
49,127
—
Thai
Baht
.........
BZWS
Buy
142,142,171
4,733,483
4/21/21
—
(69,922)
Thai
Baht
.........
BZWS
Sell
142,142,172
4,726,257
4/21/21
62,697
—
Thai
Baht
.........
CITI
Buy
141,958,431
4,726,781
4/21/21
—
(69,248)
Thai
Baht
.........
CITI
Sell
141,958,431
4,716,227
4/21/21
58,696
—
Thai
Baht
.........
HSBK
Buy
141,878,979
4,724,177
4/21/21
—
(69,253)
Thai
Baht
.........
HSBK
Sell
141,878,979
4,717,192
4/21/21
62,267
—
Thai
Baht
.........
UBSW
Buy
142,046,759
4,729,950
4/21/21
—
(69,518)
Thai
Baht
.........
UBSW
Sell
142,046,759
4,723,712
4/21/21
63,283
—
Yuan
Renminbi
.....
BOFA
Buy
1,797,149
276,051
4/21/21
—
(173)
Yuan
Renminbi
.....
BOFA
Sell
23,581,577
3,626,261
4/21/21
6,285
—
Yuan
Renminbi
.....
BZWS
Buy
1,797,149
276,035
4/21/21
—
(156)
Yuan
Renminbi
.....
BZWS
Sell
23,611,757
3,629,228
4/21/21
4,619
—
Yuan
Renminbi
.....
CITI
Buy
1,797,149
276,017
4/21/21
—
(140)
Yuan
Renminbi
.....
CITI
Sell
23,610,289
3,626,661
4/21/21
2,277
—
Yuan
Renminbi
.....
HSBK
Buy
1,797,149
276,021
4/21/21
—
(143)
Yuan
Renminbi
.....
HSBK
Sell
23,599,227
3,626,466
4/21/21
3,780
—
Yuan
Renminbi
.....
UBSW
Buy
1,797,149
276,051
4/21/21
—
(173)
Yuan
Renminbi
.....
UBSW
Sell
23,626,435
3,629,253
4/21/21
2,390
—
Total
Forward
Exchange
Contracts
...................................................
$21,828,466
$(6,203,456)
Net
unrealized
appreciation
(depreciation)
............................................
$15,625,010
*
In
U.S.
dollars
unless
otherwise
indicated.
a
May
be
comprised
of
multiple
contracts
with
the
same
counterparty,
currency
and
settlement
date.
See
Abbreviations
on
page
33.
Templeton
Funds
Financial
Statements
Statement
of
Assets
and
Liabilities
February
28,
2021
(unaudited)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
19
Templeton
World
Fund
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
...................................................................
$2,433,761,802
Value
-
Unaffiliated
issuers
..................................................................
$3,152,860,360
Cash
....................................................................................
117,780
Restricted
cash
for
OTC
derivative
contracts
(Note
1
d
)
...............................................
280,000
Receivables:
Investment
securities
sold
...................................................................
6,760,148
Capital
shares
sold
........................................................................
581,247
Dividends
and
interest
.....................................................................
11,425,508
European
Union
tax
reclaims
(Note
1
f
)
.........................................................
36,471,001
Deposits
with
brokers
for:
OTC
derivative
contracts
..................................................................
300,000
Unrealized
appreciation
on
OTC
forward
exchange
contracts
..........................................
21,828,466
Other
assets
..............................................................................
19,866
Total
assets
..........................................................................
3,230,644,376
Liabilities:
Payables:
Investment
securities
purchased
..............................................................
29,609,942
Capital
shares
redeemed
...................................................................
2,243,647
Management
fees
.........................................................................
1,701,107
Distribution
fees
..........................................................................
577,428
Transfer
agent
fees
........................................................................
438,060
IRS
closing
agreement
fees
for
European
Union
tax
reclaims
(Note
1
f
)
.................................
12,720,725
Deposits
from
brokers
for:
OTC
derivative
contracts
..................................................................
280,000
Unrealized
depreciation
on
OTC
forward
exchange
contracts
..........................................
6,203,456
Accrued
expenses
and
other
liabilities
...........................................................
583,154
Total
liabilities
.........................................................................
54,357,519
Net
assets,
at
value
.................................................................
$3,176,286,857
Net
assets
consist
of:
Paid-in
capital
.............................................................................
$2,838,378,008
Total
distributable
earnings
(losses)
.............................................................
337,908,849
Net
assets,
at
value
.................................................................
$3,176,286,857
Templeton
Funds
Financial
Statements
Statement
of
Assets
and
Liabilities
(continued)
February
28,
2021
(unaudited)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
20
Templeton
World
Fund
Class
A:
Net
assets,
at
value
.......................................................................
$3,010,066,898
Shares
outstanding
........................................................................
207,350,420
Net
asset
value
per
share
a
..................................................................
$14.52
Maximum
offering
price
per
share
(net
asset
value
per
share
÷
94.50%)
................................
$15.37
Class
C:
Net
assets,
at
value
.......................................................................
$17,428,861
Shares
outstanding
........................................................................
1,257,951
Net
asset
value
and
maximum
offering
price
per
share
a
.............................................
$13.85
Class
R6:
Net
assets,
at
value
.......................................................................
$40,742,948
Shares
outstanding
........................................................................
2,809,173
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$14.50
Advisor
Class:
Net
assets,
at
value
.......................................................................
$108,048,150
Shares
outstanding
........................................................................
7,443,310
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$14.52
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
six
months
ended
February
28,
2021
(unaudited)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
21
Templeton
World
Fund
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$1,948,117)
Unaffiliated
issuers
........................................................................
$20,580,412
Interest:
Unaffiliated
issuers
........................................................................
33,031
Income
from
securities
loaned:
Unaffiliated
entities
(net
of
fees
and
rebates)
.....................................................
185,163
Other
income
(Note
1
f
)
.......................................................................
35,793,168
Less:
IRS
closing
agreement
fees
for
European
Union
tax
reclaims
(Note
1
f
)
..............................
(12,720,725)
Total
investment
income
...................................................................
43,871,049
Expenses:
Management
fees
(Note
3
a
)
...................................................................
10,568,098
Distribution
fees:
(Note
3c
)
    Class
A
................................................................................
3,449,666
    Class
C
................................................................................
87,780
Transfer
agent
fees:
(Note
3e
)
    Class
A
................................................................................
989,135
    Class
C
................................................................................
6,015
    Class
R6
...............................................................................
9,983
    Advisor
Class
............................................................................
35,017
Custodian
fees
.............................................................................
118,919
Reports
to
shareholders
......................................................................
104,270
Registration
and
filing
fees
....................................................................
68,810
Professional
fees
...........................................................................
58,260
Trustees'
fees
and
expenses
..................................................................
89,001
Other
....................................................................................
125,856
Total
expenses
.........................................................................
15,710,810
Expenses
waived/paid
by
affiliate
s
(Note
3f
and
3g)
..............................................
(5,110)
Net
expenses
.........................................................................
15,705,700
Net
investment
income
................................................................
28,165,349
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
......................................................................
62,315,562
Foreign
currency
transactions
................................................................
1,390,739
Forward
exchange
contracts
.................................................................
(72,982,543)
Net
realized
gain
(loss)
..................................................................
(9,276,242)
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
......................................................................
331,574,243
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
..............................
(1,471,520)
Forward
exchange
contracts
.................................................................
58,942,906
Net
change
in
unrealized
appreciation
(depreciation)
............................................
389,045,629
Net
realized
and
unrealized
gain
(loss)
............................................................
379,769,387
Net
increase
(decrease)
in
net
assets
resulting
from
operations
..........................................
$407,934,736
Templeton
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
22
Templeton
World
Fund
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
.................................................
$28,165,349
$40,966,855
Net
realized
gain
(loss)
.................................................
(9,276,242)
(429,725,653)
Net
change
in
unreali
zed
appreciation
(depreciation)
...........................
389,045,629
534,580,103
Net
increase
(decrease)
in
net
assets
resulting
from
operations
................
407,934,736
145,821,305
Distributions
to
shareholders:
Class
A
.............................................................
—
(154,280,365)
Class
C
.............................................................
—
(1,156,202)
Class
R6
............................................................
—
(2,209,999)
Advisor
Class
........................................................
—
(5,819,233)
Total
distributions
to
shareholders
..........................................
—
(163,465,799)
Capital
share
transactions:
(Note
2
)
Class
A
.............................................................
(208,585,599)
(302,268,890)
Class
C
.............................................................
(3,470,300)
(9,949,131)
Class
R6
............................................................
(3,294,053)
(4,480,810)
Advisor
Class
........................................................
(5,202,868)
(12,145,110)
Total
capital
share
transactions
............................................
(220,552,820)
(328,843,941)
Net
increase
(decrease)
in
net
assets
...................................
187,381,916
(346,488,435)
Net
assets:
Beginning
of
period
.....................................................
2,988,904,941
3,335,393,376
End
of
period
..........................................................
$3,176,286,857
$2,988,904,941
Templeton
Funds
23
franklintempleton.com
Semiannual
Report
Notes
to
Financial
Statements
(unaudited)
Templeton
World
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
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
February
28,
2021,
certain
securities
may
have
been
fair
valued
using
these
procedures,
in
which
case
the
securities
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
24
franklintempleton.com
Semiannual
Report
Templeton
World
Fund
(continued)
were
categorized
as
Level
2
inputs
within
the
fair
value
hierarchy
referred
to
as
“market
level
fair
value”.
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
(unaudited)
25
franklintempleton.com
Semiannual
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.
At
February
28,
2021,
the
Fund
received
$2,700,076
in
United
Kingdom
Treasury
Bonds
and
U.S.
Treasury
Bills,
Bonds
and
Notes
as
collateral
for
derivatives.
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
8 regarding
other
derivative
information.
d.
Restricted
Cash
At
February
28,
2021, the
Fund
held
restricted
cash
in
connection
with
investments
in
certain
derivative
securities.
Restricted
cash
is
held
in
a
segregated
account
with
the
Fund’s
custodian
and
is
reflected
in
the
Statement
of
Assets
and
Liabilities.
e.
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
February
28,
2021,
the Fund
had
no
securities
on
loan.
f.
Income
and
Deferred
Taxes
It
is the Fund's
policy
to
qualify
as
a
regulated
investment
company
under
the
Internal
Revenue
Code. The Fund
intends
to
distribute
to
shareholders
substantially
all
of
its
taxable
income
and
net
realized
gains
to
relieve
it
from
federal
income
and excise
taxes.
As
a
result,
no
provision
for
U.S.
federal
income
taxes
is
required.
The
Fund
may
be
subject
to
foreign
taxation
related
to
income
received,
capital
gains
on
the
sale
of
securities
and
certain
foreign
currency
transactions
in
the
foreign
jurisdictions
in
which it
invests.
Foreign
taxes,
if
any,
are
recorded
based
on
the
tax
regulations
and
rates
that
exist
in
the
foreign
markets
in
which
the
Fund
invests.
When
a
capital
gain
tax
is
determined
to
apply,
the
Fund
records
an
estimated
deferred
tax
liability
in
an
amount
that
would
be
payable
if
the
securities
were
disposed
of
on
the
valuation
date.
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
1.
Organization
and
Significant
Accounting
Policies
(continued)
c.
Derivative
Financial
Instruments
(continued)
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
26
franklintempleton.com
Semiannual
Report
Templeton
World
Fund
(continued)
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.
In
the
event
that
EU
reclaims
received
by
the Fund
during
the
fiscal
year
exceed
foreign
withholding
taxes
paid,
and
the
Fund previously
passed
foreign
tax
credit
on
to
its
shareholders,
the Fund
will enter
into
a
closing
agreement
with
the
Internal
Revenue
Service
(IRS)
in
order
to
pay
the
associated
tax
liability
on
behalf
of
the Fund's
shareholders.
The
Fund
determined
to
enter
into
a
closing
agreement
with
the
IRS
and
recorded
the
estimated
fees
as
a
reduction
to
income,
as
reflected
in
the
Statement
of
Operations.
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
February
28,
2021,
the
Fund
has
determined
that
no
tax
liability
is
required
in
its
financial
statements
related
to
uncertain
tax
positions
for
any
open
tax
years
(or
expected
to
be
taken
in
future
tax
years).
Open
tax
years
are
those
that
remain
subject
to
examination
and
are
based
on
the
statute
of
limitations
in
each
jurisdiction
in
which
the
Fund
invests. 
g.
Security
Transactions,
Investment
Income,
Expenses
and
Distributions
Security
transactions
are
accounted
for
on
trade
date.
Realized
gains
and
losses
on
security
transactions
are
determined
on
a
specific
identification
basis.
Interest
income
and
estimated
expenses
are
accrued
daily.
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.
Certain
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.
h.
Accounting
Estimates
The
preparation
of
financial
statements
in
accordance
with
U.S.
GAAP
requires
management
to
make
estimates
and
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities
at
the
date
of
the
financial
statements
and
the
amounts
of
income
and
expenses
during
the
reporting
period.
Actual
results
could
differ
from
those
estimates.
i.
Guarantees
and
Indemnifications
Under
the
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.
1.
Organization
and
Significant
Accounting
Policies
(continued)
f.
Income
and
Deferred
Taxes
(continued)
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
27
franklintempleton.com
Semiannual
Report
Templeton
World
Fund
(continued)
2.
Shares
of
Beneficial
Interest
At
February
28,
2021,
there
were
an
unlimited
number
of
shares
authorized
(without
par
value).
Transactions
in
the
Fund’s
shares
were
as
follows:
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:
Six
Months
Ended
February
28,
2021
Year
Ended
August
31,
2020
Shares
Amount
Shares
Amount
Class
A
Shares:
Shares
sold
a
...................................
4,476,691
$60,260,641
10,921,897
$138,692,097
Shares
issued
in
reinvestment
of
distributions
..........
—
—
10,423,866
142,494,243
Shares
redeemed
...............................
(19,844,230)
(268,846,240)
(45,423,196)
(583,455,230)
Net
increase
(decrease)
..........................
(15,367,539)
$(208,585,599)
(24,077,433)
$(302,268,890)
Class
C
Shares:
Shares
sold
...................................
61,869
$807,471
154,322
$1,871,972
Shares
issued
in
reinvestment
of
distributions
..........
—
—
83,052
1,093,794
Shares
redeemed
a
..............................
(333,284)
(4,277,771)
(1,060,706)
(12,914,897)
Net
increase
(decrease)
..........................
(271,415)
$(3,470,300)
(823,333)
$(9,949,131)
Class
R6
Shares:
Shares
sold
...................................
286,332
$3,878,060
595,082
$7,580,152
Shares
issued
in
reinvestment
of
distributions
..........
—
—
89,223
1,214,330
Shares
redeemed
...............................
(542,444)
(7,172,113)
(1,044,860)
(13,275,292)
Net
increase
(decrease)
..........................
(256,112)
$(3,294,053)
(360,555)
$(4,480,810)
Advisor
Class
Shares:
Shares
sold
...................................
697,317
$9,416,253
2,063,507
$26,613,673
Shares
issued
in
reinvestment
of
distributions
..........
—
—
380,650
5,188,265
Shares
redeemed
...............................
(1,092,679)
(14,619,121)
(3,467,124)
(43,947,048)
Net
increase
(decrease)
..........................
(395,362)
$(5,202,868)
(1,022,966)
$(12,145,110)
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
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
28
franklintempleton.com
Semiannual
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
period
ended
February
28,
2021,
the
annualized
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
period:
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
..............................
$17,862
CDSC
retained
..............................................................................
$796
3.
Transactions
with
Affiliates
(continued)
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
29
franklintempleton.com
Semiannual
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
period
ended
February
28,
2021,
the
Fund
paid
transfer
agent
fees
of
$1,040,150,
of
which
$506,426
was
retained
by
Investor
Services.
f.
Investments
in
Affiliated
Management
Investment
Companies
Certain
or
all
Funds
invest
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
Funds
are
waived
on
assets
invested
in
the
affiliated
management
investment
companies,
as
noted
in
the
Statements
of
Operations,
in
an
amount
not
to
exceed
the
management
and
administrative
fees
paid
directly
or
indirectly
by
each
affiliate.
During
the
period
ended
February
28,
2021,
investments
in
affiliated
management
investment
companies
were
as
follows:
g.
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,
2021.
4.
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:
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.
    aa
Value
at
Beginning
of
Period
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Period
Number
of
Shares
Held
at
End
of
Period
Investment
Income
a      
a  
a  
a  
a  
a  
a  
a  
Templeton
World
Fund
Non-Controlled
Affiliates
Income
from
securities
loaned
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0%
.........
$—
$29,140,689
$(29,140,689)
$
—
$
—
$—
—
$—
Total
Affiliated
Securities
....
$—
$29,140,689
$(29,140,689)
$—
$—
$—
$—
Capital
loss
carryforwards
not
subject
to
expiration:
Short
term
................................................................................
$26,214,165
Long
term
................................................................................
403,056,405
Total
capital
loss
carryforwards
...............................................................
$429,270,570
3.
Transactions
with
Affiliates
(continued)
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
30
franklintempleton.com
Semiannual
Report
Templeton
World
Fund
(continued)
At
February
28,
2021,
the
cost
of
investments
and
net
unrealized
appreciation
(depreciation)
for
income
tax
purposes
were
as
follows:
Differences
between
income
and/or
capital
gains
as
determined
on
a
book
basis
and
a
tax
basis
are
primarily
due
to
differing
treatment
of
foreign
currency
transactions.
5.
Investment
Transactions
Purchases
and
sales
of
investments
(excluding
short
term
securities)
for
the
period
ended
February
28,
2021,
aggregated
$600,342,165
and
$731,352,148,
respectively.
6.
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.
7. Novel
Coronavirus
Pandemic 
The
global
outbreak
of
the
novel
coronavirus
disease,
known
as
COVID-19, has
caused
adverse
effects
on
many
companies,
sectors,
nations,
regions
and
the
markets
in
general, and
may
continue for
an unpredictable duration.
The
effects
of
this
pandemic
may
materially
impact
the
value
and
performance
of
the Fund, its ability
to
buy
and
sell
fund
investments
at
appropriate
valuations
and its ability
to
achieve its investment
objectives.
8.
Other
Derivative
Information
At
February
28,
2021,
the
Fund's
investments
in
derivative
contracts
are
reflected
in
the
Statement of
Assets
and
Liabilities
as
follows:
For
the
period
ended
February
28,
2021,
the
effect
of
derivative
contracts
in
the
Statement
of
Operations
was
as
follows:
Cost
of
investments
..........................................................................
$2,392,637,888
Unrealized
appreciation
........................................................................
$858,015,279
Unrealized
depreciation
........................................................................
(82,167,797)
Net
unrealized
appreciation
(depreciation)
..........................................................
$775,847,482
Asset
Derivatives
Liability
Derivatives
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Assets
and
Liabilities
Location
Fair
Value
Statement
of
Assets
and
Liabilities
Location
Fair
Value
Templeton
World
Fund
Foreign
exchange
contracts
..
Unrealized
appreciation
on
OTC
forward
exchange
contracts
$
21,828,466
Unrealized
depreciation
on
OTC
forward
exchange
contracts
$
6,203,456
Total
....................
$21,828,466
$6,203,456
4.
Income
Taxes
(continued)
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
31
franklintempleton.com
Semiannual
Report
Templeton
World
Fund
(continued)
For
the
period
ended
February
28,
2021,
the
average
month
end
contract
value
of
forward
exchange
contracts
was
$1,839,557,022.
See
Note
1(c)
regarding
derivative
financial
instruments. 
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
$2.675
billion
(Global
Credit
Facility)
which
matures
on
February
4,
2022.
This
Global
Credit
Facility
provides
a
source
of
funds
to
the
Borrowers
for
temporary
and
emergency
purposes,
including
the
ability
to
meet
future
unanticipated
or
unusually
large
redemption
requests.
Under
the
terms
of
the
Global
Credit
Facility,
the
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
period
ended
February
28,
2021,
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)
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Operations
Location
Net
Realized
Gain
(Loss)
for
the
Period
Statement
of
Operations
Location
Net
Change
in
Unrealized
Appreciation
(Depreciation)
for
the
Period
Net
realized
gain
(loss)
from:
Net
change
in
unrealized
  appreciation
(depreciation)
on:
Templeton
World
Fund
Foreign
exchange
contracts
..
Forward
exchange
contracts
$(72,982,543)
Forward
exchange
contracts
$58,942,906
Total
....................
$(72,982,543)
$58,942,906
8.
Other
Derivative
Information
(continued)
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
32
franklintempleton.com
Semiannual
Report
Templeton
World
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
February
28,
2021,
in
valuing
the
Fund's
assets
and
liabilities
carried
at
fair
value,
is
as
follows:
11.
New
Accounting
Pronouncements
In
March
2020,
the
Financial
Accounting
Standards
Board
(FASB)
issued
Accounting
Standards
Update
(ASU)
No.
2020-
04,
Reference
Rate
Reform
(Topic
848)
–
Facilitation
of
the
Effects
of
Reference
Rate
Reform
on
Financial
Reporting.
The
amendments
in
the
ASU
provides
optional
temporary
financial
reporting
relief
from
the
effect
of
certain
types
of
contract
modifications
due
to
the
planned
discontinuation
of
the
London
Interbank
Offered
Rate
(LIBOR)
and
other
interbank-offered
based
reference
rates
as
of
the
end
of
2021.
The
ASU
is
effective
for
certain
reference
rate-related
contract
modifications
that
occur
during
the
period
March
12,
2020
through
December
31,
2022. Management
has
reviewed
the
requirements
and
believes
the
adoption
of
this
ASU
will
not
have
a
material
impact
on
the
financial
statements.
12.
Subsequent
Events
The
Fund
has
evaluated
subsequent
events
through
the
issuance
of
the
financial
statements
and
determined
that
no
events
have
occurred
that
require
disclosure.
Level
1
Level
2
Level
3
Total
Templeton
World
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Belgium
.............................
$
—
$
102,307,409
$
—
$
102,307,409
Brazil
...............................
39,796,540
—
—
39,796,540
China
...............................
49,564,455
17,921,039
—
67,485,494
Denmark
............................
—
31,344,118
—
31,344,118
France
..............................
—
108,188,496
—
108,188,496
Germany
............................
—
209,569,905
—
209,569,905
Hong
Kong
...........................
—
64,459,592
—
64,459,592
Japan
...............................
—
470,659,177
—
470,659,177
Luxembourg
..........................
—
60,596,950
—
60,596,950
Macau
..............................
—
41,486,805
—
41,486,805
Netherlands
..........................
47,230,979
—
—
47,230,979
Norway
..............................
—
34,002,764
—
34,002,764
South
Korea
..........................
—
115,857,724
—
115,857,724
Switzerland
...........................
—
83,802,348
—
83,802,348
United
Kingdom
.......................
—
243,054,089
—
243,054,089
United
States
.........................
1,237,017,970
—
—
1,237,017,970
Short
Term
Investments
...................
—
196,000,000
—
196,000,000
Total
Investments
in
Securities
...........
$1,373,609,944
$1,779,250,416
a
$—
$3,152,860,360
Other
Financial
Instruments:
Forward
exchange
contracts
...............
$
—
$
21,828,466
$
—
$
21,828,466
Total
Other
Financial
Instruments
.........
$—
$21,828,466
$—
$21,828,466
Liabilities:
Other
Financial
Instruments:
Forward
exchange
contracts
................
$—
$6,203,456
$—
$6,203,456
$—
$—
$—
$—
a
Includes
foreign
securities
valued
at
$1,583,250,416,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
10.
Fair
Value
Measurements
(continued)
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
33
franklintempleton.com
Semiannual
Report
Templeton
World
Fund
(continued)
Abbreviations
Counterparty
BOFA
Bank
of
America
Corp.
BZWS
Barclays
Bank
plc
CITI
Citibank
NA
GSCO
Goldman
Sachs
Group,
Inc.
HSBK
HSBC
Bank
plc
UBSW
UBS
AG
Selected
Portfolio
FDR
Foreign
Depositary
Receipt
Templeton
Funds
Tax
Information
(unaudited)
34
franklintempleton.com
Semiannual
Report
1.
Qualified
dividends
are
taxed
at
reduced
long
term
capital
gains
tax
rates.
In
determining
the
amount
of
foreign
tax
credit
that
may
be
applied
against
the
U.S.
tax
liability
of
individuals
receiving
foreign
source
qualified
dividends,
adjustments
may
be
required
to
the
foreign
tax
credit
limitation
calculation
to
reflect
the
rate
differential
applicable
to
such
dividend
income.
The
rules
however
permit
certain
individuals
to
elect
not
to
apply
the
rate
differential
adjustments
for
capital
gains
and/or
dividends
for
any
taxable
year.
Please
consult
your
tax
advisor
and
the
instructions
to
Form
1116
for
more
information.
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.
As
shown
in
the
table
below,
the
Fund
hereby
reports
to
shareholders
the
foreign
source
income
and
foreign
taxes
paid,
pursuant
to
Section
853
of
the
Internal
Revenue
Code.
This
written
statement
will
allow
shareholders
of
record
on
December
17,
2020,
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.
The
following
table
provides
a
detailed
analysis
of
foreign
tax
paid,
foreign
source
income,
and
foreign
source
qualified
dividends
as
reported
by
the
Fund,
to
shareholders
of
record.
Foreign
Tax
Paid
Per
Share
is
the
amount
per
share
available
to
you,
as
a
tax
credit
(assuming
you
held
your
shares
in
the
Fund
for
a
minimum
of
16
days
during
the
31-day
period
beginning
15
days
before
the
ex-dividend
date
of
the
Fund’s
distribution
to
which
the
foreign
taxes
relate),
or,
as
a
tax
deduction.
Foreign
Source
Income
Per
Share
is
the
amount
per
share
of
income
dividends
attributable
to
foreign
securities
held
by
the
Fund,
plus
any
foreign
taxes
withheld
on
these
dividends.
The
amounts
reported
include
foreign
source
qualified
dividends
that
have
not
been
adjusted
for
the
rate
differential
applicable
to
such
dividend
income.
1
Foreign
Source
Qualified
Dividends
Per
Share
is
the
amount
per
share
of
foreign
source
qualified
dividends
plus
any
foreign
taxes
withheld
on
these
dividends.
These
amounts
represent
the
portion
of
the
Foreign
Source
Income
Per
Share
that
were
derived
from
qualified
foreign
securities
held
by
the
Fund.
1
At
the
beginning
of
each
calendar
year,
shareholders
will
receive
Form
1099-DIV
which
will
include
their
share
of
taxes
paid
during
the
prior
calendar
year. Shareholders
are
advised
to
check
with
their
tax
advisors
for
information
on
the
treatment
of
these
amounts
on
their
income
tax
returns.
Foreign
Tax
Paid
Per
Share
Foreign
Source
Income
Per
Share
Foreign
Source
Qualified
Dividends
Per
Share
$0.0227
$0.0227
$0.0227
Templeton
Funds
Shareholder
Information
35
franklintempleton.com
Semiannual
Report
Board
Approval
of
Investment
Management
Agreements
TEMPLETON
FUNDS
Templeton
World
Fund
(Fund)
At
a
meeting
held
on
February
23,
2021
(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
best
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
in
the
current
work-from-home
environment
and
liquidity
risk
management.
The
Board
also
reviewed
and
considered
the
benefits
provided
to
Fund
shareholders
of
investing
in
a
fund
that
is
part
of
the
FT
family
of
funds.
The
Board
noted
the
financial
position
of
Franklin
Resources,
Inc.
(FRI),
the
Manager’s
parent,
and
its
commitment
to
the
mutual
fund
business
as
evidenced
by
its
reassessment
of
the
fund
offerings
in
response
to
the
market
environment
and
project
initiatives
and
capital
investments
relating
to
the
services
provided
to
the
Fund
by
the
FT
organization.
The
Board
specifically
noted
FT’s
commitment
to
enhancing
services
and
controlling
costs,
as
reflected
in
its
outsourcing
of
certain
administrative
functions,
and
growth
opportunities,
Templeton
Funds
Shareholder
Information
36
franklintempleton.com
Semiannual
Report
as
evidenced
by
its
recent
acquisition
of
the
Legg
Mason
companies.
The
Board
also
noted
FT’s
attention
focused
on
expanding
the
distribution
opportunities
for
all
funds
in
the
FT
family
of
funds.
Following
consideration
of
such
information,
the
Board
was
satisfied
with
the
nature,
extent
and
quality
of
services
provided
by
the
Manager
and
its
affiliates
to
the
Fund
and
its
shareholders.
Fund
Performance
The
Board
reviewed
and
considered
the
performance
results
of
the
Fund
over
various
time
periods
ended
November
30,
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
dramatic
underperformance
relative
to
growth
stocks,
and
its
underweight
position
in
US
stocks,
as
compared
to
peers,
contributed
to
the
Fund’s
relative
underperformance.
Management
also
explained
that
particular
sectors
(such
as
consumer
discretionary,
communication
services,
financials
health
care
and
information
technology)
and
overall
stock
selection
contributed
to
the
Fund’s
relative
underperformance.
The
Board
noted
management’s
steps
to
address
this
underperformance
of
the
Fund,
including
making
enhancements
to
the
Fund’s
investment
personnel
and
process
designed
to
deepen
regional
knowledge,
enhance
opportunity
capture,
and
incorporate
uncorrelated
value
exposures.
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
closely
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,
three
other
global
multi-cap
value
funds,
six
global
multi-cap
core
funds
and
three
global
multi-cap
growth
funds.
The
Board
noted
that
the
Management
Rate
and
actual
total
expense
ratio
for
the
Fund
were
below
the
medians
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,
2020,
being
the
most
recent
fiscal
year-
end
for
FRI.
The
Board
noted
that
although
management
Templeton
Funds
Shareholder
Information
37
franklintempleton.com
Semiannual
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.
The
Board
further
noted
management’s
representation
that
the
profitability
analysis
excluded
the
impact
of
the
recent
acquisition
of
the
Legg
Mason
companies
and
that
management
expects
to
incorporate
the
legacy
Legg
Mason
companies
into
the
profitability
analysis
beginning
next
year.
The
Board
also
noted
that
PricewaterhouseCoopers
LLP,
auditor
to
FRI
and
certain
FT
funds,
has
been
engaged
by
the
Manager
to
periodically
review
and
assess
the
allocation
methodologies
to
be
used
solely
by
the
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
management’s
outsourcing
of
certain
operations,
which
effort
has
required
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.
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.
The
Board
recognized
that,
given
the
decline
in
assets
for
the
Fund,
the
Fund
is
not
expected
to
experience
additional
economies
of
scale
in
the
foreseeable
future.
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.
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.
Templeton
Funds
Shareholder
Information
38
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Reports
and
Prospectuses
You
will
receive,
or
receive
notice
of
the
availability
of,
the
Fund's
financial
reports
every
six
months.
In
addition,
you
will
receive
an
annual
updated
summary
prospectus
(detail
prospectus
available
upon
request).
To
reduce
Fund
expenses,
we
try
to
identify
related
shareholders
in
a
household
and
send
only
one
copy
of
the
financial
reports
(to
the
extent
received
by
mail)
and
summary
prospectus.
This
process,
called
“householding,”
will
continue
indefinitely
unless
you
instruct
us
otherwise.
If
you
prefer
not
to
have
these
documents
householded,
please
call
us
at
(800)
632-2301.
At
any
time
you
may
view
current
prospectuses/
summary
prospectuses
and
financial
reports
on
our
website.
If
you
choose,
you
may
receive
these
documents
through
electronic
delivery.
102
S
04/21
©
2021
Franklin
Templeton
Investments.
All
rights
reserved.
Authorized
for
distribution
only
when
accompanied
or
preceded
by
a
summary
prospectus
and/or
prospectus.
Investors
should
carefully
consider
a
fund’s
investment
goals,
risks,
charges
and
expenses
before
investing.
A
prospectus
contains
this
and
other
information;
please
read
it
carefully
before
investing.
To
help
ensure
we
provide
you
with
quality
service,
all
calls
to
and
from
our
service
areas
are
monitored
and/or
recorded.
Semiannual
Report
and
Shareholder
Letter
Templeton
World
Fund
Investment
Manager
Distributor
Shareholder
Services
Templeton
Global
Advisors
Limited
Franklin
Templeton
Distributors,
Inc.
(800)
DIAL
BEN
®
/
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franklintempleton.com
(800)
632-2301
SEMIANNUAL
REPORT
AND
SHAREHOLDER
LETTER
Templeton
Foreign
Fund
A
Series
of
Templeton
Funds
February
28,
2021
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up
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part
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the
semiannual
report
1
SHAREHOLDER
LETTER
Dear
Shareholder:
During
the
six
months
ended
February
28,
2021,
the
global
economic
recovery
was
hindered
by
a
surge
of
novel
coronavirus
(COVID-19)
cases
in
certain
regions.
Despite
this,
global
equities
advanced
over
the
period
amid
successful
trials
of
COVID-19
vaccines,
the
start
of
vaccination
programs
in
some
countries
and
expectations
for
fiscal
stimulus
from
the
new
U.S.
presidential
administration.
Investor
sentiment
was
further
boosted
by
encouraging
economic
data
from
China
and
signals
that
the
U.S.
Federal
Reserve
would
continue
to
support
low
interest
rates.
Global
equities
trimmed
some
gains
near
period-end
due
to
investor
concerns
that
rising
inflation
could
lead
some
central
banks
to
raise
interest
rates.
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
financial
professionals
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
semiannual
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
Global
Equity
Group
This
letter
reflects
our
analysis
and
opinions
as
of
February
28,
2021,
unless
otherwise
indicated.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
fund.
Statements
of
fact
are
from
sources
considered
reliable.
franklintempleton.com
Semiannual
Report
2
Contents
Semiannual
Report
Templeton
Foreign
Fund
3
Performance
Summary
7
Your
Fund’s
Expenses
9
Financial
Highlights
and
Statement
of
Investments
10
Financial
Statements
19
Notes
to
Financial
Statements
23
Tax
Information
33
Shareholder
Information
34
Visit
franklintempleton.com
for
fund
updates,
to
access
your
account,
or
to
find
helpful
financial
planning
tools.
3
franklintempleton.com
Semiannual
Report
SEMIANNUAL
REPORT
Templeton
Foreign
Fund
This
semiannual
report
for
Templeton
Foreign
Fund
covers
the
period
ended
February
28,
2021.
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
+21.52%
cumulative
total
return
for
the
six
months
under
review.
In
comparison,
the
Fund’s
new
benchmark,
the
MSCI
All
Country
World
Index
(ACWI)
ex
USA
Index-NR,
which
measures
stock
performance
in
global
developed
and
emerging
markets
excluding
the
U.S.,
posted
a
+16.65%
total
return.
1
Also
in
comparison,
the
Fund’s
former
benchmark,
the
MSCI
ACWI
ex
USA
Index,
posted
a
+16.80%
total
return
for
the
same
period.
The
MSCI
ACWI
ex
USA
Index-NR
(net
of
taxes
on
dividends)
is
replacing
the
MSCI
ACWI
ex
USA
Index
(gross
of
taxes
on
dividends)
because
the
investment
manager
believes
the
composition
of
the
MSCI
ACWI
ex
USA
Index-
NR
provides
a
more
consistent
basis
for
comparison
relative
to
the
Fund’s
peers.
For
the
10-year
period
ended
February
28,
2021,
the
Fund’s
Class
A
shares
posted
a
+31.68%
cumulative
total
return,
compared
with
the
MSCI
ACWI
ex
USA
Index-NR’s
+59.38%
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
six
months
ended
February
28,
2021.
Equities
in
all
major
regions
of
the
world
posted
positive
returns
for
the
period
despite
the
global
surge
of
the
novel
coronavirus
(COVID-19).
Following
stock
market
declines
in
September
and
October
2020
due
to
geopolitical
tensions
and
rising
infection
rates,
equities
began
to
rebound
in
November,
as
successful
trials
of
COVID-19
vaccines,
the
start
of
vaccination
programs
in
some
countries
and
expectations
for
fiscal
stimulus
from
the
new
U.S.
administration
led
many
equity
markets
to
reach
new
highs.
Some
indications
of
economic
revival,
most
notably
in
China,
also
helped
drive
stocks
higher.
However,
global
equity
markets
pared
some
gains
in
late
February
2021
amid
investor
concerns
that
rising
inflation
could
lead
some
central
banks
to
raise
interest
rates.
In
the
U.S.,
equities
posted
solid
gains
for
the
period
amid
the
government’s
fiscal
and
monetary
stimulus
measures,
the
approval
of
several
highly
effective
COVID-19
vaccines
and
the
onset
of
vaccinations.
Stocks
came
under
pressure
in
the
first
half
of
the
period
amid
uncertainties
about
the
U.S.
presidential
election
and
additional
fiscal
stimulus
measures.
Consumer
spending
slowed
during
the
fourth
quarter
of
2020
as
surging
COVID-19
infections
led
to
new
restrictions
in
some
states.
Nevertheless,
growth
in
residential
and
corporate
investment,
solid
corporate
earnings
results
and
the
outcome
of
the
U.S.
presidential
election
bolstered
investor
sentiment,
and
equities
began
to
rally
in
November.
The
start
of
COVID-19
vaccination
programs,
higher
retail
spending
and
progress
on
additional
Geographic
Composition
2/28/21
%
of
Total
Net
Assets
Asia
46.4%
Europe
37.9%
North
America
7.8%
Latin
America
&
Caribbean
1.2%
Other
0.5%
Short-Term
Investments
&
Other
Net
Assets
6.2%
1.
Source:
Morningstar.
As
of
2/28/21,
the
Fund’s
Class
A
10-year
average
annual
total
return
not
including
the
maximum
sales
charge
was
+2.79%,
compared
with
the
MSCI
ACWI
ex
USA
Index-NR’s
10-year
average
annual
total
return
of
+4.77%.
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.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
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
Foreign
Fund
4
franklintempleton.com
Semiannual
Report
stimulus
legislation
under
the
new
U.S.
administration
further
supported
stocks.
The
unemployment
rate
declined
from
8.4%
in
August
2020
to
6.2%
in
February
2021.
2
Despite
a
selloff
near
period-end
due
to
investor
concerns
about
rising
bond
yields
amid
the
economic
recovery
and
potential
for
higher
inflation,
U.S.
equities
posted
strong
overall
gains.
The
U.S.
Federal
Reserve
(Fed)
maintained
the
federal
funds
target
rate
at
a
range
of
0.00%–0.25%
and
continued
its
program
of
open-ended
bond
purchases
to
help
keep
markets
functioning.
Furthermore,
the
Fed
signaled
that
interest
rates
would
potentially
remain
low,
even
if
inflation
moderately
exceeded
the
Fed’s
2%
target
for
some
time.
In
the
eurozone,
the
economy
contracted
in
the
fourth
quarter
of
2020.
Gross
domestic
product
(GDP)
growth
rates
varied
widely
among
the
region’s
largest
economies
amid
renewed
lockdowns
and
delays
in
COVID-19
vaccine
distribution.
Germany’s
and
Spain’s
GDP
expanded
modestly
in
the
fourth
quarter,
while
France’s
contracted.
Despite
investor
concerns
about
rising
infection
rates,
optimism
about
successful
vaccine
development
and
a
Brexit
resolution
contributed
to
a
positive
performance
for
European
developed
market
equities,
as
measured
by
the
MSCI
Europe
Index.
Asian
developed
and
emerging
market
equities,
as
measured
by
the
MSCI
All
Country
Asia
Index,
rose
significantly
for
the
period.
China,
a
key
driver
of
regional
economies,
maintained
its
economic
recovery
and
was
the
only
major
global
economy
to
post
positive
GDP
growth
for
calendar-year
2020.
Asian
equity
markets
were
also
aided
by
optimism
that
economic
revitalization
would
be
further
spurred
by
COVID-19
vaccines.
Global
emerging
market
stocks,
as
measured
by
the
MSCI
Emerging
Markets
Index,
also
posted
sizable
gains
for
the
period.
Improving
economic
activity,
stabilizing
oil
prices
and
U.S.
dollar
weakness
supported
emerging
market
equities.
In
spite
of
higher
COVID-19
cases
in
some
countries,
emerging
market
stocks
rallied
amid
easing
political
uncertainty,
commencement
of
COVID-19
vaccinations
and
rising
commodity
prices.
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
Fund
outperformed
the
MSCI
ACWI
ex
USA
Index-NR
during
the
six-month
period,
primarily
attributable
to
stock
selection.
At
the
beginning
of
2020,
we
were
cautiously
positioned
and
focused
on
what
we
considered
quality
stocks
in
anticipation
of
a
typical
late-cycle
economic
pattern.
That
defensive
bias
was
beneficial
when
COVID-19
struck,
but
opportunities
quickly
evolved
as
markets
reeled
and
policymakers
responded
aggressively.
Over
the
course
of
the
spring
and
summer,
we
used
market
dislocations
to
buy
beaten-down
cyclical
stocks
and
companies
hit
particularly
hard
by
the
pandemic.
We
relied
on
fundamental
analysis
and
valuation
discipline
to
identify
companies
we
felt
could
weather
the
crisis
and
emerge
stronger,
and
we
studied
the
virus
and
vaccine
response
to
develop
a
framework
and
timeline
around
economic
reopening
prospects.
We
developed
convictions
and
implemented
them
in
our
portfolios
as
part
of
a
broader
strategy
of
diversification
across
value
types
and
economic
exposures.
These
efforts
positioned
the
Fund
well
for
the
semiannual
review
period,
which
saw
vaccines
emerge
roughly
along
our
expected
timeline,
raising
hopes
for
economic
reopening
and
prompting
a
value
rebound
led
by
many
of
the
cyclical
and
“away-from-home”
stocks
to
which
we
had
earlier
increased
exposure.
2.
Source:
U.S.
Bureau
of
Labor
Statistics.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Top
10
Industries
2/28/21
%
of
Total
Net
Assets
a
Banks
9.2%
Pharmaceuticals
7.2%
Oil,
Gas
&
Consumable
Fuels
5.9%
Semiconductors
&
Semiconductor
Equipment
5.5%
Metals
&
Mining
5.4%
Real
Estate
Management
&
Development
4.5%
Automobiles
4.3%
Technology
Hardware,
Storage
&
Peripherals
4.2%
Electronic
Equipment,
Instruments
&
Components
3.8%
Internet
&
Direct
Marketing
Retail
3.4%
Templeton
Foreign
Fund
5
franklintempleton.com
Semiannual
Report
Fund
results
during
the
period
aligned
closely
to
value
types
and
economic
sensitivity.
At
Templeton,
we
classify
all
of
our
holdings
by
their
respective
value
characteristics.
Our
largest
value
category
is
“classic
value,”
which
tends
to
be
low-valuation
multiple,
cyclically
depressed
stocks
where
the
past
can
be
a
guide
to
the
future.
We
also
have
exposure
to
quality
stocks
(which
tend
to
offer
long-term
resilience),
mispriced
growth
stocks
(where
we
believe
the
future
should
be
better
than
the
past),
discounted
cash
flow
stories
(where
cash
generation
is
key)
and
discounted
asset
plays
(where
unlocking
of
asset
value
drives
the
thesis).
During
the
semiannual
review
period,
our
classic
value
holdings
were
the
clear
outperformers.
Vaccine
and
stimulus
prospects
boosted
investor
expectations
of
economic
reflation
and
interest
rates
began
to
rise,
reversing
value’s
long-standing
weakness.
From
a
sector
standpoint,
information
technology
was
the
top
relative
contributor,
aided
by
stock
selection.
Shares
of
South
Korean
semiconductor
and
consumer
electronics
manufacturer
Samsung
Electronics
rose
to
a
record
price
high
due
to
signs
of
a
cyclical
upswing
in
the
memory
chips
business
and
investor
expectations
that
the
company’s
mobile
and
5G
network
gear
businesses
would
benefit
from
tighter
trade
sanctions
on
China.
With
significant
cash
reserves
on
its
balance
sheet,
we
also
see
significant
flexibility
around
capital
deployment
and
are
encouraged
by
the
company’s
commitment
to
return
capital
to
shareholders.
In
our
view,
the
stock
remains
inexpensive
for
a
global
technology
leader
with
strong
competitive
positions
across
a
number
of
attractive
businesses.
Stock
selection
in
the
communication
services
sector
also
boosted
relative
performance,
led
by
Chinese
internet
search
giant
Baidu.
Its
shares
rallied
after
company
management
reported
better-than-expected
earnings,
highlighting
renewed
growth
in
advertising
revenues
and
strong
cash
flows
in
spite
of
COVID-19
disruptions.
Baidu
was
late
to
recognize
the
importance
of
its
mobile
ecosystem,
but
it
has
since
invested
heavily
in
this
important
growth
driver
and
is
beginning
to
gain
meaningful
traction.
Other
sector
contributors
included
stock
selection
and
an
underweighting
in
consumer
staples,
as
well
as
stock
selection
in
financials,
materials,
industrials,
real
estate
and
energy.
All
of
the
Fund’s
top
10
contributors
to
relative
performance
were
leveraged
to
economic
reopening
or
expansion
themes
to
varying
degrees.
These
companies
included
traditionally
cyclical
businesses
in
sectors
such
as
materials
(Luxembourg-based
steelmaker
ArcelorMittal,
German
chemicals
firm
Covestro
and
Japanese
base
metals
miner
and
smelter
Sumitomo
Metal
Mining)
and
financials
(Thai
lender
Kasikornbank);
pandemic-impacted
“away-from-
home”
stocks
such
as
U.K.-based
International
Consolidated
Airlines
Group
(British
Airways
parent;
not
part
of
the
index);
and
a
handful
of
companies
geared
to
global
economic
growth,
such
as
Japanese
industrials
conglomerate
Hitachi,
Dutch
chipmaker
NXP
Semiconductors
(not
part
of
the
index)
and
the
aforementioned
South
Korean
semiconductor
and
consumer
electronics
firm
Samsung
Electronics.
Chinese
video-based
social
media
platform
Kuaishou
Technology
and
the
aforementioned
Chinese
internet
search
leader
Baidu
rallied
amid
improved
growth
outlooks
as
China
appeared
to
be
exiting
the
acute
phase
of
its
COVID-19
outbreak
earlier
than
other
countries.
Top
10
Countries
2/28/21
a
%
of
Total
Net
Assets
a
a
Japan
23.6%
United
Kingdom
13.6%
Germany
9.3%
South
Korea
7.2%
United
States
6.8%
Netherlands
5.9%
Hong
Kong
4.8%
China
4.5%
Taiwan
2.9%
Luxembourg
2.0%
Top
10
Holdings
2/28/21
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
Samsung
Electronics
Co.
Ltd.
4.2%
Technology
Hardware,
Storage
&
Peripherals,
South
Korea
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.
2.9%
Semiconductors
&
Semiconductor
Equipment,
Taiwan
Hitachi
Ltd.
2.8%
Electronic
Equipment,
Instruments
&
Components,
Japan
Takeda
Pharmaceutical
Co.
Ltd.
2.6%
Pharmaceuticals,
Japan
NXP
Semiconductors
NV
2.6%
Semiconductors
&
Semiconductor
Equipment,
Netherlands
Bayer
AG
2.5%
Pharmaceuticals,
Germany
CK
Hutchison
Holdings
Ltd.
2.2%
Industrial
Conglomerates,
United
Kingdom
Sumitomo
Metal
Mining
Co.
Ltd.
2.2%
Metals
&
Mining,
Japan
BP
plc
2.1%
Oil,
Gas
&
Consumable
Fuels,
United
Kingdom
ArcelorMittal
SA
2.0%
Metals
&
Mining,
Luxembourg
Templeton
Foreign
Fund
6
franklintempleton.com
Semiannual
Report
In
contrast,
stock
selection
and
an
overweighting
in
the
health
care
sector,
as
well
as
stock
selection
in
the
consumer
discretionary
and
utilities
sectors,
detracted
from
the
Fund’s
relative
performance.
Health
care
was
pressured
by
positions
in
Japanese
pharmaceuticals
firm
Takeda
Pharmaceutical
and
German
pharmaceuticals
developer
and
crop
science
specialist
Bayer.
Our
analysis
suggests
that
Takeda
remains
cheap
and
could
benefit
from
solid
organic
growth
and
ongoing
deleveraging
efforts
to
improve
financial
flexibility.
Bayer’s
shares
slumped
amid
persistent
investor
skepticism
around
the
firm’s
complex
settlement
to
resolve
litigation
stemming
from
its
acquisition
of
Monsanto,
the
manufacturer
of
the
controversial
weed-killer
Roundup.
Adding
to
the
negative
sentiment,
company
management
provided
tepid
guidance
for
2021
and
reduced
the
dividend.
We
believe
a
legal
settlement
will
be
reached
in
2021
and
that
there
is
value
in
the
crop
science
and
pharmaceuticals
business
that
many
investors
are
not
appreciating.
In
utilities,
German
power
provider
E.ON
also
pressured
relative
performance.
We
still
hold
a
positive
view
on
the
stock
as
we
believe
E.ON
is
transitioning
into
a
more
focused,
regulated
business.
There
were
no
consumer
discretionary
stocks
among
the
Fund’s
10
biggest
relative
detractors.
From
a
geographic
standpoint,
all
major
regions
represented
in
the
Fund’s
portfolio
contributed
to
relative
performance.
In
Asia,
all
country-level
exposures
benefited
relative
results,
bolstered
by
stock
selection
and
favorable
allocations
in
China
(underweight),
South
Korea
(overweight)
and
Japan
(overweight).
In
Europe,
relative
strength
in
the
U.K.
offset
relative
weakness
in
Germany.
In
North
America,
the
positive
effect
of
exposure
to
the
U.S.
overcame
the
negative
effect
of
stock
selection
in
Canada,
where
precious
metals
firm
Wheaton
Precious
Metals,
which
has
operations
in
Brazil,
declined
due
to
higher
real
interest
rates
and
an
improved
macroeconomic
outlook.
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
February
28,
2021,
the
end
of
the
reporting
period.
The
way
we
implement
our
main
investment
strategies
and
the
resulting
portfolio
holdings
may
change
depending
on
factors
such
as
market
and
economic
conditions.
These
opinions
may
not
be
relied
upon
as
investment
advice
or
an
offer
for
a
particular
security.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
the
Fund.
Statements
of
fact
are
from
sources
considered
reliable,
but
the
investment
manager
makes
no
representation
or
warranty
as
to
their
completeness
or
accuracy.
Although
historical
performance
is
no
guarantee
of
future
results,
these
insights
may
help
you
understand
our
investment
management
philosophy.
CFA
®
is
a
trademark
owned
by
CFA
Institute
Performance
Summary
as
of
February
28,
2021
Templeton
Foreign
Fund
7
franklintempleton.com
Semiannual
Report
The
performance
table
does
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
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
2/28/21
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
6-Month
+21.52%
+14.87%
1-Year
+19.04%
+12.48%
5-Year
+41.67%
+6.01%
10-Year
+31.68%
+2.21%
Advisor
6-Month
+21.73%
+21.73%
1-Year
+19.20%
+19.20%
5-Year
+43.37%
+7.47%
10-Year
+34.98%
+3.04%
See
page
8
for
Performance
Summary
footnotes.
Templeton
Foreign
Fund
Performance
Summary
8
franklintempleton.com
Semiannual
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
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.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
1.
The
Fund
has
an
expense
reduction
contractually
guaranteed
through
12/31/21.
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.
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
(9/1/20–2/28/21)
Share
Class
Net
Investment
Income
A
$0.0940
C
$0.0332
R
$0.0808
R6
$0.1215
Advisor
$0.1141
Total
Annual
Operating
Expenses
5
Share
Class
With
Fee
Waiver
Without
Fee
Waiver
A
1.10%
1.19%
Advisor
0.85%
0.94%
Your
Fund’s
Expenses
Templeton
Foreign
Fund
9
franklintempleton.com
Semiannual
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
181/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
9/1/20
Ending
Account
Value
2/28/21
Expenses
Paid
During
Period
9/1/20–2/28/21
1,
2
Ending
Account
Value
2/28/21
Expenses
Paid
During
Period
9/1/20–2/28/21
1,
2
a
Net
Annualized
Expense
Ratio
2
A
$1,000
$1,215.24
$5.95
$1,019.42
$5.43
1.08%
C
$1,000
$1,208.23
$10.04
$1,015.70
$9.16
1.83%
R
$1,000
$1,212.95
$7.30
$1,018.20
$6.66
1.33%
R6
$1,000
$1,216.96
$3.81
$1,021.36
$3.47
0.69%
Advisor
$1,000
$1,217.32
$4.59
$1,020.66
$4.18
0.83%
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
10
a
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
2019
2018
2017
2016
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
.....
$6.22
$6.61
$7.69
$7.81
$6.87
$6.74
Income
from
investment
operations
a
:
Net
investment
income
b
.............
0.11
c
0.10
0.19
0.12
0.11
0.11
Net
realized
and
unrealized
gains
(losses)
1.22
(0.25)
(1.09)
(0.13)
0.96
0.11
Total
from
investment
operations
........
1.33
(0.15)
(0.90)
(0.01)
1.07
0.22
Less
distributions
from:
Net
investment
income
..............
(0.09)
(0.24)
(0.18)
(0.11)
(0.13)
(0.09)
Net
realized
gains
.................
—
—
—
—
—
(—)
d
Total
distributions
...................
(0.09)
(0.24)
(0.18)
(0.11)
(0.13)
(0.09)
Net
asset
value,
end
of
period
..........
$7.46
$6.22
$6.61
$7.69
$7.81
$6.87
Total
return
e
.......................
21.52%
(2.76)%
(11.73)%
(0.15)%
15.83%
3.46%
Ratios
to
average
net
assets
f
Expenses
before
waiver
and
payments
by
affiliates
..........................
1.16%
1.19%
1.15%
1.16%
1.21%
1.22%
Expenses
net
of
waiver
and
payments
by
affiliates
..........................
1.08%
1.10%
1.08%
1.11%
g
1.21%
g,h
1.22%
g,h
Net
investment
income
...............
3.34%
c
1.55%
2.69%
1.54%
1.55%
1.66%
Supplemental
data
Net
assets,
end
of
period
(000’s)
........
$1,996,251
$1,766,365
$2,395,260
$2,929,181
$3,287,394
$3,644,336
Portfolio
turnover
rate
................
18.53%
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
Net
investment
income
per
share
includes
approximately
$0.09
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
0.68%.
d
Amount
rounds
to
less
than
$0.01
per
share.
e
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable,
and
is
not
annualized
for
periods
less
than
one
year.
f
Ratios
are
annualized
for
periods
less
than
one
year.
g
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
h
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.
Semiannual
Report
11
a
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
2019
2018
2017
2016
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
.....
$6.17
$6.54
$7.49
$7.60
$6.69
$6.56
Income
from
investment
operations
a
:
Net
investment
income
b
.............
0.09
c
0.05
0.12
0.06
0.05
0.06
Net
realized
and
unrealized
gains
(losses)
1.19
(0.25)
(1.05)
(0.12)
0.94
0.11
Total
from
investment
operations
........
1.28
(0.20)
(0.93)
(0.06)
0.99
0.17
Less
distributions
from:
Net
investment
income
..............
(0.03)
(0.17)
(0.02)
(0.05)
(0.08)
(0.04)
Net
realized
gains
.................
—
—
—
—
—
(—)
d
Total
distributions
...................
(0.03)
(0.17)
(0.02)
(0.05)
(0.08)
(0.04)
Net
asset
value,
end
of
period
..........
$7.42
$6.17
$6.54
$7.49
$7.60
$6.69
Total
return
e
.......................
20.82%
(3.42)%
(12.40)%
(0.79)%
14.92%
2.64%
Ratios
to
average
net
assets
f
Expenses
before
waiver
and
payments
by
affiliates
..........................
1.91%
1.94%
1.90%
1.91%
1.96%
1.97%
Expenses
net
of
waiver
and
payments
by
affiliates
..........................
1.83%
1.85%
1.83%
1.86%
g
1.96%
g,h
1.97%
g,h
Net
investment
income
...............
2.67%
c
0.81%
1.94%
0.79%
0.80%
0.91%
Supplemental
data
Net
assets,
end
of
period
(000’s)
........
$53,147
$54,093
$87,160
$281,640
$346,032
$397,512
Portfolio
turnover
rate
................
18.53%
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
Net
investment
income
per
share
includes
approximately
$0.09
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
0.02%.
d
Amount
rounds
to
less
than
$0.01
per
share.
e
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable,
and
is
not
annualized
for
periods
less
than
one
year.
f
Ratios
are
annualized
for
periods
less
than
one
year.
g
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
h
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
(continued)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
12
a
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
2019
2018
2017
2016
Class
R
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
.....
$6.08
$6.47
$7.53
$7.65
$6.73
$6.61
Income
from
investment
operations
a
:
Net
investment
income
b
.............
0.10
c
0.08
0.17
0.10
0.09
0.09
Net
realized
and
unrealized
gains
(losses)
1.19
(0.24)
(1.07)
(0.12)
0.94
0.10
Total
from
investment
operations
........
1.29
(0.16)
(0.90)
(0.02)
1.03
0.19
Less
distributions
from:
Net
investment
income
..............
(0.08)
(0.23)
(0.16)
(0.10)
(0.11)
(0.07)
Net
realized
gains
.................
—
—
—
—
—
(—)
d
Total
distributions
...................
(0.08)
(0.23)
(0.16)
(0.10)
(0.11)
(0.07)
Net
asset
value,
end
of
period
..........
$7.29
$6.08
$6.47
$7.53
$7.65
$6.73
Total
return
e
.......................
21.30%
(3.03)%
(11.96)%
(0.32)%
15.57%
3.10%
Ratios
to
average
net
assets
f
Expenses
before
waiver
and
payments
by
affiliates
..........................
1.41%
1.44%
1.40%
1.41%
1.46%
1.47%
Expenses
net
of
waiver
and
payments
by
affiliates
..........................
1.33%
1.35%
1.33%
1.36%
g
1.46%
g,h
1.47%
g,h
Net
investment
income
...............
3.09%
c
1.33%
2.44%
1.29%
1.30%
1.41%
Supplemental
data
Net
assets,
end
of
period
(000’s)
........
$123,952
$109,187
$127,546
$148,638
$153,516
$159,802
Portfolio
turnover
rate
................
18.53%
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
Net
investment
income
per
share
includes
approximately
$0.09
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
0.44%.
d
Amount
rounds
to
less
than
$0.01
per
share.
e
Total
return
is
not
annualized
for
periods
less
than
one
year.
f
Ratios
are
annualized
for
periods
less
than
one
year.
g
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
h
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.
Semiannual
Report
13
a
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
2019
2018
2017
2016
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
.....
$6.12
$6.51
$7.58
$7.70
$6.78
$6.66
Income
from
investment
operations
a
:
Net
investment
income
b
.............
0.12
c
0.12
0.22
0.15
0.16
0.14
Net
realized
and
unrealized
gains
(losses)
1.20
(0.24)
(1.08)
(0.12)
0.93
0.11
Total
from
investment
operations
........
1.32
(0.12)
(0.86)
0.03
1.09
0.25
Less
distributions
from:
Net
investment
income
..............
(0.12)
(0.27)
(0.21)
(0.15)
(0.17)
(0.13)
Net
realized
gains
.................
—
—
—
—
—
(—)
d
Total
distributions
...................
(0.12)
(0.27)
(0.21)
(0.15)
(0.17)
(0.13)
Net
asset
value,
end
of
period
..........
$7.32
$6.12
$6.51
$7.58
$7.70
$6.78
Total
return
e
.......................
21.70%
(2.38)%
(11.34)%
0.24%
16.52%
3.92%
Ratios
to
average
net
assets
f
Expenses
before
waiver
and
payments
by
affiliates
..........................
0.80%
0.79%
0.77%
0.73%
0.74%
0.72%
Expenses
net
of
waiver
and
payments
by
affiliates
..........................
0.69%
0.70%
0.68%
0.68%
g
0.73%
g
0.72%
g,h
Net
investment
income
...............
3.74%
c
1.96%
3.09%
1.97%
2.03%
2.16%
Supplemental
data
Net
assets,
end
of
period
(000’s)
........
$537,987
$594,452
$906,474
$1,496,328
$1,757,902
$880,092
Portfolio
turnover
rate
................
18.53%
42.37%
i
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
Net
investment
income
per
share
includes
approximately
$0.09
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.09%.
d
Amount
rounds
to
less
than
$0.01
per
share.
e
Total
return
is
not
annualized
for
periods
less
than
one
year.
f
Ratios
are
annualized
for
periods
less
than
one
year.
g
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
h
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
i
Excludes
the
value
of
portfolio
securities
received
as
a
result
of
a
subscription
in-kind.
See
Note
10.
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
(continued)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
14
a
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
2019
2018
2017
2016
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
.....
$6.12
$6.51
$7.58
$7.70
$6.78
$6.66
Income
from
investment
operations
a
:
Net
investment
income
b
.............
0.12
c
0.11
0.20
0.14
0.13
0.12
Net
realized
and
unrealized
gains
(losses)
1.20
(0.24)
(1.07)
(0.12)
0.94
0.11
Total
from
investment
operations
........
1.32
(0.13)
(0.87)
0.02
1.07
0.23
Less
distributions
from:
Net
investment
income
..............
(0.11)
(0.26)
(0.20)
(0.14)
(0.15)
(0.11)
Net
realized
gains
.................
—
—
—
—
—
(—)
d
Total
distributions
...................
(0.11)
(0.26)
(0.20)
(0.14)
(0.15)
(0.11)
Net
asset
value,
end
of
period
..........
$7.33
$6.12
$6.51
$7.58
$7.70
$6.78
Total
return
e
.......................
21.73%
(2.57)%
(11.53)%
0.16%
16.10%
3.65%
Ratios
to
average
net
assets
f
Expenses
before
waiver
and
payments
by
affiliates
..........................
0.91%
0.94%
0.90%
0.91%
0.96%
0.97%
Expenses
net
of
waiver
and
payments
by
affiliates
..........................
0.83%
0.85%
0.83%
0.86%
g
0.96%
g,h
0.97%
g,h
Net
investment
income
...............
3.62%
c
1.79%
2.94%
1.79%
1.80%
1.91%
Supplemental
data
Net
assets,
end
of
period
(000’s)
........
$1,007,582
$857,179
$857,482
$1,627,827
$1,717,937
$1,125,431
Portfolio
turnover
rate
................
18.53%
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
Net
investment
income
per
share
includes
approximately
$0.09
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
0.96
%.
d
Amount
rounds
to
less
than
$0.01
per
share.
e
Total
return
is
not
annualized
for
periods
less
than
one
year.
f
Ratios
are
annualized
for
periods
less
than
one
year.
g
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
h
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Templeton
Funds
Statement
of
Investments
(unaudited),
February
28,
2021
Templeton
Foreign
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
15
a
a
Industry
Shares
a
Value
a
Common
Stocks
93.8%
Australia
0.5%
Downer
EDI
Ltd.
.................
Commercial
Services
&
Supplies
4,912,542
$
19,469,784
Belgium
0.4%
a
Galapagos
NV
..................
Biotechnology
188,781
15,587,262
a
Brazil
1.2%
Wheaton
Precious
Metals
Corp.
.....
Metals
&
Mining
1,201,999
42,991,274
Canada
1.0%
Cenovus
Energy,
Inc.
.............
Oil,
Gas
&
Consumable
Fuels
5,237,216
38,763,711
China
4.5%
a
Alibaba
Group
Holding
Ltd.
.........
Internet
&
Direct
Marketing
Retail
1,420,640
42,689,075
a
Baidu,
Inc.,
ADR
.................
Interactive
Media
&
Services
116,389
32,991,626
China
Overseas
Land
&
Investment
Ltd.
Real
Estate
Management
&
Development
11,964,500
30,315,394
a,b
Kuaishou
Technology,
144A,
Reg
S
...
Interactive
Media
&
Services
498,440
19,843,907
Sinopec
Engineering
Group
Co.
Ltd.,
H
Construction
&
Engineering
45,622,300
24,343,338
Sinopharm
Group
Co.
Ltd.,
H
.......
Health
Care
Providers
&
Services
7,806,579
18,277,689
168,461,029
France
1.6%
a
Dassault
Aviation
SA
..............
Aerospace
&
Defense
31,370
33,727,145
Sanofi
.........................
Pharmaceuticals
277,036
25,422,735
59,149,880
Germany
9.3%
Bayer
AG
......................
Pharmaceuticals
1,545,072
93,845,591
Bayerische
Motoren
Werke
AG
......
Automobiles
586,173
50,648,479
b
Covestro
AG,
144A,
Reg
S
.........
Chemicals
735,051
53,219,917
E.ON
SE
.......................
Multi-Utilities
5,457,759
55,647,520
Fresenius
Medical
Care
AG
&
Co.
KGaA
Health
Care
Providers
&
Services
793,721
54,949,064
a,b,c
Just
Eat
Takeaway.com
NV,
144A,
Reg
S
...........................
Internet
&
Direct
Marketing
Retail
390,410
37,566,310
345,876,881
Hong
Kong
4.8%
AIA
Group
Ltd.
..................
Insurance
5,903,853
74,456,029
CK
Asset
Holdings
Ltd.
............
Real
Estate
Management
&
Development
11,079,206
65,118,861
Swire
Pacific
Ltd.,
A
..............
Real
Estate
Management
&
Development
3,997,362
29,297,401
c
Value
Partners
Group
Ltd.
..........
Capital
Markets
16,596,989
10,973,401
179,845,692
India
2.0%
Housing
Development
Finance
Corp.
Ltd.
.........................
Thrifts
&
Mortgage
Finance
2,169,157
74,609,510
Japan
23.6%
Hitachi
Ltd.
.....................
Electronic
Equipment,
Instruments
&
Components
2,246,579
103,623,276
Honda
Motor
Co.
Ltd.
.............
Automobiles
2,001,635
55,330,371
Isuzu
Motors
Ltd.
................
Automobiles
5,096,656
53,641,451
Kirin
Holdings
Co.
Ltd.
............
Beverages
1,258,873
24,802,026
Komatsu
Ltd.
...................
Machinery
1,914,267
57,469,998
Matsumotokiyoshi
Holdings
Co.
Ltd.
..
Food
&
Staples
Retailing
902,607
35,575,738
Mitsui
Fudosan
Co.
Ltd.
...........
Real
Estate
Management
&
Development
1,832,533
41,678,569
Nippon
Television
Holdings,
Inc.
.....
Media
1,088,496
14,493,389
Seria
Co.
Ltd.
...................
Multiline
Retail
682,367
21,749,843
Sony
Corp.
.....................
Household
Durables
565,814
59,753,430
Sumitomo
Metal
Mining
Co.
Ltd.
.....
Metals
&
Mining
1,696,493
82,288,882
Templeton
Funds
Statement
of
Investments
(unaudited)
Templeton
Foreign
Fund
(continued)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
16
a
a
Industry
Shares
a
Value
a
Common
Stocks
(continued)
Japan
(continued)
Sumitomo
Mitsui
Financial
Group,
Inc.
.
Banks
1,700,723
$
60,047,553
Sundrug
Co.
Ltd.
.................
Food
&
Staples
Retailing
845,939
31,811,538
Taisei
Corp.
....................
Construction
&
Engineering
1,503,600
53,321,558
Takeda
Pharmaceutical
Co.
Ltd.
.....
Pharmaceuticals
2,901,020
97,765,543
TBS
Holdings,
Inc.
...............
Media
1,192,568
21,869,339
Tosoh
Corp.
....................
Chemicals
1,683,121
30,942,071
Toyota
Industries
Corp.
............
Auto
Components
372,514
32,006,946
878,171,521
Luxembourg
2.0%
ArcelorMittal
SA
.................
Metals
&
Mining
3,240,772
75,673,179
Netherlands
5.9%
EXOR
NV
......................
Diversified
Financial
Services
305,979
24,525,889
ING
Groep
NV
..................
Banks
4,208,010
46,087,212
NXP
Semiconductors
NV
..........
Semiconductors
&
Semiconductor
Equipment
532,357
97,181,770
SBM
Offshore
NV
................
Energy
Equipment
&
Services
2,917,441
51,810,410
219,605,281
Norway
1.8%
Equinor
ASA
....................
Oil,
Gas
&
Consumable
Fuels
3,542,085
67,184,333
Portugal
0.9%
Galp
Energia
SGPS
SA,
B
.........
Oil,
Gas
&
Consumable
Fuels
3,146,927
35,176,256
South
Korea
7.2%
KB
Financial
Group,
Inc.
...........
Banks
1,638,236
63,184,402
Samsung
Electronics
Co.
Ltd.
.......
Technology
Hardware,
Storage
&
Peripherals
2,114,490
154,412,751
Shinhan
Financial
Group
Co.
Ltd.
....
Banks
1,685,431
48,884,352
266,481,505
Spain
1.0%
a
Amadeus
IT
Group
SA
............
IT
Services
290,086
20,252,173
a
Tecnicas
Reunidas
SA
............
Energy
Equipment
&
Services
1,145,160
16,657,079
36,909,252
Switzerland
1.4%
Roche
Holding
AG
...............
Pharmaceuticals
154,370
50,642,470
Taiwan
2.9%
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.
......................
Semiconductors
&
Semiconductor
Equipment
4,946,914
108,023,055
Thailand
1.4%
Kasikornbank
PCL
...............
Banks
11,050,667
50,387,071
United
Kingdom
13.6%
BAE
Systems
plc
................
Aerospace
&
Defense
7,379,848
49,943,887
BP
plc
.........................
Oil,
Gas
&
Consumable
Fuels
18,829,151
77,098,696
CK
Hutchison
Holdings
Ltd.
.........
Industrial
Conglomerates
11,025,586
83,203,138
Imperial
Brands
plc
...............
Tobacco
3,181,295
59,263,204
a
Informa
plc
.....................
Media
4,400,809
33,753,946
a
International
Consolidated
Airlines
Group
SA
.....................
Airlines
19,743,370
53,392,655
Prudential
plc
...................
Insurance
2,069,250
41,211,172
a
Standard
Chartered
plc
............
Banks
11,407,711
73,810,824
Vodafone
Group
plc
..............
Wireless
Telecommunication
Services
19,045,689
32,596,207
504,273,729
Templeton
Funds
Statement
of
Investments
(unaudited)
Templeton
Foreign
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
17
See
Abbreviations
on
page
32.
a
a
Industry
Shares
a
Value
a
Common
Stocks
(continued)
United
States
6.8%
Avnet,
Inc.
.....................
Electronic
Equipment,
Instruments
&
Components
1,014,139
$
38,608,272
a
Berkshire
Hathaway,
Inc.,
B
.........
Diversified
Financial
Services
274,353
65,984,640
a
Booking
Holdings,
Inc.
............
Internet
&
Direct
Marketing
Retail
20,334
47,347,922
H&R
Block,
Inc.
..................
Diversified
Consumer
Services
2,222,960
42,747,521
ManpowerGroup
,
Inc.
.............
Professional
Services
599,289
56,596,853
251,285,208
Total
Common
Stocks
(Cost
$2,850,652,514)
....................................
3,488,567,883
Warrants
a
a
a
a
a
Warrants
0.0%
†
Canada
0.0%
†
a
Cenovus
Energy,
Inc.
,
1/01/26
.......
Oil,
Gas
&
Consumable
Fuels
434,598
1,628,846
Total
Warrants
(Cost
$1,464,609)
..............................................
1,628,846
Total
Long
Term
Investments
(Cost
$2,852,117,123)
.............................
3,490,196,729
Short
Term
Investments
1.5%
a
a
Principal
Amount
*
a
Value
a
a
a
a
a
a
Time
Deposits
1.1%
Canada
1.1%
National
Bank
of
Canada,
0.05%,
3/01/21
......................
20,000,000
20,000,000
Royal
Bank
of
Canada,
0.06%,
3/01/21
21,000,000
21,000,000
Total
Time
Deposits
(Cost
$41,000,000)
........................................
41,000,000
Industry
Shares
d
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
0.4%
Money
Market
Funds
0.4%
e,f
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0%
.............
15,691,500
15,691,500
Total
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
(Cost
$15,691,500)
................................................................
15,691,500
a
a
a
a
a
Total
Short
Term
Investments
(Cost
$56,691,500
)
................................
56,691,500
a
a
a
a
Total
Investments
(Cost
$2,908,808,623)
95.3%
..................................
$3,546,888,229
Other
Assets,
less
Liabilities
4.7%
.............................................
172,029,449
Net
Assets
100.0%
...........................................................
$3,718,917,678
a
a
a
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
†
Rounds
to
less
than
0.1%
of
net
assets.
a
Non-income
producing.
Templeton
Funds
Statement
of
Investments
(unaudited)
Templeton
Foreign
Fund
(continued)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
18
b
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
may
be
sold
in
transactions
exempt
from
registration
only
to
qualified
institutional
buyers
or
in
a
public
offering
registered
under
the
Securities
Act
of
1933.
Regulation
S
securities
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
February
28,
2021,
the
aggregate
value
of
these
securities
was
$110,630,134,
representing
3.0%
of
net
assets.
c
A
portion
or
all
of
the
security
is
on
loan
at
February
28,
2021.
See
Note
1(d).
d
See
Note
1(d)
regarding
securities
on
loan.
e
See
Note
3(f)
regarding
investments
in
affiliated
management
investment
companies.
f
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
Templeton
Funds
Financial
Statements
Statement
of
Assets
and
Liabilities
February
28,
2021
(unaudited)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
19
Templeton
Foreign
Fund
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
...................................................................
$2,893,117,123
Cost
-
Non-controlled
affiliates
(Note
3f)
........................................................
15,691,500
Value
-
Unaffiliated
issuers
(Includes
securities
loaned
of
$14,909,448)
................................
$3,531,196,729
Value
-
Non-controlled
affiliates
(Note
3f)
........................................................
15,691,500
Cash
....................................................................................
683,120
Foreign
currency,
at
value
(cost
$135,630,329)
.....................................................
134,018,818
Receivables:
Investment
securities
sold
...................................................................
6,469,261
Capital
shares
sold
........................................................................
1,683,518
Dividends
and
interest
.....................................................................
18,829,895
European
Union
tax
reclaims
(Note
1
e
)
.........................................................
65,413,669
Other
assets
..............................................................................
5,710
Total
assets
..........................................................................
3,773,992,220
Liabilities:
Payables:
Investment
securities
purchased
..............................................................
7,808,119
Capital
shares
redeemed
...................................................................
4,335,833
Management
fees
.........................................................................
1,765,369
Distribution
fees
..........................................................................
475,416
Transfer
agent
fees
........................................................................
1,214,978
IRS
closing
agreement
fees
for
European
Union
tax
reclaims
(Note
1
e
)
.................................
18,159,672
Payable
upon
return
of
securities
loaned
(Note
1
d
)
..................................................
15,691,500
Deferred
tax
...............................................................................
4,697,893
Accrued
expenses
and
other
liabilities
...........................................................
925,762
Total
liabilities
.........................................................................
55,074,542
Net
assets,
at
value
.................................................................
$3,718,917,678
Net
assets
consist
of:
Paid-in
capital
.............................................................................
$3,815,401,155
Total
distributable
earnings
(losses)
.............................................................
(96,483,477)
Net
assets,
at
value
.................................................................
$3,718,917,678
Templeton
Funds
Financial
Statements
Statement
of
Assets
and
Liabilities
(continued)
February
28,
2021
(unaudited)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
20
Templeton
Foreign
Fund
Class
A:
Net
assets,
at
value
.......................................................................
$1,996,251,146
Shares
outstanding
........................................................................
267,704,750
Net
asset
value
per
share
a
..................................................................
$7.46
Maximum
offering
price
per
share
(net
asset
value
per
share
÷
94.50%)
................................
$7.89
Class
C:
Net
assets,
at
value
.......................................................................
$53,146,535
Shares
outstanding
........................................................................
7,158,080
Net
asset
value
and
maximum
offering
price
per
share
a
.............................................
$7.42
Class
R:
Net
assets,
at
value
.......................................................................
$123,951,500
Shares
outstanding
........................................................................
16,997,282
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$7.29
Class
R6:
Net
assets,
at
value
.......................................................................
$537,986,864
Shares
outstanding
........................................................................
73,517,196
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$7.32
Advisor
Class:
Net
assets,
at
value
.......................................................................
$1,007,581,633
Shares
outstanding
........................................................................
137,524,674
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$7.33
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
six
months
ended
February
28,
2021
(unaudited)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
21
Templeton
Foreign
Fund
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$4,600,269)
Unaffiliated
issuers
........................................................................
$30,487,920
Interest:
Unaffiliated
issuers
........................................................................
29,772
Income
from
securities
loaned:
Unaffiliated
entities
(net
of
fees
and
rebates)
.....................................................
54,906
Other
income
(Note
1
e
)
......................................................................
63,814,982
Less:
IRS
closing
agreement
fees
for
European
Union
tax
reclaims
(Note
1
e
)
..............................
(18,159,672)
Total
investment
income
...................................................................
76,227,908
Expenses:
Management
fees
(Note
3
a
)
...................................................................
11,939,427
Distribution
fees:
(Note
3c
)
    Class
A
................................................................................
2,318,733
    Class
C
................................................................................
262,659
    Class
R
................................................................................
285,233
Transfer
agent
fees:
(Note
3e
)
    Class
A
................................................................................
1,536,453
    Class
C
................................................................................
43,425
    Class
R
................................................................................
95,175
Class
R6
...............................................................................
151,570
    Advisor
Class
............................................................................
746,348
Custodian
fees
.............................................................................
213,325
Reports
to
shareholders
......................................................................
286,392
Registration
and
filing
fees
....................................................................
71,774
Professional
fees
...........................................................................
59,026
Trustees'
fees
and
expenses
..................................................................
109,604
Other
....................................................................................
117,971
Total
expenses
.........................................................................
18,237,115
Expenses
waived/paid
by
affiliates
(Note
3
f
and
3
g
)
..............................................
(1,387,849)
Net
expenses
.........................................................................
16,849,266
Net
investment
income
................................................................
59,378,642
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
(net
of
foreign
taxes
of
$41,432)
Unaffiliated
issuers
......................................................................
76,527,305
Written
options
...........................................................................
146,721
Foreign
currency
transactions
................................................................
4,997,121
Net
realized
gain
(loss)
..................................................................
81,671,147
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
......................................................................
541,559,474
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
..............................
(4,034,938)
Change
in
deferred
taxes
on
unrealized
appreciation
...............................................
(4,248,967)
Net
change
in
unrealized
appreciation
(depreciation)
............................................
533,275,569
Net
realized
and
unrealized
gain
(loss)
............................................................
614,946,716
Net
increase
(decrease)
in
net
assets
resulting
from
operations
..........................................
$674,325,358
Templeton
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
22
Templeton
Foreign
Fund
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
.................................................
$59,378,642
$63,838,421
Net
realized
gain
(loss)
.................................................
81,671,147
(499,686,561)
Net
change
in
unrealized
appreciation
(depreciation)
...........................
533,275,569
353,612,661
Net
increase
(decrease)
in
net
assets
resulting
from
operations
................
674,325,358
(82,235,479)
Distributions
to
shareholders:
Class
A
.............................................................
(25,789,554)
(79,858,470)
Class
C
.............................................................
(254,786)
(1,948,865)
Class
R
.............................................................
(1,399,512)
(4,201,944)
Class
R6
............................................................
(9,135,018)
(35,631,273)
Advisor
Class
........................................................
(14,872,436)
(28,374,973)
Total
distributions
to
shareholders
..........................................
(51,451,306)
(150,015,525)
Capital
share
transactions:
(Note
2
)
Class
A
.............................................................
(108,629,048)
(507,216,275)
Class
C
.............................................................
(10,817,772)
(29,035,746)
Class
R
.............................................................
(6,294,593)
(11,200,337)
Class
R6
............................................................
(145,591,417)
(247,767,572)
Advisor
Class
........................................................
(13,900,575)
34,825,853
Total
capital
share
transactions
............................................
(285,233,405)
(760,394,077)
Net
increase
(decrease)
in
net
assets
...................................
337,640,647
(992,645,081)
Net
assets:
Beginning
of
period
.....................................................
3,381,277,031
4,373,922,112
End
of
period
..........................................................
$3,718,917,678
$3,381,277,031
Templeton
Funds
23
franklintempleton.com
Semiannual
Report
Notes
to
Financial
Statements
(unaudited)
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
February
28,
2021,
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
referred
to
as
“market
level
fair
value”.
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
(unaudited)
24
franklintempleton.com
Semiannual
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
8 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
1.
Organization
and
Significant
Accounting
Policies
(continued)
a.
Financial
Instrument
Valuation 
(continued)
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
25
franklintempleton.com
Semiannual
Report
Templeton
Foreign
Fund
(continued)
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.
Additionally,
the
Fund
received
$528,015
in
U.S.
Government
and
Agency
securities
as
collateral.
The
Fund
may
receive
income
from
the
investment
of
cash
collateral,
in
addition
to
lending
fees
and
rebates
paid
by
the
borrower.
Income
from
securities
loaned,
net
of
fees
paid
to
the
securities
lending
agent
and/
or
third-party
vendor,
is
reported
separately
in
the
Statement
of
Operations.
The
Fund
bears
the
market
risk
with
respect
to any
cash collateral
investment,
securities
loaned,
and
the
risk
that
the
agent
may
default
on
its
obligations
to
the
Fund.
If
the
borrower
defaults
on
its
obligation
to
return
the
securities
loaned,
the
Fund
has
the
right
to
repurchase
the
securities
in
the
open
market
using
the
collateral
received.
The
securities
lending
agent
has
agreed
to
indemnify
the
Fund
in
the
event
of
default
by
a
third
party
borrower.
e.
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.
In
the
event
that
EU
reclaims
received
by
the Fund
during
the
fiscal
year
exceed
foreign
withholding
taxes
paid,
and
the
Fund previously
passed
foreign
tax
credit
on
to
its
shareholders,
the Fund
will enter
into
a
closing
agreement
with
the
Internal
Revenue
Service
(IRS)
in
order
to
pay
the
associated
tax
liability
on
behalf
of
the Fund's
shareholders.
The
Fund
determined
to
enter
into
a
closing
agreement
with
the
IRS
and
recorded
the
estimated
fees
as
a
reduction
to
income,
as
reflected
in
the
Statement
of
Operations.
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
February
28,
2021,
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
1.
Organization
and
Significant
Accounting
Policies
(continued)
d.
Securities
Lending
(continued)
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
26
franklintempleton.com
Semiannual
Report
Templeton
Foreign
Fund
(continued)
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
February
28,
2021,
there
were
an
unlimited
number
of
shares
authorized
(without
par
value).
Transactions
in
the
Fund’s
shares
were
as
follows:
Six
Months
Ended
February
28,
2021
Year
Ended
August
31,
2020
Shares
Amount
Shares
Amount
Class
A
Shares:
Shares
sold
a
...................................
16,380,585
$111,948,423
69,357,092
$423,459,874
Shares
issued
in
reinvestment
of
distributions
..........
3,171,886
22,520,388
10,008,404
72,260,672
Shares
redeemed
...............................
(35,743,712)
(243,097,859)
(157,643,462)
(1,002,936,821)
Net
increase
(decrease)
..........................
(16,191,241)
$(108,629,048)
(78,277,966)
$(507,216,275)
Class
C
Shares:
Shares
sold
...................................
346,839
$2,375,014
1,009,042
$6,191,651
Shares
issued
in
reinvestment
of
distributions
..........
35,520
251,483
254,680
1,833,698
Shares
redeemed
a
..............................
(1,998,039)
(13,444,269)
(5,809,614)
(37,061,095)
Net
increase
(decrease)
..........................
(1,615,680)
$(10,817,772)
(4,545,892)
$(29,035,746)
Class
R
Shares:
Shares
sold
...................................
1,171,175
$7,661,227
3,392,420
$20,676,976
Shares
issued
in
reinvestment
of
distributions
..........
200,428
1,392,973
582,573
4,118,799
Shares
redeemed
...............................
(2,325,946)
(15,348,793)
(5,730,365)
(35,996,112)
Net
increase
(decrease)
..........................
(954,343)
$(6,294,593)
(1,755,372)
$(11,200,337)
1.
Organization
and
Significant
Accounting
Policies
(continued)
f.
Security
Transactions,
Investment
Income,
Expenses
and
Distributions
(continued)
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
27
franklintempleton.com
Semiannual
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
period
ended
February
28,
2021,
the
annualized
gross
effective
investment
management
fee
rate
was
0.694%
of
the
Fund’s
average
daily
net
assets. 
Six
Months
Ended
February
28,
2021
Year
Ended
August
31,
2020
Shares
Amount
Shares
Amount
Class
R6
Shares:
Shares
sold
...................................
9,004,577
$60,948,564
26,657,151
$166,908,516
Shares
sold
in-kind
(Note
10
)
......................
—
—
4,415,123
25,960,926
Shares
issued
in
reinvestment
of
distributions
..........
1,210,174
8,422,813
4,730,244
33,490,128
Shares
redeemed
...............................
(33,854,653)
(214,962,794)
(77,893,716)
(474,127,142)
Net
increase
(decrease)
..........................
(23,639,902)
$(145,591,417)
(42,091,198)
$(247,767,572)
Advisor
Class
Shares:
Shares
sold
...................................
17,223,793
$116,764,249
73,215,449
$446,263,258
Shares
issued
in
reinvestment
of
distributions
..........
2,047,132
14,268,511
3,669,165
26,051,069
Shares
redeemed
...............................
(21,706,170)
(144,933,335)
(68,556,435)
(437,488,474)
Net
increase
(decrease)
..........................
(2,435,245)
$(13,900,575)
8,328,179
$34,825,853
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
(unaudited)
28
franklintempleton.com
Semiannual
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
period:
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
period
ended
February
28,
2021,
the
Fund
paid
transfer
agent
fees
of
$2,572,971,
of
which
$719,683
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
period
ended
February
28,
2021,
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
..............................
$54,900
CDSC
retained
..............................................................................
$4,483
3.
Transactions
with
Affiliates
(continued)
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
29
franklintempleton.com
Semiannual
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
each
class
of
the
Fund
do
not
exceed
0.85%,
based
on
the
average
net
assets
of
each
class
until
December
31,
2021.
Total
expenses
waived
or
paid
are
not
subject
to
recapture
subsequent
to
the
Fund's
fiscal
year
end.
Prior
to
January
1,
2021,
expenses
(excluding
certain
fees
and
expenses
as
previously
disclosed)
for
Class
R6
were
limited
to
0.70%
based
on
the
average
net
assets
of
the
class.
Investor
Services
has
contractually
agreed
in
advance
to
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,
2021.
4.
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:
At
February
28,
2021,
the
cost
of
investments
and
net
unrealized
appreciation
(depreciation)
for
income
tax
purposes
were
as
follows:
a
Value
at
Beginning
of
Period
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Period
Number
of
Shares
Held
at
End
of
Period
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%
.........
$—
$31,187,734
$(15,496,234)
$
—
$
—
$
15,691,500
15,691,500
$
—
Total
Affiliated
Securities
....
$—
$31,187,734
$(15,496,234)
$—
$—
$15,691,500
$—
Capital
loss
carryforwards
not
subject
to
expiration:
Short
term
................................................................................
$58,793,713
Long
term
................................................................................
739,809,912
Total
capital
loss
carryforwards
...............................................................
$798,603,625
Cost
of
investments
..........................................................................
$2,970,337,760
Unrealized
appreciation
........................................................................
$846,030,793
Unrealized
depreciation
........................................................................
(269,480,324)
Net
unrealized
appreciation
(depreciation)
..........................................................
$576,550,469
3.
Transactions
with
Affiliates
(continued)
f.
Investments
in
Affiliated
Management
Investment
Companies
(continued)
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
30
franklintempleton.com
Semiannual
Report
Templeton
Foreign
Fund
(continued)
Differences
between
income
and/or
capital
gains
as
determined
on
a
book
basis
and
a
tax
basis
are
primarily
due
to
differing
treatments
of
EU
reclaims,
wash
sales
and
passive
foreign
investment
company
shares.
5.
Investment
Transactions
Purchases
and
sales
of
investments
(excluding
short
term
securities)
for
the
period
ended
February
28,
2021,
aggregated
$573,580,694
and
$716,631,318,
respectively. 
At
February
28,
2021,
in
connection
with
securities
lending
transactions,
the
Fund
loaned
equity
investments
and
received
$15,691,500
of
cash
collateral.
The
gross
amount
of
recognized
liability
for
such
transactions
is
included
in
payable
upon
return
of
securities
loaned
in
the
Statement
of
Assets
and
Liabilities.
The
agreements
can
be
terminated
at
any
time.
6.
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.
7. Novel
Coronavirus
Pandemic 
The
global
outbreak
of
the
novel
coronavirus
disease,
known
as
COVID-19, has
caused
adverse
effects
on
many
companies,
sectors,
nations,
regions
and
the
markets
in
general, and
may
continue for
an unpredictable duration.
The
effects
of
this
pandemic
may
materially
impact
the
value
and
performance
of
the Fund, its ability
to
buy
and
sell
fund
investments
at
appropriate
valuations
and its ability
to
achieve its investment
objectives.
8.
Other
Derivative
Information
For
the
period
ended
February
28,
2021,
the
effect
of
derivative
contracts
in
the
Statement
of
Operations
was
as
follows: 
See
Note
1(c)
regarding
derivative
financial
instruments.
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Operations
Location
Net
Realized
Gain
(Loss)
for
the
Period
Statement
of
Operations
Location
Net
Change
in
Unrealized
Appreciation
(Depreciation)
for
the
Period
Templeton
Foreign
Fund
Net
realized
gain
(loss)
from:
Net
change
in
unrealized
  appreciation
(depreciation)
on:
Equity
Contracts
...........
Written
options
$146,721
Written
options
$—
Total
....................
$146,721
$–
4.
Income
Taxes
(continued)
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
31
franklintempleton.com
Semiannual
Report
Templeton
Foreign
Fund
(continued)
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
$2.675
billion
(Global
Credit
Facility)
which
matures
on
February
4,
2022.
This
Global
Credit
Facility
provides
a
source
of
funds
to
the
Borrowers
for
temporary
and
emergency
purposes,
including
the
ability
to
meet
future
unanticipated
or
unusually
large
redemption
requests. 
Under
the
terms
of
the
Global
Credit
Facility,
the
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
period
ended
February
28,
2021,
the Fund
did
not
use
the
Global
Credit
Facility.
10.
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. 
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
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
February
28,
2021,
in
valuing
the
Fund's
assets
carried
at
fair
value,
is
as
follows:
Value
Type
$25,960,926*
Subscription
in-kind
Level
1
Level
2
Level
3
Total
Templeton
Foreign
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Australia
.............................
$
—
$
19,469,784
$
—
$
19,469,784
Belgium
.............................
—
15,587,262
—
15,587,262
Brazil
...............................
42,991,274
—
—
42,991,274
Canada
.............................
38,763,711
—
—
38,763,711
China
...............................
52,835,533
115,625,496
—
168,461,029
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
32
franklintempleton.com
Semiannual
Report
Templeton
Foreign
Fund
(continued)
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.
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
Level
1
Level
2
Level
3
Total
Templeton
Foreign
Fund
(continued)
Assets:
Investments
in
Securities:
Common
Stocks:
France
..............................
$
—
$
59,149,880
$
—
$
59,149,880
Germany
............................
—
345,876,881
—
345,876,881
Hong
Kong
...........................
—
179,845,692
—
179,845,692
India
................................
—
74,609,510
—
74,609,510
Japan
...............................
—
878,171,521
—
878,171,521
Luxembourg
..........................
—
75,673,179
—
75,673,179
Netherlands
..........................
97,181,770
122,423,511
—
219,605,281
Norway
..............................
—
67,184,333
—
67,184,333
Portugal
.............................
—
35,176,256
—
35,176,256
South
Korea
..........................
—
266,481,505
—
266,481,505
Spain
...............................
—
36,909,252
—
36,909,252
Switzerland
...........................
—
50,642,470
—
50,642,470
Taiwan
..............................
—
108,023,055
—
108,023,055
Thailand
.............................
—
50,387,071
—
50,387,071
United
Kingdom
.......................
—
504,273,729
—
504,273,729
United
States
.........................
251,285,208
—
—
251,285,208
Warrants
..............................
1,628,846
—
—
1,628,846
Short
Term
Investments
...................
15,691,500
41,000,000
—
56,691,500
Total
Investments
in
Securities
...........
$500,377,842
$3,046,510,387
a
$—
$3,546,888,229
a
Includes
foreign
securities
valued
at
$3,005,510,387,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
Selected
Portfolio
ADR
American
Depositary
Receipt
11.
Fair
Value
Measurements
(continued)
Templeton
Funds
Tax
Information
(unaudited)
33
franklintempleton.com
Semiannual
Report
1.
Qualified
dividends
are
taxed
at
reduced
long
term
capital
gains
tax
rates.
In
determining
the
amount
of
foreign
tax
credit
that
may
be
applied
against
the
U.S.
tax
liability
of
individuals
receiving
foreign
source
qualified
dividends,
adjustments
may
be
required
to
the
foreign
tax
credit
limitation
calculation
to
reflect
the
rate
differential
applicable
to
such
dividend
income.
The
rules
however
permit
certain
individuals
to
elect
not
to
apply
the
rate
differential
adjustments
for
capital
gains
and/or
dividends
for
any
taxable
year.
Please
consult
your
tax
advisor
and
the
instructions
to
Form
1116
for
more
information.
Templeton
Foreign
Fund
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.
As
shown
in
the
table
below,
the
Fund
hereby
reports
to
shareholders
the
foreign
source
income
and
foreign
taxes
paid,
pursuant
to
Section
853
of
the
Internal
Revenue
Code.
This
written
statement
will
allow
shareholders
of
record
on
December
17,
2020,
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.
The
following
table
provides
a
detailed
analysis
of
foreign
tax
paid,
foreign
source
income,
and
foreign
source
qualified
dividends
as
reported
by
the
Fund,
to
shareholders
of
record.
Foreign
Tax
Paid
Per
Share
is
the
amount
per
share
available
to
you,
as
a
tax
credit
(assuming
you
held
your
shares
in
the
Fund
for
a
minimum
of
16
days
during
the
31-day
period
beginning
15
days
before
the
ex-dividend
date
of
the
Fund’s
distribution
to
which
the
foreign
taxes
relate),
or,
as
a
tax
deduction.
Foreign
Source
Income
Per
Share
is
the
amount
per
share
of
income
dividends
attributable
to
foreign
securities
held
by
the
Fund,
plus
any
foreign
taxes
withheld
on
these
dividends.
The
amounts
reported
include
foreign
source
qualified
dividends
that
have
not
been
adjusted
for
the
rate
differential
applicable
to
such
dividend
income.
1
Foreign
Source
Qualified
Dividends
Per
Share
is
the
amount
per
share
of
foreign
source
qualified
dividends
plus
any
foreign
taxes
withheld
on
these
dividends.
These
amounts
represent
the
portion
of
the
Foreign
Source
Income
Per
Share
that
were
derived
from
qualified
foreign
securities
held
by
the
Fund.
1
At
the
beginning
of
each
calendar
year,
shareholders
will
receive
Form
1099-DIV
which
will
include
their
share
of
taxes
paid
during
the
prior
calendar
year. Shareholders
are
advised
to
check
with
their
tax
advisors
for
information
on
the
treatment
of
these
amounts
on
their
income
tax
returns.
Class
Foreign
Tax
Paid
Per
Share
Foreign
Source
Income
Per
Share
Foreign
Source
Qualified
Dividends
Per
Share
Class
A
...........................................
$0.0223
$0.1163
$0.0944
Class
C
...........................................
$0.0223
$0.0555
$0.0451
Class
R
...........................................
$0.0223
$0.1031
$0.0837
Class
R6
..........................................
$0.0223
$0.1438
$0.1168
Advisor
Class
......................................
$0.0223
$0.1364
$0.1108
Templeton
Funds
Shareholder
Information
34
franklintempleton.com
Semiannual
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Board
Approval
of
Investment
Management
Agreements
TEMPLETON
FUNDS
Templeton
Foreign
Fund
(Fund)
At
a
meeting
held
on
February
23,
2021
(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
best
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
in
the
current
work-from-home
environment
and
liquidity
risk
management.
The
Board
also
reviewed
and
considered
the
benefits
provided
to
Fund
shareholders
of
investing
in
a
fund
that
is
part
of
the
FT
family
of
funds.
The
Board
noted
the
financial
position
of
Franklin
Resources,
Inc.
(FRI),
the
Manager’s
parent,
and
its
commitment
to
the
mutual
fund
business
as
evidenced
by
its
reassessment
of
the
fund
offerings
in
response
to
the
market
environment
and
project
initiatives
and
capital
investments
relating
to
the
services
provided
to
the
Fund
by
the
FT
organization.
The
Board
specifically
noted
FT’s
commitment
to
enhancing
services
and
controlling
costs,
as
reflected
in
its
outsourcing
of
certain
administrative
functions,
and
growth
opportunities,
Templeton
Funds
Shareholder
Information
35
franklintempleton.com
Semiannual
Report
as
evidenced
by
its
recent
acquisition
of
the
Legg
Mason
companies.
The
Board
also
noted
FT’s
attention
focused
on
expanding
the
distribution
opportunities
for
all
funds
in
the
FT
family
of
funds.
Following
consideration
of
such
information,
the
Board
was
satisfied
with
the
nature,
extent
and
quality
of
services
provided
by
the
Manager
and
its
affiliates
to
the
Fund
and
its
shareholders.
Fund
Performance
The
Board
reviewed
and
considered
the
performance
results
of
the
Fund
over
various
time
periods
ended
November
30,
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
blend
and
growth
styles,
which
has
negatively
impacted
the
Fund’s
relative
returns
during
a
period
of
outperformance
of
blend
and
growth
investing
strategies
over
value
investing
strategies.
Management
also
explained
that
the
Fund
has
a
larger
allocation
to
the
energy
sector
in
comparison
to
some
of
the
other
funds
in
the
Performance
Universe,
which
has
significantly
underperformed
for
the
one-year
period.
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
communication
services,
energy,
financials
and
health
care
sectors.
The
Board
noted
management’s
steps
to
address
the
underperformance
of
the
Fund,
including
making
enhancements
to
the
Fund’s
investment
personnel
and
process.
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
closely
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,
three
international
multi-cap
growth
funds,
and
five
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
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
Templeton
Funds
Shareholder
Information
36
franklintempleton.com
Semiannual
Report
the
individual
funds
during
the
12-month
period
ended
September
30,
2020,
being
the
most
recent
fiscal
year-
end
for
FRI.
The
Board
noted
that
although
management
continually
makes
refinements
to
its
methodologies
used
in
calculating
profitability
in
response
to
organizational
and
product-related
changes,
the
overall
methodology
has
remained
consistent
with
that
used
in
the
Fund’s
profitability
report
presentations
from
prior
years.
The
Board
further
noted
management’s
representation
that
the
profitability
analysis
excluded
the
impact
of
the
recent
acquisition
of
the
Legg
Mason
companies
and
that
management
expects
to
incorporate
the
legacy
Legg
Mason
companies
into
the
profitability
analysis
beginning
next
year.
The
Board
also
noted
that
PricewaterhouseCoopers
LLP,
auditor
to
FRI
and
certain
FT
funds,
has
been
engaged
by
the
Manager
to
periodically
review
and
assess
the
allocation
methodologies
to
be
used
solely
by
the
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
management’s
outsourcing
of
certain
operations,
which
effort
has
required
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.
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.
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
Templeton
Funds
Shareholder
Information
37
franklintempleton.com
Semiannual
Report
also
be
viewed
and
copied
at
the
Commission’s
Public
Reference
Room
in
Washington,
DC.
Information
regarding
the
operations
of
the
Public
Reference
Room
may
be
obtained
by
calling
(800)
SEC-0330.
Householding
of
Reports
and
Prospectuses
You
will
receive,
or
receive
notice
of
the
availability
of,
the
Fund's
financial
reports
every
six
months.
In
addition,
you
will
receive
an
annual
updated
summary
prospectus
(detail
prospectus
available
upon
request).
To
reduce
Fund
expenses,
we
try
to
identify
related
shareholders
in
a
household
and
send
only
one
copy
of
the
financial
reports
(to
the
extent
received
by
mail)
and
summary
prospectus.
This
process,
called
“householding,”
will
continue
indefinitely
unless
you
instruct
us
otherwise.
If
you
prefer
not
to
have
these
documents
householded,
please
call
us
at
(800)
632-2301.
At
any
time
you
may
view
current
prospectuses/
summary
prospectuses
and
financial
reports
on
our
website.
If
you
choose,
you
may
receive
these
documents
through
electronic
delivery.
104
S
04/21
©
2021
Franklin
Templeton
Investments.
All
rights
reserved.
Authorized
for
distribution
only
when
accompanied
or
preceded
by
a
summary
prospectus
and/or
prospectus.
Investors
should
carefully
consider
a
fund’s
investment
goals,
risks,
charges
and
expenses
before
investing.
A
prospectus
contains
this
and
other
information;
please
read
it
carefully
before
investing.
To
help
ensure
we
provide
you
with
quality
service,
all
calls
to
and
from
our
service
areas
are
monitored
and/or
recorded.
Semiannual
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
Your
Fund’s
Expenses
Templeton
International
Climate
Change
Fund
1
Semiannual
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
181/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Beginning
Account
Value
9/1/20
Ending
Account
Value
2/28/21
Expenses
Paid
During
Period
9/1/20–2/28/21
1,2
Ending
Account
Value
2/28/21
Expenses
Paid
During
Period
9/1/20–2/28/21
1,2
a
Net
Annualized
Expense
Ratio
2
$1,000
$1,252.96
$5.41
$1,019.99
$4.85
0.97%
Templeton
Funds
Financial
Highlights
Templeton
International
Climate
Change
Fund
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
2
a
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
Year
Ended
August
31,
2018
a
2020
2019
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
..............................
$10.71
$8.91
$9.64
$10.00
Income
from
investment
operations
b
:
Net
investment
income
c
......................................
—
d
0.07
0.27
0.04
Net
realized
and
unrealized
gains
(losses)
........................
2.71
2.03
(0.93)
(0.40)
Total
from
investment
operations
.................................
2.71
2.10
(0.66)
(0.36)
Less
distributions
from:
Net
investment
income
.......................................
(0.09)
(0.30)
(0.05)
—
Net
realized
gains
..........................................
—
—
(0.02)
—
Total
distributions
............................................
(0.09)
(0.30)
(0.07)
—
Net
asset
value,
end
of
period
...................................
$13.33
$10.71
$8.91
$9.64
Total
return
e
................................................
25.30%
23.70%
(6.75)%
(3.60)%
Ratios
to
average
net
assets
f
Expenses
before
waiver
and
payments
by
affiliates
...................
7.54%
6.48%
9.65%
13.30%
Expenses
net
of
waiver
and
payments
by
affiliates
....................
0.97%
g
0.97%
0.97%
0.97%
Net
investment
income
........................................
0.02%
0.74%
2.94%
1.51%
Supplemental
data
Net
assets,
end
of
period
(000’s)
.................................
$2,667
$2,142
$1,783
$1,929
Portfolio
turnover
rate
.........................................
18.31%
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
Amount
rounds
to
less
than
$0.01
per
share.
e
Total
return
is
not
annualized
for
periods
less
than
one
year.
f
Ratios
are
annualized
for
periods
less
than
one
year,
except
for
non-recurring
expenses,
if
any.
g
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Templeton
Funds
Statement
of
Investments
(unaudited),
February
28,
2021
Templeton
International
Climate
Change
Fund
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
3
a
a
Industry
Shares
a
Value
a
Common
Stocks
96.1%
Belgium
5.3%
Solvay
SA
......................
Chemicals
349
$
42,479
Umicore
SA
....................
Chemicals
1,702
99,986
142,465
China
3.6%
Xinyi
Solar
Holdings
Ltd.
...........
Semiconductors
&
Semiconductor
Equipment
26,413
55,477
Zhuzhou
CRRC
Times
Electric
Co.
Ltd.,
H
...........................
Electrical
Equipment
9,300
40,395
95,872
Denmark
6.2%
a
Orsted
A/S,
144A,
Reg
S
...........
Electric
Utilities
439
70,755
Vestas
Wind
Systems
A/S
..........
Electrical
Equipment
498
93,385
164,140
France
14.6%
Air
Liquide
SA
...................
Chemicals
269
40,508
Cie
de
Saint-Gobain
..............
Building
Products
1,646
88,512
Danone
SA
.....................
Food
Products
1,094
74,390
Faurecia
SE
....................
Auto
Components
884
45,730
Sanofi
.........................
Pharmaceuticals
647
59,373
Schneider
Electric
SE
.............
Electrical
Equipment
276
40,812
b
SPIE
SA
.......................
Commercial
Services
&
Supplies
1,814
40,868
390,193
Germany
11.9%
E.ON
SE
.......................
Multi-Utilities
7,454
76,001
Infineon
Technologies
AG
..........
Semiconductors
&
Semiconductor
Equipment
2,754
119,826
LANXESS
AG
...................
Chemicals
531
39,412
Siemens
AG
....................
Industrial
Conglomerates
524
81,092
316,331
India
5.4%
b
Azure
Power
Global
Ltd.
...........
Independent
Power
and
Renewable
Electricity
Producers
2,300
69,736
Kaveri
Seed
Co.
Ltd.
..............
Food
Products
3,819
26,150
NHPC
Ltd.
.....................
Independent
Power
and
Renewable
Electricity
Producers
146,462
47,883
143,769
Italy
4.0%
Prysmian
SpA
...................
Electrical
Equipment
3,335
107,119
Japan
7.4%
East
Japan
Railway
Co.
...........
Road
&
Rail
800
59,629
KH
Neochem
Co.
Ltd.
.............
Chemicals
1,000
23,041
Sumitomo
Metal
Mining
Co.
Ltd.
.....
Metals
&
Mining
1,600
77,608
Takeda
Pharmaceutical
Co.
Ltd.
.....
Pharmaceuticals
1,091
36,767
197,045
Mexico
0.2%
Industrias
Bachoco
SAB
de
CV,
B
....
Food
Products
1,967
6,526
Netherlands
7.6%
Arcadis
NV
.....................
Construction
&
Engineering
2,501
85,291
a,b
Signify
NV,
144A,
Reg
S
...........
Electrical
Equipment
2,697
117,516
202,807
Templeton
Funds
Statement
of
Investments
(unaudited)
Templeton
International
Climate
Change
Fund
(continued)
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
4
See
Abbreviations
on
page
16
.
a
a
Industry
Shares
a
Value
a
Common
Stocks
(continued)
South
Korea
6.7%
b
Samsung
Electronics
UK
Ltd.,
GDR
..
Diversified
Financial
Services
55
$
101,788
Samsung
SDI
Co.
Ltd.
............
Electronic
Equipment,
Instruments
&
Components
129
76,911
178,699
Spain
7.4%
a
Befesa
SA,
144A,
Reg
S
...........
Commercial
Services
&
Supplies
992
67,194
Siemens
Gamesa
Renewable
Energy
SA
..........................
Electrical
Equipment
2,062
76,484
b
Soltec
Power
Holdings
SA
..........
Electrical
Equipment
5,422
52,529
196,207
Sweden
3.0%
BillerudKorsnas
AB
...............
Containers
&
Packaging
4,421
81,182
Switzerland
4.7%
b
Landis+Gyr
Group
AG
.............
Electronic
Equipment,
Instruments
&
Components
1,020
70,744
STMicroelectronics
NV
............
Semiconductors
&
Semiconductor
Equipment
1,370
53,205
123,949
Taiwan
6.9%
Giant
Manufacturing
Co.
Ltd.
........
Leisure
Products
5,500
55,445
Nan
Pao
Resins
Chemical
Co.
Ltd.
...
Chemicals
5,000
29,063
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.,
ADR
..................
Semiconductors
&
Semiconductor
Equipment
800
100,752
185,260
United
Kingdom
1.2%
b
DS
Smith
plc
....................
Containers
&
Packaging
5,629
31,268
b
Total
Common
Stocks
(Cost
$1,721,459)
.......................................
2,562,832
Short
Term
Investments
2.3%
a
a
Industry
Shares
a
Value
a
a
a
a
a
a
Money
Market
Funds
2.3%
United
States
2.3%
c,d
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0%
.............
60,048
60,048
Total
Money
Market
Funds
(Cost
$60,048)
......................................
60,048
a
a
a
a
a
Total
Short
Term
Investments
(Cost
$60,048
)
...................................
60,048
a
a
a
a
Total
Investments
(Cost
$1,781,507)
98.4%
.....................................
$2,622,880
Other
Assets,
less
Liabilities
1.6%
.............................................
43,806
Net
Assets
100.0%
...........................................................
$2,666,686
a
a
a
Templeton
Funds
Statement
of
Investments
(unaudited)
Templeton
International
Climate
Change
Fund
(continued)
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
5
a
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
may
be
sold
in
transactions
exempt
from
registration
only
to
qualified
institutional
buyers
or
in
a
public
offering
registered
under
the
Securities
Act
of
1933.
Regulation
S
securities
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
February
28,
2021,
the
aggregate
value
of
these
securities
was
$255,465,
representing
9.6%
of
net
assets.
b
Non-income
producing.
c
See
Note
3(e)
regarding
investments
in
affiliated
management
investment
companies.
d
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
Templeton
Funds
Financial
Statements
Statement
of
Assets
and
Liabilities
February
28,
2021
(unaudited)
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
6
Templeton
International
Climate
Change
Fund
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
...................................................................
$1,721,459
Cost
-
Non-controlled
affiliates
(Note
3
e
)
........................................................
60,048
Value
-
Unaffiliated
issuers
..................................................................
$2,562,832
Value
-
Non-controlled
affiliates
(Note
3
e
)
.......................................................
60,048
Receivables:
Investment
securities
sold
...................................................................
6,481
Dividends
...............................................................................
5,677
Affiliates
................................................................................
71,738
Total
assets
..........................................................................
2,706,776
Liabilities:
Payables:
Transfer
agent
fees
........................................................................
85
Registration
and
filing
fees
..................................................................
1,927
Professional
fees
.........................................................................
29,033
Pricing
fees
.............................................................................
3,585
Deferred
tax
...............................................................................
221
Accrued
expenses
and
other
liabilities
...........................................................
5,239
Total
liabilities
.........................................................................
40,090
Net
assets,
at
value
.................................................................
$2,666,686
Net
assets
consist
of:
Paid-in
capital
.............................................................................
$1,990,852
Total
distributable
earnings
(losses)
.............................................................
675,834
Net
assets,
at
value
.................................................................
$2,666,686
Shares
outstanding
.........................................................................
200,000
Net
asset
value
and
maximum
offering
price
per
share
...............................................
$13.33
Templeton
Funds
Financial
Statements
Statement
of
Operations
for
the
six
months
ended
February
28,
2021
(unaudited)
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
7
Templeton
International
Climate
Change
Fund
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$1,547)
Unaffiliated
issuers
........................................................................
$12,088
Expenses:
Management
fees
(Note
3
a
)
...................................................................
8,625
Transfer
agent
fees
(Note
3
d
)
..................................................................
464
Custodian
fees
(Note
4
)
......................................................................
886
Reports
to
shareholders
......................................................................
2,626
Registration
and
filing
fees
....................................................................
1,927
Professional
fees
...........................................................................
65,711
Trustees'
fees
and
expenses
..................................................................
1,205
Other
....................................................................................
10,856
Total
expenses
.........................................................................
92,300
Expense
reductions
(Note
4
)
...............................................................
(78)
Expenses
wa
ived/paid
by
affiliates
(Note
3f
)
....................................................
(80,363)
Net
expenses
.........................................................................
11,859
Net
investment
income
................................................................
229
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
......................................................................
65,910
Foreign
currency
transactions
................................................................
638
Net
realized
gain
(loss)
..................................................................
66,548
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
......................................................................
475,826
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
..............................
(63)
Change
in
deferred
taxes
on
unrealized
appreciation
...............................................
(221)
Net
change
in
unrealized
appreciation
(depreciation)
............................................
475,542
Net
realized
and
unrealized
gain
(loss)
............................................................
542,090
Net
increase
(decrease)
in
net
assets
resulting
from
operations
..........................................
$542,319
Templeton
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
8
Templeton
International
Climate
Change
Fund
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
.................................................
$229
$13,852
Net
realized
gain
(loss)
.................................................
66,548
(197,635)
Net
change
in
unrealized
appreciation
(depreciation)
...........................
475,542
601,746
Net
increase
(decrease)
in
net
assets
resulting
from
operations
................
542,319
417,963
Distributions
to
shareholders
..............................................
(17,160)
(59,000)
Net
increase
(decrease)
in
net
assets
...................................
525,159
358,963
Net
assets:
Beginning
of
period
.....................................................
2,141,527
1,782,564
End
of
period
..........................................................
$2,666,686
$2,141,527
Templeton
Funds
9
Semiannual
Report
Notes
to
Financial
Statements
(unaudited)
Templeton
International
Climate
Change
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
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
February
28,
2021,
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
(referred
to
as
“market
level
fair
value”).
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
(unaudited)
10
Semiannual
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
February
28,
2021,
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
(unaudited)
11
Semiannual
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
February
28,
2021,
there
were
an
unlimited
number
of
shares
authorized
(without
par
value).
During
the
periods ended
February
28,
2021
and
August
31,
2020
there
were
no
transactions
of
the
Fund’s
shares.
3.
Transactions
with
Affiliates
Franklin
Resources,
Inc.
is
the
holding
company
for
various
subsidiaries
that
together
are
referred
to
as
Franklin
Templeton.
Certain
officers
and
trustees
of
the
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
(unaudited)
12
Semiannual
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:
For
the
period
ended
February
28,
2021,
the
annualized
gross
effective
investment
management
fee
rate
was
0.705%
of
the
Fund’s
average
daily
net
assets. 
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
period
ended
February
28,
2021,
the
Fund
paid
transfer
agent
fees
of
$464,
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
(unaudited)
13
Semiannual
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
period
ended
February
28,
2021,
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,
2021.
Total
expenses
waived
or
paid
are
not
subject
to
recapture
subsequent
to
the
Fund's
fiscal
year
end.
g.
Other
Affiliated
Transactions
At
February
28,
2021,
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
period
ended
February
28,
2021,
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:
    aa
Value
at
Beginning
of
Period
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Period
Number
of
Shares
Held
at
End
of
Period
Investment
Income
a      
a  
a  
a  
a  
a  
a  
a  
Templeton
International
Climate
Change
Fund
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0%
.........
$74,649
$372,551
$(387,152)
$—
$—
$60,048
60,048
$—
Total
Affiliated
Securities
....
$74,649
$372,551
$(387,152)
$—
$—
$60,048
$—
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
(unaudited)
14
Semiannual
Report
Templeton
International
Climate
Change
Fund
(continued)
At
February
28,
2021,
the
cost
of
investments
and
net
unrealized
appreciation
(depreciation)
for
income
tax
purposes
were
as
follows:
Differences
between
income
and/or
capital
gains
as
determined
on
a
book
basis
and
a
tax
basis
are
primarily
due
to
differing
treatment
of
wash
sales.
6.
Investment
Transactions
Purchases
and
sales
of
investments
(excluding
short
term
securities)
for
the
period
ended
February
28,
2021,
aggregated
$424,537
and
$444,739,
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
$2.675
billion
(Global
Credit
Facility)
which
matures
on
February
4,
2022.
This
Global
Credit
Facility
provides
a
source
of
funds
to
the
Borrowers
for
temporary
and
emergency
purposes,
including
the
ability
to
meet
future
unanticipated
or
unusually
large
redemption
requests. 
Under
the
terms
of
the
Global
Credit
Facility,
the
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
period
ended
February
28,
2021,
the Fund
did
not
use
the
Global
Credit
Facility.
Cost
of
investments
..........................................................................
$1,785,885
Unrealized
appreciation
........................................................................
$863,683
Unrealized
depreciation
........................................................................
(26,688)
Net
unrealized
appreciation
(depreciation)
..........................................................
$836,995
5.
Income
Taxes
(continued)
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
15
Semiannual
Report
Templeton
International
Climate
Change
Fund
(continued)
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
February
28,
2021,
in
valuing
the
Fund's
assets
carried
at
fair
value,
is
as
follows:
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.
Level
1
Level
2
Level
3
Total
Templeton
International
Climate
Change
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Belgium
.............................
$
—
$
142,465
$
—
$
142,465
China
...............................
—
95,872
—
95,872
Denmark
............................
—
164,140
—
164,140
France
..............................
—
390,193
—
390,193
Germany
............................
—
316,331
—
316,331
India
................................
69,736
74,033
—
143,769
Italy
................................
—
107,119
—
107,119
Japan
...............................
—
197,045
—
197,045
Mexico
..............................
6,526
—
—
6,526
Netherlands
..........................
—
202,807
—
202,807
South
Korea
..........................
—
178,699
—
178,699
Spain
...............................
52,529
143,678
—
196,207
Sweden
.............................
—
81,182
—
81,182
Switzerland
...........................
—
123,949
—
123,949
Taiwan
..............................
100,752
84,508
—
185,260
United
Kingdom
.......................
—
31,268
—
31,268
Short
Term
Investments
...................
60,048
—
—
60,048
Total
Investments
in
Securities
...........
$289,591
$2,333,289
a
$—
$2,622,880
a
Includes
foreign
securities
valued
at
$2,333,289,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
Templeton
Funds
Notes
to
Financial
Statements
(unaudited)
16
Semiannual
Report
Templeton
International
Climate
Change
Fund
(continued)
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
Tax
Information
(unaudited)
17
Semiannual
Report
1.
Qualified
dividends
are
taxed
at
reduced
long
term
capital
gains
tax
rates.
In
determining
the
amount
of
foreign
tax
credit
that
may
be
applied
against
the
U.S.
tax
liability
of
individuals
receiving
foreign
source
qualified
dividends,
adjustments
may
be
required
to
the
foreign
tax
credit
limitation
calculation
to
reflect
the
rate
differential
applicable
to
such
dividend
income.
The
rules
however
permit
certain
individuals
to
elect
not
to
apply
the
rate
differential
adjustments
for
capital
gains
and/or
dividends
for
any
taxable
year.
Please
consult
your
tax
advisor
and
the
instructions
to
Form
1116
for
more
information.
Templeton
International
Climate
Change
Fund
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.
As
shown
in
the
table
below,
the
Fund
hereby
reports
to
shareholders
the
foreign
source
income
and
foreign
taxes
paid,
pursuant
to
Section
853
of
the
Internal
Revenue
Code.
This
written
statement
will
allow
shareholders
of
record
on
December
17,
2020,
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.
The
following
table
provides
a
detailed
analysis
of
foreign
tax
paid,
foreign
source
income,
and
foreign
source
qualified
dividends
as
reported
by
the
Fund
to
shareholders
of
record.
Foreign
Tax
Paid
Per
Share
is
the
amount
per
share
available
to
you,
as
a
tax
credit
(assuming
you
held
your
shares
in
the
Fund
for
a
minimum
of
16
days
during
the
31-day
period
beginning
15
days
before
the
ex-dividend
date
of
the
Fund’s
distribution
to
which
the
foreign
taxes
relate),
or,
as
a
tax
deduction.
Foreign
Source
Income
Per
Share
is
the
amount
per
share
of
income
dividends
attributable
to
foreign
securities
held
by
the
Fund,
plus
any
foreign
taxes
withheld
on
these
dividends.
The
amounts
reported
include
foreign
source
qualified
dividends
that
have
not
been
adjusted
for
the
rate
differential
applicable
to
such
dividend
income.
1
Foreign
Source
Qualified
Dividends
Per
Share
is
the
amount
per
share
of
foreign
source
qualified
dividends
plus
any
foreign
taxes
withheld
on
these
dividends.
These
amounts
represent
the
portion
of
the
Foreign
Source
Income
Per
Share
that
were
derived
from
qualified
foreign
securities
held
by
the
Fund.
1
At
the
beginning
of
each
calendar
year,
shareholders
will
receive
Form
1099-DIV
which
will
include
their
share
of
taxes
paid
during
the
prior
calendar
year. Shareholders
are
advised
to
check
with
their
tax
advisors
for
information
on
the
treatment
of
these
amounts
on
their
income
tax
returns.
Foreign
Tax
Paid
Per
Share
Foreign
Source
Income
Per
Share
Foreign
Source
Qualified
Dividends
Per
Share
$0.0190
$0.0880
$0.0727
Templeton
Funds
Shareholder
Information
18
Semiannual
Report
Board
Approval
of
Investment
Management
Agreements
TEMPLETON
FUNDS
Templeton
International
Climate
Change
Fund
(Fund)
At
a
meeting
held
on
February
23,
2021
(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
best
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
in
the
current
work-from-home
environment
and
liquidity
risk
management.
The
Board
also
reviewed
and
considered
the
benefits
provided
to
Fund
shareholders
of
investing
in
a
fund
that
is
part
of
the
FT
family
of
funds.
The
Board
noted
the
financial
position
of
Franklin
Resources,
Inc.
(FRI),
the
Manager’s
parent,
and
its
commitment
to
the
mutual
fund
business
as
evidenced
by
its
reassessment
of
the
fund
offerings
in
response
to
the
market
environment
and
project
initiatives
and
capital
investments
relating
to
the
services
provided
to
the
Fund
by
the
FT
organization.
The
Board
specifically
noted
FT’s
commitment
to
enhancing
services
and
controlling
costs,
as
reflected
in
its
outsourcing
of
certain
administrative
functions,
and
growth
opportunities,
Templeton
Funds
Shareholder
Information
19
Semiannual
Report
as
evidenced
by
its
recent
acquisition
of
the
Legg
Mason
companies.
The
Board
also
noted
FT’s
attention
focused
on
expanding
the
distribution
opportunities
for
all
funds
in
the
FT
family
of
funds.
Following
consideration
of
such
information,
the
Board
was
satisfied
with
the
nature,
extent
and
quality
of
services
provided
by
the
Manager
and
its
affiliates
to
the
Fund
and
its
shareholders.
Fund
Performance
The
Board
reviewed
and
considered
the
performance
results
of
the
Fund
over
the
one-year
period
ended
November
30,
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
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
13
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
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,
2020,
being
the
most
recent
fiscal
year-
end
for
FRI.
The
Board
noted
that
although
management
continually
makes
refinements
to
its
methodologies
used
in
calculating
profitability
in
response
to
organizational
and
product-related
changes,
the
overall
methodology
has
remained
consistent
with
that
used
in
the
Fund’s
profitability
report
presentations
from
prior
years.
The
Board
further
noted
management’s
representation
that
the
profitability
analysis
excluded
the
impact
of
the
recent
acquisition
of
the
Legg
Mason
companies
and
that
management
expects
to
incorporate
the
legacy
Legg
Mason
companies
into
the
profitability
analysis
beginning
next
year.
The
Board
also
noted
that
PricewaterhouseCoopers
LLP,
auditor
to
FRI
Templeton
Funds
Shareholder
Information
20
Semiannual
Report
and
certain
FT
funds,
has
been
engaged
by
the
Manager
to
periodically
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
management’s
outsourcing
of
certain
operations,
which
effort
has
required
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.
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.
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.           
N/A
 
 
Item 5. Audit Committee
of Listed Registrants.             
N/A
 
 
Item 6. Schedule of Investments.
                            N/A
 
 
Item 7
. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.                           N/A
 
 
Item 8. Portfolio Managers of Closed-End Management Investment Companies.  N/A
 
 
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.                          N/A
 
 
Item 10. Submission of Matters to a Vote of Security Holders.
 
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that would require disclosure herein.
 
 
Item 11. Controls and Procedures.
 
(a)
 Evaluation of Disclosure Controls and Procedures.  The Registrant maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.
 
 
(b)
  Changes in Internal Controls. There have been no changes in the Registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect the internal control over financial reporting.
 
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Company.                            N/A
 
 
Item 13. Exhibits.
 
(a)(1)
Code of Ethics
 
 
(a)(2)
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Robert G. Kubilis, Chief Financial Officer and Chief Accounting Officer
 
 
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Robert G. Kubilis, Chief Financial Officer and Chief Accounting Officer
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
 
 
 
 
TEMPLETON FUNDS
 
 
 
By _S\Matthew T. Hinkle _______
      Matthew T. Hinkle  
Chief Executive Officer – Finance and Administration
Date:  April 23, 2021
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
 
 
By _S\Matthew T. Hinkle _ _____
      Matthew T. Hinkle  
Chief Executive Officer – Finance and Administration
Date:  April 23, 2021
 
 
 
 
By  S\Robert G. Kubilis _______
  Robert G. Kubilis
Chief Financial Officer
and
Chief Accounting Officer
Date:  April 23, 2021